Inspired by the Mint-the-Coin movement there is something of a blogosphere cottage industry in debt ceiling work-arounds. Those are measures designed to keep the United States from defaulting on its obligations in the event that the debt ceiling is not raised before Treasury runs out of cash. One of the more creative comes from Matt Levine who suggests that Treasury sell bonds offering exorbitant interest rates, but sell them above face value. Since, it's the face value that is subject to the debt ceiling, this buys Treasury some extra cash inflow in the short term. It's not unlike some home loans offered during the housing boom which paid borrowers points in exchange for accepting a higher interest rate.
As Matt Yglesias points out, the problem with all of these schemes is that they are not only short term band-aids but flimsy band-aids at that.
|