For the US, increasing the money supply through QE is simply another means to allow the economy to destroy debt and accumulate savings: the Fed wants to force down long-term interest rates, induce consumers and companies to spend, and so try to stop the US economy slipping into another recession and deflation, which would worsen the debt crisis.
The court observed only that the clause confirmed the "fundamental principle" that Congress may not "alter or destroy" debts already incurred.
More than three generations later, in 1935, Chief Justice Charles Evans Hughes, ruling in the case of Perry v. the United States, revisited the amendment and affirmed the "fundamental principle" that Congress may not "alter or destroy" debts already incurred.
Last year, Chilean artist, Francisco Tapia, set fire to documents representing $500m £326mm) worth of student debt during a protest at the country's Universidad del Mar, claiming he had 'freed' students by destroying the debt papers.
The AIG bailout benefited Goldman, the firm responsible for the largest share of many value destroying collateralized debt obligations (CDOs) against which AIG sold protection ($33 billion of the $80 billion).
Rather than destroy the debt, we have reshuffled it; initially from struggling homeowners to banks, then from banks to governments, and then from weak governments to stronger ones.It is rather like the game of Old Maid, where the loser is the player who ends up with the Queen of Spades; we all try to pass on the card to someone else.
The economist Carmen Reinhart terms this era one of the "repression" of finance -- a term that sounds ominous but in fact is what allowed the postwar recovery to go forward and not to be destroyed by debt.
The abuser may take out a credit card account in the victim's name and pile up debt, destroying her credit rating.
In August 2007, I publicly challenged AIG's accounting for its "protection" (credit default swaps) on value destroying CDOs (collateralized debt obligations backed by mortgages and various other assets including credit derivatives).
As the appeals court wrote: "It would be a perverse system that, by design, wasted taxpayer money in order to impose crippling, credit-destroying debt on lower-income students and graduates".
On March 8, a federal appeals court panel, in a four-page opinion, summarily and soundly rejected the challenge to the rule and the industry's offensive arguments; the court wrote, "It would be a perverse system that, by design, wasted taxpayer money in order to impose crippling, credit-destroying debt on lower-income students and graduates".
