One could hope they ARE considering "changes"... ? Such as changes that could reduce fraud.
But I'm probably dreaming, because that would probably involve an up-front increase in spending. And nobody seems to appreciate the value of buying a security system or paying police to prevent the loss of a lot more than the cost of those things in the long run.

It's like our whole system has turned into an instant gratification short-term only thinking culture.
So yeah, change is probably just a euphemism.

Dr. Baker I am very interested in hearing your opinion on the various options for circumventing the debt ceiling by using progressive monetary policy.

We know how big of a deal the debt ceiling is and how much power congress can wield if they are hard-headed enough to threaten default to extort the american people for concessions.

The executive has the power to mint metals and deposit them at the Fed to receive Federal Reserve Notes (perhaps fresh monetary base, but not necessarily?) and use them to meet obligations that congress refuses to borrow more to meet.

My preliminary research indicates this won't be inflationary unless the market is really spooked by the idea or if it is abused and there's a flow of debt-free money beyond what would have been created from bond issuance to meet fiscal obligations.

Since metals like platinum and gold that we have in reserves are useless and impractical (save for some electronics applications), can't we mint coins with them, force the Fed to borrow them from us, and give us Fed Notes as collateral that we can use to service debt and meet spending obligations set forth by congress.

As a progressive economist, what is your take on using this very populist method to get around the debt ceiling? If not embracing the debt-free coin minting method, which path would you advocate --- invoking the 14th amendment (BO has taken this off the table)? Using some other kind of unprecedented executive power? Talking tough and playing chicken with congress (and the world economy)? Letting them just extort us?

Very interested to read your take on this issue and I've searched exhaustively through your articles and haven't seen you really address it.

Thanks.

Paul Krugman talked about minting coins and other methods yesterday:

http://krugman.blogs.nytimes.com/2013/01/02/debt-in-a-time-of-zero/

Molly,

Krugman is rather dismissive of the idea (while acknowledging its legality). I'm wondering what Dr. Baker has to say on the matter, because something has to give in this system. And clearly the way the modern banking model has evolved, Fed stimulus is POINTLESS.

I fail to see how minting special coins is populist, but rather a concentration of power to the executive branch. Obama should learn how to negotiate rather than perform stupid pet tricks.

As for the Fed, their stimulus is not pointless nor useless. The Fed is evolving as the banking system evolves.

David,

At the zero-bound and with QE-X (what are we on now, 3, 4?) barely denting unemployment and the output gap, it's fair to say that the Fed "toolbox" is rather weak since it works top-down through banks rather than putting money in the hands of workers who need it.

I wouldn't mind the executive having more power, with Congress being as useless as they are with these ridiculous filibuster rules before even DEBATING a damn bill. It's disgraceful.