Debt Ceiling Leverage

Two ideas have recently surfaced which both involve the federal reserve. In one, the Fed destroys the treasuries they own. The result is immediate space under the debt ceiling. In a slightly modified version of this, the Fed will just destroy t-bills which will at least allow the treasury to continue issuing cash management bills and the like.

In the second idea, the Fed simply allows the US Government to overdraw its account, and continues crediting payments. Clearly this is just printing money. Assuming that these options are legally possible, Obama should at least be making unassuring noises about them.

Here's why: libertarians and tea party types have deep fears of inflation and are more or less unanimous in their view that "'inflation is always and everywhere a monetary phenomenon." They also tend to be terrified of inflation and view it as far more troublesome than, say, a ruined economy. Making their biggest economic fear (well, after being told what ketchup brand to buy) a little closer to reality might just make them slightly more flexible. Nah. For good measure, maybe Obama should hint at having to sell off the gold reserves (this assumes that they can understand the impact of drastically increased supply on a market).