Hey, let’s avoid the debt-ceiling standoff by minting a trillion-dollar platinum coin instead

posted at 4:23 pm on January 4, 2013 by Allahpundit

Words cannot express my excitement that this banana-republic idea is now being taken seriously enough to attract vocal support from a sitting Democratic congressman. If you’re looking for a way to convince the public that the left has no interest whatsoever in reducing spending before we face a fiscal meltdown, you can’t do better than having Obama and Geithner respond to the GOP’s demand for cuts by producing a de facto handful of magic beans.

In fact, that’s my condition for supporting this proposal. I’ll back it to the hilt, but only if the masterminds behind it figure out a constitutional way to let Treasury choose beans as the trillion-dollar currency instead of a coin. That’ll show those Republicans.

“There is specific statutory authority that says that the Federal Reserve can mint any non-gold or -silver coin in any denomination, so all you do is you tell the Federal Reserve to make a platinum coin for one trillion dollars, and then you deposit it in the Treasury account, and you pay your bills,” Nadler said in a telephone interview this afternoon.

I asked whether he was serious.

“I’m being absolutely serious,” he said. “It sounds silly but it’s absolutely legal. And it would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things.”

By “things,” he means magic coins, not Medicare reform. Over at National Journal, a jittery Matthew Cooper wonders if the optics of all this might not be counterproductive for Democrats:

As bad as the House behavior has been, using a small legal provision meant to please numismatists to leverage the nation’s debts seems, um, risky. The only analogy I can think of is the Court-packing mess of the 1930s when President Roosevelt, faced with a cranky Supreme Court that overturned his social-welfare programs and those in the states, tried to enlarge the size of the Court to fill it with more sympathetic appointees. After an outcry, the president backed down. But FDR at least tried to make the change by proposing a statute and forcing a Senate debate. (The bill never cleared the chamber.)

Minting the coins would seem even more imperious. After all, the Supreme Court in the 1930s was knocking down state minimum-wage laws and other expressions of the popular will. FDR had some momentum behind him. But President Obama would look despotic if he embraced this tactic. (Imagine all the pictures of King Obama on a coin.)

I assume the reason they’re thinking about a coin worth “only” a trillion instead of $10 trillion is because, you see, a $10 trillion coin would be exorbitant and sound crazy.

Via Mediaite, here’s Rick Santelli proving his extremism by wondering why people who refuse to mindlessly extend the nation’s line of credit while we’re on an unsustainable fiscal track are the “lunatics” in this debate. Exit question: Am I giving American voters way, way too much credit in thinking they’d laugh at the trillion-dollar coin idea? At this point, given the results in November, what’s the best result poll-wise we could hope for? 55-45 against?


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2 3 4

Too many underutilized walls in America today.

tom daschle concerned on January 4, 2013 at 5:14 PM

1934

Bmore on January 4, 2013 at 5:15 PM

The coin is too much trouble. Just put everyone on welfare and tax the welfare checks to support the government.

okiewan66 on January 4, 2013 at 5:16 PM

“It sounds silly but it’s absolutely legal.”

Chew on that argument – such as it is – for a moment.

He’s not saying it will work. He’s not even saying it’s not silly. Nope – we should do it because it’s legal.

Eff me…

landshark on January 4, 2013 at 5:17 PM

“I’m being absolutely serious,” he said. “It sounds silly but it’s absolutely legal.”

Like gun ownership? No, gun ownership isn’t “silly,” like spending us into $16 trillion of debt and printing trillion dollar coins, it’s obscene. Right, Nadler?

Go to hell. All of you. And I’m pretty sure you will.

rrpjr on January 4, 2013 at 5:18 PM

I will accept firearms as payments for wheelbarrows.

Bmore on January 4, 2013 at 5:20 PM

Ammo too.

Bmore on January 4, 2013 at 5:20 PM

Words cannot express my excitement that this banana-republic idea is now being taken seriously enough to attract vocal support from a sitting Democratic congressman.

Words cannot express my excitement that this banana-republic idea is now being taken seriously enough to attract vocal support from a sitting Republican Senator.

We should not negotiate with hostage takers. Mint the coins!

lester on January 4, 2013 at 5:21 PM

The fact that the media isn’t even blinking at this suggestion should tell you all that the time to panic came and went a long time ago…

Seven Percent Solution on January 4, 2013 at 5:21 PM

By the way, since stupidity and insanity are apparently reigning in our moronic government, let this be a friendly PSA reminder to invest in things that can be bartered and easily denominated. For when these awesome “one trillion dollar” coins of platinum/plastic/ceramic/poop hit the streets, you’ll need a way to pay for your food.

Weight of Glory on January 4, 2013 at 5:13 PM

Platinum actually does have some value and the spot price for an ounce of platinum is slightly lower than gold.

But your point overall is well-taken. Anyone whose wealth is tied up in pure cash or equities is at risk.

Doomberg on January 4, 2013 at 5:22 PM

lester on January 4, 2013 at 5:21 PM

…HI STUPID!
GFY!

KOOLAID2 on January 4, 2013 at 5:24 PM

Are We There Yet? Luv, We’ve Been There!

M2RB: The B-52′s

Resist We Much on January 4, 2013 at 5:25 PM

“When you’re blind, “optics” is not a matter of grave concern” – Hairy Reid

“ooh, look it’s a snake . . . no, it’s a tree . . .”

dissent555 on January 4, 2013 at 5:27 PM

We should not negotiate with hostage takers. Mint the coins!

lester on January 4, 2013 at 5:21 PM

That doesn’t even make a vague sort of sense?

sharrukin on January 4, 2013 at 5:27 PM

No, the coin can’t be made from lead. This is getting ridiculous. The point is the value in dollars that the material is supposed to cover. If they made a one ounce coin made of lead or platinum or poop, what do you think that’d do to the dollars in your pocket? It means that the 1 dollar in your pocket is worth one trillionth of a one ounce poop coin.

Weight of Glory on January 4, 2013 at 5:13 PM

Very very wrong. A penny, a nickle, and a dime are each worth more in “currency” than the material they’re made from. Not sure about a quarter, but probably so.

A $100 bill? Almost nil intrinsic value. It’s a game of confidence – and once the confidence in the government backing the currency evaporates, look out.

So, yes, lead works fine. I prefer my solution to ensure total collapse of civilization: $1M plastic coins.

peski on January 4, 2013 at 5:29 PM

We should not negotiate with hostage takers. Mint the coins!

lester on January 4, 2013 at 5:21 PM

I hope you’ve been buying gold. If not, enjoy your hyperinflation! have fun trying to buy food and clothing!

Doomberg on January 4, 2013 at 5:30 PM

Will not accept plastic coins as payment for wheelbarrows.

Bmore on January 4, 2013 at 5:31 PM

peski on January 4, 2013 at 5:29 PM

I’m not sure I’m making myself clear, because I’m arguing the same point, but from the other side. So I’ll just quote you and leave it at that:

It’s a game of confidence – and once the confidence in the government backing the currency evaporates, look out.

Yes, which is why a trillion dollar plastic coin wont work.

Weight of Glory on January 4, 2013 at 5:33 PM

That doesn’t even make a vague sort of sense?

sharrukin on January 4, 2013 at 5:27 PM

This is your brain on poppers.

Ward Cleaver on January 4, 2013 at 5:34 PM

This is your brain on poppers.

Ward Cleaver on January 4, 2013 at 5:34 PM

Is there some sort of process for applying for a better troll? Hotair isn’t a small site and we deserve better than Lester.

sharrukin on January 4, 2013 at 5:38 PM

Maybe we could just rent a printing press from Zimbabwe for a month or two.

dissent555 on January 4, 2013 at 5:38 PM

Very very wrong. A penny, a nickle, and a dime are each worth more in “currency” than the material they’re made from. Not sure about a quarter, but probably so.

A $100 bill? Almost nil intrinsic value. It’s a game of confidence – and once the confidence in the government backing the currency evaporates, look out.

So, yes, lead works fine. I prefer my solution to ensure total collapse of civilization: $1M plastic coins.

peski on January 4, 2013 at 5:29 PM

The total circulated nominal value of pennies, nickles, dimes, quarters, half-dollars, and all other non-platinum coinage is limited by law. It is only the total circulated nominal value of platinum coinage (“thank” you 1990s Congress) that is not limited.

Steve Eggleston on January 4, 2013 at 5:39 PM

Since ammo is getting scarce, I’m now investing in booze. It keeps forever, is easily bartered, and very popular.

PrepperMark (formerly SailorMark)

SailorMark on January 4, 2013 at 5:40 PM

It’s a non-serious solution for a non-serious people. We’ve become the Eloi.

DFCtomm on January 4, 2013 at 5:41 PM

We should not negotiate with hostage takers. Mint the coins!

lester on January 4, 2013 at 5:21 PM

Why not go the FULL ZIMBABWE and just let Obama print out a few “$1 Trillion Commemorative Barack Hussein Obama Second Inaugural Notes” on his computer printer and then put them in the new “United States Sustainability Trust Fund” where none of those nasty “hostage takers” can get their dirty hands on them?

Some advice should this idiocy continue: Buy yourself a wheelbarrow.

Resist We Much on January 4, 2013 at 5:42 PM

Some advice should this idiocy continue: Buy yourself a wheelbarrow.

Resist We Much on January 4, 2013 at 5:42 PM

We’re going to need bigger wheelbarrows. In fact, I doubt my pickup truck will be big enough.

Steve Eggleston on January 4, 2013 at 5:43 PM

This is your brain on poppers.

Ward Cleaver on January 4, 2013 at 5:34 PM

You give poppers waaaaaaaaaaaaaaaaaaaaaaaaaaaaay too much credit.

Resist We Much on January 4, 2013 at 5:43 PM

We’re going to need bigger wheelbarrows. In fact, I doubt my pickup truck will be big enough.

Steve Eggleston on January 4, 2013 at 5:43 PM

Tru dat…’tho the wheelbarrow made a nice change purse during Weimar Germany.

On a serious note, Germans used to pay for their meals in restaurants when they ordered them because, if they waited until after they finished their meals, the bill would have doubled.

o_O

Resist We Much on January 4, 2013 at 5:45 PM

With the FOMC minutes that came out yesterday, there were extremely diverging pov’s on the Fed’s current actions. Therefore I do not see a $1tril extra digital dollars put out there.

I would love for them to do this, or some idea further along. The People are morons and only respond to direct effects, which is what this would be. This would also not just be a domestic effect, we are still the world’s reserve currency.

John Kettlewell on January 4, 2013 at 5:47 PM

Imperious? Despotic? I’m surprised Obama hasn’t done it already.

Jim Treacher on January 4, 2013 at 5:49 PM

It was dumb the first time this topic was posted here a month or so ago.

Hasn’t gotten any less dumb.

LegendHasIt on January 4, 2013 at 5:50 PM

On the positive side, if Barky McDogeater authorizes this brilliant plan just think of how many people will be able to pay off their prior existing home, student credit card and whatever loans in record time.

Old loans are in, pre-hyperinflation numerical values. Banks cannot increase the numerical value of your already existing loans because the currency value crashes. They cannot change the interest rates either.

Let’s say your pre-hyperinflation loans are for $450,000.00 if Barky McDogeater approves this scheme, hyperinflation kicks in, a $1.00 bill becomes a $10,000.00 dollar bill (See Zimbabwe’s $100 Trillion Dollar Bill for reference), your loan of $450,000.00 suddenly becomes the equivalent of $4.50… You could pay it off out of pocket change.

SWalker on January 4, 2013 at 5:53 PM

If GOP thinks the debt ceiling gives leverage over Obama, they’re dreaming. Obama will do an end run around it, no sweat. Probably he’ll invoke the 14th Amendment, but whatever end run he uses, he’ll sail past the debt ceiling as if it were never there.

Then he’ll double down on spending.

petefrt on January 4, 2013 at 5:56 PM

Yes, which is why a trillion dollar plastic coin wont work.

Weight of Glory on January 4, 2013 at 5:33 PM

On that we’re in complete agreement.

peski on January 4, 2013 at 5:56 PM

Why bother with a coin? Just print a $1 trillion dollar certificate. “This is to certify that there is on deposit in the treasury of the United States $1 trillion dollars in bullshit payable to the bearer on demand.”

scrubjay on January 4, 2013 at 5:57 PM

It’s an old chestnut. It actually is a way to get around the debt ceiling limit. It wouldn’t have any other economic effect, aside from allowing Fed-zilla to keep on spending without the inconvenient limit (which is disastrous enough) and it does not require any participation by the Congress.

MJBrutus on January 4, 2013 at 5:58 PM

The total circulated nominal value of pennies, nickles, dimes, quarters, half-dollars, and all other non-platinum coinage is limited by law. It is only the total circulated nominal value of platinum coinage (“thank” you 1990s Congress) that is not limited.

Steve Eggleston on January 4, 2013 at 5:39 PM

Once again…

Are you implying that the Obama administration is somehow constrained by the Constitution law?

peski on January 4, 2013 at 2:16 PM

peski on January 4, 2013 at 5:58 PM

Old loans are in, pre-hyperinflation numerical values. Banks cannot increase the numerical value of your already existing loans because the currency value crashes. They cannot change the interest rates either.

Let’s say your pre-hyperinflation loans are for $450,000.00 if Barky McDogeater approves this scheme, hyperinflation kicks in, a $1.00 bill becomes a $10,000.00 dollar bill (See Zimbabwe’s $100 Trillion Dollar Bill for reference), your loan of $450,000.00 suddenly becomes the equivalent of $4.50… You could pay it off out of pocket change.

SWalker on January 4, 2013 at 5:53 PM

It would also mean that savers would be devastated, and the indebted would get a reprieve. The savers, if they could, would flee to safer foreign currencies, further damaging the dollar value as they offloaded US currency.

sharrukin on January 4, 2013 at 5:59 PM

If GOP thinks the debt ceiling gives leverage over Obama, they’re dreaming. Obama will do an end run around it, no sweat. Probably he’ll invoke the 14th Amendment, but whatever end run he uses, he’ll sail past the debt ceiling as if it were never there.

Then he’ll double down on spending.

petefrt on January 4, 2013 at 5:56 PM

Obviously, Obama studied our U.S. Constitution to explore methods to derail or “work around” it. His interests in our nation’s founding document sure seems by his behavior in elected office to be that he wants to exploit the document, not preserve, defend and protect it.

Lourdes on January 4, 2013 at 6:00 PM

SWalker on January 4, 2013 at 5:53 PM

Inflation is a twofer for Obama. It (1)redistributes wealth, reducing everyone to gubmint dependency, and (2) monetizes debt. It’s part of the plan.

petefrt on January 4, 2013 at 6:00 PM

Once again…

Are you implying that the Obama administration is somehow constrained by the Constitution law?

peski on January 4, 2013 at 2:16 PM

peski on January 4, 2013 at 5:58 PM

So noted, but platinum costs a lot more than plastic. That’s why it won’t be plastic, wood, or anything that is cheap.

If it’s not platinum, it will be a substance that is even more expensive.

Steve Eggleston on January 4, 2013 at 6:02 PM

It’s an old chestnut. It actually is a way to get around the debt ceiling limit…

MJBrutus on January 4, 2013 at 5:58 PM

Like I expressed back on Page 1 of comments here, this is yet another ploy by Obama to agitate those able to be agitated…so after a period of months of this arguing and (bizarre) discussion nationwide, he’ll have implemented a weariness with the issue of “debt” and he’ll have his open door to leverage eliminating the “debt ceiling.”

It’s not about a coin or what a coin such as “trillion dollar” one would be made of, it’s about the propaganda effect that Obama uses (and has used on other issues) to gain what he calls “change”.

He reworks the understandings of what things mean in the minds of some and then appears with his “solution” to “change” by introducing his altered definitions to what has become tiresome and viewed as “old” and “antiquated” and “racist” and “not protective of the middle class” and “uncaring” and “unfair” and yaddayaddayadda…

It’s PROPAGANDA. Obama agitates the population with these strange declarations of possibilities that aren’t possible, meaning, he sits there with his serious look or his big laugh or his “I love you back” pony dancing and then lets people stew in their misunderstandings, which he’s implemented.

Then he appears as saver-of-their-existence and, presto, he “orders” “change”.

Lourdes on January 4, 2013 at 6:07 PM

Even if the magic coin theory would work to vanish the debt, what do you think our government would do next? Start all over and go on a spending spree like no other. They can’t be cured any more than the hoarder who gets their house all cleaned up, they justify it as a reason to start hoarding again.

scalleywag on January 4, 2013 at 6:07 PM

Am I giving American voters way, way too much credit in thinking they’d laugh at the trillion-dollar coin idea? At this point, given the results in November, what’s the best result poll-wise we could hope for? 55-45 against?

Yea, you’re giving them way too much credit…remember, Obama won.

BTW, I think it would pass.

AUINSC on January 4, 2013 at 6:10 PM

Why even bother using platinum? Seems wasteful and expensive. If we’re minting fake money and calling it real, just make it out of plastic.

DaveO on January 4, 2013 at 6:11 PM

We should not negotiate with hostage takers. Mint the coins!

lester on January 4, 2013 at 5:21 PM

You never fail to prove yourself the idiot. Seriously you have to be one of the dimmest posters ever.

CW on January 4, 2013 at 6:12 PM

If it’s not platinum, it will be a substance that is even more expensive.

Steve Eggleston on January 4, 2013 at 6:02 PM

I’m being sarcastic. The whole idea is idiotic, whether they use platinum, plastic, or toenail clippings.

peski on January 4, 2013 at 6:14 PM

Why even bother using platinum? Seems wasteful and expensive. If we’re minting fake money and calling it real, just make it out of plastic.

DaveO on January 4, 2013 at 6:11 PM

The legal reason is that platinum is the only material the Treasury/Mint is authorized to use to mint $1,000,000,000,000 coins. The other reason is using platinum is wasteful and expensive.

Steve Eggleston on January 4, 2013 at 6:15 PM

I’m being sarcastic. The whole idea is idiotic, whether they use platinum, plastic, or toenail clippings.

peski on January 4, 2013 at 6:14 PM

Bingo. FWIW, sarcasm is sometimes hard to detect in digital format :-)

Steve Eggleston on January 4, 2013 at 6:16 PM

It’s a game of confidence – and once the confidence in the government backing the currency evaporates, look out.

See Zimbabwe. Or Ukraine in the early 90′s.

BacaDog on January 4, 2013 at 6:18 PM

How much platinum will it take to fill the pit?

JellyToast on January 4, 2013 at 6:19 PM

I call this real progress. For the first time in over 40 years our money will actually be specie rather than fiat.

roy_batty on January 4, 2013 at 6:21 PM

See Zimbabwe. Or Ukraine in the early 90′s.

BacaDog on January 4, 2013 at 6:18 PM

The Weimar Republic, the southeast Asian economies circa 1997, and Argentina circa 1999 also fit the bill nicely.

Steve Eggleston on January 4, 2013 at 6:22 PM

Then he appears as saver-of-their-existence and, presto, he “orders” “change”.

Lourdes on January 4, 2013 at 6:07 PM

For the first time, it will be literal.

Steve Eggleston on January 4, 2013 at 6:23 PM

A $100 bill? Almost nil intrinsic value. It’s a game of confidence – and once the confidence in the government backing the currency evaporates, look out.

peski on January 4, 2013 at 5:29 PM

That is what the elites have forgotten. They think economics has become a hard science, but in reality it’s half psychology, and this is the flaw that is going to bring us down, and when it comes down it’s going to come down fast.

DFCtomm on January 4, 2013 at 6:27 PM

Exit question: Am I giving American voters way, way too much credit in thinking they’d laugh at the trillion-dollar coin idea?

Yep. The majority of people in this country are too busy in their own lives to pay attention to the insanity in DC. It’s all “noise” at this point.

MT on January 4, 2013 at 6:28 PM

“I’m being absolutely serious,” he said. “It sounds silly but it’s absolutely legal. And it would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things.”

1. Magic beans
2. Fee Fi Fo Fum
3. Golden Eggs
4. Utopia!

BobMbx on January 4, 2013 at 6:36 PM

Old loans are in, pre-hyperinflation numerical values. Banks cannot increase the numerical value of your already existing loans because the currency value crashes.

So are pensions. Enjoy that $5,000 per month check when a loaf of bread is $6,000.

BacaDog on January 4, 2013 at 6:37 PM

“I’m being absolutely serious,” he said. “It sounds silly but it’s absolutely legal. And it would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things.”

Of course, he could always claim the moon Titan as property of the US Government, and sell rights to the lakes of liquid methane there.

BobMbx on January 4, 2013 at 6:38 PM

Conservatives are missing all the payback.

Imagine that you hate the whole white, Christian, male dominance in history.

You are not rich at the present. MSNBC has been feeding you news of the power structure or crackpot racists in Florida killing innocents and shafting you out of the success you deserve. Police act stupidly.

You need birth control but he never takes anything! We will not even mention sleeping on the wet spot, which is your real source of anger.

You know that the Republican’s ruined the economy by stealing all they could and starting wars to profit Haliburton*, CACI and Bechtel and with the last leadership so now it is your turn!

You never heard of Fannie, Freddie or Franklin Raines.

* Her name is Bunnatine “Bunny” Greenhouse. She blew the whistle when her employer, the US Army Corps of Engineers, gave a no-bid $7bn contract to the Halliburton subsidiary Kellogg, Brown and Root (KBR) as the US was about to invade Iraq. She was doing her job, trying to ensure a competitive bidding process would save the US government money. For that, she was forced out of her senior position, demoted and harassed.

Just this week, after waging a legal battle for more than half a decade, Bunny Greenhouse won. The US Army Corps of Engineers settled with Greenhouse for $970,000, representing full restitution for lost wages, compensatory damages and attorneys’ fees. From Charlie Cray on Alternet “Ten Most Brazen War Profiteers.” (web)

She wasn’t earning much for a ten year battle.

IlikedAUH2O on January 4, 2013 at 6:47 PM

I don’t know if they’ll change the rules to allow the demigod of ObamiNation to be on the front, but I know they’ll have Fluke’s arse as the tail.

Steve Eggleston on January 4, 2013 at 4:46 PM

I hope her arse is less hirsute than her face.

Nutstuyu on January 4, 2013 at 6:48 PM

This sounds like a great idea. Let’s mint a couple thousand of these suckers and then we can build that Death Star that everybody wants.

Socratease on January 4, 2013 at 6:51 PM

So am I. It would absolutely devastate an already shaky confidence in the US market, and the dollar would go into freefall.

I can see the Democrats trying to push this as a “those evil Republicans forced us into this and we want to save the kittens, so we have no choice“.

sharrukin on January 4, 2013 at 5:03 PM

Yeah, I am afraid that is exactly what will happen. Hyperinflation usually happens as a result of loss of confidence in a currency. What’s been propping the dollar up is a “slow boil” of gradual spending increases, but minting $1T coins is going to be a very visible and audacious move, and the kind of thing a banana republic would come up with. I have to think it would provoke the dollar to enter freefall.

Doomberg on January 4, 2013 at 5:11 PM

Will the American people cheer if he announces this? Absolutely.

What will the bond rating agencies do if he announces this? They will have to extend their scales to Greek letters and go with Omega with a lot of minuses.

What will foreign trade do? Start demanding other than US currency in payment. Buraq Hussein cannot force people to sell to us.

What should free Americans do if there is a hint that they have an intention of doing this? Convert every dollar you have in cash or credit into tangible goods and means to store and protect them. Those goods may be tradeable to survive and prosper after a sort when it all goes TANGO UNIFORM. And keep in mind that as soon as the EBT cards are worthless, Obama’s supporters in and out of government are going to decide that you are a nasty Kulak who deserves death for having more they they have.

Subotai Bahadur on January 4, 2013 at 6:59 PM

Get prepared, folks. This is not going to end well.

AZCoyote on January 4, 2013 at 7:01 PM

I just got here, so sorry if this has already been asked, but:
Wasn’t this already an episode of “The Simpsons”?

SagebrushPuppet on January 4, 2013 at 7:02 PM

I guess most of the left has their Camelot dreams however we need those that recognize these as dreams not reality. Economists have become horse telling us we are doing the economy a powerful wrong with all the spending. It fell on deaf ears, the thirty pieces of silver sounded better.

mixplix on January 4, 2013 at 7:05 PM

Has anybody checked on the gold supply at Fort Knox lately?

Eleven on January 4, 2013 at 7:06 PM

By the way, if anyone wants to see what a platinum eagle looks like: http://www.coinnews.net/americaneagles/wp-content/uploads/2011/01/2011-Proof-Platinum-Eagle-Coin.jpg

The obverse with the statue of liberty head is unchanging, but they do a new reverse every year. The 2011 is my favorite.

Why is that vicious bird chasing that woman?

trigon on January 4, 2013 at 7:26 PM

Here’s a better idea. Have the U.S. Government corner the market in an extremely rare material – perhaps a man-made one that other nations simply can’t duplicate (unobtainium) or something we already have that other nations really can’t get – MOON ROCKS! Then you set the price on this material at some arbitraty number depending on how much of it we have or can obtain. Maybe a billion dollars an ounce?

Then we just pass a law that says the U.S. is going to take its monetary standard off the federal reserve note and place it on the Moon Rock standard. Start printing money based on the set value of Moon Rocks and buy back all outstanding U.S. debt.

Voila – since we pretty much own it all, can prevent other nations from obtaining it and we can get more if we really want to, we can set the price at anything we want and print as much money as we need. No more national debt, no more defecit and all the money we need to live in the lap of government largess.

It makes as much, if not more, sense then minting trillion dollar platinum coins!

Fatal on January 4, 2013 at 7:30 PM

Old loans are in, pre-hyperinflation numerical values. Banks cannot increase the numerical value of your already existing loans because the currency value crashes.

So are pensions. Enjoy that $5,000 per month check when a loaf of bread is $6,000.

BacaDog on January 4, 2013 at 6:37 PM

Sigh… Sarcasm is lost on some people isn’t it…

SWalker on January 4, 2013 at 7:31 PM

It would also mean that savers would be devastated, and the indebted would get a reprieve. The savers, if they could, would flee to safer foreign currencies, further damaging the dollar value as they offloaded US currency.

sharrukin on January 4, 2013 at 5:59 PM

That’s the plan. A feature, not a flaw. To Obama, hyperinflation is the great leveler.

petefrt on January 4, 2013 at 7:51 PM

Obviously, Obama studied our U.S. Constitution to explore methods to derail or “work around” it.

Lourdes on January 4, 2013 at 6:00 PM

Right, Obama is a scholar on the Constitution like Marx is a scholar on capitalism.

petefrt on January 4, 2013 at 7:57 PM

The public would think this is cool. ‘ cause they’re sorry as hell. I’m convinced that after seeing TFG reelected 51% would back him if he got caught, on camera, raping the corpses of baby seals. I don’t think the “optics” of a trillion dollar coin would trouble the Sloth Horde of the FSA.

I said, jokingly, three years ago, that they would put Obamas face on the trillion dollar bill, such would be the value of our currency when he’s finished with us. I don’t think it’s funny anymore.

SAMinVA on January 4, 2013 at 8:02 PM

A lot of people really don’t understand the implications of this.

The Fed already “printed” trillions of dollars out of thin air, and used them to buy US treasury bonds from the banks. That’s quantitative easing. The Fed now owns trillions of dollars of treasuries, in a vault somewhere.

All this move would be doing is exchanging a trillion dollar coin in the Fed’s vault with an existing trillion dollar treasury in the Fed’s vault, until Congress raises the debt ceiling — at which point the Treasury will go back and exchange a trillion dollar treasury with the trillion dollar coin (and destroy the coin).

In other words, it would have no economic effect whatsoever. The point is that the Treasury owes the Fed x dollars — whether that record is kept in a vault in the form of a treasury bond or a metallic coin is irrelevant. No one is talking about changing anything that is in public circulation. This is just about the composition of the records in a Fed vault.

The only effect it would have is to legally get around the debt ceiling. That’s it. Not one additional dollar would be spent that wouldn’t otherwise be spent. It is solely a legal construct, to make the debt ceiling irrelevant.

jd3181 on January 4, 2013 at 8:08 PM

I assume the reason they’re thinking about a coin worth “only” a trillion instead of $10 trillion is because, you see, a $10 trillion coin would be exorbitant and sound crazy.

To cry or to laugh: that is the question.

tom on January 4, 2013 at 8:12 PM

In other words, it would have no economic effect whatsoever.

Not one additional dollar would be spent that wouldn’t otherwise be spent. It is solely a legal construct, to make the debt ceiling irrelevant.

jd3181 on January 4, 2013 at 8:08 PM

What would be the effect of the President saying that the United States has no intention of paying back the debt? I mean not a single dollar will have been added, or taken away by such a public statement.

Confidence does matter.

sharrukin on January 4, 2013 at 8:15 PM

So are pensions. Enjoy that $5,000 per month check when a loaf of bread is $6,000.

BacaDog on January 4, 2013 at 6:37 PM

Good point. Devaluing union benefits may be the one consideration that’s holding them back.

petefrt on January 4, 2013 at 8:16 PM

A trillion dollar coin? Why not? It worked for Zimbabwe, right?

HerneTheHunter on January 4, 2013 at 8:19 PM

What would be the effect of the President saying that the United States has no intention of paying back the debt? I mean not a single dollar will have been added, or taken away by such a public statement.

Confidence does matter.

If the President didn’t pay back the debt, and it came time for the Fed to wind down its QE, it would find it wouldn’t be able to. That would cause inflation, as the Fed wouldn’t be able to fight it by withdrawing its injected cash.

But that question is kind of silly, no? Of course the President or the Fed Chair could say things that create a crisis of confidence. No one’s arguing otherwise.

The point is that the President wouldn’t say anything like that. He would say that he has taken an action that is perfectly legal, whose only effect would be to get around the debt ceiling. As soon as Republicans raise the debt ceiling, the action will be reversed (up to the amount Republicans raise the debt ceiling).

jd3181 on January 4, 2013 at 8:19 PM

Make the coins out of plutonium. That way the debt naturally decays.
It would also be a deterrence to theft of the coins.

Put the coins in a box with Schroddinger’s cat.
And just DON’T OPEN THAT BOX.

connertown on January 4, 2013 at 8:20 PM

But that question is kind of silly, no? Of course the President or the Fed Chair could say things that create a crisis of confidence. No one’s arguing otherwise.

jd3181 on January 4, 2013 at 8:19 PM

A trillion dollar coin would create a crisis of confidence for the same reason. It’s an admission that they are not going to pay back what they owe and will use whatever silly trick they can to avoid that. It’s a third world banana republic trick and people would react accordingly.

sharrukin on January 4, 2013 at 8:27 PM

Who cares? History moves on.

DarkCurrent on January 4, 2013 at 8:39 PM

A trillion dollar coin would create a crisis of confidence for the same reason. It’s an admission that they are not going to pay back what they owe and will use whatever silly trick they can to avoid that. It’s a third world banana republic trick and people would react accordingly.

How is it that kind of admission at all? As soon as Republicans raise the debt ceiling, the move would be entirely reversed. Obama wouldn’t be saying the government wouldn’t pay back the money — he would be saying the opposite. If the government in the end didn’t pay it back to the Fed, that would be the same as the government not paying back the Fed for a pure treasury bond.

There’s literally no economic difference between a bond made of paper and a “bond” made of metal, if we are just talking about what is sitting in a vault at the Fed. The government could refuse to pay back either, and either would be catastrophic for the markets. But adding to the metal content of the record of the debt has nothing to do with any of this.

Keep in mind that we are not talking about doing this in a vacuum. This would only be done if we actually hit the debt limit, SS checks stop coming, Medicare payments stop, homeland security shuts down, etc. In that kind of atmosphere, the world would be begging Obama to do this — not begging him not to. Something that could sound unserious now might start to sound quite serious in a few months.

There’s really no legal argument that this illegal. The only argument is over whether Obama is REQUIRED to do this by law. The Social Security act’s spending is not optional. It is required by law. If Obama does not comply with the various spending bills, in full and on time, he would not be faithfully executing the laws of the United States, as required by the Constitution. If he has any ability to do so, he must do so.

What is REALLY a characteristic of a banana republic is to not pay all obligations of the government in-full and on-time. THAT is what would cause a crisis of confidence, and a credit downgrade — not actually faithfully executing the laws and paying the bills. If Congress didn’t like that, it should have thought about that before it appropriated all the money in the first place.

jd3181 on January 4, 2013 at 8:40 PM

How is it that kind of admission at all? As soon as Republicans raise the debt ceiling, the move would be entirely reversed.

jd3181 on January 4, 2013 at 8:40 PM

No it wouldn’t. They would spend it and demand more, and more would be easily and cheaply available.

sharrukin on January 4, 2013 at 8:43 PM

Fatal on January 4, 2013 at 7:30 PM

Elegant, but the goldbugs will hate it because they won’t have a government-guaranteed greater-than-inflation investment.

Steve Eggleston on January 4, 2013 at 8:50 PM

This is just about the composition of the records in a Fed vault.

The only effect it would have is to legally get around the debt ceiling. That’s it.

jd3181 on January 4, 2013 at 8:08 PM

Just an accounting gimmick of sorts.

While it of its own won’t increase spending, once invoked, Obama unleashed will double down on spending. Bank on it.

petefrt on January 4, 2013 at 8:50 PM

jd3181 on January 4, 2013 at 8:40 PM

News flash – the Treasury is already welshing on funding the federal employees’ retirement system and a few other things to keep the technical debt limit hit from becoming a technical Treasury security default.

Steve Eggleston on January 4, 2013 at 8:52 PM

This is just about the composition of the records in a Fed vault.

The only effect it would have is to legally get around the debt ceiling. That’s it.

jd3181 on January 4, 2013 at 8:08 PM

The money becomes real the moment the Treasury converts it into spent cash, whether it goes out the door on an aircraft carrier or a welfare check.

As for the inflationary effect, there’s two. The numerical inflation results from the trillion-dollar coins replacing the cash that would have been soaked up by Treasury securities, whether it means that new Treasury securities wouldn’t be issued or outstanding Treasury securities would be bought back. That frees up more cash to chase the same amount of goods, driving up inflation.

The loss-of-confidence inflation, which is what turns inflation into hyperinflation, kicks in when people realize that the circulating greenbacks/coinage/electrons don’t buy what they used to.

Steve Eggleston on January 4, 2013 at 9:01 PM

You know they’ve exhausted their bag of ideas when they’re stealing from Simpson episodes.

Ukiah on January 4, 2013 at 9:08 PM

Can you send me two? I’m gonna need a gallon of milk with that loaf of bread.

msupertas on January 4, 2013 at 9:12 PM

You know they’ve exhausted their bag of ideas when they’re stealing from Simpson episodes.

Ukiah on January 4, 2013 at 9:08 PM

I thought everyone was kidding about that…but it really was a Simpson’s episode.

sharrukin on January 4, 2013 at 9:12 PM

I don’t understand this at all. ?????

davidk on January 4, 2013 at 9:12 PM

Little Lulu nailed this one sixty-four years ago.

PersonFromPorlock on January 4, 2013 at 9:14 PM

I thought everyone was kidding about that…but it really was a Simpson’s episode.

sharrukin on January 4, 2013 at 9:12 PM

Great episode. That evil, white, capitalist Mr Burns had it, of course.

msupertas on January 4, 2013 at 9:15 PM

The money becomes real the moment the Treasury converts it into spent cash, whether it goes out the door on an aircraft carrier or a welfare check.

As for the inflationary effect, there’s two. The numerical inflation results from the trillion-dollar coins replacing the cash that would have been soaked up by Treasury securities, whether it means that new Treasury securities wouldn’t be issued or outstanding Treasury securities would be bought back. That frees up more cash to chase the same amount of goods, driving up inflation.

You are wrong on both counts. If the Fed replaces 2 trillion in long term bonds (in a vault) with a coin (in the same vault), not one additional dime enters circulation. But you are also wrong in a literal sense, because vault cash at the Fed is not included in M3.

You would be correct if you said that there could be inflation when it came time for the Fed to wind down is QE and sell bonds (or just stop buying new ones when old ones mature), and it couldn’t. That would be true if the coin-bond swap lasted for many years. But if you are saying we will get one dime of inflation the minute the swap happens, that is nonsense. There will not be one additional dime in circulation, which means you will not see armies of people rushing to the store to buy apples (or other goods/services in the CPI market basket of goods).

jd3181 on January 4, 2013 at 9:16 PM

Comment pages: 1 2 3 4