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 ...
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?
Welcome to the Twilight Zone.
The last 4-5 years have been like a drug trip gone bad, a horrifying nightmare from which we cannot wake up.
I wonder if the government would be interested in these magic beans that happened to come into my possession?
The day the Chinese refuse said coins and the U.S. then uses this to pay obligations to citizens, we’re in trouble.
The collateral for our debts is the 30% of the country the U.S. government locked up in parks / reserves / wilderness areas.
This is one of the worst ideas I’ve ever heard.
They need to mint 1,000 billion dollar coins, to spread the cost of the special striking out to a reasonable level. /sarc
And then, only to union shops.
How about another valuable material commonly mentioned for coins, yet, like platinum, unmentioned by the constitution... wood! We could even back it with real value. We probably have enough trees in the national forests to make 20 trillion wooden nickels. They'd be both biodegradable and renewable. The Republicans would like that they'd introduce the concept of 'growth' into the Obama administration. The Democrats would like they'd they'd have money they could literally burn.
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