A beautiful tenet of Marx and his circle - a truth they not only propounded, but lived and lived FOR - was that class could in large part determine, but would not in the future define us. Hence to be on the right side of class struggle was to fight in effect for the end of class structures themselves. Each could in due course be everything.

Thus we would 'win' when we no longer are tokens of pre-given types, but become types of our own - when we collapse the type-token distinction itself. Each 'in a class by herself,' her own type and token, her own 'sign' and 'signified,' her own form and content. No more substance and accident, only substance as essence.

A lamentable feature of the platform-based spectacle we now inhabit - the 'present age' SK saw coming - is its inhabitants' seemingly having forgotten this. Or of course never having known it.

Class in large measure now not only determines, but entirely DEFINES us in the now Marx-ignorant pseudo-left's eyes, such that there ARE now no tokens, even in potential, not typified entirely by pre-given type. Such that there IS no thing signified that isn't mere sign.

All is form, without content, in the new ersatz-left's visionscape world. We are both jointly and severally no more than a substance-free play of flat imagery in each other's 'imaginaries.' Faces of categories.

Worse than a 'lightness of being,' a non-being called 'Light,' or 'Enlightenment': putative 'knowledge' expressible only in word-forms that cannot be words. Squiggles and sounds that, no longer meant really to refer, cannot be 'meant.'

Hence the shot-in-the-back death of a health insurance executive is in a certain sense literally bloodless, just as the death-bringer is in a certain sense gutless. (No 'cajones' required to 'kill' symbols.) Both are mere class-representatives. Memes, senses without referents, connotations without denotations.

Both become 'merch' and, yet worse, are PRODUCED to be merch. PERPETUAL merch. Production for circulation and circulation alone.

'Free Luigi' is merely a laughable and a purchasable, Luigi himself nothing more than the unpaid supplier of the image that's 'featured,' the prototype of the type. (The type that's the teeshirt, the mug, or the meme.)

Brian Thompson is for his part the mere posit required, the deposit that's taken, as 'capital' investment en route to the image production and circulation. (Ask: do you recall what he looks like as you know what his killer looks like? No, because he is the input, not the output, in this 'symbolic economy.')

And it isn't just individuals now used in this manner - as means of production for ultimate circulation - of course. Opportunistically picked peoples now discharge this function as well. You see it each time that you gaze on the staged video, the repurposed black & white sand-scarf, or the fake foreign 'flag' that commodify mayhem as image and fashion merch both now.

What a fking nightmare this is. To see even one's comrades or a loved one drawn in and then almost willingly drowning in the dystopian meme-maw turned on-screen morality play. Like a parent's or lover's eyes clouding and fogging and then disappearing as she absently 'pours another drink' or 'puts a spike in / to her / vein' ... 'Bye darling, I love you darling, bye ... '

Right down 'the widening gyre.'

It is easy to see why some sensitive observers now find Gorgon's head JOKES in it all - just as did SK 180 years back. The new self-styled pseudo-left, far from class warriors or class abolitionists like Karl or Rosa, are class reifiers or hypostatizers a la Gyorgy. And instead of proletarians demanding to BE realized SUBSTANCE, have become now mere FORM-capitalists chasing value-realization through image-dissemination.

And in this case the surplus labor's extracted from us, the attenders, and more importantly all who must suffer or die in producing the images made for the circulation.

The new pseudo-left meme-capitalists: 'influencers,' 'streamers,' 'digital creators,' ... cosplayers, morality-players, 'online justice warriors,' ... identity-performers, 'virtue-signalers,' moral-peacockers ...

Latterday useless self-flattering Verkhovenskys straight outta Dosty's 'Devils,' as I mentioned here earlier in taxonomizing the class of those Useful Idiots who now surround us.

Debord once said 'soon there will be nothing but "artists" and it will take no end of effort to find a single [hu]man.'

That is no longer soon, it is now. And if it was even Kierkegaard's present, one wonders now how we shall make it our past.

More on that soon ...

Increasingly it looks to me as if much of both what remains of the self-styled left, and what remains of the self-styled right, have become useless to those on behalves of whom they claim to speak. Both appear largely to have degenerated into little more than performers of self-indulgent, sentimentalist morality-plays unanchored in any historic or species reality.

These ‘plays’ - or cosplays - that both groups put on are neither authentically progressive nor authentically conservative in any recognizable sense - there is no affirmative vision of progress or conservation that might be brought to the world in evidence. The cosplay is thus not actually about the world at all. It is about the performers - how they apparently wish to appear, both to themselves and to others.

Often, indeed, the cosplay morality-plays seem to be no more than therapy - a form first developed during the 1950s and confined to the clinic, now extended to public and virtual spaces. Characteristic of the form is both fantasy and playacting - what we might call ‘fantasy-enactment.’ Like this earlier therapeutic form, moreover, the left and right role-play morality-plays have both individual- and group-therapy versions.

The individual morality play fantasy of the counterfeit right is that of the lone and heroic entrepreneur, the visionary ‘maverick’ who ‘sees beyond’ and ‘bears divine gifts’ if we but ‘leave him alone.’ At present, ‘Elon’ is probably the most prominent exemplar. The rightwing role-player then fuses with Elon by acting as his ‘official spokesperson’ or apologist via ‘podcast’ or ‘post.’

This self-medicating fantasist’s particular pretensions are not without basis. But the image is caricatured, sentimentalized and, most importantly, far too rarely instantiated to correlate to anything more than a small part of our species’ actual worldly progress. If you doubt this, ask Elon himself what would happen to, say, Tesla, were China’s BYD, which has no Elon figure, not prohibited from selling its now world-dominating EVs in the US.

The group morality play fantasy of the counterfeit right is that of pioneering and freedom-seeking, city-on-a-hill -building idealists epically voyaging to a new, ‘uninhabited’ place to make Utopia after long-suffering and at last losing patience first with sclerotic, oppressive, intolerant old Europe, then with other places on the globe - post-liberated South Africa, for example. All of them Elons, as it were, adventuring en masse first to putatively empty continents, then to empty planets.

Here too there is a ground for the image, but as with Elon, so here the exception is grotesquely magnified into the rule. For the great bulk of those who came to the Western Hemisphere from the early 16th century onward, when they came voluntarily, came in pursuit of simple material opportunity, not Utopia.

And of course the place wasn’t empty and awaiting them even at the outset, let alone farther along in American history. Almost everyone now here was either conquered or conquerer, directly or indirectly; and probably millions were killed or maimed, physically and/or culturally-spiritually, along the way. To call these wounds noble ‘sacrifices’ is in most cases, even if not in all, again just to sentimentalize the sordid, or the bungling, or the mixed into the pure and the valorous.

Both individual- and group-rightwing fantasists (and let’s bear in mind that the two overlap) of course also project fantasy enemies of their fantasy ‘projects.’ Favorite such targets in their case are ‘leftists’ and ‘liberals,’ ‘Marxists’ and ‘communists.’ Even though there are few if any such people in American or wider ‘Western’ public life any longer. And even though, more importantly, today’s self-salving reactionaries wouldn’t know them if they saw them.

Turning now to the cosplay morality-play fantasies of the ersatz left, these are surprisingly similar to those of the ersatz right. Structurally, in fact, the fantasies, fantasizings, and therapeutic play-acting modalities are identical. All that differ between them are some of the specific story-contents, not the eschatological story-trajectories or -structures, of their stories - their myths. (Or to use the new ‘cringey’ buzzword, their ‘narratives.’ (Sorry, I recognize ‘cringey’ is cringey as well.)

The individual morality-play fantasy of the new counterfeit left - I say this with sorrow as an actual Marxian - is that of the wrong-righter and ‘social justice warrior,’ as a current idiom has it. Our hero supposes that in making a ‘fashion statement’ by wearing the latest hip piece of exotic fabric, or in ‘demonstrating’ in the right outcast-’foregrounding’ ‘resistance’ demonstration, or in hashtagging ‘#resist’ or in ritually repeating ‘no kings’ or in posting dank memes, he is furthering true liberatory struggle, not merely playing ‘heteronormative’ white savior, or Rousseauvianly ennobling some apparently agency-lacking ‘POC.’

This parents’-basement Mao, Che, or cloth-faced campus crusader can’t be bothered to learn actual history or visit actual sites of literally murderous oppression or life-and-death struggle against backward clan, feudal, or ‘religious’ savagery - e.g., in the Levant, South Sudan, or in West Asia or East Africa. For our new crusader’s purpose is, again, not to achieve anything in the world. It is simply, at best, to ‘feel a part of something’; and, at worst, to elicit expressions of approval - presently, ‘likes,’ raised snapping fingers or ‘jazz hands’ - from clapping-seal audiences of fellow idiots for successfully emitting the right phonemes and hieroglyphs. (The present degeneration of phonetic and ideogrammatic language into more primitive memespeak is of course also part of this story - a part I will treat of separately.)

It is all approved memes and emojis in a carnival of illiterate attention-incapable attention-seekers - or in the current idiom, digital ‘influencers,’ ‘cuators,’ and ‘content-creators.’

The group morality-play fantasy of the new counterfeit left is that of the oppressed ‘discrete and insular minority’ now fictitiously claimed to have possessed a putatively discrete and determinate ‘identity‘ since the beginning of time - think ‘palestinians’ or ‘furries’ here - now alleged finally to be embarked upon a long-germinating struggle to ‘liberate itself’ from fictitious ‘colonizers’ or ‘the normies.’

Every newly fabricated such ‘identity’ is quickly ‘ontoglogized,’ to modify a term that the new pseudo-left now increasingly (and apparently unknowingly) borrows from dead reactionary philosophers to indict ... yep, accused living reactionaries, ... and made the fulcrum on which all species history is comically claimed to have turned…

Even if the ‘identity’ in question is that of a class of people who ‘identify’ as bunnies or bivalves, as catnip or cats. These people seem to feel cheated, like younger siblings of older war heroes, for not having been born in time to play savior during the real abolitionist and civil rights struggles of the 1850s through the 1960s, hence are determined simply to repeat the original performances save now with new pseudo-identities ‘foregrounded.’

MLK now ‘has a dream’ that people in animal costumes will figure, not just in psychedelic music videos, but in classrooms and solemn processions as well. Malcolm X now for his part aims to free those who ‘identify’ as clams ‘by any means necessary,’ while John Brown doesn’t raid Harper’s Ferry to arm slaves, but sails to ‘gatha’ in a ‘flotilla’ boat full of condoms and selfie-sticks.

Meanwhile real liberation - productive liberation, class liberation - continues ignored and unsought - indeed, unconcealed, unimagined. In part, precisely because all the illiterate cosplayers are simply ignorant - entirely ignorant - of the great class struggles of the 19th and early 20th centuries - including those of the Knights of Labor and IWW here in the US, before the US Treasury suppressed them to favor more tame operations like this of the AFL and CIO, who didn’t challenge our still-operative system of wage-slavery (rented workers instead of owned workers).

And of course they are ignorant of these actual liberatory movements - they themselves belong to the dominant classes, and are speechless before actual working people. Hence, of course, the successes of worker-conning faux ‘populists’ and Orange Juliuses - as Central Casting a case of what Marx once called ‘Caesarism,’ ‘Blanqism,’ or ‘Bonapartism’ as a movie director could seek.

Indeed, all of this as the owning class likes it…

Why do I say that these dupes, the ersatz ‘right’ and the counterfeit ‘left,’ are all sentimentalists? Why do I say ‘self-indulgent’ and indeed ‘clinically narcissistic’?

Well for one thing, as noted before, there seems to be no positive vision of an actual world to be ‘progressed’ toward, ‘conserved,’ or both. That suggests mere ‘acting-out,’ and hence acting. ‘Play-acting,’ ‘posing,’ ‘performing.’ It’s all just purgation of (new buzz-word alert …) ‘dysphoria’ of one self-indulgently self-ascribed sort or another. All is now ‘trauma’ and, to repurpose an earlier idiom, the ‘triumph of the [bourgeois] therapeutic.’

But there is more. There is the also utter indifference not only to describing what we are to make or conserve, but also, and intimately relatedly, to understanding what we have been, what we are, and hence what we can and should be with the benefit of actual knowledge, understanding, and vision of the kind serious humans work for.

Spend a few minutes watching a troop of baboons or a shrewdness of chimps (yes that’s the term) at a wildlife preserve or in a documentary film, then Google the history of literally any country or ethnicity in the world right now or any empire of the past. While there is much beauty and nobility - much love, care, and creation - in all cases, there is also astonishing, thus far unremitting, and pervasive cruelty and aggression.

Joyce once said ‘history is a nightmare from which I am trying to awaken.’ The same might be said about ‘civilization,’ even though we can justly call history and civilizations beautiful dreams too ...

Think about it. Watch nonhuman animals ‘mark’ and take ‘territory,’ then consider all human history ...

Literally no people in the world today are ‘indigenous’ to where they live in any absolute sense. Every ‘indigenous people’ is indigenous only relative to their most recent conquerers, and every such people has itself conquered some other people who either are, or were (before being ‘ethnically cleansed’ or exterminated), indigenous relative to them.

Every people. Every ‘civilization.’

Nearly two centuries after Columbus inaugurated the ‘western’ Ibero-Catholic conquest of the Western Hemisphere (1492), for example, the ‘eastern’ Ottoman Empire was still trying to islamize Western Europe through the gates of Vienna (1682). And of course even last century (if not also this one), Ottoman, then ‘republican’ Turkey was ethnically cleansing and genociding its own Christian Armenian and Muslim Kurdish ‘communities.’

Meanwhile the Qing were still expanding the multiethnic Chinese empire, which didn’t reach its full extent until after ‘America’ declared ‘independence’ the 18th century (1776), when it became the fourth largest empire in territorial terms and the largest ever in populational terms in all of human history.

Europe’s ‘age of empire’ wasn’t only historically non-unique, it was contemporaneously non-unique, temporally overlapping as it did with multiple then-still-expanding empires in Asia (e.g. Persia, Turkey, and China), Africa (e.g. the Bantu), and even the Americas (not just the U.S., but also multiple tribes here before us that kept expanding even after we’d arrived (cf. the Iroquois and the Comanche, to name but two), more on which below.)

Even apart from its later colonialism and imperialism, Western Europe was already and still is the product of sundry Germanic conquests over Celts in late antiquity, who had themselves conquered yet earlier peoples of whom southern France’s and northern Spain’s mountain Basques are a remnant.

India is the product of Indo-Aryan conquests over previously settled Dravidians, itself later occupied for some centuries by islamizing Mongols whose ‘Mughal’ descendants later collaborated with the British Empire in lording over and parasitically extracting from the Hindu population, and whose own descendants now populate Pakistan, Bangladesh, and certain minority precincts of India (hence current ‘Hindu Nationalist’ ressentiment and resurgence).

Modern China is the product of Han and Manchu conquests of earlier Turko-Mongolic peoples, who conquered Irano-Sycthian peoples before them. (To this day the mummified remains of red-haired blue-eyed ancients are found in Chinese deserts.)

Hungarians descend from Hunno-Magyar ‘Xian Nu’ peoples chased west by the Han, who in turn pushed eastern Slav and Caspian Gothic German peoples westward to what is now western Europe.

Japan is the upshot of successful proto-Turanic/Mongolic conquests via the Korean Peninsula over earlier Sibero-Pacific Ainu peoples who now cling to remote mountainous precincts of a few Japanese isles much as the Basque do in Spain’s Pyrenees and the ‘Dark Celts’ do in Britain’s (that is a Celtic name) ‘Scottish Highlands.’

‘Western imperialism’ and ‘western colonialism’ of course were ‘a thing,’ with the consequences of which we still live. (Most modern African and ‘Middle East’ boundaries are among them.) But the same holds of the imperial and colonial conquests of the ancient Egyptians, Assyrians, Babylonians, Ethiopians, Kushites, Etruscans, Greeks, Persians, Hellenists, Romans, Byzantines, Varangians, Vikings, Arabs, Seljuks, Han, Polynesians, Kieven Rus, Muscovite Rus, Toltecs, Aztecs, Inca, Mayans, Iroquois, Ottomans, Comanche, Khoisan, Bantu, and on and on and on ...

Indeed, all of us being modern Homo Sapiens with a common point of geographical origin now thought to have been either in Eastern Africa or the adjacent Fertile Crescent, and all of us carrying small traces of genetic material from earlier hominid groups (OK, I’m probably half Cro Magnon or Neanderthal, if not ‘Peking’ or even ‘Piltdown Man’), it is clear we are all of us - literally all of us - descended from ‘settler colonial’ conquerers, ‘imperialists,’ and ‘ethnic cleansers,’ with bits of the peoples whom we replaced still inside us.

Why don’t we face this? Why not be honest about it, ‘own up’ to it, and do something useful, something self-bettering if not indeed self-overcoming and world-transforming with it?

To start with the honesty, it seems to me that an earnestly truthful, rather than merely ‘feel-good’ self-indulgent and moral-peacocking ‘land acknowledgment’ ritual at an event in the American Southwest would proceed more like this than like what we are used to: ‘I would like to acknowledge that we are on land taken from the Comanche, who took it from Mexico and the Apache, who took it from the Arapaho, who took it from certain tribes linguistically akin to the Navaho, who ...’

But of course we will never hear this because the truth of our species has never been what the current rash of group-narcissist public self-flagellation exercises are about.

They are about us here and now, not our species always and everywhere. They are about teary-eyed piety-performing, not literal progress.

Progress ... That takes us to what to do now, how to make something actually useful of our species history - something ‘conserving’ of what’s truly worth keeping and building upon, and ‘progressing’ to what is worth actually producing ...

Meditating on that word ‘progress,’ in connection with which our current crop of self-styled ‘progressives’ seem no more to have any destination idea in mind than have self-styled ‘conservatives’ any idea of what they’re ‘conserving,’ seems to me to offer the fitting way out of our current self-absorbed, self-indulgent, narcissist’s impasse ...

What are we, what have we been, and what can we become?

It seems to me we are one great thing made of two great things. We are self-creators made of creators and self-overcomers. We ‘get over ourselves’ to create ourselves - we’re creative self-overcomers, creative self-makers.

And in this capacity we can self-create positively and affirmatively, self-magnifyingly, looking energetically forward, ... or we can self-destruct negatively and narcissistically, looking lazily self-indulgently and self-flatteringly backward.

The latter is what we are doing right now, pseudo-left and pseudo-right both. And I’m not exempt, having long been a hopeful member of Team Bernie, Team AOC, Team Warren and Team Khanna - ‘movements’ I’d hoped could be all about progress and production, but ‘movements’ that now have degenerated into grotesque forms of Revanchisme-cum-Identitarianism 2.0.

Failing to own up to what we have been and can be and become - all of us, as a beastly yet beautiful species - we console ourselves now with the thought that at least we’re ‘good people’ by properly celebrating (as ‘conservatives’) or denouncing (as ‘progressives’) our pasts. And in so doing it’s natural, I suppose, to concentrate navel-gazingly upon our own now-identitarian-understood pasts.

But if we look forward, it seems to me, we can better see all of us, together, as a species now poised to beat scarcity, suffering, and even aging and death.

Look these things up. A Promethean future is now literally imminent, if we but look to it and get to work consummating it.

There were prophets who told us this long ago. They are prophets we ought now recover. And in their own words and works, not in memes or in tweets, not in secondary or tertiary literatures.

The three I think most important are those I write most about: Marx, the prophet of Social Surplus now exploitatively extracted that can be socially reclaimed and reinvested ad libitum; Nietzsche, the prophet of the Self-Overcoming Will (’will to power’ is perniciously misleading in modern English, and should be replaced by ‘will to self-overcoming), which Marx’s Social Surplus is already plentiful enough to underwrite and finance, to put into actual operation both individually and collectively; and Federov, the prophet of shared, Common self-overcoming that literally, physically, conquers both death and disease and colonizes the universe itself (what he called ‘the Common Task’), making of all of us an eternal and celebratory human symphony.

There also are complementary thinkers of great import whose writings buttressed those of my ‘Big Three,’ whom we also should be reading seriously now. Luxemburg, for one, showed why the Marxian Surplus (‘accumulation’) at present cannot be smoothly and fully productively absorbed - because produced by workers who don’t own it - and how it accordingly has issued in modern mischiefs including the contemporary, ‘market-seeking’ renditions of earlier forms of imperialism. Bataille, for another, at least in his more sober moments, traced how the pre-capitalist and capitalist Surplus, as an ‘Accursed Share,’ generated all human expansions of the past, the sordid and the splendid alike. Our task, I submit, is at long last to make of that ‘accursed’ share a Bless-ed Share, to make of the Surplus our self-overcomingly used Surplus.

In any event all of these thinkers and a few more, it seems to me, grasped our predicament honestly rather than self-flatteringly, and hence were enabled to start to map worthwhile progress and worthwhile conservation. It is these transhistorical, species-attentive, truly synoptic visionaries with whom we must ‘dialogue’ going forward, not attention-deprived and attention-incapable ‘edge-lords’ who, as obscure to themselves as to us and all working people, grope darkly for therapy - not progress, salvation, or worthwhile salvage.

It would be natural to close here with a futurist science fictional flourish - a quote from a novel by Platonov, for example, or an image from a stage-set for Victory Over the Sun. But instead I’ll stay true to the American South of my youth and quote an old fellow who briefly resided in my New Orleans ...

Faulkner is said to have said that ‘the past isn’t distant; it is not even past.’

The same can be said of our future.

Introduction

In my recent aggregates-grounded Synopsis of Marx’s ‘project’ in Capital, I capitalized (pun foreseen, not intended) certain terms of art, promising a Glossary in future. This is that Glossary. Some of the terms are my own, most are Marx’s as glossed by myself in specific connection with my Synopsis.

One needn’t grasp all of these terms, I don’t think, to understand the Synopsis - that is the point of the Synopsis. But explicating the terms in the light of the Synopsis might nonetheless aid the reader in deepening her understanding of Marx’s aims, as well as of much jargon that now fills the secondary and tertiary literatures that are or purport to be about Marx.

(Wittgenstein once lamented that ‘the only seed I am likely to sow is a certain jargon.’ Such has certainly been Marx’s lamentable fate.)

The terms are elaborated not in alphabetical order, but in a cumulative order pursuant to which later-defined terms can be readily understood by reference to earlier-defined terms. The order as a whole, in turn, is for its part intended to track the order of exposition imminent in the Synopsis.

(Capitalization of one term within the explication of another term signals that this term, too, is briefly explicated in the Glossary.)

The Terms of Art

Value: To the individual person, the importance or significance, understood in terms of the willing sacrifice of effort or Labor Time, that objects or actions (in Exchange, ‘Goods’ or ‘Services’) have for a person or persons. (The contemporary orthodox notion of ‘opportunity-cost’ is closely akin to Value thus understood.) To the community, the amount of ‘socially necessary‘ Labor Time, at a particular level of technical development and hence productivity, that must be expended on average to make the relevant object or action available - that is, to Produce it. (This is all that is meant by ‘the Labor Theory of Value’ often attributed to Marx, which is not to be confused with a theory of Price or of Price-formation but rather, again, is more closely akin to the contemporary concept of opportunity-cost.) Value thus generically understood can be further differentiated into more specific ‘Use’ and ‘Exchange’ Values according as that which is valued is valued, in a particular context, for purposes of either direct consumption or, instead, trade.

Use Value: The (qualitative) ‘Consumption’ significance (including Consumption for Production) that objects or actions might have for a person or persons. Alternatively put, the reasons a person or persons might have for seeking or wanting things that they don’t intend simply to trade or to ‘sell’ - i.e., ‘Exchange.’ Use Value thus defined overlaps with most understandings of the contemporary orthodox notion of ‘utility,’ though no Benthamite or ‘hedonic’ implications are assumed.

Exchange Value (not Price): The (quantitative) ‘trading’ significance, relative to other objects or actions, that particular Use-Valued objects or actions (now ‘Goods’ or ‘Services’) might possess in a field of Exchange, i.e., of trade or purchase on a ‘market.’ For example, where Exchange occurs through barter, three apples’ trading for six oranges translates to one apple’s bearing an Exchange Value (or ‘orange-price’) of two oranges, or equivalently one orange’s having an Exchange Value (or ‘apple-price’) of half an apple. Where Exchange occurs through monetary purchase rather than barter, it is common to refer to the Exchange Value of a Good or Service as its ‘money-price’ or, more commonly now, simply as its Price.

Exchange: The ‘trading,’ ‘bartering,’ or ‘purchasing’ process through which useful objects and actions (again, in Exchange, ‘Goods’ and ‘Services,’ which might become ‘Commodities’) are indirectly allocated or distributed in a community where allocation and distribution are not effected through exercises of collective agency or ‘central planning.’ In mixed cases, a society relies upon both indirect Exchange and Direct Distribution to allocate.

Direct Distribution: The provision of useful objects or actions by some central clearing house acting on behalf of recipients rather than itself or some party or parties other than the recipients.

Distribution: Generically speaking, the process by which the proceeds of Production flow to and reach the community’s members. Rough synonyms that I use include ‘Dissemination’ and, more canonically Marxianly, ‘Circulation.’

Commodity: A Good or Service that is not merely acquired in Exchange, but is Produced or Provided for (purposes of) Exchange, typically in order to Profit.

Social Surplus: That which a community Produces in excess of what is necessary for the Subsistence of its members. (So far as I can tell, this is all that Bataille meant by what he called ‘the Accursed Share.’ For Marx, it is the what I’ll call the blessed share - the material substrate of all human progress and self-enlargement, all species-growth in potential and realization.)

Subsistence: That which must be Produced for an individual or group of individuals to live over a biologically normal lifespan and reproduce as a species.

Productive Capacity: The community’s capacity to generate Subsistence and Surplus.

Absorptive Capacity: The community’s capacity, via its Modes of Distribution (a.k.a. ‘Dissemination’) and Circulation, to direct the proceeds of its Production to useful deployments. In other words, to endure that the Use Values that it Produces flow to their actual uses.

Surplus Value: In aggregate, the Social Surplus as it appears in Exchange. Hence, the quantum of Value generated in Production beyond what’s required for mere Subsistence. In the case of the individual laborer, the Value she produces in excess of the Value of her own Labor Time - i.e., in excess of the Labor Time necessary to produce her own Subsistence.

Surplus Labor: In aggregate, the portion of aggregate social laboring that generates the Social Surplus. In an Exchange economy, it is thus also the portion of aggregate social laboring that generates aggregate Surplus Value. In the case of the individual laborer, the Labor she expends in excess of what is necessary for her own Subsistence.

Aggregate Profit: The form in which aggregate Surplus Value appears community-wide when legally appropriated by the owners of Means of Production who rent Labor (i.e., purchase Labor Time) in the production or provision of Commodities - i.e., Goods or Services for Exchange.

Individual Profit: The revenue gleaned by a seller in excess of the seller’s costs of Production or provision.

Price: In a non-barter, monetary Exchange economy, the Exchange Value of an object or action (again, a ‘Good’ or ‘Service’) as expressed in what ever medium of exchange (’money’) is employed in trade. (Note that misguided methodological atomists who, following Bortkiewicz and Sweezy, purport to find a ‘transformation problem’ and hence ‘inconsistency’ in Capital‘s Volume III between the Values and Prices of Commodities simply commit the category-erroneous methodological blunder described at the beginning of the Synopsis to which this Glossary is appurtenant. Capital is not a work of ‘microeconomics’ or Anglophone ‘price theory,’ and the Prices of individual Commodities would never, in Capital, be taken as functions of the Labor Time they ‘embody’ alone - or even as particularly interesting - in an account of a full social system constituted by Production, Exchange, and Competition as treated in Capital.)

Production: The process through which Subsistence, then Surplus, is generated.

Means of Production (not Capital; closer to orthodoxy’s ‘capital assets’): The technical, non-human ‘natural’ resource, and other non-Labor ‘inputs’ to the process of Production. Not to be confused with ‘Capital,’ as one finds in orthodox ‘economics.’

Labor: The deployment and use, by human beings, of Means of Production in processes of Production.

Labor Power: The capacity to Labor.

Labor Time: Any temporal interval over which Laboring occurs, hence over which Labor Power is expended. A purchaser of such Time or renter of such Power under Capitalism acquires the right to direct Labor’s efforts, hence use Labor Power over the duration of the purchased interval. In this sense, the purchaser of Labor Time or renter of Labor Power can be loosely said to rent the Laborer, by analogy to the way in which a slaver under an earlier mode of social Production would have purchased the Laborer.

Capital (not Means of Production or orthodoxy’s ‘capital assets‘): Money used to purchase Labor Time and Means of Production with a view to Profiting under Capitalist Relations of Production. Symbolically, the M in Marx’s central M-C-M’ Production sequence under Capitalism. Not to be confused with orthodox economists’ ‘capital,’ understood as heterogeneous ‘capital assets,’ with its attendant ‘capital controversies’ between this and that ‘Cambridge.’ Note that in various uses for particular purposes, Capital can appear as Fixed or Circulating, and as Constant or Variable, but these distinctions need not detain those pursuing a merely synoptic, or ‘big picture’ understanding of Marx’s Capital. Those who ultimately determine to go deeper will of course reckon with these modalities later.

Relations of Production: The roles, and relations between roles, played by human beings as individuals and as members of Classes of individuals in the process of aggregate social Production. These include crucial juridical relations that find expression in role-defining, hence action-constraining, caste systems, guild systems, ‘property’ rights systems, and ‘promissory’ or ‘contract’ rights systems.

Class: In connection with Relations of Production, groups of individuals whose roles in Production are saliently determined by what they own or don’t own. Under Capitalism, for example, ‘workers’ or ‘proletarians’ - Laborers - own no input to Production but Labor Power. Capitalists by contrast own non-Labor inputs to, or Means of, Production.

Capitalism: The system of Social Surplus -generation constituted by Relations of Production pursuant to which a relative and ever-shrinking few persons (a) purchase the Means of Production and rent the Labor and, at more advanced stages at greater scale, Money of others to Produce with those Means; and (b) do this Producing in pursuit of continually recycled or Reinvested, hence self-augmenting, Profit.

Capitalist Mode of Production: Production as conducted under Capitalism, i.e., pursuant to Capitalist Relations of Production.

Reinvestment: The recycling of Capitalist Profit (in the contemporary idiom, ‘returns on investment’ or ROI) into further Capitalist Production with a view to generating yet more Profit.

Social Reproduction: The community’s generation of sufficient Value to continue over time at a specific level of material Consumption and Production. In effect, what might be called ‘steady state’ production.

Expanded Reproduction: The community’s generation of aggregate Social Surplus at a growing rate, such as results in ascending levels of material Consumption, Production, or both. In the literature, the material result of Expanding Reproduction is sometimes referred to as Accumulation.

Accumulation: The material resultant of Expanded Reproduction. Volume II of Marx’s Capital famously, but incompletely, analyzes Reproduction, Expanded Reproduction, and Accumulation. Rosa Luxemburg completes the analysis.

Collective Action Problem: A choice situation the structure of which leads multiple individually rational decisions to aggregate into a collectively irrational outcome.

Recursive Collective Action Problem: My ‘Recursive Collective Action Problems’ indicates how the most calamitous instances of this species of challenge - hyperinflations, debt-deflations, ‘crises,’ etc. - are simply iterated cases of this basic conundrum-type, which lack stable equilibria and hence end only in calamity.

I aim to make Marx’s ‘project’ in the three volumes Capital - and in the crucial but regrettably ignored Theories of Surplus Value, sometimes justly called ‘Capital Volume IV’ - accessible to non-’Marxists’ (a name Marx deplored nearly as much as he did the name’s bearers). To do this I adopt what should not, but nonetheless seems to be, an uncommon focus: I use as touchstone, throughout, what I call the Social Surplus in excess of Subsistence that Capitalist Production generates at accelerating rates until reaching exogenous outer limits imposed by technology-rooted economies of scale. The mentioned exogenous scale economies function as limits by ultimately rendering Capitalism’s two endogenously defining characteristics - its separation of Labor from Capital and its reliance on sales competition between Capitalists as principal motive force in the community’s technological development - self-undermining. For the exogenous and endogenous factors in combination, by depressing aggregate consumption income relative to aggregate output, lead capitalist economies’ Productive Capacities to outstrip their Absorptive Capacities. This in turn culminates, often after Mercantilist and Colonialist escape attempts, in the breakdown of Surplus-generation itself. But because the Surplus is the material substrate of all human progress, anarchic Capitalism’s scale-wrought breakdown is catastrophic - not just for working people, but for human progress and civilization itself. It thus necessitates our taking collective control of its continued generation and dissemination after the breakdown of Capitalism. This is the message of Marx, and the sense in which his work is ‘science’ and ‘prophecy’ both.

A forthcoming Glossary will gloss all terms of art capitalized (pun intended) here.

Introduction

Thanks to his project’s vast scope and his own erudition, Marx and his life’s work go misunderstood. A brief Synopsis of Marx’s ‘project’ might accordingly be of help to those who don’t know, and to those who erroneously think that they know, what Marx and ‘Marxism’ (a word Marx detested) are at bottom about.

The following paragraphs, I hope, might fit the bill. They aim to distill Marx’s project down to its essentials - his two principal questions and answers, along with his purpose in asking and answering. In so doing they foreground a critical quantum that tends to be backgrounded by too many self-stuled ‘Marxists’ - what I’ll call the social production of Surplus and how we now do, how we could, and how we soon must, organize this production.

Here is the lynchpin, I claim, of all that Marx did in the three volumes of Capital - as its ancillary ‘fourth’ volume, the more exegetical Theories of Surplus Value, makes plain. All else in Marx’s life’s work - his writing on politics and ideology, his party organizing and agitation, his lecture series’ to workers in union halls and his housing of refugee revolutionaries - is understandable only against this backdrop.

I’ll also say something of what I think

Marx takes my ‘we’ here to be - the nature of ‘us’ who do all this producing. For it bears both on why and on how we should do it. It’s also crucial to knowing what Marx, as distinguished from ‘cultural Marxists,’ ‘analytical Marxists,’ ‘”transformation problem” or “price theory” Marxists,’ and other Marx caricatures, is about.

Preliminary Note on Marx’s Methodology: From (Structured) Aggregates to (Interacting) Components

As I turn now to sketching Marx’s project, bear in mind one methodological preliminary. This will help expedite ‘taking-in’ what I say about Marx and his aims and his claims ...

It is regrettably common, in many theoretic accounts of some complex and consequential phenomena, to build up to wholes from their parts - to ‘make a start / of particulars,’ as William Carlos Williams might say. A species of ‘methodological atomism,’ as distinguished from ‘holism,’ morphology or ‘organicism,’ is still the order of the day in much of the Anglophone world - perhaps a legacy of crude ‘British Empiricism.’

This leaves us vulnerable to incomplete understandings at best, and to rank fallacies of composition (confusions of wholes with the sums of their parts as though wholes had no structure) at worst. A salient case in point is that category error which is many orthodox economists' bizarre attempt to provide 'microfoundations' to 'macro'-economics.

Building up understandings from particulars can admittedly prove wise in our day-to-day lives. Our loved ones, after all, are unique individuals, and a lover who treated his love as but part of some ‘social whole’ - as a mere role or exemplar or specimen - would show either the wrong kind of love or no love at all.

But in seeking a full, comprehensive theoretical grasp of ‘big systems’ such as economies or societies, it often proves more intuitively useful to work in the opposite direction - to move from the internally structured, composite whole to the constituent parts, from ‘Gestalts‘ to components and the relations subsisting among them. For both parts and their interrelations, not parts alone, are what give wholes their specific characters.

That is especially true of matters socio-economic - a realm of complexity, mutual interactivity, and dynamic change and development in which parts are not even so much as determinately individuated, let alone intelligible, in isolation from from their roles within (structured) wholes.

This is precisely, even if largely implicitly, what Marx does. He proceeds via an ‘organic,’ morphologically ‘holist’ method that he developed from modes championed by Goethe, Hegel, and other epoch-defining German thinkers who generated the extraordinary milieu - anything but ‘British Empiricist’ - in which Marx was educated. (Further encouragement, no doubt, came from Quesnay’s visionary Tableau Economique, precursor to latterday Keynesian National Income Accounts.)

Hence, even though Marx begins Capital with what he calls a ‘social atom’ in the form of what he dubs ‘the Commodity’ - the useful good or service produced or offered specifically for Exchange - he is no ‘atomist.’ For his interest in the Commodity is its bearing within its internal structure the whole of, indeed the essence of (Marx is quite comfortable with that word), both Production and Distribution as these occur under what he calls Capitalist conditions.

In a more contemporary idiom, we might say that in ‘the Commodity Form’ Marx finds the ‘DNA,’ so to speak, the ‘genetic structure’ of the Capitalist Mode of Production and Distribution itself. He sees and discusses commodities precisely as seed-bearing ‘fruits,’ as it were, of the capitalist society’s ‘tree.’

Marx’s Questions: The Relevant Social Aggregate and Its Generation-cum-Composition

We can now turn to Marx’s main questions - the twin puzzles that prompted and drove his life’s work - in light of the methodological preface just given. For what Marx seeks to know are the deep-structurally connected present and future (the latter intelligibly flowing from the former) of that social whole he calls ‘the Capitalist Mode of Production.’ And he sees this whole, in turn, above all in terms of certain aggregates that it produces.

I can’t overemphasize this. Methodologically speaking, Marx is not first about ‘exploitation,’ ‘class struggle,’ ‘revolution,’ or ‘communism.’ He is about something far larger that is both transgeographical and transhistorical, something only in terms of which those narrower and more geographically and historically limited phenomena are intelligible.

This something, this relevant aggregate, is Social Surplus - the quantum of aggregate Production over and above aggregate Subsistence.

Marx’s fullest elaboration and analysis of Capitalist Conditions of Production, the aggregates that these produce, and those aggregates’ circulation and dissemination - the ‘tree’ and its ‘fruits’ and its organic process of growth - is of course found in Capital, though as noted before it is helpful to read Capital here as if Theories of Surplus Value were its Volume IV.

Both in its two principal questions and in its modes of addressing those questions, Capital has both a ‘scientific’ and a ‘prophetic’ purpose. (Marx is no mere ‘economist.’ He is that and much more.)

Implicitly, Capital‘s point of departure is the empirically observable fact that under Capitalist Conditions of Production over time the community as a whole generates two critical social aggregates: (a) its and its members’ own means of subsistence and continuation (Marx calls this ‘Social Reproduction’); and (b) a steadily growing aggregate surplus over and above what’s required for mere subsistence (Marx calls this ‘Expanded Reproduction,’ or ‘Accumulation’).

The latter - what I will keep calling the Surplus - is effectively the Archimedean point of Marx’s life’s work. It is the fulcrum of all human history and all future human development. It is our species potential. For it is the material substrate of all human progress. All that we do, all we become and we strive for, is contingent on this Surplus and what we do with it.

(Why, once we see it, would we leave both its use and its management to chance?)

Now what I called Marx’s ‘scientific’ purpose in the face of this all-important fact, the fact of our generating Subsistence and Surplus alike, is to understand the technical means and the structured human - i.e. the ‘Social’ and ‘Productive’ - relations through which we knowingly, unknowingly, or ‘half-knowingly’ collaborate in both (a) generating this aggregate Subsistence and Surplus on the one hand, and (b) disseminating this Subsistence and Surplus among ourselves, for both Consumption and expansive Reinvestment, on the other hand.

What I called Marx’s ‘prophetic’ purpose, in turn, is to understand where the structured dynamics through which we do this producing, distributing, and reinvesting under Capitalism are presently taking us on the one hand, and how if at all we might optimize both that future and our movement toward it on the other hand.

Marx’s Answer (1): How Social Surplus Is Generated, Disseminated, and Reinvested

The resultant picture of where we are on which Marx alights in addressing his questions (that is, his first answer) runs essentially as follows:

Capitalist arrangements legally authorize a minority of propertied individual owners of what I’ll call Productive Assets, who now become ‘Capitalists,’ to appropriate to themselves the proceeds of Production, including the aforementioned aggregate social Subsistence and Surplus.

These Capitalists initiate Capitalist Production, in hopes of Profiting, by (a) purchasing the resource inputs out of which their Productive Assets can help generate Outputs, and then (b) deploying those resources as productive Inputs - ‘investing’ them.

Now crucially under these Capitalist arrangements, those whom Marx calls ‘direct producers’ - that is, hired laborers who do not possess land or other productive assets of their own - are not themselves Capitalists, but are effectively ‘inputs.’ They, or rather their time and capacity to labor (their ‘Labor Time’ and ‘Labor Power’), are simply more resources under these arrangements.

This is the basis for Marx’s discussions of Capital’s Exploitation of Labor. For all Resources, including Labor Power, are exploited in Production. But this is in a certain sense ancillary to Marx’s principal object, at least in its ‘scientific’ guise, which again is to understand the generation and distribution of social Surplus.

That the Surplus turns out to be what Marx dubs Surplus Value, generated in its entirety by what he dubs Surplus Labor (labor expended beyond what’s required for mere labor subsistence) is of course urgently important as both a moral and a practical-political - indeed as a ‘prophetic’ - matter. But as a scientific matter its significance is simply its role in explaining how Social Surplus is generated under Capitalism.

So Capitalist owners of Productive Assets rent human beings much as feudal owners in earlier times owned human beings. Workers accordingly have no rights to the aggregate Social Product (Subsistence plus Surplus) apart from what owners of assets contractually agree to share with them in order to induce them to produce for them.

And, crucially, we learn in Capital, this us all we need know about how Social Surplus is generated, and how Social Surplus is disseminated (including as Reinvestment). This Marx demonstrates through Volume I on Surplus’s generation (by Labor), then Volume II on the Surplus’s circulation (among buyers, sellers, wholesalers, retailers, shippers, etc.), and then Volume III on the Surplus’s flow into beyond commerce to banking, finance, real estate and beyond. (’Volume IV,’ Theories, is effectively Marx’s homage to and critique of his more groping, less thorough predecessors in studying and tracing what I am here calling the Social Surplus.)

Now in Capitalism’s early stages, the commanding role it confers upon Capitalists proves in part socially useful, indeed crucial, ‘developmentally’ speaking. It is key to that aforementioned ‘Expanded Reproduction’ which is the generation of a growing Surplus. For it affords Asset-endowed, ‘entrepreneurial’ individuals both incentives and, for a time, dynamically self-augmenting capacities to concentrate and mobilize human and ‘other’ Resources in the cause of ever-growing material Production, technical Productivity, and hence ... Social Surplus.

Capitalism is accordingly how Social Surplus first comes to be ‘a thing’ - something systematically generated and grown almost as if by design. (Smith’s ‘Invisible Hand.’) Capitalism is also, as the Communist Manifesto well emphasizes, how the Surplus then grows. (Hence Marx’s Pindarian paean, with Engels in their Manifesto, to Capitalism’s transformative powers of human capacity-enhancement.) It’s ‘Reinvested’ to generate ever more surplus.

Indeed, because competition between capitalists drives constant technical improvement, the rate of this growth tends to rise exponentially - for a time ...

As Capitalism ‘matures,’ however, the same structural features that render it salutary to human development early on come to render it structurally dysfunctional and thus obsolete down the road. The very competition that drives its Investment and Reinvestment ultimately combines with scale production economies in manners that push industrial concentration and productivity to such a pitch that eventually too few people own and profit, while too many people become non-owners who can’t profit, to sustain the effective ‘Consumer Demand’ that profits and thus motivates decentralized individual Capitalist Production in the first place.

In contemporary language, a colossal Collective Action Problem emerges and spreads, whereby individually rational decisions by Capitalist firms to cut costs by shedding their Labor all aggregate into the wider economy’s inability to generate Effective Demand for what it produces. (’Effective Demand’ doesn’t originate with Keynes; it’s coined in Capital‘s Volume III, as is much else we now tend erroneously to credit not only to Keynes, but also to Walras, to Wicksell, and even to self-styled successors to Marx such as Hilferding, Bukharin, and Lenin.)

In short, then, owing to its underlying mechanism and the longterm Collective Action Problem imminent in the mechanism once scale economies reach certain thresholds, what I call the Capitalist economy’s Productive Capacity ultimately outstrips what I call its Absorptive Capacity. The system begins to seize-up and break-down as its driver - that part of its Surplus recycled (Marx would say ‘Realized’) as Consumer Spending - dwindles. (Rapidly developing AI and robotics at present appear to be accelerating the pace at which we approach now this terminal point of the process.)

Marx’s Answer (2): How Social Surplus Will in Future Be Generated, Disseminated, and Reinvested

The picture of where we must go at which Marx arrives - that is, his second answer to his own questions - in this light follows straightforwardly from his picture of where we have been: It is a world in which ever smaller numbers of ‘big owners’ entitled to an aggregate Social Surplus too massive for them alone to Consume and profitably Invest no longer own everything and hence no longer are entitled to the Social Surplus that they can’t Absorb. The community itself now takes charge of its own Productive Activity and Produced Surplus.

Marx, who was the very contrary of the dogmatist some self-styled ‘Marxists’ now turn out to be, explicitly abjured any ‘blueprinting’ of precisely what form this communal ‘taking of charge’ might assume. He seems both (a) to have thought this partly a matter of ‘learning by doing’ and, relatedly, (b) to have anticipated that different societies would get to the endpoint in different regionally-, culturally-, and historically-specific ways.

Hence Marx suggested that ownership of large manufacturing concerns might next devolve on their workers in industrialized Western Europe, for example (’Cooperative Production’), while a spread of the then-still-encountered peasant commune (’Soviet’) might become the next dominant form in then-still-largely agrarian Russia.

The important point for Marx was that transformation toward direct or indirect worker ownership of the non-human determinants of Social Production, and hence of the Aggregate Social Product including the Surplus, was all but inevitable. The specific forms this would take across space and through time would emerge in the future - ideally in peaceful ways, but unavoidably either way.

There is of course much more to Capital than the foregoing, including as noted in passing above the many sectors and subsectors of the modern multisectoral economy into which the ultimately Labor-made aggregate Surplus flows - commodity capital, commercial capital, bank and finance capital, ... land rents, money rents, ... etc. These are the subjects of Parts 4 and 5 of Volume III much as the foregoing are the subjects of Volumes I, II, and Parts 1 through 3 of Volume III.

Marx’s sustained Surplus- ‘tracing exercise,’ and the mechanisms that this exercise uncovers in both Surplus Generation and Surplus Dissemination, are as fascinating as they are penetrating and revealing. But the important point for present, synoptic purposes is that it is all about Labor-generated Surplus that isn’t yet Labor-owned and -commanded Surplus, hence Surplus that flows in many directions now but will have to flow back to labor in future.

This is the future that Marx ‘prophetically’ sees through his ‘scientific’ analysis.

Postscript: Two Pretheoretical Premises to Remember Going Forward

A final ‘hot tip’ before closing: Two pervasively important but implicit substantive, indeed ‘metaphysical’ premises or pretheoretical ‘priors’ that Marx brings to his project, which must be borne in mind always in seeking both to understand and to appropriate the results of the project, are these ...

First, a conception of the human person or human essence as not only that of an irreducibly collaborative, social, or ‘political’ being in the Aristotelian or Confucian sense (’homo politicus‘), but also of an irrepressibly creative, inventive, and productive being in what can reasonably be called an artistic sense (’homo faber‘).

Hence Marx’s focus on Labor and Production throughout all his work.

And second, a conception of human and natural history as dynamically unfolding in keeping with an intelligible, indeed teleologically progressive (’dialectical’) structure, which renders it intelligible to both analytic and synthetic (both ‘penetrating’ and ‘creative’) human understanding and hence, ultimately, to intelligent human control.

Hence Marx’s optimism about our ultimately moving away from chaotic ‘anarchic’ to deliberatively rational, socially ‘agential’ production.

These are ‘priors’ that the present author shares, and that drew him to Marx in the first place in his youth. Those who don’t share them, I hope, will still find much value (sorry, pun foreseen but not intended) in Marx.

Summa: Social Management of Social Surplus By & For Our Creative Selves

In this light, we might summarize Marx’s life work as a massively ambitious and self-sacrificing effort to enable us to understand ourselves and our creative-productive conditions in a manner that enables us to wrest control over those conditions from mere fate, and thus henceforth to shape them in ways that do justice to our common creative essence.

In the early mid-1970s, forces hostile to the US and its allies acted to impede petroleum exports from the Middle East.

This brought immediate and unprecedented crisis to the US and global economies. Gasoline prices quadrupled virtually overnight, while petroleum-dependent manufacturing and other production costs shot up in tandem. Consumer prices quickly followed suit, as did employee layoffs in response to lost consumer spending.

A supply-induced macroeconomic ‘stagflation,’ theretofore thought an impossible contradiction-in-terms by self-styled ‘Keynesians’ who had never read Keynes, threatened a full ‘lost decade’ where productive progress and social well-being were concerned.

In response to the crisis, Congress enacted, and President Ford signed-into-law, the Energy Policy and Conservation Act (EPCA) of 1975 just before Christmas. The Act included many provisions aimed at both lowering and stabilizing domestic energy prices in the US, including one banning US crude oil exports and one granting the President authority to restrict exports of other petroleum, coal, and natural gas products.

The point of these latter provisions was to lever US domestic energy production in a manner enabling a decoupling of domestic consumer prices from higher global market prices.

President Trump still has this power.

In late December of 2015, almost 40 years to the day after EPCA’s enactment, President Trump’s favorite predecessor, President Obama, signed Congress’s Consolidated Appropriations Act (CAA) of 2016 into law. In light of the fracking revolution of the early 2000s, the CAA repealed EPCA’s blanket ban on crude oil exports.

Crucially, however, CAA’s Sections 101 (c) and (d) continued the President’s authority to restrict energy exports for up to one year in pursuit of national security or emergency objectives.

President Trump, who has campaigned since 2015 as an economic populist, purports to be pursuing an anti-inflationary, pro-’affordability’ agenda right now. He is also confronted with by far the worst looming stagflation threat since the glory days of the Ford and Carter Administrations, ironically stemming from the same source - Trump’s own adversaries in the Middle East.

Quite unlike during the earlier, 1970s episode, however, Mr. Trump enjoys a currently unexploited advantage that his 1970s predecessors likely never dreamed of - viz. the US’s now being by far the world’s largest petroleum and liquified natural gas (‘LNG’) - indeed, energy - producer.

Why, then, does President Trump not use his authority under Section 101 of the CAA and restrict US petroleum and LNG exports, thereby assuring the world’s largest energy supplies and its lowest energy prices here at home? Why is he leaving this available US consumer ‘money on the [proverbial] table’ - or, rather, in others’ pockets?

As the ‘pockets’ suggestion suggests, I can see one possible answer: a greater solicitude for Big Fossil Fuel’s windfall profits than for ordinary Americans’ costs of living. Sadly, this also strikes me right now as the only available explanation. Unless the Administration is simply unaware of this price-stabilization authority and its background in conditions just like those confronting us now.

Am I, then, missing something? Is there any good reason for the President not to cite national security during wartime and decouple US domestic energy prices - as systemically important a set of prices as can be - from global energy prices in the name of affordability and stability as envisaged by both the EPCA of 1975 and the CAA of 2016?

If not, Mr. Trump, when will you exercise your authority on behalf of your voters and all of those you assure that we’re ‘winning’?

Introduction

A funny thing happened on the way from what most called 'political economy' in the late 18th century to what many had begun calling 'economics' by the late 19th century. The same thing, ironically, happened even to what many called 'Marxism' by the early, immediate post-WWI, 20th century.

What was it? What was so funny? It was that production – and hence labor, extraction, exploitation, even ‘value’ in its politically salient form (surplus value) –simply dropped from most widely read technical discourses, and seemingly all academic discourses, as if through a trap door. It did so first as a normative concern, then, as always happens, as positive category.

In short, attention moved from what those who know Marx will recognize as Capital Volume I ('Production') subjects either to (a) Capital Volume II ('Circulation') subjects, among 'economists,' or to (b) German Ideology subjects, among 'Frankfurt School' social theorists and other exponents of what later came to be called 'Western Marxism' – what I think of as ‘Lit Crit Social Theory’ or ‘Marx-Curious Social Semiotics.’

Whither Production?

It is tempting to attribute this move to a wish to depart or deflect from 'the labor theory of value,' which, when (a) falsely taken for a kind of price theory, presents descriptive embarrassment, and (b) when correctly taken as an account of social resource accounting presents prescriptive embarrassment. Whichever the motive in particular instances, in aggregate this move did great mischief.

What mischief? Well, for one thing, theorists of and policymakers in western societies in time 'forgot how to make things. And, for another thing, critics of those societies in turn forgot how to critique what actually most matters in how we make things: namely, the outright robbery still at the core of our deeply connected processes of production and distribution.

To be a ‘high theory’ mainstream economist today is accordingly to be a theorist of consumption and ‘welfare’ or ‘utility,’ conceived as a state of satisfaction derived from consuming the things that one craves – not a theorist of where those things come from or how they are made.

To be a 'Marxian economist' today, in turn, is more often than not to be nothing more exalted than a primitive 'price-theorist' with mildly egalitarian sympathies: as if 1870s marginalism, focused on demand not supply, could somehow be Marxified – or, more like it, as if Marx could be Walrasianized. (Most who start down this road end up, correctly, concluding that he cannot, and thus abandoning him altogether in favor of Walras, who was himself mildly egalitarian enough even for today's few (unserious) 'socialists.'

To be a 'Marxian social critic' today, correspondingly, is then more often than not to be nothing more exalted than a primitive 'semiotician,' as if what Marx left us was simply a colorful vocabulary through which to find or ascribe 'social meanings' among the bewildering arrays of ever new, ever more purchasable objects and options circulating around us, again without ever having to ask where they came from and what role we ourselves – let alone exploitation – might have played in producing them.

All three of these perspectives – those of the modern marginalist or pseudo-Marxist economist and that of the ‘Western Marxist’ social ‘theorist,’ are those of the infant in the crib or the playpen, looking up at the mysterious mobile from which initially inexplicable colorful plastic objects dangle before him. In time, without looking much farther than the floating objects themselves, our gazers come to notice that these objects 'move' upon 'markets.'

The first two groups then come to reflect at best upon how these objects might come to have the 'prices' they do when they (somehow) come to exchange upon markets of never explained origin. The other group, perhaps less mechanically and more 'artistically' minded, reflects instead upon less precise or determinate 'hidden social meanings' arguably discernible in a 'social object language' that market exchange (still of unexplained origin) can be 'interpreted' as.

All three groups stop short, far short, of where Marx and his predecessors Steuart, Smith, and Sismondi actually took us – into the always crucial, yet seldom visited, realm of production, which determines all else. And all three groups, as just in effect noted, have current iterations still active today.

The most current, albeit nevertheless old news, crop of pseudo-Marxian Walrasians are of course the ironically named 'analytical Marxists.' The most current crop of Marx-curious social-semioticians are the 'value form' theorists who now are enjoying a bit of a comical vogue. And the most current crop of more mainstream economists and economy-curious ‘wonks’ what I’ll call the post-Clintonite dabblers in what they themselves call ‘abundance.’

It is the latter who will interest me here. For I have dealt elsewhere with the two kinds of production-ignorant pseudo-Marxians noted above. It is nevertheless what the former share with the latter – a professed interest in some of the consequences or effects of production and productive relations shorn of concern for production and productive relations themselves – on which I wish now to focus.

The Production Agenda and Dylanomics: Why Economies not ‘Busy Being [Productively] Born’ are ‘Busy Dying’

Ever since the crash of 2008, and especially since the start of the Covid pandemic of 2020, a smallish number of us who concern ourselves with economies have attributed modern dysfunctions to the aforementioned loss of attention to production. Theory’s productive aphasia has deprived theory of practical relevance, while practice’s counterpart blindness has deprived ‘Western,’ and especially British-derived, societies of far more.

The loss – in fact, the deliberately labor-exploitative ‘offshoring’ – of productive capacity has notoriously brought ever-worsening income- and wealth-inequality, ‘financialization’ and consequent macroeconomic volatility, addiction epidemics and social breakdown, and now full political breakdown to affected countries. These developments, which culminated in and then were supercharged by the crash of 2008, were of course bad enough...

But as millions began literally dying in 2020 while ‘Western’ nations struggled to produce N95 masks, pulmonary ventilators, and even hospital space adequate to the tasks of treatment, the ‘existential’ nature of the vulnerabilities wrought by productive atrophy, compressed now as they were into very short time-spans, became no longer ignorable. At least in the eyes of some …

If you ‘Google’ my name and such words as ‘production,’ ‘produce,’ ‘make,’ ‘supply,’ ‘supply-side,’ and the like, you will find scores and scores of books, articles, and draft legislation both before and, especially, during and after the pandemic. A few – but surprisingly few – others began writing similarly. Little, though, happened in response. A salutary exception here in effect ‘proved the rule’: …

Representative Ro Khanna and Senator Marco Rubio, whom I had assisted with production-friendly legislation since 2018 after doing similar work for other Congressmembers from 2010 through 2014 on ‘Nation-Building Here at Home,’ in late 2022 introduced landmark legislation that I had drafted for them back in 2020.

This National Reconstruction and Continuous Development Act of 2022 would replicate the public-private coordination structures that brought the ‘miracles’ of US productive mobilization and development in the early 19^th century, the Civil War and immediate post- Civil War era, the First World War mobilization and prosecution, and then the Second World War mobilization and Prosecution.

In (1) vesting macro-planning and coordination authority in a jurisdictionally layered public-private Council akin to the War Industries and War Production Boards of the two world wars (‘Plank I,’ a.k.a. ‘the National Reconstruction and Continuous Development Council’); (2) assuring adequate financing in all potentially useful forms by upgrading the existing Federal Financing Bank within Treasury into a full-on latterday War or Reconstruction Finance Corporation again as in the two world war mobilizations (’Plank II,’ a.k.a. ‘the Upgraded FFB’); (3) restoring the Federal Reserve System to its original status as a network of regional development finance institutions focused on production not speculation (‘Plank III,’ a.k.a. ‘Spread the Fed’); and (4) converting the already existing TreasuryDirect system into a network of universally available, P2P digital savings and payment ‘wallets’ (‘Plank IV,’ a.k.a. ‘Digital Greenbacks’), … this Act would, and still could, give practical effect to the new theoretical turn I have been seeking to introduce – actually, restore – to contemporary ‘Development Economics’ …

I have been calling this practical platform ‘the Production Agenda’ since well before Covid, and Congressman Khanna happily does likewise now. Read or view any talk or interview that he gives, and you will either read or hear it. And for this reason he is the only Democrat worth thinking about in connection with the Presidency as of next cycle.

The theoretical vision that underlies that practical agenda, in turn, I call ‘Dylanomics,’ in honor of the poet Robert Zimmerman’s memorable line that ‘he not busy being born is busy dying.’ That adage is as true – indeed probably more true – in the case of economies than it is in the case of individuals. ‘National development’ is never a ‘done deal’ or a one-off achievement, never about mere one-time ‘take off’ – a conceit handed down by Walt Rostow, a Cold War Defense Department apparatchik rather than a proper economist. It is, rather, a continuous process of maximally rapid yet stable dissemination economy-wide of continuously developing new technologies percolating up from both public and private sector innovators.

Until we recapture full appreciation of the latter, and hence until we re-recognize the absolutely decisive importance of ‘industrial clustering’ of a kind (a) that we once had, (b) that China now has, and (c) that no private sector entity has, or should have, the legal authority or ‘market power’ to bring about, productive restoration will remain out of reach.

Which take us to …

‘Abundance’: Products without Production

In recent years, and especially recent weeks, policy thinkers are all aflutter with a putatively new discovery – viz., the discovery that supplies matter. A more ‘abundant’ supplying of goods, services, infrastructures, we are informed as if this were in fact information, means ‘a bigger pie.’ That in turn means less squabbling over ‘the slices.’ More ‘spoils,’ less to-do about ‘the division of spoils.’ Why fight over distribution and redistribution if there is ever more to distribute. A good time can be (painlessly) had by all.

This is of course true enough – indeed trivially so – so far as it goes. But it doesn’t go far – indeed it goes little further than tautology. For the sole obstacle to abundance, it seems, is …

… Yep, ‘there you go again,’ the guvment. You read that right. The ‘new’ abundance agenda is essentially just warmed-over Reaganism. The state ideology, ironically (or tragicomically) enough, of precisely that period when the US decisively ceded productive supremacy to Asia (with Germany), financialized its economy, and flipped from being the world’s largest creditor nation to its largest debtor nations – a troika of calamities from which we still grope, as does ‘the abundance agenda’ itself – for means of escaping.

This is of course, on one well known definition, insanity. It is expressly counseling repetition of what we have tried before and failed with.

How in the hell did this happen? How could seemingly smart people fall into this trap?

I'm guessing that the insanity owes to some combination of two or three reasons:

(1) First, there's been a steadily growing, if subarticulate, sense of the dysfunctional developments with which I opened. There’s an inchoate recognition that when things began going wrong in the US was when we stopped producing, stopped making, stopped building, and instead (a) we started just 'pushing paper' (the phrase emerged during late Reagan years - significantly enough, after our financialization had begun gathering steam, our S&Ls were wiped out leaving only big Wall Street type banks (the era of the 'yuppie'); (b) our steel and cognate industries imploded (a popular song called 'Allentown' topped the charts in the early '80s); and (c) Japan eclipsed us as a manufacturer/producer/exporter), while turned to merely 'extracting' (the term emerged during Obama years as the tech platforms, which essentially find new ways to squeeze rents from us rather than produce, began to reach scale). The book in effect speaks to that inarticulate worry, finally giving it voice.

(2) Second, unlike the Production Agenda noted above, the 'abundance' story doesn't place any intellectual demands on you in purporting to explain what happened and how. It simply tells an already-familiar, entirely clichéd fairy tale about 'red tape,' 'bureaucracy,' 'excessive regulation,' etc. You don't have to think anything more once they start trotting that out. The script of the thoughtstream is already written and programmed into you as a post-Reagan-era American. It's already as well-established a part of the American episteme as 'cowboys' and 'freedom.' So we end up getting a very very easy Pavlovian endorphin hit: …

Abundance, lots of stuff - goooood.

Red Tape, interference - baaaaaad.

Note how much easier this makes the implied remedy too: If the problem is just some obstacle, blow it up, bulldoze it. Easy. Endorphin rush. Instant vicarious gratification.

If, by contrast, you've got to conceive, design, legislate, and put into place a planning and coordinating structure involving every level of government, every jurisdictional field handled by a cabinet level agency, and leaders from every principal economy-constituting private sector industry and labor organization as we did in preparing for the two World Wars, ... well, that's work.

The difference of perspective is also reflected in the different titles. 'Production Agenda' references what has to be done right from the get-go. 'Abundance' could just as well be titled 'Manna.' It gives you kid-with-lots-of-toys vibes - again, instant gratification - while sparing you the trouble of having to think about how stuff gets made. And if the only thing standing between you and your pile of toys is a big bad Regulator, well, there is an easy kid solution to that too: just throw a tantrum and tear it all down.

You know that Musk must love the ‘abundance agenda’ and its strange manifesto. He is in effect already enacting it - illegally.

(3) Finally third, that last observation melds with another - how the so-called ‘abundance agenda’ just continues to push the old Reagan line yet again. It's all just 'red tape' and 'unelected bureaucrats,' which we now can see not only take away our freedom but also take away our toys, our stuff. They are the Grinch who steals your Christmas, not serious public servants executing our will as expressed through legislation. So of course now Republicans will be waving this book like a 'proof' that they were right all along. 'Look!,' they will triumphantly squeal, 'even yer libral Derek Thompson and Ezra Klein admit it! Fweedom! Abundance!'

What do you bet now that Musk invites Thompson and Klein to join 'D.O.G.' while touting it as a large-hearted concession to ‘commonsense bipartisanship’?

Theoretically and practically, however, there is nothing to see here. ‘No “there” there.’ Its all old – and very bad – retread-Reaganite news.

Conclusion

Let me close, then with a simple question-trio for the new ‘abundance’ charlatans:

1. What country has produced more abundance, literally by orders of magnitude, than any other in history over the last 20 years?

2. What country did the same from the early 19^th to the late-mid 20^th century? And finally …

3. Are those countries famed for their lack of bureaucracy, regulation, or 'government interference'?

End of Story.

One quick caveat: Note that none of this is to say there are no silly regulations or process tangles. For this very reason I drafted another bill for Rep. Khanna right after he and Senator Rubio introduced the big bill described up above: viz., the Expedited National Reconstruction Permitting Act of 2023, pursuant to which the aforementioned National Reconstruction and Continuous Development Council can use it’s the Constitution’s Supremacy Clause power to cut through such obstacles when there is urgent reason to do so.

The point here, then, is to say that as putative mono-causal explanation, the so-called ‘abundance’ story it is mind-bogglingly superficial, silly, and … sorry to say, … lazy.

And if there is one thing that will not bring abundance of anything but belly fat, heart disease, and Ozempic addiction, it is laziness.

Introduction

It was always going to happen at some point. The dollar was destined to be replaced as the world’s reserve currency either by a rival or, as I have advocated for well over a decade, by a truly globally administered international – not national – currency. But as with so many things during Mr. Trump’s White House occupations, when this creature’s involved things happen faster, messier, and far more destructively than would otherwise happen.

So what’s happening now? Well, two intimately related things. First, the dollar is trading against other currencies at its lowest rate since 2001 – the year that saw the beginning of a putative ‘war on,’ rather than self-declared (trade) war-wrought, ‘terror.’ And second, yields on US Treasury debt are now spiking to levels not seen since around the same time.

Dollars and Treasuries: Sibling Sovereign Liabilities

As I say, these are intimately related phenomena – so closely related, indeed, as to be simply two sides of one actual dynamic. There are several angles from which to appreciate this.

For one thing, both the dollar and the US Treasury security are US sovereign liabilities. The ‘dollar bill,’ a.k.a. ‘Federal Reserve Note’ is as much a liability of the Fed – a US government instrumentality – as the Treasury bill, Treasury note, and Treasury bond are liabilities of the US Treasury – another US government instrumentality. It thus stands to reason that demand for the one from abroad would move in tandem with demand for the other. Same issuer, in effect, same ultimate risk.

For another thing, US Treasuries are purchased with dollars. Demand for the former abroad must be satisfied through, first, prior satisfaction of ancillary demand for the latter. Hence again, demand curves for both will tend in large part to move in tandem. A lower price for the one will accordingly mean a lower price for – hence higher yield demanded of – the other.

All right, so they’re joined at the hip. But does it matter? Do the price drops and yield spikes auger good or ill?

Dollars and Treasuries: A Rogue Romulus and Remus

Well, as partly suggested above, it could have augered good, but in Trump’s hands it’s probably ill – very ill. Here’s why …

The dollar’s high value and Treasuries’ low yields have been bad news for US industry and indeed for the world for well over a half-century now. The dollar’s role as global reserve currency – a classic hegemon’s privilege, a kind of global seignorage – results in its overvaluation relative to the actual goods and services that the US produces. That prices US goods out of global markets and hence undermines US industry.

At the same time, Treasuries’ correlate overvaluation has meant ultra-low – oft even ‘negative’ – US borrowing costs abroad, rendering the financing of hegemonic, bullying, ‘neocolonialist’ behavior all too easy, to the wider world’s detriment and chagrin. It has also, moreover, encouraged the US not to bother with producing the means of its own prosperity, instead relying on unproductive seignorage revenue – a form of mere rent extraction – afforded by the global protection racket that it in effect ‘offers.’

For these reasons, I have long advocated in articles, and now have a book coming out to the same effect, that the US must partner with China and other economies in establishing something like a modern digital rendition of J.M. Keynes’s original International Clearing Union (ICU) plan for what ultimately became a very different International Monetary Fund (IMF) in 1944.

Dollars, Treasuries, and Digital Bancors: Bringing the Beavis and Butthead of World Money to Heel – and to Heal

Under this plan, a bona fide global central bank, operated by all the world’s trading nations, would issue a bona fide global currency (Keynes called it ‘bancor’) just as our national central banks issue national currencies. This bank would modulate currency supplies to ensure adequate trading liquidity on the one hand while averting both inflationary and deflationary pressures on the other hand – again, as do all nation’s central banks. And, crucially, this same bank would periodically revalue national currencies relative to its own so as to prevent long term current (‘trade’) account and capital account imbalances between nations – the kind of thing Trump claims to be exercised about.

As I argue in the mentioned work, the present could have been – and maybe still is? – a most opportune time to do this. For after 50 plus years of ever-growing current account deficits and concomitant deindustrialization, the US (a) is now able to see the wisdom of such an arrangement as Britain but not the US itself was able to see back in 1944, while (b) also still possessed of some global bargaining power such as it but not Britain had in that same fateful postwar year. But, …

Alas, Trump …

Enter Orange Julius: Out-Beavising Beavis, Out-Buttheading Butthead

Mr. Trump, building upon the fine work of Mr. Biden earlier – albeit less dramatically – to the same end, is now doing all that he can to nullify point (b) just mentioned. That is to say, he is now rapidly draining-off what little influence the US until recently could have wielded in arranging with China and other nations to establish a latterday Keynesian ICU that could operate fairly for all. How, you might ask, has he accomplished this miracle of non-creative destruction? Well, consider …

Notwithstanding the dysfunctions of current global currency arrangements noted above, the US has managed to avert debacle thus far because:

(1) There is as yet no known 'tipping point' for when a global currency hegemon's Debt/GDP ratio, after long-term rises like that of the US, becomes 'unsustainable' (Japan still holds the record, and has yet to tumble);

(2) The US has been reliably internally stable as a domestic political matter since 1865, and as a public-financial matter since Hamilton's first prioritizing the development of a perfect national credit rating in 1787; and ...

(3) There is literally no credible alternative 'safe asset' market to the nearly $30 trillion US Treasury market, since (a) the European Monetary Union will remain shaky until Europe finally institutes a Hamiltonian fiscal transfer union to match its monetary union, (b) China till recently has needed weak currency to effectuate its export-led national growth model, and (c) every other potential issuer - including Japan - is just too debt-small in comparison to that $30 trillion US market.

The key to understanding what’s happening right now is to understand how Trump is now undercutting both (2) and (3).

On (2), Trump of course doesn't care a whit about ‘norms,’ rules, laws, reputations, words-as-bonds, truth or trust, credit-ratings, or the like. He is indeed, personally, a serial bankrupt and deadbeat himself, and seems to think this evidence that he's savvy. He is also of course profoundly unstable as a personality, and seems to infect all that he touches with a counterpart volatility.

Add to this his effective declaration of war on the entire world, including traditional US friends and allies, and it is goodbye, stable and reliably ally-committed, credit-concerned US.

Then on (3), the BRICS and allied countries' recent moves toward constituting a real global alternative to the dollar seem to have become irrevocably serious at last. That in turn looks to be stemming from several critical, ‘game-changing’ and ‘globe-changing’ factors: …

First, the BRICS and most other countries are now all decisively sick of US bullying financial and otherwise, especially since the Ukraine ‘hot war’ commenced in early 2022.

Second, they all now can see that the US is fully as incontinent and non compos mentis as is its orange Caligula.

Third, they no longer need keep their currencies cheap for the US market, since the latter is no longer reliable anyway.

And finally fourth, China has been committed to shifting from export-led to domestic-led growth for a while now in any event, such that the current situation will simply force them to speed that effort up a bit - which China is always good at, by the way (speeding up), in a pinch.

In short, then, sure, we still cannot 'know,' with certainty, that an inflection point where the dollar’s global reserve currency status is concerned is now imminent. But, when we remind ourselves why the US has been able for so long to do and get away with what it does, it is easy to see precisely how Mr. Trump has now taken the axe to that, thereby converting the prospect of a near-term end to US debt privilege from merely wishful thinking before to not unrealistic prospect now.

That is a first not only in our, but even in our grandparents' and great-grandparents' lifetimes.

Conclusion

To be clear, the ultimate demise of the dollar and dollar-denominated Treasuries was going to happen in any event. As China inexorably displaces, then replaces, the US as center of global production and civilization, its own currency, if not a bona fide global currency, would displace and then replace the dollar. China is smart enough and seemingly universalist, moreover, not to repeat US mistakes by allowing its own currency rather than a latterday bancor to become global reserve currency. In that sense, things would grow better than they are presently with or without the US’s taking its current Caligulan turn.

The process, however, could have been far smoother, far stabler, and far less painful, not to say less calamitous, than appears likely now. And that is because, while Nero might well have supplied entertainment – his fiddling – while Rome burned much as is, now, Mr. Celebrity Apprentice, Rome did indeed … burn. Unless Congress acts quickly to withdraw its own latterday Tonkin-Gulf trade resolution and deny Nero the unilateral trade war authority he’s now whipping about like the proverbial ‘swinging d__k,’ we shall soon know another debacle in Asia like that enabled by its 1964 antecedent – the one that let LBJ wreak war crime and ruin in Vietnam much as DJT is now wreaking worldwide.

Introduction

Mr. Trump’s ‘norm-busting’ ways are to be credited for helping at long last to get past our nation’s suicidal taboo against tariffs. But that is, alas, the most we can say for Trump now. For the way he is now ‘doing’ tariffs is nothing short of moronic, which will both catastrophically damage us and discredit good trade policy for decades to come.

Let’s start with the familiar argument against tariffs, then turn to how smart trade policy flows directly from that argument’s principal idiocies…

Ricardian Imbecility

The standard argument proceeds from the old Ricardian notion of ‘comparative advantage.’ In essence, the idea is that, if country A is better than country B at producing both wine and wool, say, but is ‘more’ better at the wine than the wool, then it should do wine while B does the wool, then trade. That way, you see, aggregate production by A and B combined is maximized while trade takes care of the distribution of proceeds.

In essence, this is simply a variation on Adam Smiths’ and other old time political economists’ brief for the division of labor and the productivity gains wrought by the specialization that it enables. But hold on a minute …

Where do Smithian specialization and Ricardian comparative advantage come from? Well were we to combine ourselves to Ricardo’s examples – literally the wine and wool mentioned above – you might think it a matter of ‘nature,’ of fate. Of course Portugal’s better at wine while England is better at wool, you will reckon – just look at the weather.

The problem with this idea at present, of course, is that with each passing decade since Ricardo’s early 19^th century, the role played by weather, topography, by … nature … in determining who’s best at what has inexorably shrunken. As tech and manufacturing industry grow, agriculture and tourism shrink in proportional terms. Comparative advantage accordingly becomes choice, not fate.

Had China listened to David Ricardo, it would be little more than the world’s largest grower of rice. And had Alexander Hamilton listened to Ricardo’s predecessors – principally Smith, who had argued the same thing – the US would still be an economic colony of the UK, sending it unfinished inputs for use in its factories, which of course were a chosen and built, not a God-given, advantage.

The fact that comparative advantage is actively chosen and built, not passively received, is what renders all Ricardian arguments heard since Hamilton’s late 18^th century – and especially those made by sociopath charlatans like Larry Summers and his former Clinton era colleagues to this very day (!) – so idiotic and so insidious. For they amount in such circumstances to demands we stay backward. In principle, they are no different from the arguments of old white men a century ago telling you why women and Black Americans shouldn’t vote – namely, because they were not (yet) experienced in matters of public policy.

Smart Tariffs – Three Apposite Circumstances

What shows latterday Ricardianism to be idiotic – ‘imbecilic,’ in Hamilton’s rendering – also shows where to use tariffs. In short, we should use them any time and place that the temporary cost that is briefly diminished aggregate global production is outweighed by the benefits – including longer term productivity benefits – that well designed such tariffs can bring.

What, specifically, does this mean for the US right now? Well, in essence, it means that three circumstances can well justify tariffs …

1. National Security: First, if you are reliant on a present or potential adversary, or on readily interrupted global supply chains, for strategically critical finished products or materials, the use of tariffs either to shield your own budding capacities while they develop or to interdict possible ‘contamination’ by the adversary of your supplies can be well worth the cost.

2. Infant Industries: Second, and generalizing the National Security reason, if you decide there are other, less security-rooted reasons to develop domestic capacity in some industry or industries, tariffs again can quite usefully shield your own nascent producers from ‘dumping’ death at the hands of foreign incumbents until such time as they’re able to fend for themselves.

3. Domestic Labor and Environmental Standards: And finally, if ‘free trade’ means backtracking on hard-won domestic labor and environmental protections to ‘compete’ with filthy slave-labor jurisdictions on global markets, tariffs are not only well advised, but are a moral imperative – it is literally evil not to impose them in order to preserve those earlier-made gains.

Now note what Reasons (1) through (3) tell us about Mr. Trump’s recent tariff proposals, starting with countries rather than products …

Peer nations like Canada, Europe, Japan would not seem to implicate any of the three Reasons. None are adversaries, none possess industries that we lack and seek now to start, and all have much higher labor and environmental protections than we have. All three are accordingly fine ‘friends’ for purposes of ‘friendshoring’ – the best means of maximizing Ricardo-friendly transnational production without incurring the unacceptable costs represented by items (1) through (3).

Aspiring peer nations like Mexico or Vietnam, next, represent a more middling case. They do not implicate Reasons (1) or (2) for tariffs, but they definitely implicate Reason (3). Moreover, if and insofar as they serve as conduits for exports from adversary nations (China?), they can indirectly implicate Reasons (1) and (2) as well.

Finally, bona fide adversary nations as Trump (self-fulfillingly prophetically) portrays China as being, and nations that are ahead of us in some desirable industries (EVs, solar power, battery tech, etc.) as China really is, can implicate Reasons (1) and (2), respectively.

Now, have you seen any analysis along these line in the Trump White House’s proposed plans or justificatory rhetoric around tariffs? …

Didn’t think so.

Smart Tariffs – Three Requisite Complements

But now note what else is missing from Team Trump’s planning – if we can call it that – and rhetoric: there is not only nothing on, there is actual hostility to, the necessary complements required to enable tariffs to work.

What do I mean by that? Well, remind yourself of the purpose of tariffs: they are to shield nascent domestic capacity till such time as it no longer requires protection. But this means that we minimize the costs of tariffs only by maximizing the speed at which we jumpstart domestic capacity. And this, too, requires concerted collective action. There are three types of such action, each with its own reasons …

1. Targeted National Investment: First, targeted public investment to speed up development of new industries typically is needed. The reason is obvious: Private capital can earn a far quicker buck betting on price movements in secondary financial and tertiary derivative markets than on new primary goods markets. Such are the wages of decades of ‘financialization,’ which now assure you that the human-lifespan-limited time-horizons of individual investors will channel finance capital to speculation, not production. Only the effectively perpetual-lifespanned nation has the right time-horizon to optimize productive investment.

2. Guaranteed Procurement: Second, ex ante guaranteed procurement of new production at the front end of a new industry’s lifespan also is typically needed. The front-end costs of starting a new industry from scratch are sufficiently high that, without at least some degree of confidence that there will be an actual market for new production such as can enable cost-recoupment, the risk-averse will not dare to tread into the new field.

3. National Coordination / ‘Industrial Clustering’: And finally third, some degree of coordination of nationwide development by the entity with the widest jurisdiction – that would be our federal government – also is typically needed, at least in massive redevelopment or mobilization projects like the World War I and II mobilizations. Only that way do you get the ‘industrial clusters’ that enabled the mobilization miracles achieved by the US in the 20^th century and China in the present century. For no private sector firm has the authority – nor do we wish it to – to ensure that where new factories are built, so are new neighborhoods, roads, powerlines, schools, hospitals, and the like for the new workforces that man them.

Regrettably, the Trump types don’t seem to ‘get’ this. Hence their tariffing will likely not bring domestic production on line quickly enough to substitute for foreign imports and thus circumvent inflation. Their tariffs will function more like the 1970s oil embargoes than like the Hamiltonian, Lincolnian, Wilsonian, and Rooseveltian development miracles that we worked in the past.

But wait, there’s more …

Chinageddon

I want to close this meditation with a bit more detail on just how idiotically, in light of the foregoing observations, the Trump people are handling even the one country in connection with which some sort of tariffs would, for the nonce, seem advisable – China.

So, note first that to get tariffs right, you must target not only the right countries as described above, but the right products. China is certainly the right country in some ways that, say, Canada (!) and Europe (!) are not.

But what are the products?

For Trump, it is all of them. Simply all of them. That is insane. There are at least two reasons ...

(1) First, does the US really need or even want to produce everything domestically that we now import from China? Even clothing, Chinese vegetables, and cheap plastic toys? Trump shows no sign of even having posed himself this query. That is bizarre. For the more things you target, the more things you will have to develop domestic capacities on, and that is both costly and logistically taxing,

(2) Second, inasmuch as many current imports from China are crucial inputs to US production itself, does Trump have a plan in place for rapid substitution? Again, he shows no sign of even having asked himself the question.

Meanwhile, and relatedly, as noted above, the fool is continually denouncing strategic public investment, procurement, and coordination – the latter, again, being that which gives you the 'industrial clusters' that (a) Wilson and FDR invented to win WWI and WWII, (b) we now have only one of (in Silicon Valley), and (c) China has thousands of, everywhere. Hence it is virtually certain that the answer to the query in (2) above is: ...

NO.

Now consider what this means: It means all these vital inputs that we get from China, which again are not unlike what petroleum was in the 1970s, will be shooting up in price overnight. And since we have no plan or means to substitute for them - again like oil in the '70s - ... it means: …

WELCOME BACK, '70s STAGFLATION.

A smart tariff policy on China would have had plans in place - plans for jumpstarting domestic capacity and/or 'friendsourcing' - before declaring trade war. But that would have meant strategic thinking, executing, and friend-making or -keeping. Trump seems incapable of any of this.

Even animals prepare for winter. Even animals plan. Not Trump. He is below human and even below nonhuman animals where strategy is concerned. He is more like a deciduous plant, defenseless against existential change - even when he is the cause of that change. A child with matches and no water-hose.

Conclusion

And this is a shame. For as noted above, it will not only destroy what little health now remains in our national productive and distributive capacities, but will also discredit the very policies we shall soon need to undo the damage.

Congress, your move. Save this fool from himself. And save us as well.

The Statutory ‘Debt Ceiling’ appearing at 31 USC 3101(b), rooted in the Second Liberty Bond Act of 1917 aimed at expanding Treasury financing options during the First World War, is not valid in any application that would occasion default on U.S. sovereign debt, other contractual obligations, or Social Security or Veterans’ pension obligations.

There are at least seven mutually reinforcing legal grounds for so saying. These include preemption of such application of the Ceiling by the comprehensive and painstakingly detailed Congressional Budget and Impoundment Control Act of 1974, 31 USC §§ 1301 et seq. pursuant to both the Later-in-Time Rule and the Lex Specialis Canon; the Separation of Powers, the “Take Care” Clause, the “Presentment” Clause and the 14th Amendment “Debt Clause” found in our Constitution; and the “Absurd Result” Canon preempting applications of law that could not have been legislatively intended.

This Complaint Template is accordingly offered for use by any Social Security or Veterans’ Pension beneficiary, any Treasury Debt holder, and any other Contractual Creditor of the United States whose claims might be imperiled by ‘Debt Ceiling’ gamesmanship in the U.S. Congress. With any luck, a flood of lawsuits in federal courts might force a restoration of statesmanship and responsibility to both Congress and the White House.

Here is the template: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4458389. I’ll also copy it into the text just below.

If any of my readers are interested in joining one of the four plaintiff classes here contemplated - bondholder, other contract claimant, or Social Security and/or Veterans’ Benefit pensioner - please let me know. Two colleagues and I plan to handle these cases pro bono publico - that is, free of charge.

Herewith the template:

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

--------------------------------------------------x

                                                                        :

_____ and                              :

_____,                         :        

                                                                        :

                                    Plaintiffs,                    :

           -against-                                              :

                                                                        :

JANET YELLEN, Secretary of the               :

Treasury, in her official capacity,               :         

                                                                        :

                                    Defendant.                 :

                                                                        :

--------------------------------------------------x

Civ. No. 23-cv-

COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

            Plaintiffs _____, by their attorneys, _____, for their complaint against Secretary of the Treasury Janet Yellen (hereinafter “Secretary Yellen” or “the Secretary”), allege as follows:

                                                                  Introduction                

1.          This is an action to declare unenforceable the putative limit on the amount of U.S. government debt outstanding at any one time found in Title 31, U.S. Code, Section 3101(b) (the “Statutory Debt Limit”).

2.         Defendant Yellen has stated that the Statutory Debt Limit will cause the United States to default on the public debt in early June, 2023. This it will do, she avers, by prohibiting the U.S. Department of the Treasury from borrowing sufficient funds to meet all of our government’s obligations, ranging from U.S. Treasury debt obligations through Social Security and Veterans’ benefit obligations to a plethora of separate contract obligations with scores of millions of contractual counterparties.

3.         Multiple statutes enacted by Congress and signed into law by the President, buttressed both by the structure of our government as constituted by our Constitution and by specific Constitutional provisions, take priority over the Statutory Debt Limit invoked by Defendant Yellen. They vest the Secretary with the authority, indeed the obligation, to borrow any funds necessary to avoid default. One of these statutes trumps the Statutory Debt Limit as the specific trumps the general per the lex specialis canon of statutory interpretation. The other in effect “preempts the field” that would be occupied by the Statutory Debt Limit much as federal law sometimes preempts state law and state law sometimes preempts municipal law.

4.         First, the Statutory Debt Limit, 31 USC § 3101(b), is an isolated general statutory provision that is a relic of the Second Liberty Bond Act of 1917, quite unenforceable insofar as it is contradicted by the specific pledge made later-in-time by Title 31, U.S. Code, Section 3123, promulgated in 1982.  Section 3123(a) provides: “The faith of the United States Government is pledged to pay, in legal tender, principal and interest on the obligations of the Government issued under this chapter.”  This provision is further buttressed by the 14th Amendment to the U.S. Constitution ratified in 1868, more on which infra. Plaintiffs accordingly seek a declaration that the specific and later-in-time pledge to pay the interest and principal on the public debt made in Section 3123, buttressed by the Debt Clause of the 14^th Amendment, takes precedence over the more general and earlier-in time provision that is Section 3101(b). 

5.         Second, the Congressional Budget and Impoundment Control Act of 1974 (“CBICA”), 88 Stat. 297 et seq., 31 USC §§ 1301 et seq., prescribes a comprehensive and intricately detailed set of procedural steps that Congress and the President must take in formulating their own budgets, which budgets are then reconciled and collated before being legislated into law through authorization and appropriation acts passed by Congress and signed by the President.  The resulting duly legislated and signed federal budget laws comprehensively determine federal revenue and spending, and assign the President and the Treasury the task of filling any gaps between the former and the latter through debt issuance. See 31 USC §§ 1322-32. Since the President and the Treasury are furthermore prohibited under this regime from not spending what the comprehensively detailed federal budget mandates them to spend, see 31 USC §§ 1400 et seq., the CBICA of 1974 effectively mandates borrowing any time mandated spending exceeds mandated revenue. This requirement is, moreover, buttressed by the “Take Care” Clause of Article II, Section 3 of our Constitution, which requires the President and his Administration to “take care that the Laws be faithfully executed.” Plaintiffs accordingly seek a declaration that the Statutory Debt Limit, rooted in the Second Liberty Bond Act of 1917 – an enactment originally intended, ironically enough, to expand Executive financing options (to handle the exigencies of the First World War mobilization) – has been superseded, as it were “field-preempted,” by the comprehensively detailed federal budgeting laws of 1974 and 1982 as buttressed by the “Take Care” Clause of Article II, Section 3 of the Constitution, and is accordingly null and void in any application that would purport to prohibit Treasury debt issuance to cover sovereign obligations.

6.         Finally, the Fourteenth Amendment to the U.S. Constitution, even as a freestanding rather than statute-buttressing provision of law, provides in Section 4 that “[t]he validity of the public debt of the United States, authorized by law, . . ., shall not be questioned.”  The Fourteenth Amendment further provides in Section 4 that “debts incurred for payment of pensions [such as Social Security and Veterans’ pensions] . . . shall not be questioned.”  Section 4 is referred to as the “Public Debt Clause”.  Section 5 in turn provides that “Congress shall have the power to enforce, by appropriate legislation, the provisions of this article,” on which the aforementioned 31 USC § 3123 cited above and further discussed makes good.

7.         Plaintiffs accordingly seek a declaration that any application of the Statutory Debt that called into question the validity of the public debt of the United States, or the validity of debts incurred for the payment of Social Security benefits, Veterans’ pension benefits, or any other bona fide contractual claims would be an application that violates the 14^th Amendment.  Any such application of the Statutory Debt Limit must under such circumstances be declared constitutionally unlawful for its abrogating the constitutional obligation of the United States to pay public debt, federal pension benefits, and other contractual claims both in full and on time.        

8.         Plaintiffs additionally seek a declaration that the Statutory Debt Limit would be unconstitutional as applied if a resulting shortage of funds required the President and his designee the Secretary to violate binding spending decisions made by Congress in appropriations statutes, either by not spending at all or by “prioritizing” payments in violation of (a) the separation of powers principles manifest in Articles I and II of the Constitution; (b) the President’s obligation not to “impound” budget-mandated appropriations, as President Nixon did in occasioning passage of the CBICA of 1974, but instead to carry out all appropriations decisions mandated by Congress and signed into law by the President pursuant to prior budget legislation; or (c) the President’s obligation not to “prioritize” payments in violation of the “Presentment Clause” of Article I, Section 8 of the U.S. Constitution, as interpreted in Clinton v. City of New York, 524 U.S. 417 (1998) invalidating the “line item veto.”

Jurisdiction and Venue

9.         This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because this is a civil action arising under the Constitution and laws of the United States.

10.        Venue is properly lodged in this district under 28 U.S.C. § 1391(e)(1)(A) in that the office of defendant Secretary Yellen for the performance of her official duties is located in this district.     

Parties

11.        Plaintiffs _____, _____, and _____ own Treasury bills, Treasury bonds, and Treasury notes maturing on _______, ______ and _____, 2023.  These United States debt obligations are due and payable to Plaintiffs on their respective maturity dates.

12.        Plaintiffs _____, _____, and _____ are retired _____, _____, and _____.  Plaintiffs receive monthly pension payments from the United States in the form of Social Security Administration (“SSA”) benefits.  These monthly SSA benefit payments are Plaintiffs’ principal sources of income.

13.        Plaintiffs _____, _____, and _____ are  retired _____, _____, and _____.  Plaintiffs receive monthly pension payments from the United States in the form of Veterans’ Administration (“VA”) pension benefits.  These monthly VA payments are Plaintiffs’ principal sources of income.

14.        Plaintiffs _____, _____ and _____ are _____, _____, and _____.  Plaintiffs are party to contracts with the United States pursuant to _____, _____, and _____.  Default by the U.S. Government on Plaintiffs’ contracts would not only constitute breach of contract, but also would do Plaintiffs contractual injury valued at $_____.

15.        Defendant Janet Yellen is the Secretary of the Treasury of the United States and head of the U.S. Department of the Treasury (hereinafter “Treasury” or “the Treasury”).  She is responsible for managing the public debt and serves as the financial agent for the United States government.[1]

Facts

16.       With the approval of the President, Secretary Yellen is authorized by law to borrow on the credit of the United States Government all amounts necessary for government expenditures.  Secretary Yellen determines the amount of money that the United States must borrow at any given time in order to pay Social Security and Medicare benefits, military salaries, interest owed on the national debt, tax refunds, contractual obligations, agricultural support payments, and myriad other programs and obligations of the United States government. 

17.        The Treasury exercises its borrowing authority by issuing Treasury bills, notes and bonds.  Treasury bills have a maturity of four weeks to one year.  Treasury notes have a maturity of two to ten years.  Treasury bonds are twenty to thirty-year debt obligations.  All of these debt instruments, which are referred to herein as “Treasurys,” “Treasury Securities” or “Treasury Debt Instruments,” are contractual in nature: they contain express written promises to repay principal at maturity and to pay interest according to specific coupon schedules.

18.        U.S. Treasurys have long been in high demand worldwide as the safest of  “safe assets” for inclusion in asset portfolios, for use as collateral, and even as “real world” instantiations of the hypothetical “risk-free assets” on which the use of all traders’ asset-pricing models, from the Capital Asset Pricing Model (“CAPM”) to Arbitrage Pricing Theory (“ABT”), is predicated. This renders the U.S. Treasury market, valued at over $24 trillion outstanding, by far the largest financial asset market in the world. This in turn enables the U.S. to borrow at home and abroad more cheaply by far than can any other borrower public or private. So advantageous to Americans is this global role of U.S. Treasury Securities that foreign officials have often complained of the “exorbitant privilege” that demand for U.S. Treasurys confers upon the U.S. and its citizens in comparison to all other borrowers, state or non-state.

19.       U.S. Treasury Securities also are treated as the safest of “safe assets” under all U.S. banking and finance-regulatory regimes. They are considered near cash-equivalents for both liquidity- and capital-regulatory purposes, receiving risk weights of zero under all risk-weighted renditions of these familiar regulatory regimes. For this reason, scores of millions of American retirees and other investors rely directly or indirectly on the sanctity of the covenant represented by U.S. Treasurys for the security of their retirement savings and other investment portfolios.

20.       The Statutory Debt Limit currently provides that the United States government may not borrow more than $31.381 trillion at any one time.

21.        On January 13, 2023, Secretary Yellen in a letter addressed to Speaker Kevin McCarthy of the U.S. House of Representatives advised him that the outstanding public debt of the United States was projected to reach the Statutory Debt Limit on January 19, 2023.  Secretary Yellen advised that the Department of the Treasury would thereafter have to take available “extraordinary measures” to limit the outstanding public debt to the statutory limit – in this case, suspending investment by the Treasury in certain government retirement funds.  Secretary Yellen further advised that the length of time that these measures could be used to enable the government to meet its legal obligations without additional borrowing was not certain but was likely in June, 2023.

22.       On or about January 19, 2023, the outstanding public debt of the United States reached the statutory limit.  Thereafter the Treasury could not borrow the additional amounts needed to fund the government, and it accordingly commenced its resort to the extraordinary measures described by Secretary Yellen six days earlier on January 13, 2023.

23.       These extraordinary measures have now run their course.  They no longer suffice to enable the Treasury to meet its obligations to Plaintiffs _____ and other debtholders to make repayment in full on the debt instruments issued by the Treasury. 

24.       The total amount of U.S. debt coming due in June and July, 2023 is greater than $1 trillion.

25.       Within less than one month from the filing date of this complaint, the United States will not be able to meet its legal obligations to Plaintiffs _____, _____, _____, or to literally scores of millions of other holders of U.S. Treasury Debt Instruments because the Statutory Debt Limit is, at least facially, prohibiting the Treasury from borrowing the necessary funds.  Failure to pay the principal or interest due on Treasury bills, notes and bonds in full and on time will constitute a default. 

26.       On May 1, 2023, Secretary Yellen in a letter addressed to Speaker Kevin McCarthy of the U.S. House of Representatives advised him that the Treasury will default on U.S. Treasury debt instruments by early June of 2023.  Default will potentially occur as early as June 1, 2023, but not more than a few weeks later than June 1st.  An outright default on the billions of dollars in United States debt that matures in June is thus imminent.

27.       Since 1945 the United States dollar has been the foundation of the global financial system, with the dollar functioning as the sole international reserve currency and Treasury debt long regarded as the world’s safest and most liquid financial asset.  Moreover, since the U.S. ceded manufacturing and hence export supremacy to rival nations from the 1990s onward, global demand for U.S. Treasurys has become the principal source of global demand for the U.S. dollar itself, hence for a significant portion of the dollar’s value both within the U.S. and without.

28.       A default on U.S. sovereign debt would accordingly subvert the dollar’s value, spike interest rates, and rapidly escalate borrowing and other costs for both the United States and its citizens – thereby “blowing up” the very deficits and inflation rates about which the Congressmembers now holding up a debt ceiling hike profess concern. It would also bring widespread, catastrophic disruption to domestic and global financial markets, and hence the macroeconomy as well.  Domestic housing costs would rise dramatically due to the higher interest rates that a default would occasion, while home sales could fall by 25% or more due to higher mortgage rates – a tanking on par with that of 2006-2014, instantly placing millions of home-owners “underwater.”  Consumer prices, already subject to disquieting inflation thanks to pandemic-wrought supply disruptions, would spike much, much higher. According to Moody’s Analytics, the stock market could lose as much as one third of its value – a percentage not seen since the Great Depression. 

29.       The cutoff in federal spending would thus likely result in a deep recession in which millions, if not indeed tens of millions, of people would lose their jobs. This calamity surely would constitute an “absurd result” that the drafters of the 1917 Liberty Bond Act in which the debt ceiling originates – again, ironically, an enactment through which Congress sought to expand Treasury financing options – could not have intended. (In consequence, the Statutory Debt Ceiling as it would be applied by Secretary Yellen could be deemed contrary to law on grounds of the Absurd Result Canon in addition to the other grounds above elaborated.)       

30.       Turning back to more immediate consequences of default, in this case affecting not only bondholders and financial markets but now other contractual counterparties and pension promisees too, Secretary Yellen has stated that default “would mean that Social Security recipients and veterans and people counting on money from the government that they’re owed, contractors, we just would not have enough money to pay the bills.” 

31.        This imminent default is not the result of any actual solvency problem or other economic challenge; nor is it the result of the federal budget deficit.  The imminent default is the entirely voluntary, if not sought, consequence of wanton disregard by certain members of the U.S. Congress of the wholesale calamity that will ensue if the U.S. Treasury fails to honor our country’s sovereign obligations as they come due.

FIRST CAUSE OF ACTION

(Statutory Conflict)

32.       Plaintiffs repeat and reallege each and every allegation contained in the foregoing paragraphs as if fully set forth here.

33.        Title 31, U.S. Code, Sections 1322-32 comprehensively prescribe minutely detailed procedures for formulating and enacting each year’s federal budget. These include provisions for expenditure, revenue, and debt. Title 31, U.S. Code, Section 3123(a), then provides that “[t]he faith of the United States Government is pledged to pay, in legal tender, principal and interest on the obligations of the Government issued under this chapter,” while Title 31, U.S. Code, Section 3123(b), then further provides that “[t]he Secretary of the Treasury shall pay interest due or accrued on the public debt.”

34.       These comprehensive and minutely detailed provisions on the one hand, and the general Statutory Debt Limit on the other hand, impose conflicting obligations on our Treasury Secretary.  In order to pay the principal and interest due on the public debt as prescribed and vouchsafed, respectively by the aforementioned provisions, Secretary Yellen must borrow greater amounts than purportedly authorized by the Statutory Debt Limit. In the face of this conflict, there is but one proper course of action.

35.       31 USC §§ 1322-32, rooted in the Congressional Budget and Impoundment Control Act of 1974, and 31 USC § 3123(a), rooted in subsequent 1982 “housekeeping” legislation, respectively prescribe Congressional line-item budgeting in comprehensive and minute detail while pledging the full faith and credit of the United States to pay all principle and interest incurred on debt issued pursuant to all federal budgets formulated through this mandated process. 31 USC § 3101(b), by contrast, purports simply to apply a general limit on debt issuance across the board while also, importantly, subjecting that limit to changes periodically made in the plenary debt amount “by law through the congressional budget process” prescribed in detail by 31 USC §§ 1322-32.

36.       The upshot, per the lex specialis principle, is that the “limit” is effectively repealed to whatever extent specific budget legislation, passed later-in-time pursuant to the comprehensive budgeting process prescribed in detail by 31 USC §§ 1322-32 and guaranteed by 31 USC § 3123, that subsequently happens to exceed this more general “limit” imposed earlier-in-time.

37.       Accordingly, Plaintiffs seek a declaration that Secretary Yellen is not bound by Section 3101(b) to the extent that compliance with it would prevent her from complying with Sections 1322-32 and 3123.

38.       The balance of harms favors injunctive relief as well. Defendant Yellen has stated that a default will cause irreparable harm to the United States as well as financial injury to untold millions of its citizens.

SECOND CAUSE OF ACTION

(Statutory Conflict)

39.       Plaintiffs repeat and reallege each and every allegation contained in the relevant paragraphs above as if fully set forth here.

40.       The Congressional Budget and Impoundment Control Act of 1974 (again, “CBICA”), 88 Stat. 297 et seq., 31 USC §§ 1301 et seq., provides detailed procedural steps for Congress and the President to take in formulating their own comprehensively detailed federal budget proposals.  These budgets are then reconciled and collated to constitute the final blueprint for subsequent authorization and appropriations acts passed by Congress and signed into law by the President.  Id., Sections 300-311.  The resultant duly legislated federal budget determines revenue and spending, and does not require that expenditure equate to tax revenues.  Rather, it requires that a concurrent joint resolution of Congress first specify the amount by which the statutory limit on the public debt is to be changed and then direct all committees with relevant jurisdiction to recommend such change.  CBICA § 310(a)(3).  The President and the Treasury are then required to issue debt that is consistent with the budget, not the Statutory Debt Ceiling.   

41.        The President and the Treasury are also required, moreover, to spend the amounts that the budget mandates them to spend.  This is a second way in which the CBICA, in this case buttressed by Article II’s “Take Care” Clause, requires borrowing whenever mandated spending exceeds authorized revenue.

42.       Plaintiffs accordingly seek a declaration that the Statutory Debt Limit rooted in the Second Liberty Bond Act of 1917 has been superseded by the Congressional Budget and Impoundment Control Act of 1974, and is null and void to the extent that it conflicts with that comprehensive regime enacted later-in-time .

                                                     THIRD CAUSE OF ACTION

(Violation of 14^th Amendment, Section 4)

43.       Plaintiffs repeat and reallege each and every allegation contained in the relevant paragraphs above as if fully set forth here.            

44.       In 1868 the 14^th Amendment to the U.S. Constitution was ratified in specific contemplation of the fact that legislators from former Confederate states were planning both to retake control of Congress upon readmission to the Union and then to subvert the Union from within by repudiating the public debt and pension obligations incurred in the course of putting down the Confederacy’s attempt at destroying the Union from without through rebellion.  In Section 4 it provides: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” 

45.       In 1935 the United States Supreme Court stated that the 14^th Amendment is “confirmatory of a fundamental principle, which applies as well to the government bonds [issued in 1918], and to others duly authorized by the Congress, as to those issued before the [14^th] Amendment was adopted. Nor can we perceive any reason for not considering the expression ‘the validity of the public debt’ as embracing whatever concerns the integrity of the public obligations.”[2]

46.       Congress thus may not alter, repudiate or impair the public debt instruments that it has authorized the Treasury to issue or the pension obligations that it has undertaken through our Social Security or Veterans’ Benefit legislation.  Nor may Secretary Yellen alter, repudiate or impair the public debt obligations that the Congress has authorized her to enter into or the pension obligations undertaken through that legislation.

47.       Plaintiff _____ and all other holders of Treasury debt instruments maturing in June, 2023 and thereafter are entitled to timely payment in full of the principal and interest due to them.

48.       Under Section 4 of the 14^th Amendment, the validity of the pension rights of Plaintiffs _____ and of all other recipients of Social Security or Veterans’ Administration pensions may not be questioned.  Plaintiffs _____ and all other recipients of Social Security or Veterans’ Administration pensions are entitled to timely payment in full of the principal and interest due to them.

49.       The Statutory Debt Limit is unconstitutional as Secretary Yellen would apply it because it will cause the Secretary either to default on the debt instruments the Treasury has issued and on the pension benefits due to Plaintiffs _____ and all other recipients of Social Security or Veterans’ Administration pensions, or to “prioritize” payments in violation of Article I’s “Presentment Clause” as interpreted in Clinton v. City of New York, 524 U.S. 417 (1998).

50.       Plaintiffs are therefore entitled to a judgment declaring the Statutory Debt Limit to be unconstitutional as applied.

51.        The balance of harms favors injunctive relief as well. Defendant Yellen has stated that a default will cause irreparable harm to the United States as well as financial injury to untold millions of its citizens.

FOURTH CAUSE OF ACTION

(Separation of Powers Violation)

52.       Plaintiffs repeat and reallege each and every allegation contained in the relevant paragraphs above as if fully set forth here.

53.       Article I of the Constitution vests the federal government’s spending power in Congress. See U.S. Const. art. I, § 8, cl. 1.  The U.S. Supreme Court has held that the Constitution does not give the President or his delegee Secretary Yellen discretion to suspend, cancel or fail to carry out spending already mandated by Congress and signed into law by the President.

54.       Under the facts set forth above, and in violation of the separation of powers established by Articles I and II as well as the “Presentment” and “Take Care” Clauses of those provisions, the Statutory Debt Limit necessarily requires the Defendant Secretary to cancel, suspend, or refuse to carry out spending mandated by Congress and signed into law by the President, without the consent or approval of Congress.

55.       Because the Statutory Debt Limit as applied by the Secretary necessarily delegates spending decisions to the President and his delegee Defendant Yellen in order to meet its terms, this Court should declare that 31 U.S.C. § 3101(b) is unconstitutional.

            WHEREFORE, Plaintiffs prays that this Court enter judgment:

                   A.           Declaring the Debt Ceiling Statute unenforceable to the extent that it impairs compliance by the Secretary with the specific pledge made in Title 31, U.S. Code, Sections 3123(a);

                    B.           Declaring the Debt Ceiling Statute null and void in light of the Congressional Budget and Impoundment Control Act of 1974;

                   C.           Declaring the Debt Ceiling Statute unconstitutional as applied to the extent that it calls into question the validity of the public debt of the United States by preventing Secretary Yellen from borrowing amounts sufficient to pay the public debt;

                   D.           Declaring the Debt Ceiling Statute unconstitutional as applied to the extent that it deprives Plaintiff _____ and all Social Security recipients of their pension benefits by preventing Secretary Yellen from borrowing amounts sufficient to pay these benefits;

                    E.           Directing the defendant Secretary to borrow sufficient amounts to repay principal and interest on U.S. debt instruments in accordance with their terms and to pay the Social Security benefits of all Social Security pension beneficiaries; and

                    F.           Enjoining the defendant Secretary from limiting the borrowing of the United States to the extent that the Statutory Debt Limit would otherwise require the Secretary to make de facto appropriations decisions that the Constitution directs Congress to make; and

                   G.           Granting Plaintiffs such other and additional relief as is just and proper.

Dated: New York, New York

             May 24, 2023

                                                                                              /s/ _____              

                        _____

                                                                                    _____

                                                                                    _____

                                                                                    Tel: _________

                                                                                    Email: _______

                                                                                    and

                                                                                    ___________________________

                                                                                    _____

                                                                                    _____

                                                                                    _____

                                                                                    _____

                                                                                    Tel: ________

                                                                                    Email: ______

[1]  https://home.treasury.gov/subfooter/faqs/duties-and-functions-faqs (last accessed May 24, 2023).

[2] Perry v. United States, 249 U.S. 330, 354 (1935) (emphasis in original).

Unlike the by-and-large ethnically constituted states of the “Old World,” the America of the “New World” is a covenant. Indeed it is a covenant of covenants.

The overarching covenant is our Constitution, a written document that must be “operationalized” in myriad ways through the centuries of our shared public life as a unified federal republic – a res publica, a thing of the public (e pluribus, unum) – persisting through time. A document that is accordingly by turns broadly and narrowly written so as both to set certain foundational “rock solid” precepts “in stone,” on the one hand, and to state principles meant to inform ever-developing national policy choices on the other hand.

           Among the foundational precepts is the Debt Clause of the 14^th Amendment: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.” Note in particular those phrases “public debt of the United States,” and “payment of pensions.” I’ll come back them.

           Among the covenants that subsist within that overarching covenant which is our Constitution are the modes of our public budgeting, the federal budget being, each year, our national “plan” for the year ahead – the things that we as “We” shall be doing, and hence the ways we’ll finance them. For in a monetary exchange economy such as ours, the public to command resources and enable activity must act partly by spending, and partly by “funding” that spending.

           The federal budgeting process being one of our sacred covenants as a nation – as a nation, one nation – we naturally have prescribed in detail just how that process shall proceed. On the ground of both Articles I and II which prescribe the forms of our legislative and executive organs, respectively, we have developed both (a) a detailed executive and (b) a detailed legislative process, the products of these parallel processes then to be collated in what we call, come October each year, not “the presidential” or “the congressional” budget, but the federal budget – the “game plan,” as it were, of our republic for the coming fiscal year.

           These processes are enshrined in our Presidential Budget and Accounting Act of 1921, source of our President’s Office of Management and Budget (“OMB”) and the annual development of economic projections and anticipated funding needs that it oversees, and our Congressional Budget and Impoundment Control Act of 1974, source of our Congress’s Congressional Budget Office (“CBO”) and the annual development of program authorizations and associated funding appropriations that it oversees. The latter, of course, include both “entitlements,” themselves perpetual covenants, as the term suggests, between Us as a people and those of us – in particular, our elderly and our veterans – for whom we maintain these programs, and “discretionary” spending, some of which – notably military spending – themselves function as de facto entitlement.

None of the covenants or covenants-within-covenants just rehearsed are mere “tools” or “options” hidden in some “bag of tricks” that a lawyer might “wield” or “deploy” in some lawsuit in a court. They are, rather, abiding frameworks that We, the People have prescribed for how we, as We, shall “do business.” They are foundational “ground rules” for how we shall get on every year as a people who have things to do, as a People, in order to enable ourselves as separate people – families, individuals, associations (including business associations), etc. – to flourish as best as we all can in a world beset with uncertainties.

           In light of this all-embracing purpose, in light of this sacred covenant, it is a constitutional and political anathema when anyone charged with the duties of public office endeavors to make these frameworks themselves matters of uncertainty – matters that add to, rather than buffer against or enable the rational management or navigation of, the myriad vicissitudes of ever fragile and hence all the more sacred human life.

           And yet this is precisely what a rump faction of neo-secessionist members of what once was an august and dignified political party – the party of Abraham Lincoln, no less – have been attempting again and again for the past 28 years. It began with the neo-secessionist Newt Gingrich in 1995, plateaued during the White House’s “Babylonian Captivity” by a serial bankrupt and perennially lawbreaking would-be “president for life” or Louis IV (“l’etat c’est moi”), and now continues atop that plateau at the hands of a few outright secessionists in but one caucus of but one chamber of our bicameral Congress. 

           How should the President, how should the overwhelmingly greater part of our Congress – how should We, the People – regard this? And what should we do about it?

President Biden is often said to admire his predecessors FDR and JFK. So do large numbers of Congressmembers, jurists, and other public officials and functionaries. Of course they do – vast majorities of other Americans admire them too. But the time has now come for the President, all loyal Members of Congress, all prospective judges and juries that might see new litigation around the “debt ceiling” nonsense now be pushed by some MAGAMAGA “Republicans,” and indeed all custodians of our sacred constitutional covenant, our republic, to look back to an earlier – and even more widely admired – predecessor. It is time that we summon and channel our inner Abe Lincoln.

In multiple opinion pieces in recent weeks, Professor Tribe and I have jointly and severally urged that Congress and President Biden disregard the legally moribund “debt ceiling” that a rump faction of neo-secessionist MAGA Republicans in but one House of Congress now threaten to misuse. To date we and like-minded colleagues have treated this largely as a “legal problem,” as if developing in outline a “brief” to be filed “in court.” Of course we and many gifted professorial colleagues are talking about law here, but we are also talking about what our law is for – the structuring and maintaining of the republic that embodies our national covenants.

And so as I proceed in what follows I’ll not simply be mapping a “legal strategy.” I will be mapping a posture, an attitude, and a stance as well – a stance that can be given official embodiment in the form of a Presidential Executive Order, affirmed by the Senate and all responsible Members of the House, to the effect that the false “debt ceiling” is being set aside in the name of the multitude of constitutional and statutory provisions I systematically elaborate below and the covenants I referenced above.

Think of it as a Lincolnian Civil Wartime “Debt-Emancipation Proclamation” or suspension of habeas corpus as described below if you like. The President and all responsible Members of Congress can and should give this the form of one of the Congress’s and President Lincoln’s Civil War Proclamations, more on which below.  In so doing Congress and the President can galvanize all Americans to recommit themselves to our republic – “for which [our law] stands.”

Off, then, to the races …

           I referred just above to a “hostage-taking,” a unlawful threat. What the tiny House MAGA minority threatens by holding both the President and vast majorities of both houses of Congress hostage to a superseded statutory provision – literally one vestigial subsection of one section of one subchapter of one chapter of one title of the US Code – cannot longer be doubted. The threat is to confront both the president and vast bipartisan majorities in both the House and the Senate with a legally intolerable “Sophie’s Choice.” This is not merely a choice between two grotesque and painful options. The choice into which the hostage-takers would now box the president and all of the republic is a choice between two manifestly unacceptable sets of violations of our national covenant – a covenant that, as I laid out above, is by turns constitutional, legislatively budgetary, and political.

First let me state clearly the dilemma with which the House’s rump faction of secessionist Republicans is effectively trying to box us all in. It is demanding we take at least one of the following two impossible and indeed national faith-breaking courses:

We must right now, they demand, in the midst of a still-fragile and incomplete post-pandemic recovery, throw literally millions of Americans out of work and the national economy into a deep recession threatening to rival that of 2009 if not that of the 1930s. This we must do by abruptly and arbitrarily slashing most if not all of the projected next federal budget by nearly a quarter or over one half in comparison to the present year’s budget – at least as their demands currently stand. This the secessionist MAGA Republicans know they cannot secure through the ordinary legislative process now underway in preparing the FY 2024 budget for October. So they’re using the customary tactic of those who can’t “get their way” legitimately – they’re taking hostages.

In the alternative, the MAGA gang now effectively say, we must bring on the an even greater economic and social calamity by outright defaulting on our national debt. This they – and their orange would-be “president for life,” the serial bankrupt who is himself now publicly demanding default from the sidelines – would have us do by unlawfully ignoring (a) scores of millions of contractual creditors of the United States, by far most of them American citizens; (b) the beneficiaries of others of our sacrosanct national covenants, notably Social Security pensioners and veterans; (c) the currently operative budget legislation passed by Congress itself and then signed into law by the president late last year; (d) the aforementioned Presidential and Congressional Budget Acts of 1921 and 1974, respectively, which do not countenance extortion or default upon the nation’s sacred obligations; and hence also (e) the “Take Care” Clause, the “Presentment” Clause, and the 14^th Amendment “Debt Clause” of the Constitution – itself reinforced by 31 USC §3123 – which respectively prohibit both the President and all other public officials, including all Members of Congress, from ignoring budget provisions, “prioritizing” budgeted payments, and defaulting on US obligations.

Neither of the putative options with which the rump MAGA faction of the House Republican Caucus confront us, then, seem likely actually to be seriously intended – the insurrectionist Republicans are, as the old saying goes, “crazy, not stupid.” They have to know that no pair of putative alternatives each of which means both constitutional incoherence and political-economic disaster is a bona fide choice. And so this has to be precisely the neo-secessionist Republican minority’s object: It is either quite literally to damage our federal union from within just as their secessionist forebears in the 1860s tried and failed to destroy it from without, or it is to hold out that prospect to operate as a bargaining ploy in strong-arming what, again, they cannot secure from their colleagues in the Congress or the President through the ordinary Congressional and Presidential budgeting process.

President Biden, Congressional Democrats, the overwhelming majority of patriotic Congressional Republicans, and all of us who believe in our national project must obviously rebuff this false choice, must refuse to take the MAGA-laid bait. We have no legitimate, lawful choice but to reject, overtly and forthrightly, this “Catch 22 ” – this impossible dilemma that one MAGA apologist bizarrely downplays by saying our creditors still would have “IOUs” (try feeding those to your family).

All responsible patriots must accordingly call out the current secessionist gambit, be it sincere or a bluff, as precisely what it is – an attempt to accomplish through budgetary hostage-taking at best what ordinary budgeting and our Constitution will not, or at worst what the January 6^th insurrectionists failed to achieve by invading the US Capitol and their Confederate forebears by attacking Fort Sumter. In this case, that is presumably chaos by 2024 to assist their twice-impeached dictator-in-waiting to retake the White House and thereby end our democratic covenant – which surprising numbers of this faction now quite overtly repudiate in public. And we must publicly rebuff the attempted coup accordingly.

The matter before us is not simply a question, absurd as it would be, of preventing a rump MAGA minority’s securing, by unlawfully holding compliance with last year’s budget law hostage, what they cannot get into next year’s budget law through ordinary legally-prescribed democratic give-and-take with their House and Senate colleagues along with the President. It is rather a question of preserving normal governance itself, as prescribed by our constitution and laws, which after the last seven years’ stresses simply cannot survive a collapse of the dollar and the $24 trillion Treasury market, a collapse of literally scores of millions of Americans’ Social Security pensions and 401Ks, and a collapse of both its and the world’s economies in manners not seen since 2009, if not indeed during the interwar 1930s. 

And this takes us straight on to President Lincoln, the Civil War Congress, the loyal citizenry, and the insurrection-wrought conundrums with which they had to contend. For these, too, involved a conflict between the application of one apparent law with virtually all other truly applicable laws, thereby necessitating a poignant exercise of what Professor Tribe long ago dubbed, in resonance with the classical Greek notion of a “tragic choice,” a fateful “Constitutional Choice.”

Start with Lincoln’s and the Civil War Congress’s conundrum, which necessitated a much more difficult disregard of one law in conflict with all other law than does what I am urging.

From the first month of the Civil War in 1861 until early 1863, Lincoln and Congress were faced with a terrible quandary. Secessionists in Confederate-bordering states like Maryland and Kentucky were unlawfully occupying government buildings, unlawfully wresting control of legislative bodies, and unlawfully obstructing Union recruitment efforts and related rebellion-suppressing measures. Clearly this had to be stopped if the Confederate insurrection was to be successfully put down. But the usual legal devices for doing so had themselves been unlawfully commandeered by secessionists.

Lincoln as Commander in Chief thus had to authorize Union personnel to arrest and detain insurrectionist culprits. This in turn required, however, that Lincoln suspend the writ of habeas corpus, a prerogative that Article I, Section 9 of the Constitution vouchsafes to Congress. (Congress itself subsequently ratified Lincoln’s suspension of the writ via the Habeas Corpus Suspension Act, which Lincoln signed into law two years after his March 1861 inauguration.)

Supreme Court Chief Justice Roger Taney – he of the infamous Dred Scott decision returning escaped slaves to their “masters” and holding that Black Americans, even freed slaves, bore no rights that White Americans had to respect, even that to citizenship – accordingly held Lincoln’s action to be ultra vires, in excess of his authority. Lincoln and Union officials then disregarded Taney’s decision, the President later famously querying, in Taney’s presence during a July 4^th address, “Are all the laws, but one, to go unexecuted, and the government itself go to pieces, lest that one [law] be violated?”

Few people today, I would wager, doubt that President Lincoln, then Congress, “did the right thing.” The Constitution, after all, “isn’t a suicide pact” – quite the contrary – and no application of one law can plausibly be viewed as permitted to trump all other applicable law, let alone the entire basis of all laws of our republic – viz. our constitutionally instituted federal government itself. And happily, the act of Lincolnian statesmanship that many of us now urge upon President Biden, the Congress, and all other loyal Americans occasions no “tragic choice” anywhere near as poignant as that which confronted Abe Lincoln and the Civil War Congress during our last secessionist crisis.

Here’s why…   

It happens that, much more straightforwardly than in Lincoln’s, Congress’s, and the loyal citizenry’s Civil War case, there is an obvious means by which President Biden and Congress can sidestep our current secessionists’ deliberately laid trap. It is to ignore the current rump faction of neo-secessionist House MAGA Republicans’ bluffingly threatened misapplication of the 1917 “debt ceiling,” on the grounds (a) that it is both no longer operative and contrary to literally all other applicable law, and (b) even compliance with the MAGA threat would bring national default. 

The course that I urge is, in other words, for all of us as a nation to treat the MAGA faction’s bluffingly threatened misapplication of the 1917 Liberty Bond Act as the unlawful use of an old and since-superseded budgetary provision that it would be, then proceed budgeting for next year, and continuing to pay on the already legally incurred debt obligations of last year, in the customary manner. And I urge the President to issue a Lincolnian Proclamation, in the form of an Executive Order, to this effect. Then the Senate and all sane Members of the House, be they Republican, Democrat, or Independent, must publicly endorse the “Proclamation.” This will be no more necessarily “controversial” than simply to continue to do that which has always been done literally every year of our history as a coherent and independent republic with a functioning government under law, a statutorily prescribed budget, a well-managed statutorily prescribed and constitutionally vouchsafed national debt, and an unblemished credit rating.

It will be, in other words, the Burkean “conservative” thing to do, in forthright and regrettably inescapable disregard of the latest passel of radical secessionist’s aim bluffingly to threaten destruction of our republic fiscally and financially from within much as their forebears who occasioned passage of the 14^th Amendment’s Debt Clause first threatened right after the Civil War.      

As Professor Tribe and I recently explained in The Hill, the Congress and President in taking this advice would at worst be exceeding a merely arbitrary and now obsolete pseudo-limit written into a statute enacted well over a century ago not to constrain, but to expand executive financing options during wartime – an objective that those urging the Congress and President to reject this advice ironically tout in arguing that the pseudo-“limit” must now be observed notwithstanding all the other laws that bowing to its misread command would require us all to violate. This law – again, the Liberty Bond Act of 1917 – has been routinely updated, in a purely pro forma manner, ever since the First World War. It was ultimately sidelined and in that sense replaced, however, by a more modern budget regime in the form of the Congressional Budget and Impoundment Control Act of 1974.

I should say a bit more on the latter to make clear how decisive and indeed dispositive it is at the present moment.

The 1974 Act, ironically, was aimed precisely at ending the by-then “imperial-presidential” penchant of Richard M. Nixon for refusing to spend what Congress’s budgets, all signed by the President himself into law, required him to spend – that is, for doing exactly what the tiny secessionist rump Republican MAGA minority is now attempting to box President Biden into doing! This it did by instituting, for the first time in our history, a detailed and comprehensive Congressional budgeting process in parallel with the 1921-legislated Presidential budgeting process.

This latter, quite painstakingly detailed process in turn requires, inter alia, (a) specific congressional authorizations for all federal programs, (b) congressional authorizations for all appropriations, and, with the latter, (c) congressional determinations of all expenditures, all taxes, and hence all debt issuances to cover gaps between taxes and expenditures – including for prior debts’ servicing. Via this new regime, which with the 1921 Presidential Budget Act comprehensively displaced and superseded the moribund “Liberty Bond” regime, the collated Presidential and Congressional budgets – that is, each final federal budget each fiscal year – has been its own “debt ceiling” – and floor.

Of course one might now say in hindsight that Congress should probably have repealed the Liberty Bond Act and its progeny outright when passing the Congressional Budget Act nearly sixty years later if not the Presidential Budget Act earlier, since the latter effectively rendered the former Act moot – a vestige on all fours with the human tailbone. But Congress in 1921 and 1974 probably never dreamed we would be faced again decades later with a new Civil War conducted by budgetary means.

Nobody, after all, foresaw such a thing. As Sinclair Lewis had long before noted both ironically and in lonely isolation, “It Can’t Happen Here.” And while “repeals by implication” might be generally disfavored, neither must long-overlooked, opportunistically rediscovered, leagally moribund provisions like 31 USC 3101(b), as Justice Scalia once colorfully noted in Lamb’s Chapel v. Center Moriches, be permitted new flesh-eating life like the zombies of a George Romero film.  

As if to prove this point, the 1917 vintage “debt ceiling” never was treated as being so much as “a thing” till the aforementioned neo-secessionist Speaker of the US House of Representatives from a former Confederate state – Newt Gingrich – spotted an opportunity to weaponize the budget over 20 years later in 1995. Since then, only very few legislators, all of them ironically identified with Lincoln’s now inverted political party – self-styled “Republicans” – have abused this obsolete provision to bluff-threaten fiscal Armageddon in hopes of extorting what they cannot secure through the ordinary Presidential and Congressional budgeting process. And it therefore remains, notwithstanding the strange protestations of a MAGA-apologist former judge, anything but “normal.” (Terrorism is nothing to “normalize,” especially if one is a former Circuit Judge, even if a radically “conservative” one.)       

How, then, to proceed? And how to regard what I and many colleagues urge in addressing that question?

Well, as I have said here and elsewhere, we are all adamant that the President, the Senate, all remaining real republicans in the “Republican” Party, and all loyal citizens simply must treat the 1917 vintage “debt ceiling” as rendered moot by the 1974 Congressional Budget and Impoundment Control Act, by 31 USC §3123, and by the multiple constitutional provisions I have cited both elsewhere and above. There simply is no legitimate way around this, be it through extorted “compromise” or through law-mocking gimmickry. And again, please bear in mind that we do not cite all of this other law only as if it were a “kit” of legal “tools” to “deploy” in a judicial proceeding, applicable as they might be in that setting. We also are urging, “wholistically” as it were, that everyone – all loyal citizens – repudiate and ignore the faux “ceiling” and call the MAGA Republican rump faction’s bluff.

And bluff it indeed is. For no member of Congress, no matter how unhinged, will wish to appear in a court to demand that a judge order the Treasury Department to violate scores of millions of contracts, stiff scores of millions of legally entitled veterans and pensioners, last year’s legislated budget, and multiple constitutional and statutory provisions guaranteeing the aforementioned rights and the aforementioned laws. And this is not even to mention the possible non-justiciability of any such attempt, be it under “standing” or the “political question” doctrines.   

Congress’s and President Biden’s suspending the obsolete 31 USC §3101(b), which is a vestige from 1917 that is not reconcilable with the post-1974 Congressional budget regime, the multiple constitutional and statutory provisions I have cited, or the sacred covenants I elaborated above that these laws embody, while continuing to comply with 31 USC §§ 3102 through 3106 – as well as the all-important 31 USC §3123, which statutorily reaffirms what the Debt Clause of 14^th Amendment to our Constitution requires – would thus in no sense be borrowing on the credit of the United States “on [the President’s] own unilateral say-so,” as suggested by the already mentioned, occultly reasoned MAGA apologetic to which I alluded above. It would be borrowing as required by both (a) Congress itself, and (b) our republic’s own Constitution.

It would, in other words, simply be disregarding one 1917 provision long ago fallen into desuetude in order to remain in compliance with a multitude of more recent and more detailed legal provisions, as well as three constitutional provisions. And, in light of multiple venerable canons of statutory construction – viz. the “later in time” rule, the “specific trumps the general” rule, the “constitutional-issue avoidance” doctrine and the “absurd result” canon – the President and Congress could not even be said to be “violating” the long since mooted 31 USC §3101(b) in disregarding the current secessionist attempt at its illegitimate use.

Suppose, however, you were uncomfortable with this way of articulating our view, preferring to hold that 31 USC §3101(b) in some sense remains “good law” and its threatened “deployment” a legitimate or “normal” exercise notwithstanding the incompatibility of its current would-be neo-secessionist application with the rest of our law and our social contract, including the 1974 budget regime, 31 USC §3123, and multiple additional constitutional and statutory provisions?

Well, in one sense this would mean merely that we have a terminological quibble. What I call “mooted,” “obsolete,” or “invalidly applied” you call “valid though abused.” I’m fine with that. But only if you then follow the counsel of my thoughtful colleagues Neil Buchanan and Michael Dorf, who in a classic sequence of scholarly articles and weblog posts beginning in our last “debt ceiling” crisis (and resuming now) have recommended that sane Members of Congress and the President choose what they’ve wisely called “the least unconstitutional option.”

My own view of the law and our national covenant might be somewhat more optimistic and less “tragic” than that of my brilliant friends and colleagues Michael and Neil, in that I incline to see clearly obsolete and incoherent applications of laws that remain on the books only through inattention – laws such as “no sidewalk spitting” ordinances – as no longer applicable law. (Justice Harlan’s classic observation on desuetude in Poe v. Ullman is fitting here.) But in the end my views and Professors Buchanan & Dorf’s views converge. I simply call a “not really unconstitutional option” what my thoughtful colleagues call the “least unconstitutional option.” In the end, that is the option, however labeled, that a Lincolnian Congress and President Biden, along with all committed citizens of our republic, must choose to rebuff to avert tragedy.    

I’ll close with a brief jurisprudential observation. In a still mainly common law system like ours, in which the corpus of law slowly evolves to meet new contingencies as they emerge over time, it is bound to occur now and then that older provisions come to be superseded by newer ones without anyone’s immediately noticing the incompatibility. The latent contradiction might accordingly lie dormant until some unforeseen attempt at misusing the older provision – in this case a subversive attempt like that repeated by tiny minorities of neo-Confederate Representatives like Newt Gingrich and Marjorie Taylor Greene – renders it no longer mistakable.

In a constitutional republic whose citizens do not always have the logical Ubersicht of a Kurt Gödel, who is said by Oskar Morgenstern to have discovered a dictatorship-enabling contradiction within our own Constitution on the day of his naturalization, the common law process applicable even to legislative interpretation must include means of self-cleansing, means of sidelining vestigial legal provisions clearly excluded by large numbers of more recent provisions particularly “as applied” by those seeking the destruction of our democracy. In our system, one such means is the set of interpretive canons, several noted above, that judges routinely deploy in avoiding constitutional and statutory conflict and incoherence. Another is the time-honored distinction between legal provisions “as written” and “as applied” – one reason I’ve used the word “application” repeatedly here. 

In the end, however, the utility of these self-cleansing tools rides on the statesmanship of our republic’s custodians – its legislators, its executive, its courts, and its citizenry. At this perilous moment of crisis, those stewards are clearly ourselves – and with them our agents the President, the Senate, and all but a few neo-secessionist, neo-Confederate white supremacists, one of them now under federal criminal indictment, in our House of Representatives. Unless we and they act now and act well, the final act of stewardship will have to be taken by our courts.

The last time that self-styled ‘Republicans’ threatened the destruction of our republic with fiscal terrorism was about twelve years back. That gleeful attempt at dissolving the binding agent of our polity — viz., ‘Hamilton’s Blessing,’ our national debt — brought the first rating agency downgrade of US sovereign debt in our history. In angry astonishment, I penned at the time a brief narrative contextualizing the episode within the broad arc of our history.

That history — the tale of an unprecedentedly productive and prosperous commercial republic, financially engineered into existence by ingenious statespersons in the mold of our primary constitution-drafter, fiscal-state-creator, and Treasury Secretary, Alexander Hamilton — is once again under threat by Jim Crow ‘Republican’ oligarchs once again cynically masquerading as republicans and as Federalists. (Please look up the terms’ original meanings if you’re unaware of the cynicism.) The time accordingly looks ripe for a re-upping.

Here goes …

It began late in the 20th century, when corrupt would-be plutocrats first sought, then successfully seized, control over large swathes of the national government. In this they did much as their ancestral counterparts had done in the mother country three centuries earlier. They likewise did much as their class-counterparts down south had done over the 19th and 20th centuries, in the ‘banana republics.' All that distinguished the latest rendition of this all too familiar ‘decline and fall' story from its predecessors were a few of the techniques and technologies employed by the perpetrators: First they purchased ‘consultants' and ‘focus groups' with a view to adapting the dark arts of psychological manipulation to political purposes. Then they purchased media adverts and ‘news' organs employing those arts. Thereby the soon-to-be plutocrats commenced a long course of procuring concubine legislators, presidents, and policies.

In surprisingly short order, the plutocrats' puppet politicos began to dismantle those portions of the revenue code to which plutocrats were subject. They worked simultaneously to take apart regulatory programs to which firms owned by plutocrats –- including, ominously as we'll see, financial firms –- also were subject. Next they dismantled the legal barriers to trade with countries that, unlike our republic, did not regulate industry, labor markets, or wealth spreads at all. That of course heightened pressures upon the republic's longstanding tax, labor, and other salutary regimes. It also 'squeezed,' of course, that 'yeoman' middle class which these regimes were in place first to foster and then to maintain. Finally, as if for good measure, the plutocrats' politicos named to the nation's high courts certain judges and ‘justices.' These people straightaway set about vaporizing the laws that had regulated plutocrat purchases of elections and public officials themselves. The same judges hollowed out much in the way of the national laws' constitutional supremacy over sub-national state laws. The strong federation that our first Treasury Secretary had launched thus began to lurch back toward imbecile ‘confederation' -- that Rube Goldberg contraption which had presided in impotence over national entropy, interstate squabbling, and consequent stagnation prior to 1787.

As if to add idiomatic insult to all of the legal, political, and financial injury, and in a chilling instance of what literate folk recognized for Orwellian ‘newspeak,' the aforementioned court-appointees and their legal cronies called themselves ‘federalists.' That, you'll recall, was a name first employed by our first Treasury Secretary and his confrères two centuries earlier. What these new ‘federalists' actually were, of course, was precisely what had been called ‘anti-federalists' in our Secretary's day. They were the anti-constitutional faction comprising ‘states' rights'-favoring slaveholders and bigoted, whiskey-slugging yahoos. Our 'new federalists,' in other words, were 'new' indeed: No previous Federalists had looked anything like them – any more than had any previous republicans of the ancient Roman, Renaissance European, or early American varieties so much as remotely resembled the corrupt oligarchs who now obscenely labeled themselves ‘Republicans.’

Plutocrat newspeak wasn't confined to the false self-descriptions of anti-federalist grandees and yahoos, however. Like a relentless bacterium it spread to contaminate all of our political culture. The technique was employed, in particular, to rechristen a multitude of cherished and critically necessary national programs and policies. Excises on birth-lottery winnings –- estate taxes –- for example, were redubbed ‘death taxes,' as if it were corpses rather than silver spoon spawn of moneyed aristocrats who had been asked to contribute to the public fisc. Billionaires and millionaires who fell within higher income tax brackets, for their part, now were called ‘small family businesses.' Vast and malodorous agricultural combines were relabeled ‘small family farms.' Through the crudest of linguistic conjuring tricks, in short, the sick toxic chemical, abattoir cannibal worlds of Frank Norris and Upton Sinclair were 'rebranded' as insipidly quaint Norman Rockwell portraits. The plutocrats undermined and dismantled not only the machinery of the republic, in other words, but also the language its citizens spoke, hence the minds in which they attempted to think.

In what was perhaps a crowning measure of irony along these same lines, the plutocrats financed what they called ‘think tanks.' Here Pavlovian advertising executives and university flunkies ‘thought' up and planned all of the aforementioned assaults on the polity, the economy, and the brain. In a well coordinated counterpart move, the plutocrats also established ‘foundations' charged with planting plutocrat payees and prostitutes in the nation's centers of higher learning. The plutocrats' ‘news' networks then wasted no time insinuating the ‘think' tanks' and foundations' quasi-cognitive germs into the brains of the general public. Often over-fed, sometimes raisin-faced men and peroxide-blond policy-bimbos uttered their assigned words and phrases without cease, effectively disseminating 'ear worms' across all the nation from ubiquitous blue-glowing television monitors. These latter, for their part, were obligingly found not only in private, but increasingly also in public spaces -- elevators, waiting rooms, bank teller windows, you name it. In consequence much of the citizenry, upon whose continued attention, intelligent involvement, and considered judgment an enduring republic must always depend, devolved quickly into a theretofore unknown hybrid species: something between languorous mollusks and screeching directionless chimpanzees.

Now one crucial result of the unremitting demolition work done by the plutocrats' purchased politicos was, as hinted at before, that the national government was starved of its principal sources of revenue. That included revenue meant to pay creditors, maintain public infrastructure, finance regulatory activity, and buttress employment-sustaining demand for goods, services, and productive capital during times of economic slowdown -- which, believe us, would come. These essential government functions therefore grew steadily more difficult to discharge. Domestic living conditions thus began gradually, then more rapidly, to fray and unravel for more and more citizens. They began to resemble nothing so much as those conditions that had prevailed across our new nation before 1787, as described in Act I of our drama.

A nation with immense intellectual vitality, technological know-how, and universities second to none; a nation with more Nobel laureates than any other; a nation whose urban structures had towered to the heavens; whose roads had once flowed with gleaming automobiles; whose bridges spanned once unspannable chasms… began to resemble nothing so much as a burned and abandoned, crumbled-asphalt-strewn Florida suburb overrun by tall grass and dog-eating monitor lizards. And, as befits life in environments like these, people began once again packing pistols and rifles -- as had not generally been done since their predecessors roamed forests in animal skins. The only difference this time was that our latter day arms-bearers, plied with corn syrup, 'cheese foods,' and cheap tasteless mead drinks, appeared to be rather less healthy. Oh, and that now the earlier mentioned plutocrat-procured judges and 'justices' maintained that the private pistol-packing and other forms of bestialization underway counted as constitutional rights.

A closely related consequence of the plutocrats' plenary demolition work had to do with the class structure of our society, a structure that both our first Treasury Secretary and his chief nemesis -- the bankrupt slave-owning 'gentleman planter' who wrote lovely words about autarky and independence -- had labored mightily to introduce: Many working people, who as noted before had by dint of progressive taxation, trade-regulation, and labor-market-regulation come to constitute a great ‘yeoman' middle class, now began sinking toward lower class status. The few who did not were for their part able to maintain middle class lifeways only by means of alarmingly growing indebtedness to plutocrat-owned lending companies -- classic debt dependence of the sort that, ironically, had most troubled the 'gentleman planters' among our Founders. Ah, but this was no longer surprising, now that the largest bank in the nation was headquartered in the heart of the Piedmont region that once was the center of anti-bank paranoia. The growing consumer debt burden was in any event more than an affront to our history, however. It would prove a significant vulnerability were financial contraction to occur -- and again, please believe us, it would. The debt-overhang would then prove a slump-lengthening long-term liability.

And again there were knock-on effects on the culture at large. Our growingly indebted, less and less educated, vaguely disquieted populace, not knowing how to respond to their worsening plight, sought solace in strange new entertainments, many of them televised or playable as ‘games' upon laptop computers. These in eerily prescient ways presaged or dramatized what life in our nation itself was becoming: Mud-slathered half-naked people, stranded on islands, consumed insects and conspired to harm one another. Unintelligibly motivated sociopaths carrying weapons through dark streets eviscerated all signs of human and animal, even vegetable life. Unathletic men clad in bright-colored leather costumes drove automobiles in circles to no evident purpose. Panem et circenses.

Another knock-on effect of the plutocrats' swathe of destruction, this one a direct consequence of changes to the tax code and straightforward counterpart to the middle class's dwindling, was dramatically widening social and economic inequality. Wealth and income skewed to the tops of their distributions, to the point that far fewer than five percent of the population held well more than ninety percent of its wealth. Widely tracked inequality indices accordingly reached measures not seen since some 80 years earlier. This was a bit ominous, for the just mentioned occasion was immediately prior to a notorious stock and real estate crash and ensuing ‘great' depression. The links among inequality, market crash, and longterm contraction were by no means accidental, either, for reasons to which we next turn; so the return to immediate pre-'great'-depression levels was worrisome indeed.

Finally, one additional and again related result of the changes our plutocrats' purchased politicos wrought had to do with money-flow patterns in the republic: The plutocrats, already sated with consumer and luxury goods, not to mention liquors and narcotic powders, found themselves suddenly flush with more funds. These, crucially, were not apt to feed into employment-sustaining consumer demand. Instead they flowed straight toward unproductive, speculative investments –- perversely enough, in the very same markets our first Treasury Secretary and his successors had done so much to establish, then moderate. Why would that be? It was because productive investment makes sense only where there are potential consumers of that which productive investment-recipients produce. And the earlier mentioned tax giveaways to grandees, along with their sequelae as just catalogued, had unremittingly siphoned income and wealth from that great middle class which our first Secretary and his successors had done so much to nurture and grow.

In short order, therefore, in what amounted to a dangerous complement to shrinking consumer demand, our newly flush plutocrats channeled their moneys in manners that bid up the prices of new ‘financial products.'

Many of these were associated with unproduced things that were in finite and not readily extensible supply –- things like real estate. The newly flush plutocrats also directed their moneys, relatedly, to finance ‘second mortgages,' ‘home equity loans,' and ‘home equity lines of credit' taken out by the ever more desperate yeomanry. These were, in other words, yet new forms of consumer debt –- debt that in this case quite ominously eviscerates home ownership stakes –- racked up by yeoman now desperately seeking to maintain accustomed material living standards. The aforementioned debt overhang accordingly grew to enormous proportions. Were a crash to come -- and, please believe us, it would -- deep and protracted depression, potentially worse than that 'great' depression of 80 years earlier, would now be a virtual certainty.

Ah, but the plutocrats were not finished, they were only beginning: Next their puppet politicos led the republic into two stratospherically costly wars of choice to no national purpose -- after taking the axe to the tax take. These were wars that yielded, moreover, no spinoff technologies or other developments that might feed back in salutary ways into the peacetime economy. The public fisc was accordingly drained even further. There were no offsetting advantages to the nation's economy other than, perhaps, a few petroleum and defense contracting firms with which the republic's nominal president and vice president were affiliated.

The nation went deep and then deeper into debt to finance these gratuitous family adventures. It owed much of the debt, what is more, to one of those nations with unregulated product and labor markets that plutocrat-procured trade-liberalization had helped rack up wide-gaping trade surpluses with our republic. This was a nation, moreover, apt in future to constitute an immeasurably greater ‘security threat' to the nation than did either of the two backwaters the plutocrats' president had invaded. The republic also lost ‘goodwill value' through these behaviors: Once widely admired like its Founders themselves, it steadily came to be feared and reviled by other nations, much like the new plutocrat ‘leaders' themselves. Our republic, in sum, began to look much like a long-ago rival to its own mother country, whose sterile wars had brought it to ruin as soon as the silver it drew from its slave-labor colonies was exhausted. And this happened all while, ironically, it likewise began to resemble that country's former colonies -- the ‘banana republics' -- in its wealth spreads and consequent feudalist social conditions.

But only now do we come to the pièce de résistance: Remember the speculative pursuits of the new cash-flush plutocrats mentioned a moment ago? Well, those in the secondary real estate markets fueled what became a spectacular asset price bubble, following quickly on earlier such bubbles in equity markets. This grew to the point that nearly all of the principal institutions composing the republic's –- as well as the world's –- financial infrastructure were exposed. Recycled current account surpluses accumulated by the aforementioned unregulated trading ‘partner' added more fuel to the fire. So did the cheap credit policies sought by the speculators and maintained for near twenty years by the nation's chief money modulator –- a favorite of the plutocrats, appointed and reappointed by their purchased presidents. This fellow conveniently professed to believe asset price bubbles undetectable if not indeed impossible –- all while, fittingly enough, reading id-pornography penned by a lumpen-philosopher given to celebrating the great human capacity for self-flattery.

When the final gargantuan credit-fueled bubble at long last imploded as all of them do, the aforementioned financial firms now were imperiled. They accordingly ceased making credit available for the financing of employment-sustaining, productive activity. Indebted consumers, for their part, retrenched: consumer demand shrunk to the vanishing point. The government, in consequence, had for a time to make funding available -- both to shore up the mentioned institutions, and to augment demand for employment-sustaining products and services sold in the ‘real' economy. Its 'full faith and credit,' for better or worse, was about all that remained to be credited.

But all of this of course led to yet further drain on the public fisc. The national debt, long a ‘blessing' as the first Secretary had called it and as Act I explained it -- when properly managed and funded -- threatened in time to become a great curse. For it grew to equal in size the gross national product. And it was not being offset by investments in durable assets or value-adding public infrastructure of any kind, only purposeless blood-draining wars and now-dispersed bubble gasses. Nor, of course, was the debt being reliably funded any longer; the plutocrats' hit on the revenue code had seen to that.

But the debt was emphatically not a curse yet. For the nation's Treasury securities still constituted the ‘gold standard' where investors' trust was concerned. The nation looked apt to be able to borrow both cheaply and indefinitely. Yields –- interest charges –- on Treasuries remained unprecedentedly low, owing in large part to the huge economy's idle capacity itself. And there were few real competing investments, after all. Private firms did not look to be good prospects absent collective action -- that is, government stimulus. And no other nation seemed as good a bet as our remarkably creative, pragmatic, and prosperous republic -- financially-engineered from the proverbial 'get-go' by a brilliant first Treasury Secretary, then ably stewarded by his able successors. Indeed the nation's prospects for full economic recovery and renewed opulence, were future borrowings spent wisely on, say, repairing the nation's once state-of-the-art transport, water-treatment, education and other infrastructures, were unparalleled.

How, then, did the debt become a curse? And how did the nation manage to sink deeper into its hole? Narrowly framed, it was through nothing more complicated than one final act of plutocrat chicanery. More broadly framed, it was through a strange sort of tricorn-hat-wearing suicide virus, set upon the republic by its plutocrats after the government functionaries they had already procured had proved not quite enough.

Here's how it happened:

First, the aforementioned bubble's bursting and consequent hardships had filled many people –- especially our now many uneducated people –- with great fear. Fear of course lays people prone to nostalgia and paranoia. And to both of these panic dispositions our plutocrats were prepared to appeal, employing the selfsame manipulative techniques noted earlier.

The new President, you see, who won election during the worst of the crisis, was of a different ethnicity than previous presidents -- an ethnicity shared by people once owned by the ancestral counterparts of our latterday yahoos and plutocrats. His surname, moreover, bore a vaguish resemblance to the first name of one ‘terrorist' feared by our terrified citizenry. The President's generally unused middle name, what is more, stemmed from a culture wherein a religion not widely practiced in the republic, but widely practiced in nations from which many ‘terrorists' seemed to hail, figured importantly.

Why not, then, the plutocrats reasoned, encourage Pavlovian mental association between the new President and alien ‘terrorists' in the minds of the nation's now many uneducated successors to those bigoted whiskey-slugging yahoos of the 1780s? At the same time, play up this president's ‘differentness' by regularly repeating aloud his alien-sounding middle name. Further, encourage belief that he is literally ‘alien' and ‘illegitimate' by spreading gratuitous doubts about the authenticity of his birth certificate.

Repeat also, incessantly over our 'news' organs for maximal Pavlovian effect, the word ‘socialism' in connection with this man and his policies. Do so notwithstanding that he is infinitely less ‘socialist' than even the first modern ‘conservative' president of our republic, Richard M. Nixon. Do this because uneducated people don't know what ‘socialism' means or who Richard M. Nixon was anyway, but do find that the 's' word rings vaguely civilized and European and, therefore, ‘suspect.' And if some of them do in fact know who Nixon was, well then so much the better. For they'll know that the man was impeached, and might therefore call for the same of the new President.

So much for the paranoia piece of the strategy. Next, for the nostalgia portion, hark back to the aforementioned heroic founding era. That was an era, again, during which people of the new President's ethnicity were chattel property belonging to people of the now struggling and fearful lower middle class's ethnicity. It was also an era during which many of the Founders –- though notably not our early abolitionist first Treasury Secretary, who founded his state's manumission society –- approved that arrangement. Induce these poor slobs into thinking that somehow taxation, a well-funded national debt, and those indispensible forms of collective –- that is, government –- action which taxation and debt-finance enable were themselves alien to that era.

Suggest, in other words, that all of the best attributes of our great early republic that still characterize our modern republic ... were alien to that early republic, rather than to its imbecile predecessor –- the unfunded, ineffectual, and therefore long since abandoned ‘confederation.' Do so, indeed, notwithstanding the fact that our Founder and first Treasury Secretary, acting in the name of our still worshipped first President during the very era now being invoked, introduced all of these measures wish to repudiate. For, once again, the uneducated bumpkins will not know the difference. And we can then ‘channel' their ‘energy' to the cause of more plutocrat plunder.

Finally, wrap up the paranoia, the nostalgia, and that which has now brought them to fever-pitch all together into one oily package: Get frightened citizens to associate, again in unthinking Pavlovian fashion, the manufactured legal and cultural alienness of the President, along with the manufactured political and historical alienness of his sensible taxation, regulation, and borrowing policies, with the current economic calamity itself! Suggest, in other words, that the President's ethnicity and ‘forged' birth certificate, the national debt and taxation, and regulation and government themselves are the joint causes of the bubble and burst and ensuing depression, rather than irrelevant or co-symptom or cure, respectively, of the same fisc-draining, plutocrat-propagated mental and physical illness from which we've now suffered for decades.

And give the slobs knee breaches and tri-corner hats for good measure, so as to play up the manufactured ersatz resonance with our republic's traditions that you wish falsely to foment. Why, before you know it, you'll have a full-bore, ‘home-grown,' ‘grassroots' ‘patriotic' ‘movement' underway, all underwritten by Kansas petroleum profits, and you'll capture yet more of the government to boot.

And lo, it all happened. These ‘energized' –- that is, again in the words of a poet, ‘frightened hysterical naked' –- people managed to take one house of the nation's bicameral legislature, and to take portions of the other, during a midterm election. That enabled them, in turn, to block nearly every government measure that would have been salutary –- indeed, that would have helped them, the ‘energized' bumpkins themselves, before all. They turned everything upside-down, as is the wont of hysterical crowds made of untutored lumpish folk, concentrating public discussion on ‘debt-reducing' when capacity was idle and borrowing costs were unprecedentedly low. It was the full economic-policy equivalent of states'-righters' calling themselves ‘federalists.' It was Orwellian newspeak as spoken by illiterate crackpots in knee-breeches and tri-corner hats, people whose lips moved when they read –- when they could read at all.

The bumpkin-‘legislators' –- is the word not at this point implausibly august? -– blocked funding for bubble-preempting regulations that their immediate predecessors had passed in the wake of the financial meltdown, beckoning a yet more calamitous meltdown in future. They blocked nominees to the bench and to regulatory agencies, including finance-regulatory agencies, further de-manning the government. They demanded deep cuts to government expenditure at precisely the time that only government spending could underwrite employment-sustaining productive activity –- activity that would sustain the bupkins' own employment, at places other than low-paying ‘mall' outlets peddling carcinogenic imports from the aforementioned trading ‘partner.'

And finally, as the nation's economy continued to sputter, its public infrastructure crumbled to complete ruin, and its unregulated trading ‘partner' began economically to surge past them even while offering indefinitely continuing cheap credit, they blocked legislation necessary to enable the nation to redeem its own debt. That's right: they demanded default; unprecedented default.

The nation that on one day could borrow more cheaply than any entity under the sun; the nation that now sorely needed to borrow, since it lacked tax funding, so as to set massively idle capacity back to productive activity and citizens to remunerative work; the nation whose credit was second to none; on the very following day … could not borrow at all.

The plutocrats' purchased politicos had already transformed the nation from world's largest creditor to world's largest debtor within several short years. Now their new and improved bumpkin-legislators transformed it, for the first time in all of its 230 year history, to number one deadbeat. They forced the republic to default, for the very first time since its first Treasury Secretary had placed it upon a firm financial footing by issuing well-funded debt instruments, on its own golden Treasuries.

And so: Overnight, the world's sole reserve asset lost all its luster –- a luster our Founder first Treasury Secretary and all his successors had labored like Hercules to establish and maintain. Portfolios plummeted instantly in value. Fiduciaries and regulated institutions shed their now low-rated Treasuries per duty. Repo and other credit markets froze up entirely. Firms right and left went insolvent quite literally overnight. Interest rates shot out of sight. There seemed to be no firm ground anywhere upon which anyone could stand.

Everyone trembled, waited, and watched, in a strange sort of wide-eyed wonderment -- as if thrilled and spooked simultaneously, like all of those uneasily smiling, morbidly fascinated tourists who turn up in Times Square at dusk. But waiting and watching for what? No one and nothing could act. The only collective agent possessed of sufficient wherewithal to address this collective calamity –- the national government –- had been consumed and dismembered out of existence by the plutocrats and their underling bunglers, termites who had returned everything to dirt.

Financial, then with it productive, activity ground to an absolute halt -- the economic equivalent of zero degrees Kelvin. The economy simply stopped functioning. Soon folk were literally starving. We were right back to where our forebears had been circa 1787 -– bankrupt, broken, wretched and vulnerable. It was as though the Constitution, the effectual government, the inexorable growth of a prosperous, egalitarian, industrious yeoman republic … had simply never happened.

The yahoos in their 18th century costumes and Nascar suits now shook their heads slack-jawed in disbelief. What had happened?

Writing in outrage for over a decade about the illegality of the putative ‘debt ceiling as I, along with several distinguished colleagues, have been doing, I am not a little relieved to see some of our longstanding arguments gaining traction. I am a little bit troubled, however, by how attention has centered almost solely upon the 14^th Amendment to the U.S. Constitution.

            The 14^th Amendment is, to be sure, one of the grounds upon which the ‘debt ceiling’ must be declared null and void – for reasons even beyond those we’re hearing right now, as I’ll indicate. But there are at least five additional such grounds. It might then be helpful to elaborate them, along with their mutual complementarities, in summary fashion.

My hope in so doing will be to supply responsible members of Congress, our President, and his Treasury Secretary with the fortitude needed to end the present tragicomedy, now ritually repeated with dispiriting regularity any time that a Democrat is in the White House and Republicans hold one or both Chambers of Congress, once and for all.

Let’s start with the constitutional and legislative backdrop …

Articles I and II of the Constitution vest both Congress and the President with budgetary roles. All spending and revenue-raising must be legislated, and valid legislation must be passed by both chambers of Congress and signed into law by the President. Final budgets, such as they are, are accordingly joint Congressional and Presidential products – save in such rare circumstances as those in which Congress overrides a Presidential veto with a supermajority vote.

The Constitutional provisions that I have just channeled are broadly worded and prescribe very little as to the details of federal budget processes. These are determined, instead, by more legislation. In 1921, through the Budget & Accounting Act, Congress vested primary budget formulation responsibility with the President, establishing both detailed timetables and the predecessor of today’s Office of Management and Budget (OMB) to help shepherd the process along.

The ‘debt ceiling’ is rooted in this era, during which Congress relinquished its previous role as legislator of every distinct federal bond-issuance. This Congress did to afford the President – by their own law our primary budget-formulator – more flexibility in determining revenue sources for funding the growing variety of legislated programs. That’s right, the original ‘ceiling’ was about affording the President more discretion, not less.  

It is no accident that the Liberty Bond Act of 1917 (original source of the ‘ceiling’), the 1913 vintage 16^th Amendment to the Constitution authorizing the federal income tax, the thereby enabled Revenue Act of 1913, the Federal Reserve Act of 1913, and the aforementioned Budget & Accounting Act of 1921 all came in rapid succession. In effect, these enactments, all passed by Congress and signed into law by the President, constituted one coherent federal budget regime. 

All of this changed, however, in 1974. The ‘crisis’ that occasioned the change was brought on, like so many others of the era, by President Richard Nixon. Nixon had an unfortunate tendency to think himself more ‘imperial’ than the Constitution allowed, and took it upon himself to decide with unprecedented frequency what Congressionally legislated and funded programs, even though he had signed them into law in the first place, were worthy of actual execution and funding.

The practice in which he manifested this proclivity was known as ‘impoundment.’ The idea was that instead of spending what Congress had instructed him to spend and what he had agreed, by signing their legislation, to spend, Nixon was routinely spending only what he wished to spend, while ‘impounding’ the rest – in effect, holding it hostage.

Congress put an end to this chicanery by passing the Congressional Budget and Impoundment Control Act of 1974, pursuant to which both Congress and the President go through detailed procedural steps in formulating their own budgets, which budgets are then ‘reconciled’ and collated before being legislated into law piecemeal through sundry program authorization and appropriations acts passed by Congress and signed by the President. (The Supreme Court closed all plausible loopholes in the Act in Train v. City of New York one year later.)

This is also the origin of the Congressional Budget Office (CBO), designed as a counterpart to the President’s OMB. In effect, then, what we have had for the past 50 years is an altogether new budget regime superseding the regime put in place 50 years before then. The earlier regime, in other words – including its ‘debt ceiling’ component – was implicitly repealed by the later regime.

You can see this by noting the logic – or shall we say the arithmetic – of the post-1974 regime. Pursuant to that regime the duly legislated federal budget first determines both revenue and spending, then assigns the President and his Treasury Department the task of filling any gaps between the former and the latter through debt issuance. And, since the President is prohibited under this regime from not spending what the budget mandates he spend, the regime effectively mandates that he borrow any time mandated spending exceeds mandated revenue. 

We are now situated to see why the 1917 ‘debt ceiling’ as presently wielded like an AR-15 by a rump faction of the House Republican Caucus is actually no more than a leaky water pistol. For there is literally no way for the President to comply with the putative ‘ceiling’ as thus applied that does not entail his violating the federal budget itself as formulated pursuant to the 1974 regime that superseded the early 20^th century regime.

And it is here that the five legal grounds to which alluded above as additional to the 14^th Amendment ground get their traction. Let us run through them quickly…

The ‘Take Care’ Clause: Article II, Section 3 of our Constitution requires that the President ‘take care that the Laws be faithfully executed.’ President Nixon effectively violated this provision by not spending as Congress, through that law which is the federal budget, mandated that he spend. President Biden would be doing the same were he not to spend as the last federal budget requires that he spend, and were he not to borrow in so doing as that budget arithmetically mandates that he borrow.

The ‘Presentment’ Clause, a.k.a. ‘Line-Item-Veto’ prohibition: Article I, Section 7 of our Constitution requires that bills passed by both chambers of Congress be ‘presented’ as wholes to the President, which the latter then signs into law or vetoes. In Clinton v. City of New York (1998), our Supreme Court held that the Line Item Veto Act of 1996 violated this clause by purporting to permit the President to ‘cherry-pick’ which budget items would become law and which ones would be left on the cutting room floor.

Were President Biden to ‘prioritize’ payments mandated by the current federal budget as the aforementioned rump faction of the House Republican Caucus suggests, he would be doing precisely what the Court held that President Clinton couldn’t do and that Congress could not authorize.

The 14^th Amendment: Article XIV, Section 4 of our Constitution provides that ‘[t]he validity of the public debt of the United States, authorized by law... shall not be questioned.’ The framers’ intention in enacting this Constitutional provision is of particular interest right now. The self-styled ‘Confederate States of America,’ controlled by slave owners, had pulled their members from Congress and endeavored to destroy our federal union ‘from without’ by launching military attacks upon Fort Sumter and other federal installations in 1861. President Lincoln and Congress incurred unprecedented federal debt (multiplying it 80-fold, from a bit over 64 million to 5.2 billion), in the form of Treasury securities sold to millions of patriotic Americans, in financing the successful effort to end that rebellion.

As the nation began healing at the Civil War’s end, concerns grew that Southern legislators readmitted to Congress would continue their effort to destroy our federal union, save now from within, by repudiating the war-occasioned federal debt that American statespersons since Alexander Hamilton had recognized as the essential financial binding agent holding our union together. Indeed, Southern legislators were quite open about their intentions on this score, which is precisely what occasioned the requirement that Southern states ratify the 14^th Amendment as a condition of rejoining the Union rather than remaining militarily occupied conquered territories.

The applicability of the 14^th Amendment to the present ‘debt ceiling’ insanity grows quite clear when we recall this history. It is a striking fact both that the aforementioned rump faction of the House Republican Caucus nearly all hail from former Confederate or Confederate-border states, and that many of them have called for a ‘national divorce’ while routinely speaking like, meeting with, or endorsing white supremacists. It is equally striking that most of these Jim Crow Republicans have been transparent about their aims in most current controversies to sow chaos and thereby pave the way for a Weimar style anti-constitutional putsch by their criminal ringleader and serial bankrupt in Mar-a-Lago, Florida – who has himself now explicitly called for default on the national debt.         

This is precisely what the Debt Clause of the 14^th Amendment is meant to preempt. But let us return now to the other legal grounds on which the ‘debt ceiling’ is unlawful, notwithstanding their being a bit less dramatic than the 14^th Amendment ground just elaborated.

The ‘Later in Time’ Rule: It is a well established judicial canon of statutory construction that when an old law appears to conflict with a newer law or treaty, the older law must either be interpreted in a manner that does not conflict with the newer law, or be treated as having been implicitly repealed by the newer law. There are two ways in which this canon is applicable to our present ‘debt ceiling’ imbroglio.

First, the 1974 budget regime clearly displaces the earlier regime, including its ‘debt ceiling.’ This is made dramatically clear in the 1974 regime’s requiring both that the President execute the budget in full (no impoundments), and that s/he issue debt in so doing to fill any gap between spending and revenue. And second, any current budget enacted later in time than the last ‘debt ceiling’ hike of course supersedes the latter.

It is for this reason that I’ve often written that ‘the budget is its own “debt ceiling.”’ Indeed, in light of the anti-impoundment content of the 1974 Act, it is clear that the budget is both its own floor and its own ceiling. It is self-contained. It is the be all and end all of federal budgeting. It is the entirety of the law governing spending, taxing, and borrowing, with no role left to be played by the old 1917 Liberty Bond Act ‘ceiling.’

The ‘Absurd Result’ Canon: It is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would yield a result so absurd that the legislature cannot plausibly be taken to have intended it, the interpretation yielding that result must be considered mistaken.

In the present context, it is clear that the interpretation of the ‘debt ceiling’ proffered by the aforementioned rump faction of the Republican House Caucus would yield multiple absurdities of the relevant sort. It would require the President to violate contract obligations (which US borrowings assuredly are), the last-legislated federal budget of 2022, the 1974 Congressional Budget and Impoundment Control Act, and one or more of the three Constitutional provisions assayed above.

And that is to say nothing of the cataclysm that default on our national debt, which we’ve never reneged on before, would bring to the US dollar, to US debt servicing costs, to the US banking and financial sectors, to the nation’s pension and mutual fund holders, to the nation’s inflation rate and its broader economy, and indeed to the world’s capital markets and trading economy.

It is simply impossible to imagine the framers of the Liberty Bond Act of 1917 – who were seeking to facilitate the finance of the First World War effort – or indeed any member of Congress prior to the aforementioned rump faction of the House Republican Caucus, ever having intended even one of these outcomes, let alone all of them. It often is said that the Constitution is not a suicide pact. Even less, then, would be an unlawful and unconstitutional interpretation of the Liberty Bond Act of 1917.   

The ‘Constitutional Avoidance’ Doctrine: Finally, it is also a well established canon of statutory construction that, when a legal provision – either as written or as it would be applied – can be construed in more than one way and one such way would raise a Constitutional issue, the interpretation yielding that result should if possible be considered mistaken. The applicability of this doctrine to the present imbroglio is, like those of the previous legal doctrines, quite clear as well. The ‘debt ceiling’ as interpreted by today’s Jim Crow Republicans would squarely conflict with the 14^th Amendment as noted above. Either the interpretation, then, or the ‘ceiling’ itself must be deemed without legal force.

I hope that the point is now made. Neither the President, nor the Treasury Secretary, nor any responsible member of Congress need worry that there would be anything ‘legally questionable’ about either or both Congress’s and the President’s simply disregarding the ‘debt ceiling’ and continuing to make good on the nation’s legal obligations as always. No court would find otherwise.  

There simply is no uncertainty here. Indeed, the law quite clearly, quite certainly and quite squarely requires one thing. It requires that Congress and the President alike recognize that the old 1917 relic known as the ‘debt ceiling’ as presently applied is null and void, and has been so both since its inception and especially since Congress smacked down the would-be ‘imperial’ President Nixon a half-century ago.

The last time a J.P. Morgan helped solve an American banking crisis, it was the dude - John Pierpont Morgan himself - rather than the institution that now bears his name who had come to the rescue. That was during the Panic of 1907, when the nation’s near calamity but for the financial statesmanship of one man finally led Congress to institutionalize Morgan’s role with the Federal Reserve Act of 1913.

The reasoning here was quite obvious. Sure, it was laudable of Mr. Morgan to have stepped up to the proverbial plate and assist - for a profit - his nation in its hour of financial distress. But was that any way to run a republic - to leave it dependent on the good graces of one private sector individual who hadn’t had to help at all?

Surely a modern republic worthy of the name - and of the dignity connoted by such such a name - would require its own, public means of addressing its public crises, rather than relying on ‘the kindness of ...’ if not ‘strangers,’ at least those not obliged to lift so much as a finger. And so Congress and President Wilson resolved at long last our republic’s longstanding ambivalence about central - central - banking.

This we did in a characteristically American, pragmatic, ‘both-and’ rather than ‘either-or’ manner. We centralized ultimate authority over our new central bank’s operation - vesting it in a federal agency housed in DC - but we decentralized its operations, vesting the Fed’s discounting (that is, its short-term business lending) functions with twelve regional Fed District attentive to the greatly varying productive and monetary conditions prevailing across distinct parts of our continent-spanning republic.

That’s right, we established what amounted to a network of regional economic development-finance institutions explicitly mandated to aid with productive - as explicitly distinguished from merely speculative - lending nationwide. I have written at great length by now in many venues about how ingenious - and simultaneously Jeffersonian and Hamiltonian - this design was, hence what a calamity it was when we upended it in 1935, a mistake we won’t rectify till we once again, as I label it, ‘Spread the Fed.’

Rather than rehash all of that here, however (I will just link to it instead, as above), I think it more fitting at this point to note not mere tragedy, but tragic irony - the irony that we are now again leaving the rescue of our economy to one J.P. Morgan, and this time not yet following it up with institutional reforms aimed at preserving what little remains of our once geographically well distributed development finance institutions - in this case, our sector-specific regional, community, and industrial banks.

As I have written extensively - indeed, seven times in these pages alone - since last March, Fed Chairman Powell’s rate hikes are now destroying our nation’s smaller banks. The reason is obvious: the rate hikes are on the one hand destroying our smaller banks’ client base - small businesses and startups - while on the other hand temporarily sapping their asset portfolios, composed largely of business and real estate portfolio loans on the one hand, US Treasurys and other safe, ‘boring’ fixed-income instruments on the other.

Taken alone, these hits to our smaller banks need not destroy them. The problems they raise are but short-term liquidity challenges, after all - self-fulfilling prophecies or recursive collective action predicaments that are a far cry from the solvency-challenged ‘toxic’ portfolios of the 2008 era. But these hits come along with an fatal institutional gap that in now functioning in the early 21st century much as the lack of a central bank functioned in the early 20th century ...

I refer to the anachronistic caps that we still impose upon Federal Deposit Insurance, which now confront our small businesses, and hence our small banks, with an altogether needless and hence wasteful Hobson’s choice.

Here’s what I mean...

For a startup or small business with a payroll and nontrivial operating expenses to cover each week (as distinguished from an individual like you or me), a $250,000 transaction account is mere chump-change. Yet that is all that our FDI system at this point will insure.

Businesses must accordingly work a trade-off: they can stick with the expertise and patient capital offered by smaller sector-specific banks who understand their sectors, their local business and broader economic conditions, and associated special needs, but only at risk of losing their money in the event of short-term bank runs of the kind that hit Silicon Valley Bank, Signature Bank, and now First Republic BankFRC.

In the alternative, these businesses can move their deposits to JPMorgan Chase or one of the other ‘Big 4’ megabanks, thereby gaining the safety that too-big-to-fail status confers on those banks, but only at the cost of losing that specialized understanding, expertise, and patient investment that are the hallmarks of Main Street, not financialized Wall Street banks.

And let there be no mistake: when Wall Street banks take over Main Street banks, funding is redirected from the latter’s productive traditional small business clients to the former’s more speculative big market-player clients.

This is of course what has just happened again, with JP Morgan’s - the bank’s, this time, not the dude’s - bargain-basement purchase of First Republic yesterday with the aid of ... wait for it ... the Federal Deposit Insurance Corporation! That’s right, the very federal agency meant to preserve our small banks is now selling them off to the very megabanks, already too large for our economy’s good, that the former are our sole remaining vital alternatives too.

And there is as yet no end to this in sight.  

Now, I said before that there is a missing institution now as there was before 1913, and that the current $250 caps upon Federal Deposit Insurance are anachronistic. What do I mean by those claims?

Well, they are intimately connected. The missing institution is uncapped deposit insurance, and current caps are anachronistic because they descend from a time, before 2005, when we did not rationally price deposit insurance. In the old days from 1933 to 2005, we neither risk-priced deposit insurance nor assessed premia in advance of payouts - two crucial characteristics of actuarily sound insurance.

Price-wise, it was as if an insurance company were to charge the same premia to insure a Hollywood mansion as an Ithaca cottage, or to insure the health of a heavy smoker and an Olympic marathoner. And assessment-timing-wise, it was as if Joseph had advised Pharaoh to store up grain not during the seven fat years, but during the seven lean years.

Against that backdrop, caps on FDI could be viewed as an understandable limit on federal exposure in light of the FDI system’s irrational pricing system. But as I say, we’ve not done that since 2005. Congress now mandates both risk- and magnitude-pricing of FDI, and pre-payout assessments during ‘fat’ (bank-stable), not ‘lean’ (bank-tumultuous) times. There is accordingly no need for capping at all.

So where are we now? Well, after seven weeks of obsessively haranguing sundry officials and Congressmembers from both parties in both Chambers, I am pleased to be able to report that legislation I drafted the day of Silicon Valley Bank’s demise will soon be proposed formally in Congress. I am also delighted by the fact that the FDIC is now, as of yesterday, suggesting more or less precisely what that legislation would do.

So with a bit of luck we might yet see our smaller and sector-specific industrial banks spared any further traumas, and our nation’s grand Build Back Better agenda accordingly vouchsafed by still-vital producers’, rather than merely speculators’, banking. Lest we do not do this within coming days, though, let me leave you with what for some (though far from all) might well seem a darker outcome ...

About halfway between the Panic of 1907 and passage of the Federal Reserve Act of 1913, the great Austrian economist and Finance Minister Rudolf Hilferding published what often is credited with being in essence the Fourth Volume of Marx’s Kapital.

In his Finanzkapital of 1910, Hilferding prophesied that the relentless concentration of the financial sectors of the advanced European economies on the one hand, combined with the concentration of productive industry itself under the direction of those ever-more-concentrated banks on the other hand, spelled opportunity for Europe’s rapidly growing socialist movements. For, he said, once the Revolution was ready to nationalize Europe’s economies, all it would need do is seize what he said had become ‘the Commanding Heights’ of those economies - that is, their now oversized financial sectors.

Why do I note this right now? The answer should be obvious. The FDIC has just made JPM Chase, which was already by far the nation’s largest banking institution, much larger. It has, moreover, transferred ownership of one of the US tech sectors’ primary west coast lenders over to the nation’s largest Wall Street bank - an institution far more interested in US and global capital markets than in domestic manufacturing, tech or otherwise. In effect, Jamie Dimon as JPM Chase’s CEO has become much as was JP Morgan the dude of a century ago.

And at a time when the nation’s very security now depends upon reindustrialization, the new economic nationalists are not apt to accept this for long without thinking of nationalizing the banking sector much as Hilferding prophesied. Indeed, the Industrial Workers of the World (IWW), at the time nearly two million strong in the US alone, called for much the same here at home before passage of the Federal Reserve Act in 1913.

And no less influential an Anglo-American figure than J.M. Keynes, still considered the greatest economist of the 20th century, called for much the same in referring to ‘the socialization of investment’ in his General Theory (1936) during the worst of the Great Depression in 1936, after a decade of bank concentration on Wall Street had brought on that calamity. The US effectively took him up on that for a while through the Reconstruction Finance Corporation - by far the largest financial institution in the world from 1933 to 1947.

What’ll it be, then, Congress? Will you lift the irrational caps on Federal Deposit Insurance, allowing our smaller productive lenders and with them American industry to flourish, or will you give Jamie Dimon final command of the very ‘Commanding Heights’ you denied John Pierpont Morgan? If you choose the latter, you are likely choosing, wittingly or not, the ultimate Keynesian ‘socialization of investment.’

Fed Quantitative Easing (QE) and its discontents are yet again under discussion. How could this not be the case - pretty much every banking and wider financial dysfunction of recent years stems from or implicates it.

Unfortunately, most discussion of these matters continues to devolve into either/or nonsense and consequent futility. Critics routinely ignore the disasters that would have befallen us by now had the Fed not embarked on and retained QE ever since 2008. Apologists, for their, ignore whether we might have done - and might still do - QE better.

As it happens, we could do and can do QE far better than we have been doing these past 15 years. But to do so we must relearn lessons lost since the 1930s. Specifically, we must relearn that in any market and monetary system characterized by recursive collective action challenges and endogenous credit, central bank money-modulation is simply not possible absent (principled, productive) credit allocation.

This means that to be effective, quantitative easing must be accompanied by qualitative tightening.

Central banks must, in other words, get back to the business they once managed well - viz., directing endogenous credit money towards productive, and away from speculative, deployments. Markets can’t do this on their own, and central banks fearful of ‘picking winners and losers’ can’t do so either.

The only way to maintain monetary and financial stability and smooth economic growth is centrally to pick at least one broad class of ‘winners’ - productive firms in the ‘real’ sectors - and one class of losers - mere speculative ‘investors’ (read ‘gamblers’) in the secondary financial and tertiary derivatives markets. The remainder of this post elaborates on and substantiates this claim.

Introduction: ‘Independent’ Central Banks, Credit Modulation, and Credit Allocation

Let’s start with the storied story of central bank ‘independence,’ in which all that follows takes root. People speak often of central bank independence - why it’s desirable, why it is not, why or whether we have it, etc. Seldom, however, do people define the term carefully. I’d like here to rectify that - first by defining the term in a manner I think most plausible, then by highlighting what seems to me an oft-overlooked fact about central banking.

My claim is accordingly that that a central banking imperative often effectively taken to justify independence – what I call the necessary modulation of endogenous credit aggregates – cannot be done without doing something else effectively taken to rule-out independence – what I call the productive allocation of endogenous credit flows.

We used to know and to do this, I’ll argue, and can do it again at no cost to the accountability that independence is mistakenly assumed to offend. All we need to do is to learn the right lesson of 1929, which we have failed to learn up to now. I’ll define my terms, naturally, as we proceed.  

1. Central Bank ‘Independence’ – A Dependent Variable

Let’s start with the word ‘independence,’ in order to clarify what’s at stake. Central bank independence is often extolled or decried in an untethered, free-floating manner. This can occasion unnecessary confusion. Calls by some of my friends to ‘end independence’ and ‘democratize the Fed’ several years back, for example, apparently meant that the Fed should be more answerable to Congress.

Yet it seemed not to have occurred to my friends, while they were on this roll, that the White House and Congress were in the hands of a crisis-fomenting and -perpetuating political party that had garnered, and routinely still garners, many millions fewer votes in national elections than does their rival party. If you want to democratize the Fed, I recall suggesting, you might want to start by democratizing the United States – or at least the White House and Congress. 

The broader point should be clear. Central bank independence cannot really be understood in political isolation any more than central banks can themselves operate in political isolation. The word ‘independent’ is typically followed by a preposition. It is a relative, ‘unsaturated’ predicate, implicitly indexed by some assumed ‘independent variable’ from which or of which various values of the dependent variable – ‘independence’ of one sort or another – are variably dependent or independent.

And there are many independent variables in relation to which we might unreflectively be taking the ‘independence’ in question dependently to vary. Do we mean ‘independent of’ the executive of a national government? ‘Independent of’ the legislature? ‘Independent’ of ‘the democratic process’ or ‘the political process’ more generally? ‘Independent’ of what, exactly? 

Even once we decide which independent variable(s) we have in mind, of course, we require yet further specification of the dependent variable itself before we know what we are talking about. Do we mean ‘complete’ independence (in some sense) from what the bank is meant to be independent of, under all circumstances, always and everywhere?

Do we mean independence only in respect of certain decisions or subject matters, and/or within certain time intervals – for example, only as to interest rate targets, workforce participation rates, wealth gaps, environmental impacts … or within political campaign cycles, ‘staggered’ across campaign cycles, outside of financial or other crises, or … again, what? Without more refinement, it’s not clear we are talking about anything at all.

As critical as further specification along all these broad lines is to productive discussion of central bank independence, it is a somewhat narrower range of context-relativity within this larger range that will be my focus here. For my subject is central bank independence as it figures into a specific set of institutional understandings that current discussions of the subject seem simply to assume as background conditions – conditions that require more careful attention to the modulation and allocation functions that I have just mentioned than is typically forthcoming. 

My task is accordingly to foreground and sympathetically critique this set of understandings, which I shall ultimately accept in part while also rejecting in part. For (a) it is an institution-bound ‘thought-complex’ in which most, if not all, present-day discussions of central bank independence are implicitly embedded, and (b) this complex implicitly assumes certain falsehoods about the credit modulation and allocation functions.

Because this complex is thus partly but not wholly sound, and can be made wholly sound only through careful identification, critical examination, and purposeful reconstruction, I shall have to do the latter to make the claim with which I introduced this symposium contribution convincing.  

In the end, I shall show that one principal assumption upon which most if not all contemporary discussions of central bank independence tacitly rely – namely, that central banks must and do engage only in what I long ago dubbed neutral ‘modulation,’ and not in inherently contestable ‘allocation,’ of endogenous Wicksellian credit-money (more on which below) – is false. So – and relatedly – is the assumption that central bank allocation cannot be done neutrally or, therefore, incontestably and independently.

At least this is so in connection with the only forms of neutrality, legitimate contestability, and independence we should care about where public finance in a would-be democratic republic is concerned. 

The implications of this conclusion are ‘radical,’ in the original Latin sense of the term: they are foundational and far-reaching where sound public allocation of the public’s own investment capital – its central-bank-issued credit-money – is our ultimate interest. For they suggest we must reconstitute and recombine the roles of individual and collective action in the realm of finance and, therefore, production.   

2. Independence in Context: Endogenous Public Capital and the Twin ‘Scissors’ of Public Finance

Let us now turn, then, to a sympathetic, ‘ground-up’ schematization of the institution-bound thought-complex to which I’ve alluded. This is the institutional-cum-intellectual context from which most if not all contemporary discussions of central bank independence seem effectively, if not always cognizantly, to spring.

Where public finance in a decentralized market-exchange economy with endogenous credit-money is concerned, there are broadly two public functions that have to be collectively discharged. This is so notwithstanding – indeed, even because of – market-exchange’s primarily decentralized, ‘privately ordered’ character. People seem never explicitly to say – or perhaps even to recognize – this. But they implicitly commit to it every time they speak of ‘monetary’ and ‘fiscal’ policy, or of ‘central banks’ and ‘finance ministries,’ as legitimate yet putatively distinct functions and institutions, respectively. 

The first such function is what I just called the money-modulatory task, while the second is what I just called the money-allocative task. These tasks are seldom identified, let alone named. They go, in effect, barely noticed, because only tacitly assumed. Partly for this very reason, what goes yet more crucially unnoticed is (a) that these two functions both are necessitated by credit-money’s endogeneity itself, and (b) that this same endogeneity renders the functions both theoretically and operationally inseparable. They succeed or fail together. 

The modulatory and allocative functions accordingly constitute, we might say, two blades of one scissors of public finance. I’ll explain why in a moment. But first a bit more on money endogeneity and the blades individually, along with their links to central bank independence. For only when we are fully clear on the blades’ purposes can we grasp their mutual functional dependence.

3. Endogenous Credit-Money: Privately Allocated, Publicly Generated Capital

I and many others have written extensively on credit-money’s endogenous character elsewhere, so there is no need to be tedious here. The essentials, however, must be grasped firmly to ‘get’ my argument. So here they are in two paragraphs…

Contemporary polities publicly license private sector banks and other financial institutions to generate and allocate national money supplies without falling foul of anti-counterfeiting laws. This they do by (a) authorizing these institutions to extend spendable credit in fiduciary account form, while (b) publicly ‘recognizing’ payments made out of such accounts as discharging commercial obligations via legal tender laws and associated public administration of national payments systems. This amounts to public outsourcing of the public’s own money-issuance authority to private sector lending institutions. Hence Wicksell’s (1898, 1906) dubbing this money-form ‘bank money,’ which we can generalize to additional financial institutions through use of the broader term ‘credit-money.’

There are three characteristics of endogenous Wicksellian credit-money worth emphasizing for present purposes. First, it represents by far the greater portion of contemporary economies’ ‘money supplies.’ Second, the only limitation on this form of money’s generation by private sector institutions, apart from public guidance (more on which below), is the prospective profitability of lending – a prospective profitability that includes, crucially, loans for speculative gambling purposes as well as legitimately productive purposes. And third, owing to the dispositive role played by public authority in enabling this form of credit to function as money at all, Wicksellian credit-money is effectively public capital. 

Publicly licensed, yet profit-motivated, endogenous credit-money extension just is publicly issued, yet privately allocated, finance capital. In this very hybridity lies the inseparability of credit modulation and allocation as public functions.       

4. First Blade of the Scissors: Modulation, Technocracy, ‘Independence’

Now, what I call public finance’s modulatory task is necessitated by the aforementioned endogeneity itself. It is the task of retaining variable money quantity fluctuations, rooted in the indefinite extensibility and contractibility of bank-issued credit-money, within a tolerable band. In finance parlance, this is a collaring function. Variable credit-money availability, made possible by money endogeneity, opens the door to aggregate over- or under-extension of credit relative to goods, services, and (euphemism alert) financial ‘asset’ quantities purchasable with credit-money. This in turn renders credit-fueled inflation, hyperinflation, deflation, and debt-deflation ever-present dangers. 

Because credit-money endogeneity also renders inflations and deflations potentially self-worsening without limit – amplifying them into what I long ago christened recursive collective action problems (‘ReCaps’), more on which below – centralized management of endogenous credit-money supplies is imperative if decentralized market finance, and with it decentralized market exchange generally, is to be sustained over time. Money supply management is, in other words, one minimal degree of centralized jurisdiction that must be retained if otherwise decentralized market exchange is to be possible over the long term at all. 

That bears repeating. Continued private ordering of production requires, at a minimum, a significant degree of publicly-ordered finance. And, as we’ll soon see, this means public allocation (of a sort) nearly as much as it means public modulation. 

Now the populations of many contemporary polities seem to be at least partly or semi-consciously aware of the modulatory need. For they all exercise some degree of modulatory collective agency where endogenous credit-money supplies are concerned. (My argument below is that they will now have to exercise more.) They do so through public instrumentalities tellingly labeled ‘central banks’ or ‘monetary authorities,’ the italicized components of these phrases suggesting collective agency and corresponding concentration of control. Polities then task these instrumentalities with collaring price fluctuations by modulating supplies and circulation-velocities of endogenous credit-money relative to that which money exchanges for or commands. 

Now comes a crucial move in the thought-complex I’m reconstructing. The modulatory task as I have just characterized it is inherently counter-majoritarian, in what lawyers will recognize as the Bickelian sense, as a theoretical matter. And it is inherently technical as a practical matter. And this is the justification, fully appreciated or not, of modern central banks’ simultaneously ‘independent’ and ‘technocratic’ characters.

The modulatory task is counter-majoritarian because it has to be counter-cyclical within any environment of decentralized market-exchange. It has to be counter-cyclical in turn because it is rooted in inflation’s and deflation’s character as endogeneity-rooted recursive collective action problems, in the sense just noted, in any such environment. To explain… 

5. Endogeneity’s Achilles Heel: Recursive Collective Action Problems

A collective action problem is, of course, simply a choice situation in which multiple individually rational decisions aggregate into collectively irrational outcomes. It is accordingly ‘tragic’ in the classical Greek (‘damned if you do, damned if you don’t’) sense of the word. A recursive such problem is just such a tragedy as self-worsening through iterated decisions, each decision at time t informed by and as it were ‘replying’ to the outcomes of decisions at time t-1. It is in other words an ongoing collective action predicament with ‘feedback’ effects. 

Markets in which endogenous publicly generated but privately allocated credit-money figures as a medium of exchange are rife with predicaments of this sort – a fact that continues to go surprisingly unremarked. In an inflation or hyperinflation (a.k.a. ‘bubble’), for example, individuals rationally buy now in anticipation of prices’ rising later. In so doing, they collectively drive prices yet higher, leading to more purchasing, more price rises, and so on. In a deflation or debt-deflation (or ‘bust’), the same happens in reverse. 

In all such cases, individual agents collectively drive cycles simply by making individually rational decisions. Only a collective agent, acting in the name of all, can prevent such decisions’ aggregating into collectively irrational outcomes. This the agent does by short-circuiting the recursion cycle – crucially, by countering the crowd, by ‘acting contrarian.’ Specifically, the agent does so by rendering participation in the relevant ‘crowd’ no longer individually rational – for example, by raising borrowing costs, by taxing away asset price ‘capital gains,’ by taxing speculative ‘short swing’ transactions, or the like. 

It is easy to see why some degree of insulation from crowd preferences – some form and degree of ‘independence’ – will be necessary if this contrarian task of counter-cyclical collective agency is to be discharged effectively. Counter-majoritarian action is only possible when short-term majoritarian preferences can be temporarily disregarded, hence when democratic accountability is ‘lagged’ rather than immediate. 

There is the ‘independence’ piece of the modulatory task. The ‘technocratic’ bit enters through what is required to discharge the role not so much at all, as competently and effectively. Central banks have to modulate endogenous money supplies relative to anticipated resources, goods, services, and asset supplies that money purchases. This involves massive data collection, aggregation, estimation, and prediction. So does the task of deploying the tools used to vary credit-money availability relative to those projections. These are technical tasks in which technical expertise, although not sufficient to discharge of the task, is in any event necessary. 

6. Second Blade of the Scissors: Allocation, Democracy, ‘Accountability’

There is the modulatory task in brief outline. Now for the allocative task. Here we speak less in ‘quantitative’ than in what might be called ‘qualitative’ terms where endogenous credit-money is concerned. We are foregrounding not ‘how much’ money is flowing so much as ‘where’ it is flowing. The first question to ask about allocation is whether and why it is really an objective of public finance at all? Is collective agency as obviously necessary here as it is in the case of modulation? 

It takes some, but not much, reflection to see that the answer has to be yes. Polities do things and act on decisions about what shall be done. That is indeed all that collective agency and collective action themselves are – decisions made and executed jointly by or on behalf of multiple deciders acting ‘as one.’ What anyone does, polities and other collective agents included, in turn always involves some use of resources. And, again in any monetary-exchange economy such as our own, this in turn requires the commanding of resources through money expenditures. That is just allocation. It is money-allocation for purposes of resource-use in pursuit of particular public objectives.  

Polities also typically take interest, for purposes of maintaining some degree of social and juridical cohesion if not actual justice, in distributions of advantage and disadvantage among their constituent members. This too just is an interest in resource allocation, with ‘resources’ now understood broadly as materials used not in this case by publics in pursuit of public objectives, but by private sector citizens and associations in pursuit of privately conceived plans and projects.

Now because resource allocation produces comparative ‘winners and losers’ in connection with literally every decision, polities actuated by democratic values will tend to view the allocative character of particular matters of collective decision as best subject to democratic accountability. The legendary war cry of the American Revolution – ‘no taxation without representation’ – is but one dramatic example of the idea at work here. We accordingly tend to vest the more overtly money-allocative authority of our polity in institutions that we endeavor to keep less technocratic and insulated, more democratic and accountable. 

We resort, in other words, to legislatures subject to regular elections, and to finance ministries subject, in turn, to continuous legislative oversight.

Here, again with varying cognizance of the fact, is the basis for contemporary jurisdictions’ maintaining finance ministries separate from their central banks and other monetary authorities. Here also, accordingly, is the basis for running aspirationally separate ‘fiscal’ and ‘monetary’ policies via these institutions, with each institution issuing its own monetary or quasi-monetary financial instruments in furtherance of its mission (Federal Reserve Notes or ‘dollar bills’ in the one case, for example, and Treasury Notes, Bills, or Bonds in the other). 

The idea, implicit or otherwise, is that the one institution will only modulate supplies of, and accordingly be authorized to issue, explicitly monetary instruments and their fiduciary (e.g., bank account) equivalent. The other institution will primarily help allocate and accordingly be able to monetize only such of its own financial instruments as the legislature authorizes for particular purposes, and which the ‘independent’ central bank or public are willing to purchase to convert into spendable money. Et voila, central bank independence and finance ministry accountability in modern public finance. 

7. Scissors Need Two Blades: No Modulation without Allocation

Now, even granting the intuitive tractability and provisional usefulness for some purposes of (a) the modulation/allocation distinction as just elaborated, and (b) its modern institutional embodiment, recent events confront us with a set of questions that we can now either continue to duck, as we have done for five decades, or instead finally address. The questions are: (1) is the modulation/allocation distinction as crisp as I’ve just made it sound? (2) has it always been observed, tacitly or otherwise? And (3) if it isn’t or hasn’t, is the thought-complex that latently and therefore uncritically relies upon the distinction salvageable? 

I think the answer to the first two queries is no while that to the third query is yes – with revision. That is, the distinction partly dissolves under scrutiny and has often been at least tacitly rejected, at least in part, in consequence. But it also is partly salvageable, if we attend carefully to its actual contours and respond institutionally by partly reconstructing our principal organs of public finance – our central banks and finance ministries. My reasons for saying these things are rooted in the very phenomenon that leads us to recognize the urgency of the modulatory task itself – again, money endogeneity. 

Credit-money’s endogeneity, which necessitates modulation as a necessary collective function in the first place, also renders modulation impossible absent a certain definable range of forthright collective allocation – a range I’ll define shortly in principled fashion. And this means that more thoroughgoing fiscal and monetary coordination or consolidation – independence’s partial contrary – which always intensifies during crises but then recedes once the crises appear to be past, must become a ‘new normal.’ At least that is so if ever-deeper and more frequent crises are not themselves to remain a new normal. Here’s what I mean… 

Credit-fueled bubbles develop as over-issuances of speculative credit-money to traders who spot and then trade upon fads in the making. The objects of these fads can be virtually anything – ‘junk’ this, ‘subprime’ that, ‘crypto’ whatever… Once a ‘boom’ in such objects begins attracting (euphemism alert) ‘momentum traders,’ a decentralized monetary-exchange economy with endogenous credit-money and ‘deep’ secondary financial and tertiary derivatives markets – what I elsewhere call ‘meta-markets’ – generates the most formidable of all known recursive collective action predicaments: the credit-fueled asset price bubble. For indefinitely extensible credit can be borrowed cheaply to purchase ‘assets’ whose prices are rising at rates higher than ‘borrowing rates.’ 

Under boom conditions it becomes individually rational for ‘investors’ (euphemism alert) to borrow in order to buy in order then either (a) to sell on the secondary markets or (b) to ‘hedge’ (euphemism alert) on the tertiary markets. But everyone’s acting thus rationally aggregates into irrational outcomes, as prices are driven to points at which even the most profligate lenders balk. Ensuing reversals then culminate in busts as intemperate as their antecedent booms, leaving debt overhang in the wake since borrowing costs are fixed while asset prices are variable. 

Reactive ‘downside’ Fisherian (1932, 1933) debt-deflations, which are themselves recursive collective action problems of the same sort, are, of course, the bane of sustained macroeconomic stability, and hence of continuous productive and full-employment activity. They must accordingly be defused collectively too. But this is just the modulation challenge that I sketched above, begun in an allocation challenge, as are all endogenity-rooted modulation challenges. 

What then to do? Must all endogenous credit-money allocation be ‘independently’ and ‘technocratically’ managed just as must modulation? Must fiscal and monetary policy be collapsed into one another – fully ‘consolidated’? And what then of all of that ‘picking of winners and losers,’ and of the intolerable ‘democratic deficit’ that doing this ‘technocratically’ and ‘independently’ of politics would seem to entail?

9. Production and Speculation: More Distinguishable than Modulation and Allocation

Well, relax. The quandary is not as acute as it looks at first blush. The key is to retrieve a distinction that both (a) is more or less objectively and technically drawable, and (b) used to be routinely technically drawn. We mistakenly abandoned this distinction in 1935 owing to a false lesson drawn from the first years that followed the 1929 crash, but can retrieve it in ‘new and improved’ form both theoretically and operationally – with few if any changes to our law.

Really? Yes. I am alluding to the distinction between productive investment and merely speculative betting, and the implications of drawing that distinction for how we govern primary investment markets on the one hand, and secondary and tertiary betting markets on the other hand. Our past understanding of this distinction found expression in the old ‘Real Bills Doctrine’ (RBD) favored by Fed founders Paul Warburg and Carter Glass (yes that Carter Glass), among others. The problem with the RBD was that it was only half-right, not that it was wholly wrong. Hence our effectively dispensing with it entirely after 1935 was but half-right as well.   

To see what I mean, start with the distinction itself. While productive investment and speculation of course overlap at the margin, paradigmatic cases of the former are cases in which producers and suppliers of material goods and services, or of material inputs to productive processes, are doing the borrowing or otherwise tapping the capital markets. We can call the markets in which all of this happens the ‘primary’ markets. 

Paradigmatic cases of merely speculative betting are cases in which the claims generated by real or putative primary market investment are themselves bought, sold, or bet upon or against, with the speculators borrowing in order to purchase those claims with a view either to selling them at higher prices or to capitalizing on such secondary market price changes through tertiary derivative instruments. The markets in which these purchases and sales occur are accordingly what I call the ‘secondary,’ ‘tertiary,’ and iteratively through time what I call ‘n-ary’ markets or ‘meta-markets.’  

Primary markets in decentralized-exchange economies with endogenous credit-money do not typically generate serious recursive collective action predicaments of the kind that I highlighted above. For they are ultimately ‘grounded’ in, ‘anchored’ by, or ‘tethered’ to, something that nature or physics themselves more or less exogenously modulate – viz., potentially profitable material production. Where credit-money is endogenous and profitability is not immediately tethered to material production but can also include winning bets, on the other hand, meta-markets have to be artificially modulated if there is to be any exogenous constraint upon endogenous credit dissemination. 

And this means that modulation will require allocation – steering money from speculative meta-markets to productive primary markets. Meanwhile, the exogenous modulation in question will still have to be done collectively – both in the manner, and for the reasons, elaborated above. 

But if the latter is allocative, at least as between productive primary markets and speculative meta-markets, is it politically viable to do it technocratically and ‘independently’? Are we faced with an operational paradox or ‘tragedy,’ with modulation requiring independent collective agency while also requiring allocation, and the latter in turn requiring independence-excluding accountable collective agency?

Conclusion – Privately Ordered Production and (Partly) Publicly Ordered Finance

The answer is no. There need be no real operational paradox or tragedy. For the production/speculation distinction is itself technically tractable and universally appreciable as critical to macroeconomic stability – a proper concern of everyone – while at the same time there is sufficient variety under each heading to allow for a great deal of private ordering where allocation under them is concerned. Hence we can extend a great degree of independence to certain broad forms of central bank allocation and concomitant fiscal-cum-monetary consolidation without (a) resorting to comprehensive ‘state planning’ or (b) objectionably insulating the ‘pickers of winners and losers’ from desirable democratic accountability. 

We can see this in early Fed history and current conditions alike – conditions for which I’ve proposed an updated pre-1935 (that is, pre- Banking Act of 1935) style ‘spread Fed’ model that retrieves what was sound in the old model while eschewing what was unsound. The short-playing version of the mentioned history is that we were right to allocate endogenous money but wrong to overlook and not modulate exogenous money before 1935, then to do the latter and not the former after 1935. (You cannot be only halfway Wicksellian – you must attend both to exogenous and to endogenous money, and to the cumulative process through which they interact, especially in a globally ‘open’ economy.) The short-playing version of the mentioned proposal is that it does precisely that – retaining the post-1935 Federal Open Market Committee (FOMC) as nationwide modulator, while restoring the pre-1935 Federal Reserve District Banks as regionally distributed (‘spread’) productive allocators. 

For more on the history, please look here, here, here, and here. And for more on the proposal, please look here, here, here, here, here, here, and here, as well as at the draft bill here.

The US’s 18th century Founders laid the ground for a new republic of yeomen citizens possessed of their own homes and means of livelihood. Subsequent leaders, notably Lincoln and FDR, furthered the mission through new means of home and higher education finance. Now 'asset managers' imperil that legacy.

I have been sounding the alarm wrought by this peril since the crash of 2008. Indeed, my eminent domain plan for writing-down underwater mortgage loans, which drew much attention both favorable and unfavorable from 2010 through 2014, was explicitly predicated on concern not only about growing homelessness and ongoing debt-deflation, but also about our lapsing back into the pre-yeoman, neo-feudal status our Founders had sought to end.

The worry, in other words, was that New York now would become to the 21st century what London had been to the 18th - headquarters of the world’s largest absentee landlords. Alas, little has happened to lessen that worry. Indeed, private equity, hedge funds, and other ‘asset management’ firms have accelerated the re-feudalization-through-financialization process that’s been underway in American housing since the Clinton/Bush 1990s and 2000s.

There remain means to end and reverse this that lie ready to hand. These include both the forthright permanent re-nationalization and revitalization of our home finance entities established during the New Deal, and new legislation I drafted for Congressman Ro Khanna last summer - legislation that’s now formally before Congress.

Here’s what I mean, from ‘deep background’ to current state-of-play …

Fifteen years after failing and being rescued by our federal government, our nation’s principal secondary market makers in home mortgage loans – Fannie MaeFNMA and Freddie Mac – remain in federal receivership. The proximate reason for this is that neither Republicans nor Democrats in Congress have been able to come to consensus – interparty or intraparty consensus – on what should be done with the home mortgage government-sponsored entities (‘GSEs’) post-crisis.

The deeper reason for continuing impasse, I believe, is that public – that is to say, citizen – ownership of secondary market makers in home loans is in a certain sense ‘natural’ in any republic, such as ours, in which both middle class standing and that standing’s primary indicator – home-owning – are deeply ingrained in the citizenry’s self-ascribed national identity.

In this sense, Fannie’s and Freddie’s 2008 falling into federal receivership is best understood as a form of ‘reversion to the mean.’ The ‘mean’ here being intimate public involvement both in fostering and maintaining a ‘yeoman’ – that is, middle class – republic as a general matter, and in fostering and facilitating, pursuant to that general project of what I call ‘materializing citizenship,’ home-owning across the broadest possible swathe of the populace as a particular matter.

This means, I believe, that the most sensible ‘wind-down’ of Fannie’s and Freddie’s receivership by our federal government will be a re-institutionalization of Fannie’s and Freddie’s forthright ownership by our federal government.

The latter is, after all, simply that collective instrumentality, ‘owned’ and operated by all of us for the benefit of each of us, possessed of the most general national jurisdiction.  

In both earlier and recent scholarly work, not to mention a forthcoming book, I make the case for these claims.

These works elaborate the American polity’s self-conception as a ‘republic of owners,’ as manifest in its now centuries’ long tradition of republican ideology and associated ownership-spreading public policy.

They also treat of our home-spreading history in particular, focusing especially on the origins and first sixty years of the principal public home-spreading instrumentalities still with us – FHA, Fannie, Freddie Mac, and Ginnie Mae. They also home in on the particularly poignant and yet overlooked financial side of American home-owning, concentrating in particular on home prices’ status, in any middle class republic, as what I elsewhere call ‘systemically important prices,’ or ‘SIPIs.’

These works converge on the conclusion that our traditions and ideological commitments, in conjunction with the aforementioned financial entailments of those commitments, yield but one unavoidable policy upshot – namely, that home mortgage finance instrumentalities should be publicly owned and operated. They amount, in effect, to the most important public utility that our public possesses, short of our central bank and our federal government itself.

This is all, as I’ve noted, about the medium-to-longer term, both in respect of our future and in respect of our past, our republican traditions. In the more immediate term, I believe, we must now urgently reverse the trend toward refeudalization-through-financialization that the home finance debacles of 1993 to the present set in motion. We must, in other words, get ‘asset management’ firms out of residential real estate altogether.

This is what prompts my Owner-Occupied Real Estate Protection and Encouragement Act of 2022, which is now before Congress in slightly modified form as the Stop Wall Street Landlords Act of 2022 thanks to Congressman Ro Khanna.

This legislation includes three principal measures.

First, it prohibits federal mortgage agencies from assisting financial institutions in purchasing owner-occupied real estate. Second, it heavily, even prohibitively, taxes formerly owner-occupied real estate held by private equity firms, hedge funds, and other ‘asset-managing’ financial institutions. Finally third, it redoubles financial assistance to would-be owner-occupiers of humble means who seek to purchase residences for themselves and their families. 

These steps are crucial if we would restore that ‘ownership society’ that our Founders envisaged, that subsequent leaders including Presidents Lincoln and Roosevelt furthered, and that Presidents Clinton and Bush ironically dismantled. Time now to take them.

It is by now a near commonplace that the ‘globalization’ and ‘offshoring’ manias of the 1990s and after did not go as planned. China indeed grew, but it did not become America’s junior partner as its cheerleaders once cheerfully - not to say arrogantly - predicted. Prices, meanwhile, indeed dropped, but so did American wages and salaries, such that even the cheaper goods came to be priced out of reach for near all but those willing to rack up consumer debt in their purchase.

The Biden Administration and many bipartisan Members of Congress, to their credit, at last have awakened to the dangers the past thirty years have now brought. They see the skewing of incomes and wealth and attendant dysfunctions that the Clinton/Bush version of ‘free trade’ has brought. They also see now the national security threat this all poses, not to mention the inflationary consequences of dwindling productive capacity.

Among the upshots have been the Inflation Reduction Act and CHIPSHIPS & Science Act of last year. These enactments already are bearing fruit in the form of productive investments and new productive facility building across the nation. One limitation on these efforts’ successes, however, has been their entire reliance on ‘carrots,’ with no ‘sticks,’ in pursuit of their aims. They rely, in other words, on tax breaks and other subsidies to secure the internal investments that we have been short of for decades.

Were the matter an ‘either/or’ proposition, that would be fitting and proper. Far better to encourage what we need rather than discourage what we can no longer afford if one has to choose. But in fact one need not choose. One can both encourage what is wanted and discourage what is not, and in so doing obtain far more ‘bang’ for the ‘buck.’ And the fact is that outsourcing these past thirty years has been more than a cost - it’s been an externality imposed on American labor by outsourcing American firms.

This is what people like Clinton and Bush didn’t tell you when they cheer-led the gutting of American manufacturing. They touted the diffuse benefits of lower priced goods made by underpaid labor abroad, but said little to nothing of the concentrated costs that would be borne by ‘shed’ American labor and newly underpaid ‘service’ workers here at home.

Sure, at least Clinton made noises about ‘job retraining.’ But that never materialized in sufficient volume and in any case couldn’t have done so when all that remained in an ‘era’ when visionless politicians said ‘big government is over’ were fast-food and ‘care work’ jobs offered by oligopolies. And while Bush’s ‘ownership society’ blandishments might have seduced some, that racket was bound to prove a swindle when all that it meant was the further financialization of social insurance through ‘privatization’ of Social Security.

Surely the time has come, then, to add sticks to our carrots and force outsourcing firms to internalize the costs they impose upon both American labor and society at large - which remains over 95% labor-dependent for its incomes. The Outsourcing Cost Defrayment Act that I reproduce here shows how easy this will be to effect. Without further ado, then, here it is.

                      The Outsourcing Cost Defrayment Act of 2023

1.    Core Findings. Congress finds that the corporate practice of “outsourcing” American jobs to foreign, cheap labor jurisdictions causes immense harm to:

a.    Working Americans, by taking away or lowering their incomes and putting downward pressure on wage-rates economy-wide;

b.    American Communities, by impoverishing their populations, lowering their property values and associated tax bases, and raising both crime rates and rates of dependency on social service programs;

c.     American Consumers and National Security, by subjecting national supplies of goods, services, and even strategic materials to the vagaries of insecure global supply chains.

2.    Additional Findings. Congress also finds that assessing a surtax from outsourcing firms will:

a.    force firms to internalize the aforementioned costs that they currently impose upon Working Americans, American Communities, American Consumers, and National Security;

b.    force firms to compensate the Workers, Communities, and Consumers they harm by outsourcing;

c.     disincentivize firms from outsourcing in all cases save those where “offshoring” yields sufficient gains as can fully compensate all harmed American interests while still allowing for profitability.

3.    Outsourcing Cost Defrayment Levy. Wherefore be it enacted that the Internal Revenue Service within the Department of the Treasury shall levy an Outsourcing Cost Defrayment Levy upon any firm doing business in the United States and employing American Workers that moves operations off of American shores within five years before or five years after:

a.    reducing the pay per hour of its American employees;

b.    reducing the weekly hours available to its American employees; or

c.     reducing the number of paid jobs available to American workers at the rate of pay that it paid prior to offshoring.

4.    Calculation of Levy. The Outsourcing Cost Defrayment Levy shall be calculated as follows: For each year within five years before or after a firm offshores as provided for in Section 3 immediately above:

a.    ascertain the number of current or former employees of the firm whose weekly pay has been involuntarily lowered by the Outsourcing Event;

b.    ascertain the average difference in weekly pay between (i) what the current and former employees have earned prior to the Outsourcing Event and (ii) what the current and former employees are earning within one month after the Outsourcing Event (including those unable to find work), and call this the Wage Differential;

c.     multiply the Wage Differential specified immediately above in Subsection b by the number of current or former employees specified in Subsection a, and call this the Outsourcing Cost imposed by the outsourcing firm;

d.    levy the Outsourcing Cost imposed by each outsourcing firm against that firm, with the same periodicity as that of the firm’s wage or salary payments made to its employees prior to their loss of pay as specified above in Subsection b.

5.    Use of Levy Proceeds. The proceeds of the Outsourcing Cost Defrayment Levy shall be paid out to the outsourcing firms’ current and former employees whose weekly pay has been diminished for two (2) weeks or longer by their outsourcing employers’ offshoring activity, in order to replace the Wage Differential for each employee for up to [five (5) years] after their firms’ Outsourcing Events.

6.    Determination of Levy Beneficiaries. Any current or former employee of an outsourcing firm whose weekly pay has been adversely affected by an Outsourcing Event within the timeframes established above in Sections 3 through 5 shall be entitled to proceeds from the Outsourcing Cost Defrayment Levy in an amount closing his or her Wage Differential as defined in Section 4.b.; PROVIDED that he or she (i) has in good faith sought reasonably equivalent work within one month of the relevant Outsourcing Event, and (ii) has not been individually terminated for cause rather than pursuant to the Outsourcing Event. Any outsourcing firm wishing to contest a prospective Beneficiary’s entitlement as just described may do so, but the burden of proof that condition (i) or (ii) as just described is unmet shall be on that firm.

7.   Annual Recalculation of Benefit. Beneficiaries of the Outsourcing Cost Defrayment Levy as defined immediately above in Section 6 shall be eligible, per Section 5 above, for [five (5)] years’ receipt of the lost Wage Differentials; PROVIDED that the wage differential for each Beneficiary shall be recalculated each year of the five to account for any changes in the Beneficiary’s weekly pay, for better or for worse.           

New out of India today has me once again hopeful about the Digital Greenbacks and Inclusive Value Ledger plan I’ve ben pushing since 2018 and posted about right here last week. The ‘India Stack’ project is precisely such a plan, and bids fair to propel India instantly to the forefront of monetarily sophisticated nations just as it moves to the tip-top of most populous nations.

India’s news also prompts me to reflect a bit on money’s history, perhaps because India, like China, is recapturing an ancient role - at the forefront of global commerce - precisely, in part, by reclaiming, in updated form, older, more venerable forms of savings and payments.

Please hear me out for a moment …

As long as there has been commerce, there has been money; and as long as there continues to be commerce, there will be money. This suggests a method for tracking humanity’s commercial history. ‘Follow the money,’ and you will follow the history of how we have traded, not to mention how we’ve produced, in ‘exchange economies,’ over time. And ‘how’ here means not only payment technologies, but also payment practices, not to mention social and economic conditions—the conditions in which exchange and production-for-exchange all take place.

Given the deep link between money and commerce—money just is ‘that which pays’ in a practice or ‘system’ or ‘platform’ of commercial payments—this shouldn’t be surprising. But what might be surprising is that our commerce at this point is taking us back to a place we once were—‘back,’ as it were, ‘to the future.’ It is taking us back to what we can call ‘social accounting’—to a sort of citizens’ ledger or Capital Commons on which we are already implicitly transacting, and on which we shall soon be explicitly transacting again.

Here’s what I mean …

Start with the fact that money needn’t take any particular physical form. Where societies are small enough, or claim-tracking technologies sophisticated enough, a formally or informally kept account book or ‘mental ledger’ suffices to ‘keep score’—that is, to keep track of everyone’s claims and counterclaims, credits and debits, assets and liabilities.  

Coin and currency get into the act only when societies grow large and complex enough to render informal mental accounting and even paper book-keeping no longer up to the task of tracking all transactions, while still being technologically underdeveloped enough to render a single, formally kept digital social account book or ledger not yet practicable.

Currency and coin are in this sense intermediate-stage payment technologies in monetary evolution. They are means of ‘keeping accounts’ with each other in a common unit of account—a ‘common currency’ or ‘coin of the realm’—even when we do not all know one another or have means of recording and tracking our many exchanges with one another on one common ledger or spreadsheet. They are in other words primitive ledger-substitutes.

This affords us a clue as to why coin and currency issuance typically become sovereign, and in that sense ‘centralized’ functions—in a republic, republican functions—as economies and the polities in which they are always embedded grow ever more populous, socially complex, and technologically advanced. It is because, as centralized ledger substitutes, coin and currency have to be ‘centralized’ in a certain sense too—in the sense that they must both be universally used and retain uniform value across space and time. (The ‘uni’ in ‘universal’ and the ‘uni’ in ‘uniform’ are the same ‘uni’—they are, dare I say it?, unitary.)

Let’s take a gander at how this works…

Just as people in very small societies or proto-polities could in theory keep accounts with one another through debit and credit entries in a common—common, i.e., universal, and in that sense ‘central’—mental or paper account-book or ledger, so could they partly decentralize that account-keeping while retaining a new form of centrality as they grew larger in number and no longer able to use the same physical book. They could do so by conveying individually issued promissory notes to one another, while also providing universally available, and in that sense ‘centralized,’ means of valuing claims and enforcing contract and legal tender rules in connection with such claims.

This appears to be essentially how wooden ‘tally sticks’ and breakable clay, then metal, tablets and bars—the first circulating currencies—functioned in ancient societies that, not accidentally, also afforded means of adjudicating commercial disputes. The break pattern clearly identified who owed whom by reference to who held each half of the broken token. And uniform social practices of payment, enforceable by ‘centralized’ public authority, could then be invoked to ensure verified owing’s becoming actual paying.

The problem this left, however, was that the same growth in population and economic complexity that prompted the move from mental accounting to what we might call ‘metal accounting’—that is, to commercial- and financial-instrument-issuing—ultimately rendered private instrument-issuing, like mental accounting, unsatisfactorily transaction-limiting and hence production-limiting too. Broad transferability and hence universal usability of claim tokens was limited to those able to ‘credit’—that is, to believe in the credibility of—the token-issuer. And such credibility, though partly attainable through enforceable law, could only be incompletely attained in that manner.

It was natural in this circumstance to centralize token-issuance itself, which for present purposes is best seen as a step toward reinstituting centralized bookkeeping or ledger-tracking to societies that have grown beyond bothinformal account-keeping and private token-issuing. The universality and associated uniformity of the currency enabled it to function as a ‘distributed’ rendition of the ‘centralized’ universal ledger itself. Here’s how it worked—and still works, for the moment …

Sovereign or quasi-sovereign authorities themselves issue tokens that can function as claims and payment media more widely—at the limit, throughout their jurisdictions or realms—than can privately-issued tokens. Subjects or citizens then can lay hold of such tokens either by making excise payments in kind—for example, in the form of crop shares paid the local liege lord, or grain bushels requisitioned by a priestly authority—or by temporarily swapping private promissory tokens for public promissory tokens, which is what you do to this day when you sign a promissory note for a bank loan.

Centralization of issuance in this case substituted for centralization of account-keeping and, in some cases, even of contract enforcement. Authorities dispensed tokens as evidence of payment-obligations’ fulfillment. Because the mentioned obligations were universal and ongoing, the tokens, as de facto requisition receipts representing the authority’s obligation to recognize payments’ having been made, were universally desired. And universality of such token use, like universality of inclusion on an account book, as noted above, just is ‘centralization’ in the relevant sense of the word.

These tokens of  what I call ‘vertical’ credit/debit relation between sovereign and subject or republic and citizen accordingly could thus easily come to function as means of discharging even what I call ‘horizontal’ credit/debit relations among subjects or citizens inter se. Originally fashioned of clay into which sovereign or priestly seals could be stamped before baking for purposes of authentication, in time they came to be fashioned of more durable yet malleable metals resistant to corrosion, for which purposes gold and silver were most suitable.

Here, incidentally, lies the origin of sovereign-stamped metal coinage—not to mention of coin-metals’ perceived preciousness. Metals were precious because rare and coined, not rare and coined because somehow ‘intrinsically’ precious.  

Banks got into the money business—indeed, came even so much as to exist and then constitute the money business—in these societies much later than tribute-requisitioning and receipt-issuing sovereigns, quasi-sovereigns, religious or other social authorities. They began as metal-smiths whose business required the keeping of safes. Safe-ownership led naturally to a sidelight, that of metal storage for a fee—bailment. Holding metal in trust for many people in time came to recommend issuance of ‘claim checks’ used to keep track of whose metal-stores metal-smiths held.

Some smiths—the most trusted ones—might well have simply kept books. Others, with clients less trusting, issued verifiable claim tokens. In time it came to be recognized that claim tokens could substitute, as payment media, for the heavier metal coins or other objects that they represented claims upon, and then that they also could be issued in excess of those metal stores themselves.

The life of functional ‘elastic currencies’—moneys whose supply could in theory be modulated more readily than metals could be mined and then minted—effectively commenced at this juncture. Metal-smiths who had banked became bankers, full stop. These bankers could spend their own claim checks as money or lend them to others at interest so long as they did not issue them too far in excess of metal stores. Fractional-reserve banking was born.

Public authorities appear to have permitted this eventually burgeoning private ‘note issuance’ practice owing to the social advantages an elastic currency afforded. Money supplies could grow to accommodate growing transaction volume as economies grew, even when metal-mining couldn’t keep pace. All that was needed was to ensure that they did not grow too fast—at rates that brought excess inflationary pressure, excess liquidity risk, or both. The money-modulating task now became salient.

(Excess metal-mining, which did sometimes happen even if but rarely, could exert similar inflationary pressure. This seems to have happened, most notably, after Spain and Portugal struck silver in conquered South American territories. Their economies and empires devolved soon thereafter, a lesson apparently lost on the few remaining contemporary metallists.)

So sovereigns allowed, but also modulated, private bank currency issuance based upon sovereign coin and bullion issuance. And they let bankers lend in those currencies at interest so as to facilitate trade, investment, productive activity, and growth. In effect, they shared their seigniorage, which their coin issuance long had afforded, with bankers in the form that new note issuance afforded

This privatized ‘note seigniorage,’ which persists to this day in the form of bank fees and interest charged upon lending out sovereign currencies or their accounting equivalent (‘bank accounts’), was meant to serve as an incentive to bankers to lend prudently and productively—that is, in ways that were well calculated to prove wealth-generating.

In effect, sovereigns were outsourcing the role of productively issuing and lending sovereign claims upon resources, money—in elastic, readily multipliable, hence modulatable paper form—to their citizens. And they were controlling the quality of the multiplied money by requiring licensure of its private disseminators and regulating their activities.

Et voila, our modern finance franchise was born—the public as franchisor, the bankers and then other financial institutions as franchisees, and financial regulation as ‘quality control’ in respect of the franchised good, which is our monetized public full faith and credit.

But with the currency elasticity and prudent lending incentives this system brought came a vulnerability as well, the seriousness of which varied inversely with the effectiveness of sovereign franchisor monitoring of franchisee institutions’ activities. That was the danger of losing, through the franchise arrangement itself, precisely that form of monetary uniformity and associated de facto account centralization that centralized sovereign coin issuance had ben developed to afford in the first place

Which takes us to the present. Our money and our financial system have grown both dysfunctional and obsolete in the last several decades. The crash of ’08 was a wakeup call, and the present pandemic is a death knell. First came the poor modulation—the bubbles and busts—of the decades before 2008, which signaled massive credit-money misallocation. Now comes the recent pandemic’s productive breakdown, another allocative and hence modulatory disaster…

What, then, must be done? How must we revamp our money? In a number of recent books and articles as well as in future works, I aim to show how to take charge of our money and financial system again, ensuring that all of us are fully commercially enfranchised and that investment again flows to production, not offshoring and speculation. Key here is to remember our citizens’ ledger or Capital Commons—our implicit national account book—and make it explicit again.

The easiest way to do this is to imagine our system as a central bank balance sheet—our Fed’s balance sheet. On the liability side of this sheet will be digital dollars paid into and out of Fed-administered digital wallets for all citizens, businesses, and guests. Call them ‘Fed Wallets.’ These are the ledger equivalent of dollar bills—the present day, tokenized form of Fed liabilities.

Corresponding to these liabilities, on the asset side of our Fed’s balance sheet, will be productive, not speculative, assets. Here I mean public issuances associated with new infrastructure and related public investments, and small business paper associated with production and ‘discounted’ or ‘re-discounted’ by our regional Federal Reserve Banks, as originally intended by the Federal Reserve Act.

This is, again, what our Fed—our ‘central’ bank—was meant to be all along. The Fed is a centrally coordinated network—a ‘federation’—of regional development banks. It is time to restore to it that all-important mission

While this vision that I’m setting forth is of course future-oriented, it isn’t on that account ‘futuristic’ in any science fiction sense of that word. For again, it is a restoration of how we used to ‘do’ money and finance—back when we were productive. You can find more upon what I’m proposing here simply by looking at work I have linked to throughout—work on ‘Digitizing the Dollar,’ ‘Spreading the Fed,’ recapitalizing and commonly governing our ‘Capital Commons,’ and rediscovering the perpetual need of continuous ‘National Reconstruction and Development.’

For now, it will do simply to recognize that all of this means upgrading and revitalizing, and hence rediscovering, our National Ledger. For this is our new, as it once was our old, National Money.

Some political-economists and many policies informed by them have helped to bring miracles of wealth-growth worldwide. This they’ve accomplished by showing how societies that materially foster and reward creativity and initiative, and that provide these sacred human attributes with efficient outlets through which to build and produce what begins in the imagination or on the drawing board, are societies whose members flourish and grow ever more prosperous together.

Modern economics and the policies informed by it also have suffered some blind spots, however. For one thing they have overlooked nation-states, treating ‘the world economy’ as though it were the relevant unit of policy analysis even for national leaders. For another thing they have treated ‘national development’ as if it could be a ‘done deal’ or a one-off achievement, rather than a lifelong process of perpetual improvement and modernization.

These two errors have cost America dearly in recent decades. For we have ‘outsourced’ our most important productive capacities to other countries - sometimes even rival countries - in the name of not US, but ‘global’ production since the late 1970s. And we have thought we could do this because we have falsely believed that our national economy, which first ‘developed’ well over one hundred years ago, could somehow stay ‘developed’ without national care or strategic attention.

Early political-economists like Adam Smith and James Steuart, and statesmen who learned from them like the US’s first Treasury Secretary, Alexander Hamilton, were admirably clear about the ‘nation’ and ‘development’ parts of ‘national development.’ They spoke of ‘The Wealth of Nations.’

The discipline of ‘Political Economy’ that they initiated and then acted upon addressed itself to the leaders of distinct polities (hence ‘political’ economy), not any not-yet-existent ‘world government.’ And what they urged was a continuous national development, not offshoring, of strength- and wealth-building capacity.

A continuously developing national economy, to stay strong and creative and prosperous through time, has to remain a productively diversified economy – diversified within the national boundaries that policy-makers have actual authority to affect. Robust national economies have to have robust agricultural, industrial, commercial, and financial sectors – they can’t afford to ‘outsource’ or ‘offshore’ these things.

This is why Representative Khanna and Senator Marco Rubio announced last December new bicameral, non-partisan legislation I developed in 2020 and named ‘the InvestAmerica,’ or ‘Building Back Better Forever’ Plan.

The National Development Strategy and Coordination Act of 2022 both partially repurposes and regularly reconfigures existing institutions of our government in a once familiar but lately forgotten manner. It does this through two simple and mutually complementary, yet far-reaching measures.

First, it combine all of our already-existing (and democratically accountable!) Cabinet-level executive Agencies with responsibility for facilitating the nation’s primary industries and infrastructures, joined by leaders from all of our States and all of our most systemically important private sector industries, into one regularly meeting National Development Council (‘NDC,’ or ‘the Council’).

The Council will be responsible both for crafting and regularly updating a coherent cross-regional and cross-sectoral, ongoing National Development Strategy, and for coordinating that Strategy’s continuous execution. In so doing, it will act much as our regularly meeting National Security Council does in accountably bringing together all of our national defense and security agencies in crafting, regularly updating, and executing a single coordinated national defense and security strategy.

Second, the bill repurposes the already existing Federal Financing Bank (FFB) within the Department of Treasury, whose job is already to collect, lever, and distribute the funds used by our Cabinet-level Agencies in executing national policy, into the financing arm of the Council. That is, it repurposes the FFB in a manner directly corresponding to the way that the Council itself regularly recombines and partially repurposes those parts of the Executive Branch of our government responsible for executing national economic development policy.

This two-tiered model, which strategically combines collaborative policymaking and coordination functions with financing functions to facilitate productive synergies and continuous modernizations across all regions and industrial sectors of our continent-spanning economy, is not new. It is the modern equivalent of what we have done as a nation in all of the most ‘winning’ productive periods of our past as a proud and productive sovereign people.

The coordinative Council corresponds, for example, to President George Washington’s and Secretary Hamilton’s Treasury Department and Society for the Promotion of Useful Manufactures, while the repurposed FFB corresponds to their first Bank of the United States. That pairing catapulted the US from colonial status into a world-class diversified economy by early on in the 19^th century.

The Council also corresponds to President Abraham Lincoln’s and General Montgomery Meigs’s Office of the Quartermaster General, while the repurposed FFB corresponds to Lincoln’s and Secretary Salmon Chase’s Treasury Department and Office of the Comptroller of the Currency. That pairing first won the Civil War and then made the US into one of the world’s top three industrial powers by later in the 19^th century.

In more modern times the same pairing, in the forms first of President Woodrow Wilson’s and Chair Bernard Baruch’s War Industries Board and Chair Eugene Meyer’s War Finance Corporation, then of President Franklin Roosevelt’s and Chair Donald Nelson’s War Production Board and Secretary Jesse Jones’s Reconstruction Finance Corporation, first won the First and Second World Wars and then made the US the world’s unmatched premier economy and first superpower, respectively.  

We can do it again, just as we’ve done it so many times before. And we can do it without stopping this time. The key is to take to heart the importance of nations and perpetual development as noted above, along with one other lesson implicit in the pairing that the new Bill reinstitutes – namely, that perpetual productive development is synergistic, and hence must be coordinated in cross-cutting ways.

An electronic vehicle (EV) industry, for example, cannot grow absent a battery industry and regional networks of charging stations. Yet disparate private sector industries can no more push one another to move first on EVs or batteries, or zone locally or nationally for charging stations, than can public sector actors efficiently produce EVs or batteries.

Similarly, a new chip factory in a particular state or region will hardly make sense absent reliable sources of water and power and neighborhood housing and schooling and transportation for growing workforces and shipment needs. Nor will a wind farm for energy in one site of production be efficient if there is already a solar farm or hydropower station or refinery underway just across a nearby state line.

Yet no single firm or state has the resources or authority to ensure all needed parts of the whole that is chip manufacturing are available.      

For private sector industry, then, the job will be doing the creating, the inventing, the producing and the distributing. For public sector agencies, it will be spotting and addressing all holes – all regional disparities, financing shortfalls and other market failures – that private sector firms lack the means, the authority, or the rational incentives to correct. The Bill enables precisely these needed developments.

The coordinative council and financing bank duo is a uniquely American invention that’s been the secret to all of our greatest productive achievements as a nation throughout our proud 250 year history. It is time we restored it. The Bill does this not by establishing yet more new agencies or by ‘reinventing the wheel,’ but by optimally reorganizing the accountable instrumentalities we already have so that they can get rolling again.

Let’s get to work, then, as Hamilton did in constructing the nation’s first industrial park and as all subsequent leaders did to end decades of atrophy. Let us once again reconfigure our collective agent - our government and its instrumentalities - to exercise needed collective agency, so that every citizen and every firm that our citizens constitute can more effectively exercise individual agency, thereby building back better forever.

Anyone who spends even a few minutes reading the Federalist or Hamilton’s Treasury Reports will be struck by our first Treasury Secretary’s frequent use of the word ‘imbecile’ and its cognate, ‘imbecility.’ If you read with a 21st century sensibility, you might think he means something like idiocy or stupidity - the sort of thing manifest daily in apelike hooting by the likes of a Marjorie Taylor Greene or Lauren Boebert, or in the curiously vacuous stares of a Kevin McCarthy or Matt Gaetz, all of these creatures now peopling a shockingly debased U.S. Congress.

In fact, however, Hamilton meant something distinct, if related. He meant the want of composure, of composition, in any locus of agency needful of being composed or coherent to exercise agency. An ‘imbecile union,’ in Hamilton’s rendering, was effectively the outer form of a union without the inner ligature of a union. A ‘union’ without unity, a pluribus without unum - in short, a pathos-wrought contradiction in terms.

The conceptual tie between this form of imbecility and that of a Trump, Gaetz or Greene is clear enough - we say of the Propecia-poisoned or the insane, after all, that they are not compos mentis, not ‘of composed mind.’ But the mind Hamilton meant was the ‘common mind’ ordered by a common cause or purpose pursued by a polity acting in unison - a mode of collective agency exercised by individual agents in pursuit of collective ends, shared goals. A res publica, a republic or ‘thing of the public’ considered as One made of Many - e pluribus unum.

Against this backdrop, the current Speaker of the U.S. House of Representatives - the aforementioned Kevin McCarthy - is in for an unpleasant reaction today when he comes to New York, hat in hand, hoping to enlist Wall Street’s support for his and his imbecile Party’s plan to disintegrate the American Union not only socially, as they have been doing for decades now, but also fiscally and financially, as they have attempted repeatedly since 2011.

Wall Street will first spot the weak composition of the Speaker’s own mind as manifest in his strangely blank stare, then puzzle over the mere quasi-composition of the Speaker’s five caucus-fragments (fittingly called now ‘the five families’) as manifest in his tenuous grip on the Speakership, then finally shudder over the outright fiscal-cum-financial decomposition of the American Union he will effectively be seeking their support for.

The immediate sign of the horror he brings will be market turbulence as traders confront what the loss of the world’s premier financial market (the over $25 trillion Treasurys market), not to mention the sole ‘risk-free asset’ that all Wall Street pricing models presuppose, would mean for the U.S. and global economies. The longer term sign will be global melt-down, deflation, and war - the stuff of the 1930s, save this time with nuclear weapons.

In hopes of preempting McCarthy’s and other Republican’s long-sought doomsday, however, I’d like to offer a comforting observation - viz., that there is no real ‘debt ceiling’ apart from the federal budget itself. The President, the Congress, and Wall Street along with the wider world can ignore Mr. McCarthy, ignore his non-caucusing pseudo-caucus, and ignore their faux debt ceiling as just one more TikTok or Instagram cat video. For again, the federal budget, is its own debt ceiling.

Here’s what I mean …

American lawyers whose tort classes used one or another edition of the old William Prosser casebook will recall an archaic Kansas statute, apparently apocryphal, that Professor Prosser noted for tongue-in-cheek pedagogical purposes. This statute was said to have required, of the conductors of any two trains that approached one another from opposite directions, that each was to halt his or her train and wait for the other to pass.

The pedagogical point here, of course, had to do with what we’re to do in response to a statute that cannot actually have been meant to prescribe or proscribe what it seems to prescribe or proscribe – since presumably no legislature would ever seriously intend, for example, that the railways be clogged by immobile trains all putatively waiting for one another to pass.

As it happens, lawyers and courts over literal centuries have developed widely-used means of dealing with conundrums like that raised by the proverbial Kansas statute. Conundrums do regularly arise, after all, even if not always as comically as in the train story.

Massive bodies of law like any U.S. State’s statute book or the U.S. Code grow organically over time, such that later-enacted legislation can easily come into conflict with earlier-enacted legislation, sometimes in ways that escape notice by newly legislating legislators who haven’t memorized decades’ or centuries’ worth of past legislation. When that happens, neither our States nor our Republic can afford simply to cease all action – like those two Kansas trains! – while waiting for new legislators to go back and harmonize all new enactments with all prior laws.

Law codes aren’t Euclid’s Elements or Newton’s Principia, after all. They aren’t formal systems whose axioms aspire to full theoretic completeness and internal consistency once and for all. They are practical instruments we use to address public challenges and coordinate interacting private activities publicly, and hence regularly expand and amend to respond to new circumstances.

Sometimes we do the latter via new legislation, and sometimes instead we use what the lawyers call ‘canons of interpretation.’ It is through these latter that we handle ambiguous or conflicted statutes like the proverbial Kansan one between sessions of legislative address.

At least three and in fact probably four such canons, I think, offer straightforward legal means by which President Biden and Treasury Secretary Yellen can simply ignore a stunt that’s now brewing in Congress. I refer to the latest Republican attempt at terrorist bargaining over a putative U.S. ‘debt ceiling.’

Biden and Yellen, I claim, can simply ignore the would-be hostage-taker this time, leaving the ball in their ‘court’ to hail Treasury into our Courts and then watch the Supreme Court annul it. Unless President Biden actually wants House Republicans to pretend to ‘take us to the brink,’ then – letting them thereby commit political suicide as their predecessors did back in 1995, 2011, and 2013 – he should simply announce that the ‘debt ceiling’ just ‘isn’t a thing’ and instruct Janet Yellen to disregard it.

What are these canons that I claim President Biden can cite? They are actually quite simple and, again, altogether familiar to lawyers both inside and outside the White House and Congress.

The first is what’s called the ‘later in time’ rule of statutory construction. The idea here, common-sensibly enough, is that where two legislative enactments appear to conflict, the later enactment will be read as implicitly repealing the earlier one – at least as applied in any manner that yields conflict. The applicability of this canon to the latest ‘debt ceiling’ imbroglio is straight-forward…

Since enactment of the Congressional Budget and Impoundment Control Act of 1974, Congress has had ultimate control over the federal budget process, treating as merely advisory the President’s proposed budget each year. The ‘debt ceiling’ regime, by contrast, stems from the old Liberty Bond Act of 1917, passed by Congress as a means both of (a) conferring more budgetary discretion on the President in funding the U.S.’s First World War Effort, while also (b) imposing some minimal degree of control over the President’s use of that discretion during and immediately after the War.

That the ‘debt ceiling’ regime was never intended to apply to present circumstances, especially after 1974, of course is revealed by the fact that it wasn’t fought over by White Houses and Congress during the decades following 1917 … until opportunistic politicians beginning with Newt Gingrich in 1995 rediscovered it in the U.S. Code and decided to try their hands at employing it for stunt-performing purposes like shutting down the government.

Be that as it may, the important point right now is that both (a) the 1974 budget regime trumps the 1917 budget regime, and (b) the current budget trumps any putative ‘debt ceiling’ imposed after that budget became law.

The President should therefore just say that the last putative ceiling was implicitly repealed by the current budget, then note while at it that this also accords with Section 4 of the 14^th Amendment to the U.S. Constitution, more on which below, ratified by the former Confederate States as a condition on readmission to the Union. That provision prohibits questioning of the U.S. national debt, which compliance with any putative ‘debt ceiling’ imposed after debts are already incurred would amount to.

How about those other canons of statutory interpretation to which I alluded? Well these, as it happens, nicely complement the first. Start with the ‘absurd result’ canon. Pursuant to this one, a law that on one interpretation yields a result that cannot possibly have been rationally intended, while on another interpretation yields a result that could indeed rationally have been intended, must be read in keeping with the latter, rationally intendable interpretation. If, instead, there is literally no possible rational interpretation, the putative ‘law’ in question is treated as a nullity.

The absurd result canon of course offered means of dealing with the apocryphal Kansas train statute with which I opened. But it also carries over straightforwardly to the debt ceiling non-issue, in a manner that complements the later-in-time rule. For it is simply impossible to view Congress as having required both that the federal government issue Treasury securities pursuant to the latest budget, and not to borrow as much as required by that budget owing to earlier, putatively ‘limiting’ legislation.

We cannot, in other words, rationally interpret Congress as having done with fiscal legislation what the apocryphal Kansas legislature was said to have done with the aforementioned railway legislation. We must, then, instead view the most recent budget as having implicitly repealed any prior ‘debt ceiling’ legislation that would render compliance with the budget impossible.

A third canon-like norm of statutory construction in effect treats Constitutional conflict itself as a form of ‘absurd result’ to be averted when interpretively possible. I refer to the ‘Constitutional avoidance’ doctrine, pursuant to which a plausible statutory interpretation that avoids raising a Constitutional problem is to be preferred to one that does not avoid such a conflict. In the case of the ‘debt ceiling,’ the potential Constitutional conflict includes the one I alluded to earlier, along with several more.

First, then, Section 4 of the Constitution’s 14^thAmendment prohibits impugning the national debt of the U.S. – something that Treasury Secretaries since our very first, Alexander Hamilton, have understood to be crucial to the integrity, stability, and indeed long-term survival of our republic. Under the most historically plausible interpretation of this clause, even for a federal official to suggest that our debts won’t be paid is a violation, ‘calling into question’ as it does the integrity of U.S. obligations.

But (ironically named) ‘Republican’ gamesmanship with the old Liberty Bond regime of 1917, pursued with a view to undermining confidence in the solvency of those U.S. sovereign debt instruments that are the bedrock of both the U.S. and the world financial systems, amounts to as dramatic a direct assault on the full faith and credit of the U.S. as can be imagined.

The Republican abuse of the debt ceiling also raises Constitutional issues under the Constitution’s ‘Take Care’ Clause found in Article II, Section 3, pursuant to which the President is required to ‘take care that the Laws [- including the federal budget -] be faithfully executed,’ and the Separation of Powers doctrine, pursuant to which Congress, not the President, determines under Article I how funds shall be spent and how taxes shall be raised.

Republicans’ apparent interpretation of the debt ceiling of course (a) would obstruct the President’s execution of the law in the ways mandated by the budget - which, again, is duly enacted Congressional legislation - and (b) confer on the Treasury, via the ‘extraordinary measures’ that it would have to take, a de facto line item veto of the kind the Supreme Court has ruled violates Article I and the Separation of Powers.

Any interpretation of the debt ceiling regime that looks to threaten default, violate the Take Care Clause, or offend Article I and the Separation of Powers, then, must be rejected under the constitutional avoidance canon in view of its raising a Constitutional conflict. It must instead be interpreted as the later-in-time rule and the absurd result canon discussed above suggest.

A final canon of statutory construction that President Biden and Secretary Yellen might find helpful under present circumstances is known as the ‘specific trumps the general’ rule. Here the idea is that if a general prescription or proscription made by a legislature appears to conflict with a more specific proscription or prescription made by the legislature, the more general provision is to be read as implicitly including an exception for the specific provision. (A ‘no sidewalk littering’ ordinance, for example, will be read as compatible with another ordinance requiring that people salt their sidewalks when they are icy.)

Here again the canon in question enjoys straightforward application to present circumstances. Anybody who’s read or tried to read an annual federal budget know there are literally thousands of quite specific spending, taxing, and borrowing mandates laid out by Congress and signed into law by the President.

The so-called ‘debt ceiling,’ by contrast, says nothing directly about any of these thousands of budget line-items. Instead it speaks quite as generally as can be imagined, referring solely to an aggregate Treasury issuance amount starting with 1917’s First World War Liberty Bond issuance. The last-enacted budget – which, again, is the law – must accordingly be viewed as implicitly repealing any ‘ceiling’ legislation interpreted as conflicting with it.

Where does this leave us? I think it’s pretty straight-forward…

If President Biden, like Presidents Clinton and Obama before him, wishes to give would-be financial hostage-takers in Congress more rope to hang themselves with, he can of course play up the present pseudo-conflict, say that he ‘will not negotiate with terrorists’ or ‘cut Social Security or national defense,’ thank them for the de facto line item veto they’ve unconstitutionally conferred on him in the form of Secretary Yellen’s ‘extraordinary measures,’ and enjoy yet another public backlash against Republican House clown-shows.

If, on the other hand, the President decides that it is long since time to pull the plug on this farce so the nation can address real problems, he should simply inform Congressional Republicans that there is no debt ceiling apart from the budget that they themselves have enacted, then watch them either drop their latest hijack attempt or sue him and be told the same thing by the courts.

An oft-heard cry, after last summer’s overturning of Roe v. Wade by an overreaching Supreme Court, was that the U.S. Congress and President Biden should consider ‘packing the Court.’ The call, that is, was to enlarge the Court’s number of seats from the current 9, and then nominate new judges with greater respect both for rights and for precedent.

President Biden, of course, quickly dismissed the idea, as did many others. Their reasons were many.

One was that President Roosevelt had experienced great political backlash after floating a similar idea after wooden-headed Justices struck down one New Deal program too many. Another, related reason was that the plan seemed too ad hoc and ‘result-driven’ rather than principled. And still another was that the same senescent process that had led to the Court’s current imbalance would bring the same to a larger Court.

I was among the many who dismissed the Court-packing idea. Though I agreed with the merits of at least two of the three rationales I’ve just specified, however, my primary reason was quite different…

It was that the Court, along with our other federal courts, is already packed, and our task is, accordingly to unpack it.

If you doubt this, first ask yourself how representative six ultraconservative white male Catholics are of the demographics or the core values of the American public. (Yes, it’s unclear whether the Federalist Society member, Scalia-adulating, and Robbie George protégé Justice Gorsuch is a conservative Catholic, as he was raised to be, or a wealthy Episcopalian as his family’s church membership suggests; but this is a distinction with little difference here.)

Then ask yourself how the Court got this way. The answer: through concentration of nearly all Court appointment power into the purpuric hands of one corrupt and unprincipled Southern reactionary - the spectacularly sociopathic Mitch McConnell.

You remember McConnell, right? The fellow who invented a new ‘principle’ to block Senate consideration of Obama-nominated Merrick Garland, canned the ‘principle’ to expedite confirmation of Trump-nominated cultist Amy Coney Barrett, and unilaterally ended investigation into multiple allegations of sex crimes committed by nominee Brett Kavanaugh.

Ironically, however, it was McConnell’s convenient shut down of the Kavanaugh investigation that points the way to how best to unpack our courts. Even a cursory read of past cases of successful House and Senate impeachment of U.S. federal judges makes clear that the most common predicate offenses leading to judicial removal are bribery, sexual assault, and perjury.

Might one or more of these offenses be found, via proceedings not artificially brought to a halt by one anti-democratically over-empowered Senate Committee Chair, to attach to any current Supreme Court Justices or federal judges of whom you have heard? Well, two sitting Justices have been credibly accused by multiple witnesses - not to mention alleged victims - of assault. Both of them also stand accused of perjury concerning those charges.

At least two other Justices stand accused of perjuring themselves both before the Senate and in individual office meetings in respect of their attitudes toward Roe v. Wade, while another stands accused of having plagiarized in writing a dissertation for an advanced degree.

And now of course Justice Thomas appears also to have broken the law - forget ‘judicial ethics’ - in taking money from at least one ultrawealthy, bizarrely reactionary ‘donor.’

But wait, there’s more.

This morning it emerges that Matthew Kacsmaryk, the Texas federal judge who credited himself with greater expertise as to drug safety than had the FDA twenty-three years ago and all medical experts since, mysteriously removed his name from a bizarre law review article he had published when asked by the Senate to disclose his past publications. This, of course, also is perjury, quite apart from his misapplication, if not outright violation, of well settled administrative law from the bench.

Are you seeing a pattern here? How could anyone not? What we seem to have now in the judiciary is an institution long grown accustomed to impunity, to the point that less savory judges - typically recommended for appointment and then appointed by our least savory public servants - scarcely bother even to attempt to comply, or to conceal noncompliance, with codified ethical norms or even, in distressingly many cases now, criminal law.

But in that distressing circumstance lies hidden a Blessing - if we’ll but now use it: cultures of brazen contempt also are cultures of rich paper trails and caches of evidence. Those who don’t bother to hide their crimes also are those who’re most easily convicted of their crimes. And from the looks of things, reactionary judges have become now a rich mine of criminal prosecution, impeachment and removal for any moderately enterprising Congressional staffer with a sense of real justice.

Indeed, in light of the pervasive contempt for the law and outright criminality of the previous occupant of the White House, I don’t believe it should be controversial to propose that literally every appointment, to the bench and to all other federal offices, should be presumed to be ‘fruit of the poisonous tree,’ investigated, and removed where fitting.

Rot breeds rot, and it looks now as if we’ve a full Augean stable’s worth. Get out your shovels, then, Congress, and start cleaning our courts.