Smasharoo wrote:
You're missing the key step "deposited at the Fed", and also missing the key point I wrote. The federal debt is the total dollar value of all outstanding treasury bills. How they come to be outstanding is irrelevant.
Nope, it's extremely relevant.
We've had discussions in the past about intergovernmental debt and whether/how-much it counts as "real debt", but for purposes of the debt ceiling it does not matter. Your earlier post mentioned the use of t-bills as part of how the coin(s) would be used. All I'm saying is that once t-bills are issued, it adds to the debt which is limited by the debt ceiling.
Yes, I understand. You are wrong. Not in my opinion, mind you, that's just not how the debt ceiling functions.
http://www.fas.org/sgp/crs/misc/RL31967.pdf
Nope, it's extremely relevant.
We've had discussions in the past about intergovernmental debt and whether/how-much it counts as "real debt", but for purposes of the debt ceiling it does not matter. Your earlier post mentioned the use of t-bills as part of how the coin(s) would be used. All I'm saying is that once t-bills are issued, it adds to the debt which is limited by the debt ceiling.
Yes, I understand. You are wrong. Not in my opinion, mind you, that's just not how the debt ceiling functions.
http://www.fas.org/sgp/crs/misc/RL31967.pdf
Huh? You just linked to a source which confirms what I just wrote:
"The Sum of debt held by public and debt held by government is the total federal debt".
Both of those are measures of outstanding T-bills Smash. WTF? How about instead of just linking to stuff and assuming it supports what you're saying, you actually find some quote which supports what you're saying? That would be a novel approach, wouldn't it?
Quote:
That's how it functions. It's not a secret. We don't have to "assume" we understand how it works by making wild guesses.
What's how it functions? You didn't actually say anything Smash. You just linked to a document. The total federal debt is the total dollar amount of all outstanding treasury bills. Period. There are two methods under which the treasury issues bills:
1. It borrows money from the public, typically to make up for a deficit. This is called "Debt held by public".
2. It borrows money from budgeted government programs. This happens when congress mandates that X dollars fund a given program, but the program has a surplus. instead of having congress pass a new law every time this happens, the treasury simply hands the program X dollars in T-bills, and takes the money out and re-allocates it to some other program. This is called "intergovernmental debt" (or "Debt held by Government" as the document you linked calls it).
Point being those are the only two ways that treasury bills exist, and their total is the total of federal debt. The debt ceiling caps federal debt. Therefore, if you increase the number of T-bills outstanding, you increase the federal debt. If your process to leverage the $1T coin through the Fed involves the treasury handing the Fed a $1T worth of T-bills as it's method of borrowing against the coin, then that process increases the federal debt by $1T. Period. You can't use that as a means to get around the debt ceiling.
For a guy who claims to understand economics and monetary theory, you're sure failing to grasp the most simple concepts here.