The tenacious and relentless Joe Firestone has a nice post up at correntewire this week that does some projections on what Congress may be thinking with respect to federal deficit spending through March of next year.
Well, here we are again, House leaders have agreed on a compromise continuing spending resolution at the same level as before from October 2012 through January 2013. It’s likely now that the President(s?) will probably try to make the money available for deficit spending as of today, last through the time period of the continuing resolution so that one deal including both the budget and raising the debt limit can be made by March of 2013. According to the July 31, Daily Treasury Statement, there’s $499,424,000,000 left until the debt ceiling. That’s an average of $62,428,000,000 deficit spending per month for the next 8 months, ending March 31, 2013. For the past 10 months, average deficit spending was at $114,802.3 Billion per month,My emphasis. Joe has dug out the details of what he sees as a desire by Congress to only net issue $62B/mo. of USTs through next March; while over the last previous 10 months, the non-government sector (both domestic and external) have been demanding and taking $114B/mo.
The non-government sector always wins in this "contest of wills". So expect the monthly deficits going forward to be closer to the $114B recent trend levels.
That said, although Congress cannot dictate a level of the federal deficit, they can probably take certain actions in which they retain discretion related to the rate of withdrawals from the Treasury accounts. So expect slower government vendor payments, delayed awards of federal contracts, an underfunded US Postal Service pension fund, slower (less timely) Medicare and Medicaid reimbursements, delayed infrastructure project starts and so forth. This as Treasury seeks to reduce the rate of US Treasury account withdrawals where they have some discretion in an effort to reduce the rate of new net Treasury securities issuance.
Joe goes on to repeat the great and larger policy proposal for Treasury to simply deposit a large minted coin (btw struck in platinum, suck it up moron gold-lover commodity fetishist sickos) with a $T face value to top-over the Treasury General Account. This is a method to avoid an unnecessary "fiscal cliff" that could be created by the present policy of UST issuance that is limited via a separate and redundant congressional action in the form of "debt ceiling" legislation.
Thanks for this analysis Joe!
(Mike, this does not look like a "good" development... $114B/mo. will come, but "kicking and screaming", reduced cash-flow for many, like attaching a leech onto an already sick patient, etc...)
8 comments:
Joe goes on to repeat the great and larger policy proposal for Treasury to simply deposit a large minted coin (btw struck in platinum, suck it up moron gold-lover commodity fetishist sickos) with a $T face value to top-over the Treasury General Account.
You are truly clueless. Employing a large minted coin for this purpose has nothing to do with commodity money. The purpose of commodity money is to "constrain" both the government and private entities from issuing new "paper" or keystroke money because of the limited amount of the commodity money which cannot be artificially reproduced while the coins can be tested for authenticity and purity. You say things like this because you do not understand Austrian concepts and have lost the debate. Thus, you have nothing left but name calling which telegraphs to the world what you do not and will not understand. And BTW, what you wrote amounts to journalistic fraud.
Bob,
"Employing a large minted coin for this purpose has nothing to do with commodity money."
No shit Sherlock it is a different monetary system entirely that does not include convertibility into a commodity...
I understand perfectly well how convertible currencies work and I politically advocate for a contrary policy that uses state currency that is non-convertible.
WE understand how your preferred policy works (convertibility), it is YOU who do not understand how OUR preferred policy works (non-convertible).
Suggest you divorce yourself from your relationship with Gold and maybe your eyes will be opened....
Rsp,
"while the coins can be tested for authenticity and purity"
Test away. By Act of Congress, the US Mint is the only source of authentic legal tender US coins made of pure platinum.
"The Congress shall have Power... To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."
Art 1 Sect 8, US Const
Bob,
Read THE LAW here: "and fix the Standard of Weights and Measures."
Under your system, who or what defines the standard weight and measure of the commodity that your "money" is based on? The invisible hand?
The govt does this under your system also...
rsp,
Bob Roddis's comment is a pure distraction postulating a fantasy world we do not live in. As beowulf first made clear the Executive has the legal authority to issue 1 oz. proof or bullion platinum coins of arbitrary face value (no relation of metal value to fiat money nominal value). So that's the truth of the legal situation.
I proposed a $60 T coin so the Treasury can force the Fed to issue $60 T of electronic credits which would be used to pay off the debt subject to the limit, and also to deficit spend appropriations over at least the next 15 years or so. The 44 T or so not earmarked for debt then fills the public purse as very public evidence that the Government always has plenty of money to buy anything Congress collectively decides we need even if it costs more revenue than the Government collects in taxes.
I propose this to change the context of political debate so that the austerity con must end. No more debt; plenty of money left for future spending. Removes the fig leaves from the austerians private parts, and shows people that there's no there there.
Anyway thanks Matt, for noticing this, and embellishing it with your own thoughts. I'll be tracking things to see if reality matches my hunches here. The lame duck is most likely time for reality to diverge. But if we don't get divergence; then I think we're likely to get stagnation for most of the next year.
Oh, btw, this is an updating of a cross-post that appeared here last year: http://mikenormaneconomics.blogspot.com/2011/07/definitive-solution-to-debt-crisis.html
Way to stay on message Joe.
Thanks for continuously promoting this thought provoking platinum coinage policy proposal...
I think what will probably happen is the deficits will come in larger over the months and the "debt ceiling" will probably be hit sooner than March 2012.... but it looks like it should not be an issue before the Nov elections...
rsp,
Thanks Matt, I have a petition up at: http://signon.org/sign/end-austerity-mint-the It's about minting that $60 T coin and ending austerity.
I really think the Administration will be able to make that $500B last until March, if they have to. They will hurt people to do it. But they've shown they can do it. Remember last year when they were reaching the ceiling and they just stopped issuing debt for a couple of months. They can do that again,especially since the first quarter is a very big quarter for tax revenues. Geithner and jack Lew will juggle the hell out of whatever headroom and reserves they have left. They'll start doing that as soon as the election is over.
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