From Humble Student of the Markets:
...MUCH MORE...If the Treasury is unwilling to stretch the definition of extraordinary measures, on the day that the Federal Reserve predicts that the Treasury will run out of cash in its account and the Treasury is bound by the debt ceiling, it suspends all payments and awaits instructions from the Treasury. As a result, the government’s principal economic officials will face the prospect of violating one of these three laws:Roche postulated that #3, the Constitution, ranks senior to the other laws, so Treasury Secretary Jack Lew and Fed Chair Ben Bernanke would likely choose to violate #2 in order to prevent a global financial meltdown. However, there would be a conversation that would go something like this before it ever happened:
1. The Second Liberty Bond Act of 1917 that establishes the debt ceiling;
2. The Federal Reserve Act that prohibits the Fed from lending directly to the Treasury; or,
3. The 14th Amendment of the Constitution that holds that the debt of the United States government, lawfully issued, will not be questioned.
Tsy Sec Jack Lew: ”Ben, I’m about to break the law here if we don’t do something. Oh, and we’re about to crash the global financial system. How about you enact the exigent circumstances clause and just fund our account?”
Fed Chief Ben Bernanke: “Sure, but I want some guarantees that I am not going to be the only one on the hook here for this.”
Lew: ”Sure thing.” [Dials in President Obama]
President Obama: “Hey dudes, how can I help?”
Bernanke: “If I am going to save the world AGAIN, I need some guarantees I won’t go to jail this time around. Can you guarantee that?”
