Debt ceiling, overdrawn Fed accounts: Standing to sue?

Well, if they switched from buying bonds to selling them, that would be reverse QE.

I don’t think that’s necessary, though. I mean, it wouldn’t do anything to change the effect on the Fed’s balance sheet - it’s going to go into the red either way.

The idea of the coin is that it allowed the Fed to credit an asset to its balance sheet, so it could avoid the appearance of insolvency. If the Fed simply starts “giving” money to the Treasury, their balance sheet will go negative. I think you know that doesn’t really matter, in a practical sense. But a substantial and vocal minority will make the claim the Fed is bankrupt. At the very least you’d expect a massive spike in the price of gold.

Prohibition? Slaves count as 60% of a “person”?
The constitution is not a guarantee of good constitution, either.

No, it wouldn’t be.

People would call it that, but it wouldn’t be true.

Quantitative easing is exactly what it says: easing monetary conditions based on changing the quantity of base money, instead of the normal technique of easing monetary conditions by adjusting interest rates. But in this case, very different, they would be selling bonds so that the quantity of base money would be unchanged, not lower. It would be sterilization, not reverse-QE. Their current QE purchases could continue as they are, completely unaffected by any of this.

Completely untrue.

Well, I guess it would depend on the size of the liabilities they were trying to sterilize. If (and I don’t know the actual numbers, so I’m making them up) they wanted to advance to the Treasury a sum of $100 billion, and they wanted to “sterilize” the transaction, they’d need to either reduce future bond purchases by that amount, or sell an equivalent amount of existing assets. Since money is fungible, it wouldn’t matter which they did. Selling something for $100 and then buying it for $100 is the same as not buying or selling anything in the first place.

The Fed’s capital is something like $50 billion, if I remember right. Once they spend through that, if they continue “gifting” money to the Treasury, their liabilities will be more than their assets. If it were an ordinary bank, that would mean it’s insolvent.

Of course, they could just label it some sort of short term loan, and count the loan as an asset. But then that would contradict the idea that the the money was a gift, rather than debt.

What would be nice is if people could simply accept the fact that the Federal Government has a bank that can finance any amount of debt, at interest-free rates, forever. Then we could focus on real issues, rather than the fake issue of the government running out of money.

60% was better than the 100% that the slavers wanted. The 14th Amendment tried to keep states from counting disenfranchised groups at all, but it was unfortunately never enforced.

Since you are in GQ and asserting this as fact, then, I would like a citation. It sure seems like the Supreme Court often interprets laws in a non-textual way, for instance.

Are you asking me for a cite for the quote, or something else? I’m happy to oblige, I would just like to know what you’re looking for.

I believe even that particular bar is set higher than your wording suggests. The plaintiff must be able to argue that he has already been demonstrably, uniquely, harmed. In other words, he cannot sue on the basis of either collective or prospective harm. That two pronged threshold is what makes it virtually impossible for an individual to challenge the constitutionality of a law, per se.

The Supreme Court may be the perceived arbiter of constitutionality, but issues of standing and jurisdiction prevent the preponderance of law from ever actually being tested. Separation of powers issues make judicial scrutiny an even thornier proposition, never more so than when you simultaneously toss legislative fecklessness and executive overreach into the mix. IANAL, but all of this seems increasingly problematic to me. What could be more grave than collective constitutional harm on a national scale? What damage could be more irrevocable ex post facto?

This is not quite right. A sufficiently immediate future threat of harm can confer standing.

Could you give me an example of what might constitute such a sufficiency in regard to challenging the constitutionality of a law or an executive branch order? I don’t mean to argue the point; I’m only working from what I’ve read about recent attempts to initiate actions on that front, and I hadn’t realized what an enormous obstacle issues of standing can be. I guess my understanding hasn’t hit the “million wrinkle” mark yet!

In Gore v Bush, the Supreme Court took the case before the recount had been completed and the winner officially certified. And in fact, Florida was ordered to stop the recount until the Court ruled, at which point it became too late to complete the recount.

Sure. Here’s an example: Congress passes a law (or the President issues an executive order to the Coast Guard, if you prefer) that says all pit bulls will be killed on November 1, 2013. I have a pit bull.

Agreed, see Flast v. Cohen.

Congress can’t sue the President. A demarcation dispute such as this is by definition a political question. SCOTUS long ago held that members of Congress can sue as individuals if they suffer a discrete, personalized injury. They can’t sue as a body for institutional injuries, on the same standing principles Richard Parker outlined above.

With apologies for not returning sooner, I appreciate the examples of qualifying prospective harm (and the education).

Richard Parker: If you’re still around and don’t mind another query, what would the constitutional basis for the pit bull challenge be? Aside from dramatically framing the question of public safety, would the fact that the government plans to kill your dog, not just take it away from you, have any constitutional import in its own right?

If I’m wading a little too deeply into the hypothetical weeds, at this point, I’ll just say thanks for correcting my initial assertion.

I think you are deep in the weeds since whether the challenge has any legal merit is separate from whether there is standing. But one could bring such a challenge on many grounds: rational basis review under the Fourteenth Amendment, denial of due process, denial of substantive due process, and equal protection all come to mind.

Legally, there may be no consequences; however the debt ceiling problem is about the Full Faith and Credit of the United States of America. The financial shenanigans you described may be enough to make creditors weary; even if the interest payment is technically early, new money is effectively being printed by maintaining “overdrawn” accounts. This money is not quite legally sanctioned, and its value is no longer as safe, as it could lead to drastic inflation. Investors will want higher interest rates to make up for the uncertainty.

The value of our money is based almost solely on the good name of our government. The strategies you suggest would tarnish our reputation.

Thanks, Richard.

I see that I have been misguidedly conflating merit and standing. In retrospect, the central flaw in the cases I had in mind may have been that the prospective harm was not sufficiently immediate or defined to warrant hearing, but, as you suggest, that would still be an issue of merit, not standing.

Ah. Thank you for correcting me.

The value of our money is based on the ability of the government to extract taxes, and the ability of banks to foreclose or otherwise force people to pay back their debts.