Posted on 01/03/2013 4:36:21 PM PST by blam
Suddenly, Lots Of Influential People Are Talking About The Trillion Dollar Coin Idea To Save The Economy
Joe Weisenthal
Jan. 3, 2013, 4:42 PM
This is really thrilling.
An arcane idea that started on finance blogs in the summer of 2011-- that Tim Geithner should mint a trillion dollar platinum coin to avert the debt ceiling -- is now seriously taking off.
The premise of the idea is this: Although the Treasury can't just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins, and the thinking is that Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Fed's account.
The first blog to really promote the idea was Cullen Roche's Pragmatic Capitalist. We jumped on it soon thereafter, as did others. Of course, once the debt ceiling was solved, people forgot about it.
But there's a new debt ceiling looming, and this time, LOTS more people are talking about it.
We noted our surprise back in early December that an actual 3rd party research firm brought up the idea.
Now it's going even more viral.
Paul Krugman discussed it yesterday.
In an interview with Capitol New York, Representative Jerry Nadler came out in favor of the solution (Nadler has an above-average understanding of economics in our experience).
Josh Barro at Bloomberg is now endorsing it, and that's spread a huge conversation about it among DC journalists and policy folks on twitter.
Barro explains why it's the perfect "solution" to the debt ceiling fiasco:
Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession,"
(snip)
(Excerpt) Read more at businessinsider.com ...
Okay, lemme guess, it’s “Three-Year-Olds Run the Economy Day”?
We should mint a lot of them. If Congress continues spending like Obama is a drunken sailor, then we’re all going to need those trillion dollar coins - for bus fare.
The day the US Treasury prints a Trillion dollar coin, that will be the clearest signal yet to hoard gold, silver and ammunition, get rid of all paper assets, especially all Gov’t bonds, and make sure your loved ones are safe.
Because at that point, we will have become Zimbabwe.
May as well simply print trillion dollar bills, it’s economically just as valid an exercise. I suggest Groucho Marx for the bills portrait.
They stole that idea from the Simpsons. Monty Burns once had a Trillion Dollar bill.
No, we have the Fed to do that for us. sheesh.
Great idea. Just mint and give one to every man, woman and child in America. Then let the feds tax it at 50%. Feds have scads of cash and everyone is a multi-billionaire. Win-win for all ... what could go wrong?
Homer Simpson: “Here trilly, trilly, trilly....”
Obama’s picture on one side and a picture of the DNC’s mascot on the other side. That will work!
The government has built a house of cards on the perception of value in the paper dollar, and a platinum coin the size of a silver dollar has more weight than that house of cards can support.
Once Joe Average figures out that sixteen of 'em represent payment for the ENTIRE US government debt, the platinum will hit the fan.
On Obama spending like a drunken sailor....this is not true, drunken sailors spend their OWN money!
That would be too late. The day that it is suggested that "the US Treasury prints a Trillion dollar coin" ... isn't quite too late (nudge nudge).
This would not result in massive inflation, because we wouldn't have a gigantic injection of new money into "the system." That is only achievable through massive spending beyond which the economy can handle.
*cough*
These people are probably sitting around laughing their butts off. Why not? The American populace is stupid enough to believe it. Which makes them laugh even harder.
All they have to do is tell the MSM propaganda crew to go for it.
He'd probably drop it and lose it in a storm drain on the way over to the fed...
3 year olds playing 3 Card Monte
Not really too outlandish.
By the day Obama, Geithner and Bernanke are done it will take a Trillion Dollar coin to buy a used Ford Pinto.
The next day it will cost even more.
Uh huh. In that same article, Nadler showed his "above-average understanding of economics" by saying that the part of the 14th Amendment saying that U.S. Civil-War debt is indeed debt, somehow means that Congress doesn't have a say in spending any more.
Nadler has an above-average understanding of economics in our experience a fork & spoon.
Which would also require the minting of a half-a-trillion dollar coin.
A "four bits-a-trillion" coin, so to speak...
What would be the difference if it was say ...gold?
Would using platinum deflate the value of hoarding gold?
Should we start buying platinum?
And would that move us from a fiat standard to a platinum standard and really screw-up all the other countries that have been hoarding gold?
Stop spending our money overseas.
Start saving money here.
Enough idiot ideas. Save money now.
I WISH Zero would spend like a drunken sailor! As a former drunken sailor, I can tell you that I stopped when I ran out of money.
Yup. :D
“New York, Representative Jerry Nadler came out in favor of the solution (Nadler has an above-average understanding of economics in our experience).”
Maybe if above-average means you have no clue how inflation, the money supply, or currency devaluation work.
“What would be the difference if it was say ...gold?”
It wouldn’t be valid, because the loophole only applies to platinum.
“Would using platinum deflate the value of hoarding gold?”
No. In fact, if they pull this scheme, the value of the dollar versus gold will drop, effectively inflating the price of any gold you already own.
“Should we start buying platinum?”
Not unless you were already planning to. This won’t affect the price of platinum, except through inflation, like it will for any other valuable commodity.
“And would that move us from a fiat standard to a platinum standard and really screw-up all the other countries that have been hoarding gold?”
No, the coin may be platinum, but it is still a fiat currency. It will not be minted with one trillion dollars worth of platinum, that would defeat the entire purpose (to create money out of thin air). So, it’s no different in that respect than having fiat money made out of copper, zinc, or nickel.
There are actually signs that the democrats fully intend to do domething like this. Obama is acting as if he wants to start inflation, by not reducing spending, by giving people raises, by encouraging strikes for more wages. All of these have the intent of forcing prices to rise, but they will fail in today's economy.
If inflation occurs, then interest rates should rise, which means that we would then be forced to default on our debt. So, he would need a way to increase the money supply without borrowing from the federal reserve. Which means the treasury would have to print it.
well they better print about 200 of them for all the fake derivative thin air money that’s about to crash.
Must be some lame "Finance" blogs. Anyone with basic knowledge knows that Geithner can do no such thing, unless he was perhaps directed by Congress. The Congress could most certainly create a "Trillion Dollar Coin", as the Constitution provides them with the ability to coin money(NOT paper currency). Not sure who would accept such a coin as payment though. It would be worth it's melt value in Platinum I would think. lol
God help us.
This is the most stupid idea I’ve ever heard. To print a trillion dollar coin, but not put it into circulation means the coin is worthless except to collectors of rarity. It’s very existence might however lead to a devaluation of the dollar with respect to other currencies simply because of the distrust it demands. The Obama administration governs and leads by gimmicks and manipulation. Nothing is ever on the up and up with them. What is actually needed right now is for all of Congress to be sent home for 1 year and government not be able spend a damn dime during that time. People would then see that they can survive without government spending or Congess being in Washington. I mean it, not one dime.
Why stop with one or a few of those trillion dollar coins?
Why not mint 7 billion of them, and give one to each person in the world. That would make everybody instantly wealthy.
Then, there would be no need for government social programs, since there would be no poor people anywhere. And there would be no class-warfare, since there would be no middle-class and no poor class and no rich class. There would also be no buses or corporations, since nobody would have to work for a living. And, since rich people would not be envious of what others have, then perhaps there will never again be any wars.
The biggest benefit would be that, without the need to support wars or to support people, there would be no need for governments.
And, if anyone ever gambles away his/her trillion dollars, then, just minting another trillion dollar coin would make him/her wealthy again.
The people with the trillion dollar coin idea have just come up with the perfect solution to all the world’s problems. Let’s start minting today!
You see, what the government can do is mint the coins, then pay off the debt to the Federal Reserve with them (being sure to get the receipt [notarized and triplicate], then refuse to honor the face-value of the coins citing the Constitution's provision that the states can only make gold or silver payment for debts.
IOW: Eat the debt fed!
2nd paragraph correction:
“there would also be no businesses or corporations...”
File this under “magical thinking”. Kind of like the Fed thinking it can print its way out of a recession.
It’s a great idea and all, but what happens if he’s walking it over to the treasury, passes a vending machine and realizes he does have any other change?
“Everything about socialism is sham and affectation.” - 23.11; Ch23; Economic Harmonies; Frederic Bastiat 1801-1850
Eliminate the FED. Swing Bernanke & Geithner from a lamp post.
Problem solved.
Congressmen would buy a small ticket item, like a pack of gum or book of stamps, at the House Post Office, write the cashier a check for hundreds/thousands of dollars, then pocket the change. The checks were never cashed, and the taxpayers refilled the till.
That was so long ago, now why did that event pop into my head? Maybe because a made-up coin that never circulates has the same value as a check you never cash - none. And anyone who makes money based on the value of either one is A CROOK.
Expanding the money supply doesn’t save the economy. It ruins the economy. The point of the coin is to preserve the government’s ability to buy elections and redistribute wealth.
Paul Krugman is an idiot.
Representative Jerry Nadler came out in favor of the solution
Gerold Nadler is an idiot.
Josh Barro at Bloomberg is now endorsing it
Josh Barro isn't even smart enough to be considered an idiot. If you ask his dad Robert what he thinks about it, he would say that his son needs to shut up about things he knows nothing about.
The difference is that gold and silver are regulated where as platinum is not.
So the treasury could not mint a trillion dollar gold coin because it would have to have trillion dollars worth of gold in the coin.
Effectively this would fix the price of platinum in the US at hugely high levels. Thus, it might be a good idea to buy some now because you could be a trillionaire with a couple of thousand dollars investment
However, doing this would make the dollar worthless. So you’d have a trillion of them an be able to buy a loaf of bread. This would in effect, exponentially devalue the dollar.
The people who should really be upset about this are the holders of US debt like the Chinese and Arabs. It would mean that the Arabs had given the US all that oil because they sold it in 1990 dollars which are now worth 0.000001 of the value at the time.
So in a perverse way this would not only get rid of the deficit problem but the trade imbalance as well.
It would in my view probably lead to war but the very least wold mean no country would import goods to the US, from the US or buy the government bonds. Ask yourself; “If someone owed you money and said they were going to pay back 1/10,000,000 of it would you be happy? Would you do something to prevent that.
If Geitner does this the entire financial system of the US will collapse.
Unless the trillion dollar plantinum coin weighs 20,000 tonnes, then it might actually work.
Knowing Hermie, he’d probably use the thing for bus fare on the way to the Fed.
Forgot about that but thanks for the reminder. Didn’t many of them write hot checks also?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
