<![CDATA[Latest posts for the thread "Trillion Dollar Coin"]]> http://www.dakkadakka.com/dakkaforum/posts/list/54.page JForum - http://www.jforum.net Trillion Dollar Coin
Trillion-dollar coin could let President Obama bypass debt-ceiling impasse

This is insane.

Spoiler:
Trillion-dollar coin could let President Obama bypass debt-ceiling impasse
Far-fetched, perhaps, but it is legal for the Treasury Department to make such a coin. Federal law permits it to mint platinum coins for any amount.

BY KRISTEN A. LEE / NEW YORK DAILY NEWS

MONDAY, JANUARY 7, 2013, 6:31 PM
Print US MINT/AP

A one-ounce $100 platinum coin, also sold in half-ounce, quarter-ounce and tenth-ounce versions, went on sale to the public in 1997.
Could another standoff over the nation’s debt ceiling be avoided with some loose change?

Advocates for a new trillion dollar platinum coin don’t find that idea so outlandish.

New York Rep. Jerrold Nadler is the most prominent politician arguing that minting a trillion dollar coin to pay some of the nation's debt is a better option than another fight over raising the U.S. debt ceiling that could result in default.

And with Washington bracing for yet another game of brinkmanship in less than two months over the $16 trillion debt limit, the seemingly far-fetched idea seems to be gaining currency.

Influential columnist Paul Krugman argued for minting a coin to avoid default on Monday, saying the U.S. is faced with “a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous.”

AFTER LAST-MINUTE FISCAL CLIFF DEAL, PRESIDENT OBAMA STILL FACES BATTLE WITH REPUBLICANS OVER DEBT

The growing chorus pushing for the coin prompted Republican Rep. Greg Walden of Oregon to introduce a bill on Monday to ban the proposal, which he called “absurd and dangerous.”

“My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air,” Walden said. “We sat down and figured out how to balance the books.”

Nadler and other proponents, however, argue that a trillion dollar coin is no more absurd than the debt ceiling itself, which caps the government’s ability to cover spending Congress has already authorized.

The proposal stems from a line in federal law that allows the Treasury Department to “mint and issue platinum bullion coins and proof platinum coins” in any size or denomination it chooses.

That loophole, intended to allow for collectors’ coins, theoretically opens the door to the trillion dollar coin.

While platinum is a precious commodity, a platinum coin would have to weigh more than 20,000 tons to have an actual value, when melted, of a trillion dollars. But the face value of no U.S. coin actually matches the value of the metal used to make the coin.

The proposal has been subjected to much mockery on Twitter and in the blogosphere.

Some critics, including a spokesman for House Speaker John Boehner, have noted that the notion of a trillion dollar bill was once covered in an episode of The Simpsons.

A White House petition for a trillion dollar coin had just 5,000 signatures on Monday afternoon, roughly 20,000 short of triggering a response from the Obama administration.


Read more: http://www.nydailynews.com/news/politics/obama-mint-trillion-dollar-coin-deal-debt-ceiling-article-1.1235224#ixzz2HS1vVgtg]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153687.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153687.page GMT Re:Trillion Dollar Coin
Was so ready to post "The Simpsons did it!" until I got to the part where the article states the same.

Thunder stolen ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153708.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153708.page GMT Trillion Dollar Coin
They want to make a platinum coin, and sell it for 100 bucks, so the government can get out of debt? Isn't that sort of just shifting the debt and not really doing much about it?]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153711.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153711.page GMT Re:Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153736.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153736.page GMT Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153756.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153756.page GMT Re:Trillion Dollar Coin
The only way to make coins and sell them to make money would be to have it be hard currency. The government could sell gold coins but that would be no different than just selling gold bullion by the ounce.

Congress needs to stop spending money it doesn't have.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153910.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153910.page GMT Trillion Dollar Coin

 Cannerus_The_Unbearable wrote:
Any highly trained internet economists have a guess what would happen to the dollar afterwards?


The dollar would deflate, because you'd be putting more dollars into circulation.

But then the treasury has been actively pumping more dollars into circulation since the GFC, to counter the deflation, maintain demand and increase international competitiveness (for the first it worked a treat, for the latter two it achieved little and was never going to because monetary policy is ineffective in promoting demand... as we've known since the 1950s).


Automatically Appended Next Post:
 Grey Templar wrote:
You can't simply print money to make a debt problem go away. Thats what happend in Germany after WW1.


Yeah, if you just print more money almost unrestrained then you get hyper inflation. Good thing no-one is talking about just straight up printing as much money as government can print, so that's completely pointless.

Congress needs to stop spending money it doesn't have.


People who don't understand economics need to stop talking about it.

These kinds of general notions of good household budgeting just do not work when it comes to economies, because they are not the same thing. Your household has an income, if it goes down it makes good sense to spend less money, because how much you earn is independant of how much you spend. But in an economy that isn't true, what you spend is what I earn, and what I spend is what you earn.

So when the government says 'egads, there's a financial shock and tax revenues are falling, better cut spending to balance the books' what you see is further reductions in economic activity, leading to further reductions in tax revenue, and so less government spending and all the way down the spiral until you hit a great depression.

The correct government response is known and has been well-established for generations now - government undertakes deficit spending to maintain aggregate demand until normal economic activity has been restored.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153911.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5153911.page GMT Trillion Dollar Coin
It's really a brilliant play.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5154147.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5154147.page GMT Trillion Dollar Coin
 DeathReaper wrote:
From the NY Daily news:

Trillion-dollar coin could let President Obama bypass debt-ceiling impasse

This is insane.

Spoiler:
Trillion-dollar coin could let President Obama bypass debt-ceiling impasse
Far-fetched, perhaps, but it is legal for the Treasury Department to make such a coin. Federal law permits it to mint platinum coins for any amount.

BY KRISTEN A. LEE / NEW YORK DAILY NEWS

MONDAY, JANUARY 7, 2013, 6:31 PM
Print US MINT/AP

A one-ounce $100 platinum coin, also sold in half-ounce, quarter-ounce and tenth-ounce versions, went on sale to the public in 1997.
Could another standoff over the nation’s debt ceiling be avoided with some loose change?

Advocates for a new trillion dollar platinum coin don’t find that idea so outlandish.

New York Rep. Jerrold Nadler is the most prominent politician arguing that minting a trillion dollar coin to pay some of the nation's debt is a better option than another fight over raising the U.S. debt ceiling that could result in default.

And with Washington bracing for yet another game of brinkmanship in less than two months over the $16 trillion debt limit, the seemingly far-fetched idea seems to be gaining currency.

Influential columnist Paul Krugman argued for minting a coin to avoid default on Monday, saying the U.S. is faced with “a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous.”

AFTER LAST-MINUTE FISCAL CLIFF DEAL, PRESIDENT OBAMA STILL FACES BATTLE WITH REPUBLICANS OVER DEBT

The growing chorus pushing for the coin prompted Republican Rep. Greg Walden of Oregon to introduce a bill on Monday to ban the proposal, which he called “absurd and dangerous.”

“My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air,” Walden said. “We sat down and figured out how to balance the books.”

Nadler and other proponents, however, argue that a trillion dollar coin is no more absurd than the debt ceiling itself, which caps the government’s ability to cover spending Congress has already authorized.

The proposal stems from a line in federal law that allows the Treasury Department to “mint and issue platinum bullion coins and proof platinum coins” in any size or denomination it chooses.

That loophole, intended to allow for collectors’ coins, theoretically opens the door to the trillion dollar coin.

While platinum is a precious commodity, a platinum coin would have to weigh more than 20,000 tons to have an actual value, when melted, of a trillion dollars. But the face value of no U.S. coin actually matches the value of the metal used to make the coin.

The proposal has been subjected to much mockery on Twitter and in the blogosphere.

Some critics, including a spokesman for House Speaker John Boehner, have noted that the notion of a trillion dollar bill was once covered in an episode of The Simpsons.

A White House petition for a trillion dollar coin had just 5,000 signatures on Monday afternoon, roughly 20,000 short of triggering a response from the Obama administration.


Read more: http://www.nydailynews.com/news/politics/obama-mint-trillion-dollar-coin-deal-debt-ceiling-article-1.1235224#ixzz2HS1vVgtg


Go for it. Every third world banana republic needs a Dear Leader with a trillion dollar coin. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5154396.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5154396.page GMT Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5154957.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5154957.page GMT Trillion Dollar Coin
 sebster wrote:

People who don't understand economics need to stop talking about it.

These kinds of general notions of good household budgeting just do not work when it comes to economies, because they are not the same thing. Your household has an income, if it goes down it makes good sense to spend less money, because how much you earn is independant of how much you spend. But in an economy that isn't true, what you spend is what I earn, and what I spend is what you earn.

So when the government says 'egads, there's a financial shock and tax revenues are falling, better cut spending to balance the books' what you see is further reductions in economic activity, leading to further reductions in tax revenue, and so less government spending and all the way down the spiral until you hit a great depression.

The correct government response is known and has been well-established for generations now - government undertakes deficit spending to maintain aggregate demand until normal economic activity has been restored.

I have really missed your particular brand of comedy, sebster. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155125.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155125.page GMT Trillion Dollar Coin
 azazel the cat wrote:
The coin idea is basically just the Democrats coming up with a way to prevent the Republicans from using the entire American economy as a hostage -again. By introducing a near-as-crazy-as-defaulting-on-the-debt solution, it presents an option that is not as harmful as the game of chicken that the GOP wants to play, and therefore takes away any and all negotiating leverage the GOP hopes to have.

It's really a brilliant play.

QFT...

But, after reading how this all works... it's interesting.

The process is called "Coin Seignorage".

For the Platinum process works like this (legally, you can't do this with most other precious metals):
-A platinum coin or coins (!! egads!) would be minted and deposited in the US Mint’s Public Enterprise Fund (PEF) at the Fed, where it would be credited for their full legal tender face value, as determined by the Sec of Treasury's discretion. That's the true power of a sovereign government... to arbitrarily assign a fiat value to a coin, regardless how much the raw material is worth. (ie, coin is physically worth $20 to make, but it's legal tender can be $1 trillion)

-The Treasury would then “sweep” the profits (technical term I think), which is the difference between the cost to the Mint of producing the coin and face value of the coin into the Treasury general Account (TGA) at the Federal Reserve. This is how it normally works for any denominations.

-Again, the face value of the coin can be whatever the Treasury Sec/Mint chooses... there is no requirement that the coin weight be related to the face value. So, it could be $1 trillion or more, or less if preferred. This is all perfectly legal. o.O Keep in mind, this is how our currency works.

- So, the remaining balance is sitting in basically the Treasury Dept's bank account (far away from debt limit), which they would be used to retire existing debts and pay for current congressional appropriated budgets. The argument is that (which I disagree) the inflationary pressure wouldn't change since the Treasury won't spend any more than what Congress has already appropriated. There's no new *sudden* $$$ released in the currency market. My retort is that... now that the Treasury Dept's piggy bank has lots of ones and zeros... what's to prevent Congress from spending even more?

-Crazy option... would rather the Prez to take on Congress in court regarding the debt limit rather than creating more monopoly money.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155183.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155183.page GMT Trillion Dollar Coin
daffy duck wrote: I'm not sure if our government is made up of smart men playing a joke on us or a pack of well meaning idiots.
]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155221.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155221.page GMT Trillion Dollar Coin
However, I am all for it. I've always wondered what living in the Weimar Republic would be like, and I'm digging the concept of a follow on government with cool snazzy uniforms and lots of neat parades.

Watch out Americas, we need need living room! ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155231.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155231.page GMT Trillion Dollar Coin
 sebster wrote:

The correct government response is known and has been well-established for generations now - government undertakes deficit spending to maintain aggregate demand until normal economic activity has been restored.


We had a government try that over here. End result: our national debt doubled and we needed a bailout from the EU and the FMI...

That "correct government response" landed us in the worst crisis since 1978!]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155277.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155277.page GMT Trillion Dollar Coin
 Frazzled wrote:
It utterly ignores the inflationary effects of such an action.


Just to be a devil's advocate... how?




Automatically Appended Next Post:
PhantomViper wrote:
 sebster wrote:

The correct government response is known and has been well-established for generations now - government undertakes deficit spending to maintain aggregate demand until normal economic activity has been restored.


We had a government try that over here. End result: our national debt doubled and we needed a bailout from the EU and the FMI...

That "correct government response" landed us in the worst crisis since 1978!

I think the real question should be.. .how much government intervention (spending/borrowing) should we have...]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155278.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155278.page GMT Trillion Dollar Coin
 whembly wrote:
 Frazzled wrote:
It utterly ignores the inflationary effects of such an action.


Just to be a devil's advocate... how?.


When more money is put into circulation the total value of each individual unit of money is devalued. Exactly the same as if it were any other durable good. If there is more of an item its value will decrease.

If someone were to dump thousands and thousands of Ferraris on the market the value of said car would go down. The same applies to money. Note that this applies to both Fiat money and currency thats backed by valuable material/is made of valuable material.

This move is no different to post-WW1 germany printing trillions of marks.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155460.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155460.page GMT Trillion Dollar Coin
 whembly wrote:
 Frazzled wrote:
It utterly ignores the inflationary effects of such an action.


Just to be a devil's advocate... how?




Automatically Appended Next Post:
PhantomViper wrote:
 sebster wrote:

The correct government response is known and has been well-established for generations now - government undertakes deficit spending to maintain aggregate demand until normal economic activity has been restored.


We had a government try that over here. End result: our national debt doubled and we needed a bailout from the EU and the FMI...

That "correct government response" landed us in the worst crisis since 1978!

I think the real question should be.. .how much government intervention (spending/borrowing) should we have...


Like it is now, but on a grand scale. The value of the dollar ideclining, driving greater inflation. The price of gasoline is an excellent example, but try anything right now.

Again we have excellent examples of what happens when you pull such stunts. 1970s US, Argentina, Zimbabwe etc. etc.
Its just another method of inflating yourself out of the debt. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155502.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155502.page GMT Trillion Dollar Coin
 Grey Templar wrote:
 whembly wrote:
 Frazzled wrote:
It utterly ignores the inflationary effects of such an action.


Just to be a devil's advocate... how?.


When more money is put into circulation the total value of each individual unit of money is devalued. Exactly the same as if it were any other durable good. If there is more of an item its value will decrease.

If someone were to dump thousands and thousands of Ferraris on the market the value of said car would go down. The same applies to money. Note that this applies to both Fiat money and currency thats backed by valuable material/is made of valuable material.

This move is no different to post-WW1 germany printing trillions of marks.


Yeah... I understand the basic premise of inflationary pressure...

The german trillion $ marks were actually released into the market.

The argument about Seignorage is that it doesn't release any additional currency into the market (ie, it's not like the stimulus check we got years ago).

This "plan" only fills the Treasury's coffers. (as a way to circumvent the debt limit, which is the intent of this action). However much the Treasury's coffers has (tax revenue + borrowed $$$) doesn't in itself create inflationary pressure to the currency market. The Treasury can only use the money to retire any debt, service the mandatory spending and fund the congressional appropriations. This is the key distinction.

Now, if Congress continues to spend in an increasing rate (relative to GDP) knowing that they'll never hit that debt ceiling, then THAT'LL definitely create inflationary pressures.

I disagree with this strategy as you'd have to believe that at least the bond market and the "market confidence" on US dollars would take massive hits... ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155511.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155511.page GMT Re:Trillion Dollar Coin
Using it to pay off debt is no different to them using it to pay for SS or Medicare.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155523.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155523.page GMT Re:Trillion Dollar Coin
 Grey Templar wrote:
Except money in the Treasury is still in circulation. Thats why it won't work.

Using it to pay off debt is no different to them using it to pay for SS or Medicare.


Exactly. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155544.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155544.page GMT Re:Trillion Dollar Coin
 Grey Templar wrote:
Except money in the Treasury is still in circulation. Thats why it won't work.

Using it to pay off debt is no different to them using it to pay for SS or Medicare.

*Devil's advocate hat on*

Money in Treasury isn't necessarily in circulation until it's spent. (which, admittedly... it's the same because the Treasury doesn't have anything in the bank...hence why it's borrowing).

Any rise in inflation would be due to Congressional appropriations relative to revenues becoming inflationary rather than the effect of this whacky plan. Again, the Treasury can't spend any more than what it's authorized to do.

*Devil's advocate hat off*
Whembly's 3 part plan:
1) Repeal ACA act.
2) Institute full single-payor healthcare (ala, Canada)
3) Using the Simpson/Bowles plan (minus the healthcare part) to pay down debt]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155650.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155650.page GMT Re:Trillion Dollar Coin
Regardless, it will cause inflation. And quite a bit of it too.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155672.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5155672.page GMT Re:Trillion Dollar Coin
People who don't understand economics need to stop talking about it.

These kinds of general notions of good household budgeting just do not work when it comes to economies, because they are not the same thing. Your household has an income, if it goes down it makes good sense to spend less money, because how much you earn is independant of how much you spend. But in an economy that isn't true, what you spend is what I earn, and what I spend is what you earn.


Can you explain how exactly to me? Because it doesnt make sense. If the Gov only makes, say $10 a year from tax payers, how can they spend $15? Thats how it works with households, and businesses as well. You cant really spend more money then you make, and if you do, creditors come and take your things away until youre even stevens again.

So cliff notes please, but you ALWAYS seem to counter argue with this logic, and the things you say never ever make sense to me. I keep coming back to "Well they are spending more then they are making....by a gak load"]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156481.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156481.page GMT Trillion Dollar Coin
]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156526.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156526.page GMT Re:Trillion Dollar Coin
Having the government's ability to tax as backup for the loan is a good solid deal, but it really can only go so far. And more people have to lend than borrow. Otherwise we end up where there simply isn't money to borrow anymore.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156556.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156556.page GMT Re:Trillion Dollar Coin
 KingCracker wrote:
People who don't understand economics need to stop talking about it.

These kinds of general notions of good household budgeting just do not work when it comes to economies, because they are not the same thing. Your household has an income, if it goes down it makes good sense to spend less money, because how much you earn is independant of how much you spend. But in an economy that isn't true, what you spend is what I earn, and what I spend is what you earn.


Can you explain how exactly to me? Because it doesnt make sense. If the Gov only makes, say $10 a year from tax payers, how can they spend $15? Thats how it works with households, and businesses as well. You cant really spend more money then you make, and if you do, creditors come and take your things away until youre even stevens again.

So cliff notes please, but you ALWAYS seem to counter argue with this logic, and the things you say never ever make sense to me. I keep coming back to "Well they are spending more then they are making....by a gak load"


Note:
-Debt Limit was defined in some 1917 act.
-Congress controls the purse string (ie, keep it close or open)
-Congress delegated the coinage making to US Treasury/Mint
-Congress delegated the Treasury to borrow money if necessary to fund congressional appropriations

Having said that... let's take your example:
1) Gov recieves $10 /year in tax revenue
2) Congress passed laws/spending/paying current debt, that amounts to a total of $15 /year
3) The Treasury is empowered to issue bonds for $5
4) The Treasury realizes that they've exceeded their debt limit and can only borrow $2
5) Prez and Congress critters goes WTF?

It's a structural problem right now...]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156584.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156584.page GMT Re:Trillion Dollar Coin
On the other hand, another fight over the debt ceiling is also a big problem. I don't know what to do about this, really. Ideally congress would stop passing spending bills they'd later choose not to fund.

However, since they have like 12% approval rating and nearly always get re-elected, clearly the electorate is happy with these choices. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156799.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5156799.page GMT Re:Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157026.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157026.page GMT Trillion Dollar Coin
 Frazzled wrote:
The argument is that the government can keeping borrowing the difference. The problem is the argument doesn't work. Eventually lenders start demanding higher rates, quit lending, or you run out of lenders.


The argument works perfectly fine, as it isn't based on a perpetual set of practices.

Of course, it also helps that you have ~23% of nominal global GDP subject to your economic policy.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157097.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157097.page GMT Trillion Dollar Coin
 Seaward wrote:
I have really missed your particular brand of comedy, sebster.


Whereas I haven't missed your content free posts one bit.

If you have something to contribute, do so. If you don't, read what others have to say and learn from it.


Automatically Appended Next Post:
 whembly wrote:
- So, the remaining balance is sitting in basically the Treasury Dept's bank account (far away from debt limit), which they would be used to retire existing debts and pay for current congressional appropriated budgets. The argument is that (which I disagree) the inflationary pressure wouldn't change since the Treasury won't spend any more than what Congress has already appropriated. There's no new *sudden* $$$ released in the currency market. My retort is that... now that the Treasury Dept's piggy bank has lots of ones and zeros... what's to prevent Congress from spending even more?


Nothing would prevent Congress spending even more... except that Congress understands the problems of inflationary pressure and works to avoid it. It's why the Federal Bank has been given instruction to make control of inflation their primary objective, and why inflation in the US has moved out of the 3-5% target bracket just a couple of times in the last 25 years.


Automatically Appended Next Post:
 Frazzled wrote:
It utterly ignores the inflationary effects of such an action.


Having money accessible to be spent isn't inherently inflationary. It's only inflationary when those dollars are put out into the economy.

This operation simply sidesteps the utterly stupid politics of people pretending the debt ceiling won't be raised. The amount the government puts out into the economy remains constant.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157571.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157571.page GMT Trillion Dollar Coin
 dogma wrote:


Of course, it also helps that you have ~23% of nominal global GDP subject to your economic policy.


It hurts in that the amount of debt you're talking about strains the entire global financial system. Its a house of cards. Eventually (and not far off) it will fall.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157622.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157622.page GMT Trillion Dollar Coin
PhantomViper wrote:
We had a government try that over here. End result: our national debt doubled and we needed a bailout from the EU and the FMI...

That "correct government response" landed us in the worst crisis since 1978!


Portugal has massive national debt due to four decades of fiscal mismanagement, borrowing to fund a bloated and top heavy civil service. Which has exactly feth all to do with the deficits one would run in the short term to maintain aggregate demand.

And the Portugese response, like all of Europe, has been to follow Germany's call for austerity, reducing government spending to bring the state's finances under control. It is that reduction in spending, along with the fall in consumer spending and investment in the wake of the GFC, that has seen unemployment climb to 15%.



I think one of the biggest problems the punter on the street has with the basic idea of Keynesian stimulus spending is that he easily gets confused between short term measures and the overall structure of the economy. In short - it is bad to run government deficits year on year, it is bad to set up a tax system that can't generate enough to pay for government spending. Over the long term government needs to bring in as much as it puts out. But short term deficits in response to economic downturns are good and sensible policy.

Portugal's year on year deficits, stretching back to the Carnation Revolution, were a bad, bad thing. But right now the country, like every country dealing with flat demand, should be running short term deficits to drive recovery. Once that is achieved, then a structural surplus position should be established to bring overall debt under control.


Automatically Appended Next Post:
 Grey Templar wrote:
When more money is put into circulation the total value of each individual unit of money is devalued. Exactly the same as if it were any other durable good. If there is more of an item its value will decrease.

If someone were to dump thousands and thousands of Ferraris on the market the value of said car would go down. The same applies to money. Note that this applies to both Fiat money and currency thats backed by valuable material/is made of valuable material.


No, money isn't a good, it is a means of trade. Just... please... don't go giving advice when you have no clue what you're talking about.

Now, you're right in that if more money is pumped into the economy, the value of each dollar will reduce. But this isn't due to demand/supply mechanics (as there is now inherent utility to a fiat dollar), but because the actual, real economy (the goods and services produced and consumed in a year) remain constant. That is, if an economy produces, say, 100 units of production a year, and has a money supply of 300 (physical notes, plus terms deposits and other multiplying effects times by the number of times each dollar is spent in a given year), then you're going to get a price of $3 per unit of production. If you were to ramp up the money supply by 10% to 330, then the price per unit of production would move to $3.30.

This move is no different to post-WW1 germany printing trillions of marks.


Except those marks were put immediately into circulation, making it completely different.


Automatically Appended Next Post:
 Frazzled wrote:
Like it is now, but on a grand scale. The value of the dollar ideclining, driving greater inflation. The price of gasoline is an excellent example, but try anything right now.


Inflation and the decline in the dollar are different things. ISLM. Study it. Learn it.

And then start making sensible comments about economics.


Automatically Appended Next Post:
 Grey Templar wrote:
Except money in the Treasury is still in circulation. Thats why it won't work.

Using it to pay off debt is no different to them using it to pay for SS or Medicare.


They're using it to pay of debt as it falls due, as they would normally if the debt ceiling limit were not in place.

Seriously, there is no plan here to suddenly ramp up government spending. Accept that. Understand it. And the stop talking about it driving up inflation, because that makes no fething sense.


Automatically Appended Next Post:
 whembly wrote:
Money in Treasury isn't necessarily in circulation until it's spent. (which, admittedly... it's the same because the Treasury doesn't have anything in the bank...hence why it's borrowing).


Yes, exactly. You only get inflationary pressure from the money moving through in the economy.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157667.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157667.page GMT Trillion Dollar Coin
There is a bill being presented right now by Senator Ron Wyden from Oregon to plug the loophole and bar the ability to print this platinum coin.

]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157709.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157709.page GMT Re:Trillion Dollar Coin
 Grey Templar wrote:
Partly true, but of course the Government is going to spend it. For money to have any effect it must be in circulation, out of circulation money is just useless trash with no value other than what the material is worth.


For feth's sake. Inflation is the problem the US absolutely doesn't have. It's an issue that's been controlled extremely well for the last 25 years (since the US, among other governments in the wake of the stagflation debacle, gave up on the idea of central banks having dual purposes of controlling inflation and unemployment, and unofficially moved to purely controlling inflation).

Regardless, it will cause inflation. And quite a bit of it too.


No, it won't. You don't get to just say that. You don't get to just pretend you know how this works.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157721.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157721.page GMT Trillion Dollar Coin
 Necroshea wrote:
isn't that sort of just shifting the debt and not really doing much about it?

Yes - the law says that they're not allowed to accrue more debt without going to through the proper channels, so they're trying to cheat without cheating.

Or to put it in our terms, it's a RAW vs. RAI argument.

Personally, I'm against it. In this and all matters of legalism, I would always side against the government. After all, it is the government's fault if the letter of the law differs from the spirit of the law, so it is only fair that they not be permitted to use that to seize more power by stealth.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157756.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157756.page GMT Trillion Dollar Coin
 AlexHolker wrote:
Personally, I'm against it. In this and all matters of legalism, I would always side against the government. After all, it is the government's fault if the letter of the law differs from the spirit of the law, so it is only fair that they not be permitted to use that to seize more power by stealth.


Except that this is only talked about because of the entirely stupid and economically damaging exploitation of what was previously a rubber stamp process - raising the debt ceiling.

If the choise is between a legalistic, stupid but harmless process, and a legalistic, stupid and very harmful process, the choice ought to be obvious.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157808.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157808.page GMT Trillion Dollar Coin
 sebster wrote:
Except that this is only talked about because of the entirely stupid and economically damaging exploitation of what was previously a rubber stamp process - raising the debt ceiling.

It wasn't supposed to be a rubber stamp process - the fact that it even exists is proof of that. A law whose only purpose is to create a threshold that you never intend to enforce would be absolutely pointless.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157861.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157861.page GMT Trillion Dollar Coin
 AlexHolker wrote:
It wasn't supposed to be a rubber stamp process - the fact that it even exists is proof of that. A law whose only purpose is to create a threshold that you never intend to enforce would be absolutely pointless.


It was a bad process, which became obviously a poor and dangerous method from the first time it was implemented - that's why it almost immediately became a rubber stamp process. Because you don't control government finances by putting a hard cap on total borrowing, that's like controlling speeding by putting a brick wall in the middle of the freeway.

Good governance means having long term stable finances, having a basic structure in place where, across the whole business cycle, you bring in the revenue needed to pay for government expenditure. And that means that in poor economic times borrowings will spike, only to decline again when there's good economic times.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157903.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5157903.page GMT Trillion Dollar Coin
 sebster wrote:
 AlexHolker wrote:
It wasn't supposed to be a rubber stamp process - the fact that it even exists is proof of that. A law whose only purpose is to create a threshold that you never intend to enforce would be absolutely pointless.


It was a bad process, which became obviously a poor and dangerous method from the first time it was implemented - that's why it almost immediately became a rubber stamp process. Because you don't control government finances by putting a hard cap on total borrowing, that's like controlling speeding by putting a brick wall in the middle of the freeway.

Good governance means having long term stable finances, having a basic structure in place where, across the whole business cycle, you bring in the revenue needed to pay for government expenditure. And that means that in poor economic times borrowings will spike, only to decline again when there's good economic times.

That's all good...

But shouldn't the discussion really be this:
A) Can we handle a deficit of more than 1.6 trillion dollars? If so, raise the debit limit. If not, reduce spending or cut services.

B) How can we bridge the spending plans to what we can actually spend? Meaning, it seems the system is currently setup to put the Cart in front of the Horse here...]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158043.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158043.page GMT Trillion Dollar Coin
 Shadowseer_Kim wrote:
As I understand it, it is already against the law for the Government to print a gold coin in this fashion. So printing a platinum coin face value more than it's weight is a loophole.

There is a bill being presented right now by Senator Ron Wyden from Oregon to plug the loophole and bar the ability to print this platinum coin.

It is against the law for the Government to print a gold coin or silver coin in excess of its value.

The reason platinum coins can be minted in any amount is for the collector edition coins that the U.S. Mint occasionally releases as collector coins.

If they plug this hole there will be no more collector platinum coins over 100 or so dollars.

But the real issue is the stupidity. We are in debt what do we do? We should just print more money... It is like they gave the government over to Emperor Spengo or President Skroob.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158126.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158126.page GMT Trillion Dollar Coin
I guess I was just saying, I doubt it will happen, because it is ridiculous, and they will likely pass the bill that says they can not.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158160.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158160.page GMT Trillion Dollar Coin
 Shadowseer_Kim wrote:
I understand the problem as well as any above average citizen does, meaning i pay attention. I have no interest in debating/discussing economics right now.

I guess I was just saying, I doubt it will happen, because it is ridiculous, and they will likely pass the bill that says they can not.

Reid won't floor it by itself.

The only way this loophole is closed is if the Democrats get a very favorable budget/debt ceiling agreement. Which I think it's exactly how it will go down.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158178.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158178.page GMT Trillion Dollar Coin
 whembly wrote:
That's all good...

But shouldn't the discussion really be this:
A) Can we handle a deficit of more than 1.6 trillion dollars? If so, raise the debit limit. If not, reduce spending or cut services.


16 trillion, not 1.6 trillion. If debt was just 1.6 trillion (10% of GDP) you'd be laughing.

And while that isn't an unreasonable question, the problem is that answer suggested by the debt ceiling is far more disastrous. To continue my example from before about putting a brick wall on the middle of the freeway - speeding is bad and it is good to slow down, but not by hitting a brick wall.

And that's exactly what letting the country hit the debt ceiling means. You don't get a steady reduction in spending/steady reduction and return to sustainable budgets, you get a sudden, immediate stop that will send shockwaves through the economy.

B) How can we bridge the spending plans to what we can actually spend? Meaning, it seems the system is currently setup to put the Cart in front of the Horse here...


Long term structural reform. A government that plans long term tax and spending policies for sustainability.


Automatically Appended Next Post:
 DeathReaper wrote:
But the real issue is the stupidity. We are in debt what do we do? We should just print more money... It is like they gave the government over to Emperor Spengo or President Skroob.


No. You don't understand this issue at all.

Right now, the US is running deficit budgets. This is not only a good thing in poor economic times, it's also basically unavoidable (as poor economic times means less tax money coming in, and more money going out to the increased unemployed). There is a process in congress that puts a formal limit on the total debt the US government can run up. This process has formerly been a simple rubber stamp deal. It was a rubber stamp deal because denying the increase is pure economic madness. It would basically just yank hundreds billions of dollars out of the economy overnight, and that shock would crash markets.

But the Republicans are claiming they won't just rubber stamp the process, because they want to get the Democrats to agree to do stuff, basically cut spending on stuff the Republicans don't like.

So the Democrats can continue to let the Republicans extort stuff everytime the ceiling is hit, or they can let the ceiling get hit and tank the economy, or they can sidestep the issue by minting a coin like this one.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158184.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158184.page GMT Re:Trillion Dollar Coin
 Ouze wrote:
I have to imagine the dollar will be devalued with this stunt anyway: How interested would you be in using dollars as your reserve currency if you saw the government doing stupid accounting tricks like this?

On the other hand, another fight over the debt ceiling is also a big problem. I don't know what to do about this, really. Ideally congress would stop passing spending bills they'd later choose not to fund.

However, since they have like 12% approval rating and nearly always get re-elected, clearly the electorate is happy with these choices.


We are full of crappy solutions:

1) Just make new money to pay old bills.
2) Say that you won't pay old bills.

]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158218.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158218.page GMT Trillion Dollar Coin
 whembly wrote:
Reid won't floor it by itself.

The only way this loophole is closed is if the Democrats get a very favorable budget/debt ceiling agreement. Which I think it's exactly how it will go down.


There is no such thing as a favourable debt ceiling for the Democrats. The whole issue is what has to be given up to get Republicans to take their finger off the button.

What this means is that if the Republicans demand too much, then the Democrats will be forced to look silly printing a trillion dollar coin.

Now, Democrats don't want that, because frankly no-one wants to make their government institutions look like the set-up for a Austin Powers movie, but it is considerably less of a problem than tanking the entire economy. Which means the extent of what Republicans can extort through this process reduces.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158221.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158221.page GMT Trillion Dollar Coin
 sebster wrote:
 whembly wrote:
That's all good...

But shouldn't the discussion really be this:
A) Can we handle a deficit of more than 1.6 trillion dollars? If so, raise the debit limit. If not, reduce spending or cut services.


16 trillion, not 1.6 trillion. If debt was just 1.6 trillion (10% of GDP) you'd be laughing.

Derp... derp.

And while that isn't an unreasonable question, the problem is that answer suggested by the debt ceiling is far more disastrous. To continue my example from before about putting a brick wall on the middle of the freeway - speeding is bad and it is good to slow down, but not by hitting a brick wall.

And that's exactly what letting the country hit the debt ceiling means. You don't get a steady reduction in spending/steady reduction and return to sustainable budgets, you get a sudden, immediate stop that will send shockwaves through the economy.

You're assuming that there would be no compromise...

The Republicans are going to try using the Debt Ceiling to leverage some spending cuts (but, I think they'll chicken out).

I honestly think this "shockwave" is a blip... akin to that whole fiscal cliff fearmongering.

B) How can we bridge the spending plans to what we can actually spend? Meaning, it seems the system is currently setup to put the Cart in front of the Horse here...


Long term structural reform. A government that plans long term tax and spending policies for sustainability.

Well... what were they doing in the 90s? 8os? 70s? If it hasn't happened then, why whould it happen now?

*shrugs* I just don't believe there's a hard link between what the government recieves inbound vs. budget appropriations. This is exactly why we're having this debt limit thing... o.O HEY! The "Debt Limit" is that 'ard link!]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158222.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158222.page GMT Trillion Dollar Coin
 sebster wrote:
 whembly wrote:
Reid won't floor it by itself.

The only way this loophole is closed is if the Democrats get a very favorable budget/debt ceiling agreement. Which I think it's exactly how it will go down.


There is no such thing as a favourable debt ceiling for the Democrats. The whole issue is what has to be given up to get Republicans to take their finger off the button.

Yup.

What this means is that if the Republicans demand too much, then the Democrats will be forced to look silly printing a trillion dollar coin.

If they coin that... can Obama be on it smoking a blunt? It'll go into the Federal Reserve, so its not likely anyone would see it again.
Better yet, read this (notice the last paragraph ):
Spoiler:
Obama's Top Secret Plan to Solve the Debt Crisis

JB


Secretary Tim Geithner had a troubled look as he was ushered into the Oval Office. Senate Majority Leader Harry Reid and Vice-President Joe Biden were already there.

"Tim, did you put our top secret plan to solve the debt crisis into place?" President Obama asked.

"Yes, Mr. President, but we've hit a bit of a snag."

"What top secret plan?" Reid interjected. "Why wasn't I informed about it?"

"Well, if you knew, it wouldn't be top secret, now would it?" Biden chortled.

Reid shot him a dirty look.

"Don't worry, Harry," Obama said calmly. "Tim, explain our fail safe to the Senator."

"As you know," Geithner began, "we have very limited options if we don't raise the debt ceiling by August 2nd. We're on record rejecting the idea that the President can borrow money without Congress's approval, even if failing to do so would destroy the economy."

"Yes, I know," Reid replied, "you shot down the Fourteenth Amendment constitutional option a few weeks back."

"We had to. Our lawyers told us that as long as the President can work within existing laws, he can't go beyond what Congress has authorized."

"And so ..." Obama urged him on.

"And so we started going through the statute books looking for already existing authorizations that we could use.

"It turns out that there aren't that many. We can't issue extra bonds because of the debt ceiling. We could sell off government property, but there's no time to hold an auction to raise two trillion dollars of property.

"That left one other possibility. We could use coin seigniorage."

"Senior what?" Reid exclaimed.

"Seigniorage. Sovereign governments like the United States can print their own money. We have a system of fiat currency and we've been off the gold standard for many years now. With fiat currency, you issue coins and simply assert that they have a certain value, which may have little to do with the value of the raw materials you use to make them. But as long as people believe that your money is worth something, the system works.

"The difference between the face value of the coin and the cost of the materials it takes to produce it is called seigniorage. So if you create a hundred dollar coin made mostly of copper and nickel, the seignorage is likely to be close to a hundred dollars. That's new monetary value pumped into the system."

Geithner continued: "Now it turns out that under federal law, there's a limit to how much paper money we can have in circulation at any time.

"However, there's no limit to the amount of coinage we can make. There are rules that limit what we can do with gold, silver, copper, and other metals. However, 31 U.S.C. Section 5112(k) says that we can print platinum coins in any denomination at our discretion:
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
"So we told the Mint to make a couple of trillion dollar platinum coins. Then, if the President gives the order, the Mint deposits the two coins in its account at the Federal Reserve. The coins are legal tender. We direct the Federal Reserve to move this money into the Treasury's accounts, and we are up around two trillion dollars.

"We don't need to borrow any more money, because now we have plenty of cash on hand. There are a few more bells and whistles, (some lefty bloggers have come up with their own ways of doing it) but that's essentially how it works."

"That's a big F'ing deal." Biden laughed.

"You said, it, Mr. Vice-President," Obama chuckled.

Reid was nonplussed. "What do these coins look like?"

"Well, as I said, they're made of platinum."

"How big?"

"A little larger than a quarter."

"And what's on them?"

"Well, on the back you have a bald eagle, E pluribus unum, that sort of stuff."

"No, no," Reid interjected, "I mean, "whose face is on them?"

"Oh," Giethner smiled almost imperceptibly. "Well, we had some fun with that. One of them has Ronald Reagan on it."

"I'm sure the Tea Partiers will like that!" Reid exclaimed. "Their patron saint solves the debt crisis without raising taxes. And this is Grover Norquist's dream come true. He always wanted Ronnie to displace Alexander Hamilton on the ten dollar bill. This is so much better!"

"The other coin has George W. Bush on it," Geithner continued. "We figured it was kind of fitting, since, after all, he sort of started us down the road to this mess."

Reid guffawed.

"And, of course" Geithner added, "it also says `in God We Trust.'"

"It should say, In God We Trust, all others pay cash," Biden chimed in.

"Yes, well, that would probably undermine the credibility," Geithner responded.

"Ya think?" Reid exclaimed. "Well, this is the most preposterous thing I've ever heard of! And it's all perfectly legal?"

"As far as we can tell," Geithner replied. "I mean, there are multiple ways to interpret the statutes, and it's probably not what Congress had in mind, but this is a pretty straightforward reading."

"But won't this cause inflation?" Reid asked. "After all, you're injecting two trillion dollars into the system."

"Actually, that's not the issue," Geithner explained. "The money is already appropriated, and the government will spend it whether we raise the money from making new cash or issuing new debt. All the coins do is give us authority to spend appropriated funds without borrowing extra money and paying interest on the new debt. (In fact, we might even collect some interest from the Fed). And remember we're in a situation with excess capacity.

"The real problem with this solution is how it looks to the rest of the world. They might start thinking that we are just going to print money recklessly, and that will affect bond markets, the value of the dollar, investor confidence, and so on. That's why it's only as a last resort."

"And we're not going to do it, either," Obama said calmly, "unless we absolutely have to. And we're not going to tell anybody about it either. If we told people that we were even considering this, it would blow up any chance of getting a debt reduction deal, much less a new debt ceiling. The Republicans would just call my bluff and make me use the coins, and then they'd use them to run against me for the next two years."

"It would be a public relations disaster," Biden agreed. "Imagine all the jokes on the Tonight Show."

"That's why it's a top secret fail safe," Obama continued. "We need to have it ready if all else fails, but we don't even know if it would calm the markets. They might think it's just a trick. And one thing it certainly won't do is calm the Republicans. It will just get them even more angry and unwilling to deal. If it leaks out that we are considering something like this you can kiss our negotiations goodbye. That's why we only do it if we reach the deadline and there's no other choice."

"So instead of the constitutional option," Reid said thoughtfully, "it's the jumbo coin option."

"Yes, but it has to stay secret until the last moment," Biden added.

Obama turned to Geithner. "O.K., Tim you said there was a snag. What is it?"

"Well, Mr. President, we made the two coins just like you said. They came out really good. I put them in my pocket and I was going to walk over to the Federal Reserve, but I sat down on my couch to have a cup of coffee and when I got up I reached in my pocket, and I couldn't find them."

"You what?"

"I think I lost them in the sofa cushions. We tried everything, but we just can't find them."

"You lost two trillion dollars in the sofa cushions?" Reid was incredulous.

"Either that or they fell out when I was walking somewhere. Maybe I lost them in the dryer, or in the car. I just don't know." Geithner looked crestfallen.

Reid rolled his eyes.

Obama was impassive. "Don't worry about it Tim. Just make two more of the same. And this time, have the Secret Service convey them over to the Fed. They're part of Treasury, too."

"Sure thing, Mr. President," Geithner said. "But what happens if somebody finds the ones we misplaced?"

"Oh don't worry about that," Obama smiled. "If somebody finds a one trillion dollar coin with George W. Bush's picture on it, they'll know its a joke."


Now, Democrats don't want that, because frankly no-one wants to make their government institutions look like the set-up for a Austin Powers movie, but it is considerably less of a problem than tanking the entire economy. Which means the extent of what Republicans can extort through this process reduces.

Politics... its really one of the dirtiest jobs... call Mike Rowe for show idea!


Automatically Appended Next Post:
 d-usa wrote:


We are full of crappy solutions:

1) Just make new money to pay old bills.
2) Say that you won't pay old bills.


Sorta...
1) Just make new money to pay old bills.(via platinum coinages)
2) Say that you won't pay old bills. (hit the debt limit)
3) Prez challenges Congress to take him to court if he unilaterally raise the debt ceiling, citing 14th Amendment.
4) Cut government spending and/or raise taxes
5) The shaman all disappears and the Emperor reveals himself, and we begin our conquest in the galaxy (debt limit, who?)
]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158242.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158242.page GMT Trillion Dollar Coin
 whembly wrote:
You're assuming that there would be no compromise...

The Republicans are going to try using the Debt Ceiling to leverage some spending cuts (but, I think they'll chicken out).


Yeah, there'll be a compromise. And another one next time the ceiling is hit, and another one the time after that. And all that means is that the fiscal policy of the country isn't being determined by compromise between the parties, or by the party with the most power awarded to it by the electoral process. It means that fiscal policy is going to be set by the party who is most willing to hit the debt ceiling (either because they're convinced the other side will blink first, or because they're crazy enough to not actually understand what they're threatening).

And while that might not seem such a bad idea now for Republican minded people because its their party who holds the upper hand right now, consider that there's no guarantee which party will be the craziest in the future. And all this really means is that fiscal policy is to be by whichever party happens to be the craziest at any given point in time.

I honestly think this "shockwave" is a blip... akin to that whole fiscal cliff fearmongering.


No, it's how it works. Sudden removal of money flows in the economy flow very quickly. If Boeing were to just stop business tomorrow completely out of the blue, then we'd suddenly lose the payroll and dividend streams Boeing puts out into the economy. Much worse than that, though, is that many businesses, without any time to adjust and find a new customer base will go bankrupt.

The really, really important thing is to start to realise that the economy is basically a really elborate network of private contracts (many official, many more unofficial). Pulling a major thread out of that network is bad, and pulling it out really suddenly is much worse.

Well... what were they doing in the 90s? 8os? 70s? If it hasn't happened then, why whould it happen now?


There's nothing to make it more likely now. Neither party really believes in long term financial stability. They just have a freak out about the debt right now, and a politically convenient belief that they can fix this by cutting stuff the other side likes.

But as difficult as genuinely responsible, long term minded government might be, it remains the only way to actual ensure long term financial stability.

*shrugs* I just don't believe there's a hard link between what the government recieves inbound vs. budget appropriations.


Of course there isn't. And in the short term there shouldn't be (you should have large deficits in poor economic times and strong surpluses in good economic times). Nor is there any hard link in the long term, other than the hard link that people put in place of purpose.

Which means, for instance, when Bush put through his tax cuts in '01, you should have had lots of people saying 'well no, that means total tax revenue would drop to about 19% of GDP, while spending is 21% of GDP, that's a clear long term structural problem'. But they didn't, because woohoo tax cuts are awesome, so instead they just pretended that cuts would have to be made later on to some vague thing that they imagine won't be any program they like.


Automatically Appended Next Post:
 whembly wrote:
If they coin that... can Obama be on it smoking a blunt? It'll go into the Federal Reserve, so its not likely anyone would see it again.
Better yet, read this (notice the last paragraph ):
Spoiler:




Sorta...
1) Just make new money to pay old bills.(via platinum coinages)


The coin isn't just printing new money. If they just wanted to do that, inflation be damned, then they could just do that. They wouldn't even have to go through the hassle of printing more money - just put money in various commercial banks which those banks could, theoretically, then transfer into hard currency if they wanted.

The coin is basically an accounting trick. Right now what happens is when the government wants more money, it tells the Fed to issue more debt, which the Fed does, bringing dollars into government. Now, if the ceiling isn't raised the government can't get the Fed to do that any more. So instead it prints a trillion dollar coin and gives that to the Fed. The Fed, to find that kind of cash, then sells some of its own financial assets (it has about 3 trillion on its books in financial securities).

The net effect of all this is exactly the same as if the Fed has issued debt to secure the funding.

2) Say that you won't pay old bills. (hit the debt limit)


I don't think people realise what we are seeing right now is a unique point in the history of the human race. Governments have defaulted on debts before, but never before has a government defaulted just because it doesn't want to pay.

3) Prez challenges Congress to take him to court if he unilaterally raise the debt ceiling, citing 14th Amendment.


Do you think this is still the most likely Democratic ploy? It probably is, but it's a tough call.

4) Cut government spending and/or raise taxes


This one simply isn't possible in the period of time put forward by the debt limit. Government is a 3.5 trillion dollar behemoth, it doesn't turn on a dime. Getting the US to a genuine surplus is probably a ten year thing (they did it very quickly in the 90s because economic times were good, which considerably overstated the underlying position).

5) The shaman all disappears and the Emperor reveals himself, and we begin our conquest in the galaxy (debt limit, who?)


This is, admittedly, about as likely as my suggestion that congress look to long term, stable fiscal policy
]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158262.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158262.page GMT Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158401.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158401.page GMT Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158747.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158747.page GMT Trillion Dollar Coin
 Breotan wrote:
Since that coin would be legal tender, could someone steal it and then buy Disneyland with it?


Would be a shame if someone accidentally dropped it into on of those red kettles during Christmastime. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158770.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158770.page GMT Trillion Dollar Coin
 Breotan wrote:
Since that coin would be legal tender, could someone steal it and then buy Disneyland with it?

In theory, yes. In practice, no, because the moment someone tries to spend one you automatically know it's stolen property and can call the cops.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158792.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158792.page GMT Re:Trillion Dollar Coin ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158959.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5158959.page GMT Trillion Dollar Coin
 sebster wrote:
PhantomViper wrote:
We had a government try that over here. End result: our national debt doubled and we needed a bailout from the EU and the FMI...

That "correct government response" landed us in the worst crisis since 1978!


Portugal has massive national debt due to four decades of fiscal mismanagement, borrowing to fund a bloated and top heavy civil service. Which has exactly feth all to do with the deficits one would run in the short term to maintain aggregate demand.

And the Portugese response, like all of Europe, has been to follow Germany's call for austerity, reducing government spending to bring the state's finances under control. It is that reduction in spending, along with the fall in consumer spending and investment in the wake of the GFC, that has seen unemployment climb to 15%.



I think one of the biggest problems the punter on the street has with the basic idea of Keynesian stimulus spending is that he easily gets confused between short term measures and the overall structure of the economy. In short - it is bad to run government deficits year on year, it is bad to set up a tax system that can't generate enough to pay for government spending. Over the long term government needs to bring in as much as it puts out. But short term deficits in response to economic downturns are good and sensible policy.

Portugal's year on year deficits, stretching back to the Carnation Revolution, were a bad, bad thing. But right now the country, like every country dealing with flat demand, should be running short term deficits to drive recovery. Once that is achieved, then a structural surplus position should be established to bring overall debt under control.


That is a pretty fair analysis of our situation, but you simply cannot run high deficits to try and prop up the economy when you already have a +100% of the GDP as debt, because no one will loan you the money for it at the rates that you need.

Portugal has been running a deficit since 1974, but the USA also hasn't run a surplus budget since Clinton (correct me if I'm wrong)! These are chronic spending problems that are always excused with your way of thinking: "we are running a deficit because the excess money that we are spending is being used to support the economy that will gain in value accordingly and give us back that excess money in taxes in the near future"! Except that it isn't working like that in the past 10+ years, since everyone that is overspending is still suffering from very anaemic growth rates that don't support the deficit spending...

]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5159440.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5159440.page GMT Trillion Dollar Coin
 Frazzled wrote:

It hurts in that the amount of debt you're talking about strains the entire global financial system. Its a house of cards. Eventually (and not far off) it will fall.


Of course it hurts the overall financial system, that degree of concentration of production, and the subsequent necessity of the economic health of the country doing all that production, is bad for economic stability in a number of ways. However, for the United States, its actually quite good as provides a ton of political leverage.

Will it fall? Maybe, the US will certainly lose its primacy in terms of its share of global production. The question is whether or not it does so by way of the expanding share of other countries, or marked decrease in its own GDP.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160255.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160255.page GMT Re:Trillion Dollar Coin
 Kilkrazy wrote:
Spoiler:


Amusing comic aside, this is still a terrible idea, and so is raising the debt ceiling.

Side note: brilliant idea for saving some money for something useful. Cut congress's pay to minimum wage for their state of residence. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160647.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160647.page GMT Re:Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160662.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160662.page GMT Re:Trillion Dollar Coin
 Grey Templar wrote:
Fine by me. Not that I think that would have the desired effect. It would just mean only independently wealthy individuals would run for office.


So no change at all then?]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160668.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160668.page GMT Re:Trillion Dollar Coin

Its just that I know many people that think many politicians are in it for the money. They really arn't. Their payday is almost always small beans to what they are making/already made as businessmen.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160676.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160676.page GMT Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160677.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160677.page GMT Re:Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160682.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160682.page GMT Re:Trillion Dollar Coin
 Grey Templar wrote:
Precisely

Its just that I know many people that think many politicians are in it for the money. They really arn't. Their payday is almost always small beans to what they are making/already made as businessmen.


They get elected, then get rich. Its amazing how rich they can get (and their family -watch the spouse's income jump). ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160868.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160868.page GMT Re:Trillion Dollar Coin
]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160879.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160879.page GMT Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160884.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5160884.page GMT Trillion Dollar Coin
PhantomViper wrote:
That is a pretty fair analysis of our situation, but you simply cannot run high deficits to try and prop up the economy when you already have a +100% of the GDP as debt, because no one will loan you the money for it at the rates that you need.

Portugal has been running a deficit since 1974, but the USA also hasn't run a surplus budget since Clinton (correct me if I'm wrong)! These are chronic spending problems that are always excused with your way of thinking: "we are running a deficit because the excess money that we are spending is being used to support the economy that will gain in value accordingly and give us back that excess money in taxes in the near future"! Except that it isn't working like that in the past 10+ years, since everyone that is overspending is still suffering from very anaemic growth rates that don't support the deficit spending...


Oh absolutely, stimulus spending should be a very short term thing - purely for the length of the business cycle in which the economy is flat. Once you get outside that and you still hear politicians justifying debt as stimulus spending, well then you get different politicians

For it's worth, though, right now the US is borrowing money at rates that are just a tick above 0% over inflation, so there's no doubt about them running out of lenders any time soon.


Automatically Appended Next Post:
 whembly wrote:
Yeah... this chart is telling...



Who are the losers who can win a seat in congress but can't pull themselves up into the top 10%?

I demand names.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5162002.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5162002.page GMT Trillion Dollar Coin
 sebster wrote:

 whembly wrote:
Yeah... this chart is telling...



Who are the losers who can win a seat in congress but can't pull themselves up into the top 10%?

I demand names.
How exactly do you propose that all of the senators and representatives get into the top 10% OF THE HOUSE AND SENATE. It's like saying the 8 billionaires tied for last on the Forbes wealthiest list are failures because they only have $1.1B.
And also whembly fixed your image.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164405.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164405.page GMT Re:Trillion Dollar Coin http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164437.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164437.page GMT Trillion Dollar Coin
 AustonT wrote:
How exactly do you propose that all of the senators and representatives get into the top 10% OF THE HOUSE AND SENATE. It's like saying the 8 billionaires tied for last on the Forbes wealthiest list are failures because they only have $1.1B.
You can start by not mixing your data. The top 10% figure Whembly used is for all income earners in the USA, not a percentage of income of Congressmen.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164440.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164440.page GMT Trillion Dollar Coin
 Breotan wrote:
 AustonT wrote:
How exactly do you propose that all of the senators and representatives get into the top 10% OF THE HOUSE AND SENATE. It's like saying the 8 billionaires tied for last on the Forbes wealthiest list are failures because they only have $1.1B.
You can start by not mixing your data. The top 10% figure Whembly used is for all income earners in the USA, not a percentage of income of Congressmen.

Quote it then.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164466.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5164466.page GMT Re:Trillion Dollar Coin http://www.foxnews.com/politics/2013/01/12/treasury-department-shoots-down-platinum-coin-idea-as-debt-ceiling-solution/
The Obama administration ended speculation Saturday that it would mint a trillion-dollar platinum coin as a way to avoid the debt ceiling.
Treasury Department spokesman Anthony Coley said the agency wouldn't mint one and the Federal Reserve would not accept the coin.
“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Coley said.
His statement was followed by one from White House Press Secretary Jay Carney.
“There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default," Carney said.
Though the idea seemed far fetched when it recently resurfaced, the Obama administration appeared to add speculation by not dismissing the idea outright.
On Wednesday, Carney said there was no "Plan B" on the debt ceiling but didn't totally rule out the platinum coin.
The idea of minting such a coin to invalidate the debt ceiling purportedly comes from part of the 1997 Omnibus Consolidated Appropriations Act.
The words were written by then-Delaware Republican Rep. Mike Castle, who purportedly is a coin collector.
Carney also said Saturday, "When congressional Republicans played politics with this issue last time, putting us at the edge of default, it was a blow to our economic recovery, causing our nation’s credit rating to be downgraded. The president and the American people won’t tolerate congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job.”



]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5168777.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5168777.page GMT Trillion Dollar Coin
If the Republicans are going to be flying rodent gak crazy, the democrats ought to match them in craziness. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5169018.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5169018.page GMT Trillion Dollar Coin
LoneLictor wrote:Damn, I was hoping he'd do it.

If the Republicans are going to be flying rodent gak crazy, the democrats ought to match them in craziness.

Because the only way to fight crazy... is with more crazy.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5169476.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5169476.page GMT Trillion Dollar Coin
 azazel the cat wrote:
LoneLictor wrote:Damn, I was hoping he'd do it.

If the Republicans are going to be flying rodent gak crazy, the democrats ought to match them in craziness.

Because the only way to fight crazy... is with more crazy.


Just like how when a house is on fire, you torch it with a flamethrower.

That'll show the fire whose boss; my fire. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5169574.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5169574.page GMT Re:Trillion Dollar Coin
The theme from 2001: a space odyssey cranking as he brandishes it before Congress!

Then, it has to make it to the Fed. How is it going to make it there? The whole world knows about this legal tender, trillion dollar coin. Mafia figures, rogue SWAT agents, drug dealers, gang members, the worst of the worst all competing to ambush the convoy. Probably only one good cop, just days from retirement, can carry it through the sewers while a decoy is aboveground.

But the terrorists know! They've kidnapped his wife, and demand the coin as a ransom payment! Does he bring the coin to the fed, or hijack an experimental STOL aircraft from the Air Force and take them on, while hiding the coin on his cat's collar?

What if, also, Nazis or something?]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5171307.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5171307.page GMT Re:Trillion Dollar Coin
 Ouze wrote:
Probably only one good cop, just days from retirement, can carry it through the sewers while a decoy is aboveground.


Nah, James Cameron. He fixed the Deepwater Horizon mess, he can fix this one too. His compensation? Exclusive movie rights.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5171695.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5171695.page GMT Trillion Dollar Coin
 AustonT wrote:
How exactly do you propose that all of the senators and representatives get into the top 10% OF THE HOUSE AND SENATE. It's like saying the 8 billionaires tied for last on the Forbes wealthiest list are failures because they only have $1.1B.


You don't understand the graph, or its point. It isn't showing what percentage belong to the top 10% of congress. That number would be 10%, by definition, obviously.

It is showing what proportions of congress critters belong to the top one percentile of income earners, what percentage belong to the second to tenth percentiles, what percentage belong to the eleventh to twentieth percentiles, and who belongs to the bottom 80 percentiles.

If for some reason you doubt any of that, go to the link on the image, it is explained there quite clearly.

For the record, my joke was poking fun at the people who manage to get into congress but still can't pull themselves into the top 20% of wealthy people.


And also whembly fixed your image.


It isn't my image, its whembly's.


Automatically Appended Next Post:
 whembly wrote:
Not gonna happen now...
http://www.foxnews.com/politics/2013/01/12/treasury-department-shoots-down-platinum-coin-idea-as-debt-ceiling-solution/
The Obama administration ended speculation Saturday that it would mint a trillion-dollar platinum coin as a way to avoid the debt ceiling.
Treasury Department spokesman Anthony Coley said the agency wouldn't mint one and the Federal Reserve would not accept the coin.
“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Coley said.
His statement was followed by one from White House Press Secretary Jay Carney.
“There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default," Carney said.
Though the idea seemed far fetched when it recently resurfaced, the Obama administration appeared to add speculation by not dismissing the idea outright.
On Wednesday, Carney said there was no "Plan B" on the debt ceiling but didn't totally rule out the platinum coin.
The idea of minting such a coin to invalidate the debt ceiling purportedly comes from part of the 1997 Omnibus Consolidated Appropriations Act.
The words were written by then-Delaware Republican Rep. Mike Castle, who purportedly is a coin collector.
Carney also said Saturday, "When congressional Republicans played politics with this issue last time, putting us at the edge of default, it was a blow to our economic recovery, causing our nation’s credit rating to be downgraded. The president and the American people won’t tolerate congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job.”





Interesting. I thought there was a chance the Obama administration might use this as a bargaining chip, as in 'we don't want to do something stupid, but if you leave us no alternative then it's better than letting the country fall over.'

I'm guessing instead they've chosen to remove talk about an Obama solution to the problem (especially given the inherently goofy and legalistic nature of minting the trillion dollar coin) and put the political focus on congress to fix their own mess. It's a pretty reasonable strategy, provided the chance of congress fixing this (now and every other time it comes up) is high enough.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5172702.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5172702.page GMT Trillion Dollar Coin
 sebster wrote:
 AustonT wrote:
How exactly do you propose that all of the senators and representatives get into the top 10% OF THE HOUSE AND SENATE. It's like saying the 8 billionaires tied for last on the Forbes wealthiest list are failures because they only have $1.1B.


You don't understand the graph, or its point. It isn't showing what percentage belong to the top 10% of congress. That number would be 10%, by definition, obviously.

It is showing what proportions of congress critters belong to the top one percentile of income earners, what percentage belong to the second to tenth percentiles, what percentage belong to the eleventh to twentieth percentiles, and who belongs to the bottom 80 percentiles.

If for some reason you doubt any of that, go to the link on the image, it is explained there quite clearly.

For the record, my joke was poking fun at the people who manage to get into congress but still can't pull themselves into the top 20% of wealthy people.

I understood your joke...

But, it is an interesting analysis how wealthy the majority of the congress critters are... but, that doesn't bother me as much, since getting elected in high positions is a significant achievement. It's just interesting... that's all.

And also whembly fixed your image.


It isn't my image, its whembly's.

First one is what I linked, but someone green'ed it out... *shrugs

Automatically Appended Next Post:
 whembly wrote:
Not gonna happen now...
http://www.foxnews.com/politics/2013/01/12/treasury-department-shoots-down-platinum-coin-idea-as-debt-ceiling-solution/
The Obama administration ended speculation Saturday that it would mint a trillion-dollar platinum coin as a way to avoid the debt ceiling.
Treasury Department spokesman Anthony Coley said the agency wouldn't mint one and the Federal Reserve would not accept the coin.
“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Coley said.
His statement was followed by one from White House Press Secretary Jay Carney.
“There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default," Carney said.
Though the idea seemed far fetched when it recently resurfaced, the Obama administration appeared to add speculation by not dismissing the idea outright.
On Wednesday, Carney said there was no "Plan B" on the debt ceiling but didn't totally rule out the platinum coin.
The idea of minting such a coin to invalidate the debt ceiling purportedly comes from part of the 1997 Omnibus Consolidated Appropriations Act.
The words were written by then-Delaware Republican Rep. Mike Castle, who purportedly is a coin collector.
Carney also said Saturday, "When congressional Republicans played politics with this issue last time, putting us at the edge of default, it was a blow to our economic recovery, causing our nation’s credit rating to be downgraded. The president and the American people won’t tolerate congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job.”





Interesting. I thought there was a chance the Obama administration might use this as a bargaining chip, as in 'we don't want to do something stupid, but if you leave us no alternative then it's better than letting the country fall over.'

I'm guessing instead they've chosen to remove talk about an Obama solution to the problem (especially given the inherently goofy and legalistic nature of minting the trillion dollar coin) and put the political focus on congress to fix their own mess. It's a pretty reasonable strategy, provided the chance of congress fixing this (now and every other time it comes up) is high enough.

Eh... they can still do it if they wanted to...

The Debt Limit will be raised... nothing to worry 'bout.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5172754.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5172754.page GMT Trillion Dollar Coin
 sebster wrote:
 AustonT wrote:
And also whembly fixed your image.


It isn't my image, its whembly's.

No gak, that's why I said "and also whembly..."
Here I'll do it again
Whembly: it's green and yellow because red and blue carry certain implied connotations.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5172929.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5172929.page GMT Trillion Dollar Coin
 whembly wrote:
I understood your joke...


Cool

But, it is an interesting analysis how wealthy the majority of the congress critters are... but, that doesn't bother me as much, since getting elected in high positions is a significant achievement. It's just interesting... that's all.


Yeah, and to some extent it's going to naturally be the case. The sort of people who are smart enough and charismatic enough to make it into the higher levels of politics are are going to be the kind of people who were smart enough and charismatic enough to already make loads of money in business.

But there's also the problem that 'you need to be this rich to enter politics' - just the funding and personal connections needed to make a realistic shot at politics excludes a lot of people. Not everyone that has a useful contribution to make to politics is a self made gazillionaire. And if the system is dominated by only people from one group then you end up with a very myopic view on politics. Even if people have all the best intentions for helping the poor, there's going to be a basic lack of understanding on how to help them unless those people themselves are part of the conversation.

But then... if they were part of the conversation they'd be on $150k and wouldn't be the poor, so its something of a catch 22. I think what I'm saying is that Trading Places is a profound movie.

Eh... they can still do it if they wanted to...

The Debt Limit will be raised... nothing to worry 'bout.


Sure thing. It'll be raised, there'll be some concessions, and then we'll be back here again in another, what do you reckon? Six months? Maybe a year, or two?


Automatically Appended Next Post:
 AustonT wrote:
No gak, that's why I said "and also whembly..."
Here I'll do it again
Whembly: it's green and yellow because red and blue carry certain implied connotations.


Who cares about the colours... do you get the meaning of the image now? You get that it means 42% of congress members are among the top 1% wealthiest people in the country?]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5173311.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5173311.page GMT Re:Trillion Dollar Coin
Sure thing. It'll be raised, there'll be some concessions, and then we'll be back here again in another, what do you reckon? Six months? Maybe a year, or two?

I don't know... how long does the "debt" needs to be armed and operational?
]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5174534.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5174534.page GMT Re:Trillion Dollar Coin
 Ouze wrote:
I'm a little disappointed he won't order the coin minted. Not because I think it was a good idea (for a lot of reason I think it actually kinda isn't) but because I had started imagining the epic ceremony that would have followed it.


Apparently Obama's decided it's far easier just to order the debt ceiling raised. ]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5174619.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5174619.page GMT Re:Trillion Dollar Coin
 Grey Templar wrote:
You can't simply print money to make a debt problem go away. Thats what happened in Germany after WW1.
The only way to make coins and sell them to make money would be to have it be hard currency. The government could sell gold coins but that would be no different than just selling gold bullion by the ounce.


Exactly. Was going to mention that.
Germany started printing money to get out of debt, and that caused hyper-inflation which in turn made the money literally worthless.
They could wipe their arse with paper money, and it would be cheaper than buying proper toilet paper

Making a special coin worth whatever amount of money is equal to printing money. if they do that, dollar will start going down in value.]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5180359.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5180359.page GMT Re:Trillion Dollar Coin
Daemonhammer wrote:
Exactly. Was going to mention that.
Germany started printing money to get out of debt, and that caused hyper-inflation which in turn made the money literally worthless.


Oh for feth's sake. It's one thing to know nothing about this, it's quite another when you repeat a point that has already been raised and dismissed.

As I already explained, printing more money is only inflationary when that money is pumped into the economy* and the coin in this instance will not be getting put directly into circulation. Instead it will be deposited with the Fed, who will then have another trillion dollar asset, freeing them to continue to finance government through open market operations. The end result is exactly as if the debt ceiling were increased by another trillion.

Please, in future, just read the thread. You will learn things. It will save you from repeating stuff that is already established as naive and just plain wrong.




*Actually even then there's no guarantee of an inflationary effect. Since the GFC the Fed has trebled the money supply in the economy, while inflation has stayed low. This is because the accelerator (the amount of times that money is lent out, deposited back into the banking system, lent out again and so on) varies due to economic circumstances. For this reason it is important to vary the money supply considerably over time to maintain price levels]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5180910.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5180910.page GMT Re:Trillion Dollar Coin
 sebster wrote:
Daemonhammer wrote:
Exactly. Was going to mention that.
Germany started printing money to get out of debt, and that caused hyper-inflation which in turn made the money literally worthless.


Oh for feth's sake. It's one thing to know nothing about this, it's quite another when you repeat a point that has already been raised and dismissed.

As I already explained, printing more money is only inflationary when that money is pumped into the economy* and the coin in this instance will not be getting put directly into circulation. Instead it will be deposited with the Fed, who will then have another trillion dollar asset, freeing them to continue to finance government through open market operations. The end result is exactly as if the debt ceiling were increased by another trillion.

Please, in future, just read the thread. You will learn things. It will save you from repeating stuff that is already established as naive and just plain wrong.


*Actually even then there's no guarantee of an inflationary effect. Since the GFC the Fed has trebled the money supply in the economy, while inflation has stayed low. This is because the accelerator (the amount of times that money is lent out, deposited back into the banking system, lent out again and so on) varies due to economic circumstances. For this reason it is important to vary the money supply considerably over time to maintain price levels

Not that it'll happen, but I've highlighted the important part....

And what you "astricked" is exactly right... (to me, it is rocket science! )]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5180975.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5180975.page GMT Re:Trillion Dollar Coin
 whembly wrote:
Not that it'll happen, but I've highlighted the important part....


Yeah, the Whitehouse has gone down another path. Makes political sense to put the pressure on congress and not leave the coin as an out, as we already discussed.

And what you "astricked" is exactly right... (to me, it is rocket science! )


In a sense it kind of is, you get a lot of really high end math factoring in a lot of variables to determine the necessary money supply. Way more than I can follow (I got the hell away from economics when it got into the really maths heavy econometrics stuff).]]> http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5181070.page http://www.dakkadakka.com/dakkaforum/posts/preList/499215/5181070.page GMT