7/30 A balanced budget amendment in the midst of a depression.... sound idiotic? It should.
What does this do to gold? :) Let's see, on the one hand the contraction of money supply makes gold less valuable. On the other hand the contraction of money supply is exactly what can deepen the depression, causing gold to be more valuable...maybe? hmmmm.
The idea is, though, a partially brilliant strategic move by the fairly idiotic to get re-elected. Such an amendment would be widely supported and politicians voting against it would do so at their peril. However, any concerted effort could block things as it isn't easy to pass a Constitutional amendment. Even a veto stops it and that would jeopardize only one politician's career, albeit for the sake of sanity.
The obvious? Any economic stimulus we might need in a future downturn (perhaps the double dip that looks to be appearing) would be impossible unless the Fed would be allowed do it. But Fed stimulus is mostly a rich man's game.
Would wars be taken off-budget? Or would we just not go to war? That would certainly be a positive, unless, per chance, we actually needed to go to war. Had we had a balanced budget amendment, the Iraq war would have been impossible but Hitler's Germany would probably have controlled most of the world's oil supply long ago anyway.
All in all, I think I'll start calling them the Mad Tea Party.
7/30 I will have to stop using sandwich shop lingo for titles. I'll make a pledge. If our country doesn't default, no more sandwich puns. :) The inability of our government to work is becoming shocking even to me. I think this illustration is much more extensive than the first failed bailout vote that sent the stock market off a cliff. Truly awe inspiring.