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View Diary: More on Section 4 of the 14th Amendment and the debt ceiling (45 comments)

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  •  Introduced during WWI. (0+ / 0-)

    Congress wanted to put a handle on Wilson's "foreign adventure" by limiting how much he could borrow for it.  After that it proved convenient, so they kept it for political purposes.

    Mind you, in 1916 the US was on a gold standard, and borrowing meant borrowing credit against the gold reserves in JP Morgan's vaults.  The US didn't have enough god reserves to back the additional currency on its own.  In fact, nobody did, which was what was discovered in 1929 when all the long-delayed bills from WWI finally hit due all over Europe and the various can-kicking machinations that had been used to paper it over stopped working.  Thus the Great Depression.  And every nation in the world went off the gold standard within a few years, except the US, which went off the standard internally but continued to pay foreign government claims in gold.

    So actually, the treasury COULD print money at will, but we're all terrified of that because 1) the Germans did that to deliberately reduce their war debts in 1922, and it hurt international banks badly, and 2) since ultimately most of the price was paid by New York bankers, they have since done everything in their power to make "printing money" anathema.  We are therefore fed propaganda about the horrors of printing money from kindergarten through college.  Printing money would deprive our largest campaign contributors of both their security and a major profit stream.

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