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 ...
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.
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