Nobody From Nowhere (@i8dc)

Occasional Common Sense

Posts Tagged ‘debt limit

Debt limit leverage benefits Obama, not tea party (take 2)

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When we get to the debt limit, which I think we will, here’s what won’t happen. We won’t get a trillion dollar coin, and the Fed won’t issue premium bonds. In other words, no gimmicks. Obama will have a single choice: violate the debt limit or don’t. And he’ll choose to violate it, because the alternative is worse in every way.

Violating the debt limit means continuing to spend as directed by appropriations, and continuing to borrow as needed. It’s likely that the market would demand higher returns in these auctions, but if the auctions were really going badly, the Federal Reserve could buy a lot (or even all) of the issued securities.

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Written by David Clayton

October 9, 2013 at 11:29 pm

Posted in Punditry

Tagged with , , , ,