What if a Platinum Coin?

What if the Treasury minted the platinum coin people have talked about, with a denomination of $1Trillion?

What would happen?

There would be much whining within the monopoly media that Obama had become a dictator: he's taken away Congress's power of the purse, the debt ceiling.

Obama could also simply declare, according to the 14th Amendment, that the President has to defend the "full faith and credit of the United States," by continuing to borrow whenever necessary, even if the Congress refused to pass an increased debt ceiling. That's a better alternative.

In either case, the Executive does have the power to maintain the currency. A strong case could be made: a President's first responsibility is to defend the nation, whether it derives from foreign military threats, or domestic economic ones. A default on the US dollar is a much greater threat than any of our last half-century's wars.

A default would probably spell the death knell for the greenback as the world's reserve currency. Interest rates could go sky high, stopping all growth; imports would become prohibitively expensive: a recipe for severe stagflation. Global depression could follow.

Yet, our powerful finance industry isn't leaning on the GOP to quash its debt-ceiling extortion. But then, Wall Street would dearly love to achieve some of the GOP's agenda: especially, privatizing Social Security (which doesn't contribute to the deficit), so maybe it won't press Republicans to stop, unless it looks as if Obama won't blink.

That's one reason why either the platinum coin or Presidential declaration, make sense. Either would stop the hostage taking. Then, if both sides still wanted to talk about deficit/debt reduction, they could have a rational discussion of corporate subsidies, of sensible cuts to the war machine, of reforms to health care and Medicare/Medicaid, by cutting costs without reducing benefits or raising eligibility.

Without the above Presidential action, negotiations would remain irrational: under duress on both sides. Just as in the fiscal cliff negotiation, corrupt deals under the table would pollute the actual bargain ("great" or not), in the rush to meet--or almost meet--the deadline. Reasonable solutions, like restructuring payment mechanisms in Medicare, (as is being tried in New York City hospitals), would be impossible to negotiate.

Wall Street, the GOP, and some Wall Street Democrats, wouldn't like either presidential response, because they'd have a harder time extorting their loopholes, gifts and grants. Conservatives would also bemoan the expansion of Presidential power--not that they opposed it under Bush II.

But maybe the US would finally get a government that governed more or less rationally, for The People.

What are the odds, if our Roman Senators don't get what they want, that the President would even try to get what the nation needs? Where is a backbone when backbone is needed? The selfish class has to be stopped. It would be ironic if a mere coin could do that.

Centuries of Idiocy

We seem to have stepped into the fifth century--or the 15th: in the latter, economists posited that the strength of nations was measured in holdings of gold and silver. Therefore, nations tried to hoard as much as they could, beggaring their neighbors. While the Ron Paulists subscribe to the 15th century theory, most Tea Partiers are much more enamored of magical thinking--like Romans of the fifth century.

For Paulists, paper currency is anathema. Paper, or fiat money, can be managed by central banks like the Fed, whereas only the market manages gold. If you have more gold than other nations, you're rich, if not, not. If that leaves you without capital to develop your nation, tough luck, unless you sell out to the global elite.

The magical thinkers, on the other hand, believe that if you cut government spending in a recession, you create jobs. If there is even less money earned or spent in the economy, how does that create jobs? Corporations and small businesses expand and hire in response to perceived demand for their products or services. They're not hiring for lack of capital, but because people have too little money; you can't grow demand for goods and services with less consumption. As more become unemployed, there will be even less money to sustain purchases.

So, why would cutting the deficit create jobs? It requires cutting jobs, cutting programs that create jobs, and cutting payments to hospitals, seniors and poor people, making less money available to buy goods and services. If someone's Social Security is slashed, he's going to be more frugal; he may be unable to keep up his house payments: less money is spent in the economy. A default on a home even subtracts wealth. Finally, Republicans insist: you can't possibly raise taxes on the one segment of the population that is actually doing very well.

The argument (or propaganda line) is: they're "job creators," so you can't raise their taxes, or they won't create jobs. But they don't create jobs; they invest in places like China. Why? In China, there is surging demand for goods and services.

Demand creates jobs, not millionaires/billionaires; they just take advantage of demand--when it's there. They go elsewhere when it's not, or 'invest' in speculation, or, like fifth century Roman Senators, in gold. Roman Senators didn't survive long after Rome's fall.

The worst time to cut the deficit is in a recession: expenditure cuts cause lower government revenues and increase the need for government relief--thereby increasing deficits, and the nation's debt.

Yet, Obama offered devastating cuts, and puny tax increases in the debt-ceiling talks; Republicans walked out, refusing to raise taxes at all.

Only a small rump of Democrats still lives in the 21st century: they object to needless cuts and demand government jobs programs plus tax increases for the wealthy.

A Fatal False Issue

There is something fundamentally wrong with what's going on in Washington. A false issue--the debt and debt ceiling--could trigger economic apocalypse, while the real economic issue--jobs and the housing market--are brushed aside.

The extreme right, true-believer "tea party" Republicans, the new guys on the block, are the tail wagging the dog.

Neither Obama, nor Democrats, nor the Republican leadership want to risk default. Also, Democrats know, at least, that Americans support them on not cutting Medicare, Medicaid and Social Security. But they also believe Americans want them to be reasonable, so if Republicans refuse to budge until the last minute, Democrats and Obama may compromise even on cuts to the big three--in order to avoid a default.

Such a compromise may be in the works between Senate Majority Leader Reid, and Minority Leader McConnell. Reportedly, it would cut $1.5 trillion, contains no new revenue, and is only short-term. You can bet that cuts won't be in subsidies to oil and coal, or more than token Defense cuts. That leaves the big three.

Also, there emerged the "gang of six" Senators: three from each party, who have now proposed a sweeping plan that would cut $4 trillion in ten years, while also dramatically lowering taxes for the wealthy, more so than for anyone else, but cruelly slashing funding for programs and transfer payments that help people, rather than corporations--and cutting Medicare and Medicaid.

Why can't Obama and Democrats stand up, and fight for the issues they believe in, issues supported overwhelmingly by the American public. Are Democrats in Congress and the Whitehouse as scared of the extremist fringe as German moderates were of Hitler? Moderate German politicians thought they could compromise with him, especially since Nazi (NSDAP) strength in the Reichstag was far from a majority. Yet, in less than a year, Hitler gained virtual control over all Germany.

Could it happen here? Crisis breeds authoritarianism, but Obama seems an unlikely Diocletian; he was the Emperor who took military power, and then turned the whole empire into a totalitarian state to avoid more civil war. Nevertheless, Obama's actions in Libya and the drone war confirm the tug of the imperial Presidency.

If Republican back-benchers refuse compromise on the debt ceiling, the economy could collapse with the default. American anger might explode. Either Obama emerges in 2012 as a new Diocletian who will set things right, or an extremist like Bachman will triumph; she has all the answers.

Given America's rightward turn, an imperial, Diocletian-type totalitarianism, or a fascist takeover seems more likely than a popular revolution, but either would take over a fast failing empire. We'll no longer be able to borrow to maintain it.

Do our Roman Senators, the extremely rich, think they will survive the apocalypse? They do think so, which is a big part of the problem. The Roman Senators of old did not survive, despite their huge caches of gold.

Debt Ceiling Chicken

The debt ceiling debate is degenerating into a game of chicken. Each side is waiting for the other to cave. Obama says we have to set a long-term deficit/debt reduction in process, and wants to shoot for $4.5 Trillions in cuts over ten years; the Republicans, until recently, were saying they'd work for a $2 Trillion cut, because, frankly, they're scared of taxes. Scared that if they vote for any increase in taxes for the wealthy (they call them "job creators," which they definitely are not, especially now in this jobless "recovery"), they'll suddenly lose all the huge corporate campaign contributions they're counting on to gain the majority and the Presidency in 2012.

Perhaps the Republican leaders do get it, that a default would be bad, very bad, but both Boehner and McConnell have as much as said, more than once, that their real mandate is to insure that Obama fails, and is not re-elected. If they do force a default, however, it's not clear that Obama wouldn't be able to campaign against them for causing it, and for opening the way for other unpleasant things: like the dollar no longer being the reserve currency, our huge debt becoming hugely more expensive and our freedom to import whatever we want whenever we want it going away.

I think Obama knows this, so he's playing chicken, too. No short-term fixes, he asserts: this is America; we don't fix our books for 3 months at a time.

Some tea party types do actually argue that a default would be a good thing, and I could, too, from one perspective. They argue, and I wouldn't agree, that we'll have to cut back on all those senseless 'consumption' programs like Medicare and Social Security (say insurance), and that as far as Medicaid is concerned, the recipients are mostly no-goods, anyway.

I argue that a default would mean we'd no longer be able to afford our costly military and its world empire. We actually can't afford it anyway. And, ultimately, we'd be much better off without it: all those things we "can't afford," like high quality education and Medicare for all, we'd easily be able to pay for--if we weren't spending almost three-quarters of a trillion yearly on "Defense" and its relatives, like Intelligence, Energy and "Homeland" Security.

And we'd be freer, too. No longer would our police forces try to emulate (and get funds from) the military, for things like tanks and armored cars. No longer would the military be so sacrosanct. And no longer would the rest of us be treated as if we were potential terror suspects.

However, a default would be painful for everyone but bond and currency traders; for them it could create fortunes. A default would mean: the beginning of the end of American Empire. Bankruptcy caused the "Fall of Rome."

Next Right-wing Target

They anticipate that their dirty deal with Obama is sealed, and will pass even in the Democratic House. Why Democrats will pass such a monster is another question.

So, right-wingers are pleased about the $700-800 billion in income tax breaks for those who don't need it--people earning over $250,000 a year. They also are moderately pleased with the Estate Tax deal, in which estates under $5 million will be exempt, and the rate above that is lowered to 35%. Actually, many right-wingers want to eliminate the estate tax altogether. They don't call it the "Death Tax" for nothing. Under Bush, they had put in place the budget-busting Medicare Part D, which is lavish to big Pharma, as well as the tax cuts now being renewed.

So, what is their next target? They are mobilizing to prevent the GOP from supporting "compromise" on the debt ceiling. It's currently at $14.3 trillion.

That looks like a large number, and it is, but the US keeps on bumping up against whatever ceiling is current law; it has been for years--except during Clinton's last two years.

Before the Great Recession, the biggest and fastest addition to the debt was during the Bush II administration. Trillions in debt were added from the two unjustified wars, the two rounds of tax cuts and the unfunded Medicare Part D.

The recession, as recessions always do, caused the debt to rise further, because the unemployed and/or defaulted homeowner is unlikely to pay income tax, but aid to both means the government has to borrow. Would it be better to let people starve in the streets? Or sink into a depression?

Right-wingers seem to think so. They don't expect to be the ones who do the starving. They apparently assume that if people don't have jobs, it's their own faults--after all, jobs are listed in newspapers and online, so why aren't people working? They have it too easy with unemployment insurance! Those stupid Democrats wanted unemployment benefits extended; it was the lever Republicans used to get their way.

However, if the government runs out of money, it won't pay unemployment. To stop the government from borrowing will, effectively, stop the government from operating.

Why do right-wingers want this?

There is much rhetoric in right-wing venues about the damage government does. Their assumption is that a coming period of stalemate will be a good thing: it will stop that African Socialist, Obama, from expanding government programs and regulations. It will also demonstrate what right-wingers believe: government can't do anything right. If they can hamstring government until the 2012 election, then right-wingers can regain power.

But they don't appear to care if, in the process, they drive the US into a depression. If they succeed, the US will lose the dollar's reserve status. Then, goodbye American Empire.