Peter Dorman at Econospeak writes a letter to Bank of America:
The Moral Imperative of a Debt Ceiling
From this morning’s New York Times:
Representative Jerrold Nadler, Democrat of New York, signed on to the trillion-dollar [platinum] coin plan, telling Capital New York: “It sounds silly but it’s absolutely legal. And it would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things.”
But he might find resistance from Representative Greg Walden, Republican of Oregon, who said he would introduce legislation to close the loophole and end the debate once and for all.
“My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air,” Mr. Walden said.
Dear Bank of America:
As a lender to my small business, you should be the first to know of a decision I’ve decided to take. It wasn’t easy, and I’ve given it a lot of thought, but now I’m convinced it’s the right course of action. I won’t be making my next monthly payment.
It is true that I have already ordered shipments of equipment and materials using the funds I’ve borrowed from you. It is also true that I have adopted a pricing policy that’s designed to increase market share at the expense of current cash flow. The result of these choices is that my financial obligations will exceed my revenues for an extended period of time.
I have a line of credit that can cover this shortfall; we discussed it at length in our meeting last month. I appreciate your willingness to finance it at a negative real interest rate. But I now believe that it is immoral for me to increase my debt, which could be a burden on my children and grandchildren. As a result, I have imposed a debt limit on myself—a limit which I refuse to raise.
I’m sure you can understand the sound principles on which this choice is based: taking on more debt is evil. That’s why I have chosen instead to default on your loan, as well as withhold wages I’ve promised to pay to my workers. Please support me in this virtuous undertaking.