And now there are three (ways around the debt limit threat):
1. The Fourteenth Amendment.
2. The Trillion Dollar Coin.
and, now, per Nobel Laureate and non-Treasury Secretary Paul Krugman:
3. The MOC (Moral Obligation Coupon).
Today, right after advocating the Trillion Dollar Coin" solution (see Dro's rec'd diary), and declining the Treasury Secretary position, our favorite NYT columnist came up with a third proposal around the debt ceiling crisis:
Moral Obligation Coupons, "which declare the intention of the government to redeem these coupons at face value in one year."
It should be clearly stated on the coupons that the government has no, repeat no, legal obligation to pay anything at all; you see, they’re not debt, and therefore don’t count against the debt limit. But that shouldn’t keep them from having substantial market value. Consider, for example, the fact that the government has no legal responsibility for guaranteeing the debt of Fannie and Freddie; nonetheless, it is widely believed that there is an implicit guarantee (because there is!), and this is very much reflected in the price of that debt.
Krugman acknowledges that if the "MOC's" are sold on the open market, they would substantially discounted from their face value. But, he stresses, this in effect high-interest-rate financing is "better than either default or giving in to blackmail."
Let's face it, the Republican hostage taking is unacceptable and the more methods around it the better.