Even if extraordinary measures and Treasury cash on hand ran out, it still wouldn’t mean default. Default doesn’t mean delaying payments to vendors, Social Security or other supposed obligations. It is one thing and one thing only: failing to pay interest or repay principal on maturing debt. This is not a discretionary spending item. The 14th Amendment stipulates "the validity of the public debt ... shall not be questioned.” In 1935, the Supreme Court interpreted this to mean Congress’s borrowing carries with it the “highest assurance [of payment] the government can give.”[ii]Houston we have a problem.
The right to coin includes the right to default, in contradiction with the 14th. Something I had not noticed. When we do our generational default the bond holders will sue, in fact, the court may invalidate any New Fed contract we conceive.
Are we defaulting on private parties? No, we are defaulting on all holders of US currency. This is not an individual bond default against some specific bond holder. However, I am not sure the lawyers can manage this.
Sandbox needs to continue the push to set Fed market share to zero, just in case. The last thing sandbox needs is to get in them middle of a Supreme court debate with Roberts the Ill. If it is lawyer time, then the best bet is to eliminate the Fed from the sandbox. I dunno, difficult problem.
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