How could the 14th amendment relate to the US gov't debt ceiling crisis?
It's a disturbing development -- someone is floating the idea that the executive has the ability to issue debt without the consent of congress to measure the public's reaction. Why disturbing? Because people are using language like this: The president, moreover, can move quickly, but court cases take time. “At the point at which the economy is melting down, who cares what the Supreme Court is going to say?” Professor Balkin said. “It’s the president’s duty to save the Republic.” The implication to your personal finances is that we continue to live in interesting times, and you need to be aware of the downside risks that your investments are exposed to. If your portfolio is built around the idea that US government obligations are risk-free, you need to rethink that. Section Four of the amendment reads: The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.  In other words, if President Obama wants to, he could unilaterally invoke this provision and go ahead and get the money he needs.  Good articles describing this in some detail can be found here and here.
Should voters care? What is the scenario in which this debt actually becomes a problem? It seems to me that the money from this debt is largely going into the pockets of US Citizens, so less debt would mean less prosperity for Americans. What are the arguments against this assumption? "For political reasons, almost all governments (including the US) spend more money than they get from taxes etc.  There are a number of things a government can do to cover the difference: Most governments opt for selling bonds.  The ""National Debt"" of a country can be thought of as being the sum of all the ""Bonds"" that are still paying interest, and that the Government hasn't Redeemed. It can all go horribly wrong.  If the Government gets into a situation where it cannot pay the interest, or it cannot Redeem the Bonds it has promised to, then it may have to break its promise (""Default"" on its payments).  This makes the owners of the Bonds unhappy and means potential buyers of future Bond sales are less likely to want to buy the Governments new Bonds - effectively meaning the Government has to promise to pay more interest in the future.  Recent examples of this include Argentina; and may include Greece soon. The US is in the fortunate position that not many people believe it will Default.  Therefore the new Bonds it sells (which it does on a regular basis) are still in demand, even though its interest payments, and promises to Redeem Bonds are huge." There is no situation one can imagine in which the US defaults (beyond a day or three) on its obligations. The treasury can print money, and while it would be disastrous, 'monetizing' the debt would simply eliminate all outstanding debt at the risk of devaluing the dollar to hyperinflation levels. This thread has been linked to from elsewhere on reddit.    - [/r/bestof] [/u/78fivealive explains the debt crisis in Argentina as &amp;quot;A Streetcar Named Desire.&amp;quot;](http://np.reddit.com/r/bestof/comments/2cb2qi/u78fivealive_explains_the_debt_crisis_in/)   *^If ^you ^follow ^any ^of ^the ^above ^links, ^respect ^the ^rules ^of ^reddit ^and ^don't ^vote ^or ^comment. ^Questions? ^Abuse? [^Message ^me ^here.](http://www.reddit.com/message/compose?to=%2Fr%2Fmeta_bot_mailbag)* *1. Apple - holding over 100b cash in their vault more than any banks have in their reserves in the world and more than enough to pay off all of the debts of the U.S.*  There is $14 trillion in US government debt. You're off by a couple of orders of magnitude. I love the constant denial on this site that mounting debt is an issue. By the way, this is an insult and not an invitation for a discussion. I really don't give a fuck what you or u/geerusell think on the issue. You are both total fucking idiots with your bullshit Keynesian views. "They also ignored bankruptcy law and gave a large part of the New GM to the unions when it should belong to the bondholders. Or if the bondholders are getting wiped out, it should belong 100% to the US Government. Theoretically you need the legislative or judiciary branches to back such actions, but in practice it doesn't always happen. Or when Obama tanked the Las Vegas tourism industry when he took at shot at the ""fat cats"" and the next day all the executives cancelled their corporate events in Vegas because they wanted to get out of the line of fire." "But do you know about a US state risking to go default now or in the past?  In 1847 four states - Mississippi, Arkansas, Michigan, and Florida - failed to pay all or some of their debts.  All of these states had issued debt to invest in banks.  From the detailed source listed below: ""...it should be remembered that all cases of state debt  repudiation, as contrasted with mere default, involved banks.""  Jackson had killed the federal central bank 10 years earlier and the states were trying to create their own inflationary central banks.  Six other states delayed debt payments from three to six years (source, page 103, this source has more details).  This is the only case I know of where US states defaulted.  US cities default more frequently. I'm very confused do US single states like IOWA have debt and emits obligations on their own like Italy does in EU? Yes.  Individual states can issue their own bonds. Oh, and just another little thing I would like to know, is Dollar a fiat currency too like the Euro? Yes, the US dollar is a fiat currency.  I think the better question is: ""Is there any currency that is not a fiat currency?""" govt debt and money printing is nothing to the amount of debt in circulation in the private sector (41 trillion).  it was the private sector that created the inflation and bubbles.     giving students 1 trilion to pay off all student loans isn't inflationary, it would be deflationary.  because the banks created the credit out of thin air to lend to the students for college, if you pay it back, it closes the circuit.   Govt would have 1 trilion in debt, but that's nothing, only a trilion dollars.   it can get paid back in tax revenue from economic recovering by the private sector no longer burdened by debt. Reaching the debt ceiling is an admission that the US can't pay its bills as they come due.  Credit rating agencies could cut the US's debt rating, making acquisition of new debt much more difficult.   Creditors could file for involuntary bankruptcy, forcing the government to pay back the debt - which, to be clear, it simply is incapable of doing in any kind of reasonable timeframe.  The loss of confidence in the US's ability to pay its debts...  Given how the US is such a financial and economic center of the world (partially by design, partially by happenstance), it would probably be disastrous worldwide. There no legal framework that allows states like the US or countries in Europe to default on their debt.  Should congress pass a law to default the US supreme court is likely to nullify the law. It's misleading news. Comparing debt levels in nominal terms is completely pointless over a period of more than a few months.  The article you responded to quite literally quoted extracts from the article you subsequently posted and explained why they were misleading or incorrect. Did you read the article?  They weren't arguing whether or not the debt could be defaulted on.  They were arguing that one side can't unilaterally change the terms of the contract and decide to pay less.  Which seems like common sense, but whatever. They're not going to do anything about it. Washington needs the debt wheel to keep spinning, or the Dollar will lose its position as the Reserve Currency. Then all hell would break loose. Powerful countries like Japan are going to have to take the initiative. And apparently they are starting to. It has to be countries like Japan because if a weak country tries this, they'll get invaded. Millions of Americans are affected by this. Millions of Americans live in debt, through credit cards and other sources that depend on these scumbaggers. Yet, the media picks it up, due to necessity, and drops it faster than a wide receiver with no hands.