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

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

And Schrödinger’s cat would glow in the dark. Or would it blink on and off? Really, really fast.

davidk on January 4, 2013 at 9:17 PM

I’m hoping one day to look back at these times and laugh at how stupid it got, because by then all the libs are either in jail or deported.

msupertas on January 4, 2013 at 9:19 PM

I’m hoping one day to look back at these times and laugh at how stupid it got, because by then all the libs are either in jail or deported.

msupertas on January 4, 2013 at 9:19 PM

I’m praying WE won’t all be in jail, slave camps, or graves before long.

MelonCollie on January 4, 2013 at 9:20 PM

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

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

lester on January 4, 2013 at 5:21 PM

What am I missing here? The linked article mentions nothing about minting a trillion-dollar coin, much less Cornyn’s support for it.

JimLennon on January 4, 2013 at 9:29 PM

Because, outside of platinum coinage, the nominal amount and type of coinage is limited by law.

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

Your point is what exactly?

USA Corp does not obey the corporate finance laws in addition to sundry other ones.

Again, you were trying to make a point?

CorporatePiggy on January 4, 2013 at 9:32 PM

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

So federal spending doesn’t affect the economy at all? Is that what you’re saying? You’re making no sense here.

The entire purpose of bonds is to wring out of others cash to spend that the issuing entity otherwise does not have. Since the Treasury is a soverign capable of creating its own cash, it does have the option to create cash out of thin air, or in this case platinum, instead of using other people’s cash. Guess what; the other people’s cash does not vanish – it merely has one less thing to chase.

The same principle applies to QE-Fed, though the inflation from that is limited by the fact that the Fed uses its (printed) cash to buy Treasury securities at artifically-low interest rates, thus limiting inflationary pressure.

Steve Eggleston on January 4, 2013 at 9:36 PM

Your point is what exactly?

USA Corp does not obey the corporate finance laws in addition to sundry other ones.

Again, you were trying to make a point?

CorporatePiggy on January 4, 2013 at 9:32 PM

The point is you’re not going to see trillion-dollar plastic coins. Do follow the conversation.

Steve Eggleston on January 4, 2013 at 9:37 PM

This could actually work!

I’m not being sarcastic either. It’s a matter of how you do it:

Let’s say that Congress passes a law authorizing the coining of a single coin, with the face value of 1 Trillion dollars. But this coin can only be issued in the following way:

1) A lottery is created for the coin. The law guarantees that the coin will be unique. Lottery tickets are to be sold for $100 each.

2) The US government awards the coin to the winner of the lottery. Foreign lottery ticket sails are permitted. If there are multiple winners, they jointly own the coin.

3) The US government guarantees to buy the coin back, at the owners demand, for 50 cents on the dollar.

4) The lottery will not take place until $1.5 Trillion in lottery sales has taken place. (That’s 15 million tickets.)

5) If the awarded coin is later re-sold to the US Treasury, then repeat the above steps as needed.

Rich H on January 4, 2013 at 9:45 PM

Rich H on January 4, 2013 at 9:45 PM

Except for the multiple-winners part,….

Steve Eggleston on January 4, 2013 at 9:50 PM

So federal spending doesn’t affect the economy at all? Is that what you’re saying? You’re making no sense here.

The entire purpose of bonds is to wring out of others cash to spend that the issuing entity otherwise does not have. Since the Treasury is a soverign capable of creating its own cash, it does have the option to create cash out of thin air, or in this case platinum, instead of using other people’s cash. Guess what; the other people’s cash does not vanish – it merely has one less thing to chase.

The same principle applies to QE-Fed, though the inflation from that is limited by the fact that the Fed uses its (printed) cash to buy Treasury securities at artifically-low interest rates, thus limiting inflationary pressure.

What do you think would happen if the mint created a trillion dollar coin, put it in a drawer, and didn’t tell anyone? Would there be massive inflation?

I’ll assume your answer is no. Why? Because the money does not go into circulation, so there is not one additional penny chasing the same number of goods

So what happens if someone takes the coin out of the drawer, gives it to the Fed (in exchange for a 30 year treasury bond of the same amount), and the Fed takes the treasury out of a desk drawer and puts the coin back in the desk drawer?

Nothing at that moment — except that the treasury can now borrow a trillion dollars despite what the debt ceiling law says. It is economically equivalent in every way to a simple clean 1 trillion dollar increase in the debt ceiling.

Now, let’s say it is 3 years later, the economy is heating up, and the Fed wants to sell its treasury assets to mop up the cash it previously printed to buy the bonds in the first place (essentially unwinding QE). If it still had the coin, instead of the bond, it could not do so. Because of that, inflation could occur. But this would only happen because the Fed would open the drawer, expecting to find a bond, but instead would find a coin that it could not circulate. In other words, this would only happen when it came time for the Fed to unwind QE.

Before that time, no one would have even looked in the drawer. The effect would be identical to minting a quadrillion dollar coin, putting it in a drawer at the mint, and not telling anyone about it.

jd3181 on January 4, 2013 at 9:55 PM

Except for the multiple-winners part,….

Steve Eggleston on January 4, 2013 at 9:50 PM

I thought I covered that in point #2. Why don’t you think that would work?

Rich H on January 4, 2013 at 10:02 PM

jd3181 on January 4, 2013 at 9:55 PM

The problem with your analogy is that trillion-dollar coin is not going into the desk drawer or even in between the cushions of the couch. It’s spent, just as the cash the Treasury receives in exchange for Treasury securities is spent.

Steve Eggleston on January 4, 2013 at 10:03 PM

I thought I covered that in point #2. Why don’t you think that would work?

Rich H on January 4, 2013 at 10:02 PM

Multiple ownership sort of makes point #3 impossible unless all owners agree to take their share of $500B in spendable cash. Besides, who would have physical possession of the coin in a multiple-ownership situation.

Steve Eggleston on January 4, 2013 at 10:07 PM

The problem with your analogy is that trillion-dollar coin is not going into the desk drawer or even in between the cushions of the couch. It’s spent, just as the cash the Treasury receives in exchange for Treasury securities is spent.

By who? The whole point is that the Fed would not spend the cash. It would become Fed vault cash, just sitting in the vault. If the Fed spent the cash, it would be increasing QE by a trillion, and it presumably does not want to do that (or it would have already done so).

The cash the Treasury receives in exchange for Treasury securities would be spent, but that is no different than a clean debt ceiling increase by the same amount.

jd3181 on January 4, 2013 at 10:08 PM

It’s spent, just as the cash the Treasury receives in exchange for Treasury securities is spent.

Steve Eggleston on January 4, 2013 at 10:03 PM

By who?
jd3181 on January 4, 2013 at 10:08 PM

The cash the Treasury receives in exchange for Treasury securities would be spent

jd3181 on January 4, 2013 at 10:08 PM

sharrukin on January 4, 2013 at 10:13 PM

So can I make a turd and stick in a box and say it’s worth a million dollars? Seems like same logic Obozo is using.

banzaibob on January 4, 2013 at 10:15 PM

sharrukin on January 4, 2013 at 10:13 PM

Damn, but this is getting to be too easy. Not only do trolls answer themselves in a contradictory manner, but that gets pointed out before I can even refresh the page. Thanks.

Steve Eggleston on January 4, 2013 at 10:19 PM

Damn, but this is getting to be too easy. Not only do trolls answer themselves in a contradictory manner, but that gets pointed out before I can even refresh the page. Thanks.

Steve Eggleston on January 4, 2013 at 10:19 PM

He may not be a troll. We might be talking to Paul Krugman.

sharrukin on January 4, 2013 at 10:22 PM

By who? The whole point is that the Fed would not spend the cash.
jd3181 on January 4, 2013 at 10:08 PM

So we don’t need to raise the debt limit because the Fed doesn’t need to spend an extra trillion dollars? WOOHOO.

Wait, why bother with the coin… we don’t need the spending so we don’t need the coin either.

OH WAIT we DO need the spending… but we won’t spend the coin. We’ll borrow against the coin and spend the money we borrow; which is magically different.

Try again… that’s not a difference. We’re spending an extra trillion dollars. Putting a coin in a drawer somewhere didn’t change that reality.

gekkobear on January 4, 2013 at 10:22 PM

I thought I covered that in point #2. Why don’t you think that would work?

Rich H on January 4, 2013 at 10:02 PM

Multiple ownership sort of makes point #3 impossible unless all owners agree to take their share of $500B in spendable cash. Besides, who would have physical possession of the coin in a multiple-ownership situation.

Steve Eggleston on January 4, 2013 at 10:07 PM

In the case of multiple winners, the coin could be stashed in Fort Knox until the winners jointly disposed of it. – It worked for gold reserves.

The very issue you bring up – valid as it is – is an incentive for the winners to work together to resolve their differences. A bird in the hand as they say….

But the bigger point is that the US treasury has 1.5 Trillion in its pockets already. Failure of the winners to cash in is a feature rather than a bug.

Rich H on January 4, 2013 at 10:23 PM

He may not be a troll. We might be talking to Paul Krugman.

sharrukin on January 4, 2013 at 10:22 PM

And the difference is…what exactly?

Steve Eggleston on January 4, 2013 at 10:25 PM

I’m hoping one day to look back at these times and laugh at how stupid it got, because by then all the libs are either in jail or deported.

msupertas on January 4, 2013 at 9:19 PM

More like rehab, I think.

ccrosby on January 4, 2013 at 10:25 PM

lester on January 4, 2013 at 5:21 PM

Cutting government spending is a banana-republic idea?

What planet are you from?

blink on January 4, 2013 at 6:09 PM

…A n u s !

KOOLAID2 on January 4, 2013 at 10:29 PM

And the difference is…what exactly?

Steve Eggleston on January 4, 2013 at 10:25 PM

How many trolls do we have with a Nobel Prize?

sharrukin on January 4, 2013 at 10:29 PM

Rich H on January 4, 2013 at 10:23 PM

We’re talking about those suck…er, people willing to pay the Stupid Ta…er, play the lottery in the dream of getting rich. They’re the ones who want two in the bush.

Seriously, the lottery has a long tradition which includes George Washington. Why go through the expense of creating a coin when you could make it a cash prize? After all, once the gift tax is applied, the government would still get a $1 trillion profit (assuming, of course, a foreigner didn’t win) and the state of residence would get their cut (again, assuming a foreigner, or a resident of a no-income-tax state didn’t win).

Steve Eggleston on January 4, 2013 at 10:32 PM

How many trolls do we have with a Nobel Prize?

sharrukin on January 4, 2013 at 10:29 PM

There’s Krugman, Teh SCOAMF, the Peanut Farmer,…(I could go on, but the QOTD thread is up).

Steve Eggleston on January 4, 2013 at 10:34 PM

How big would that coin have to be to contain the actual market value (these days, around $100 less than gold per oz.) of platinum? The size of a football field and a meter thick?

If not, then they may as well make it out of recycled plywood.

I don’t see how printing currency based on virtually nothing is any better than writing bad checks.

Dr. ZhivBlago on January 4, 2013 at 10:36 PM

I don’t see how printing currency based on virtually nothing is any better than writing bad checks.

Dr. ZhivBlago on January 4, 2013 at 10:36 PM

It beats the inevitable seizure of all private stocks of the standard-of-choice.

Here’s the dirty little secret of economics – it matters not whether a currency is fiat or pegged to a standard, if those stuck using it lose faith in it, it’s worthless.

Steve Eggleston on January 4, 2013 at 10:41 PM

Rich H on January 4, 2013 at 10:41 PM

OH WAIT we DO need the spending… but we won’t spend the coin. We’ll borrow against the coin and spend the money we borrow; which is magically different.

Try again… that’s not a difference. We’re spending an extra trillion dollars. Putting a coin in a drawer somewhere didn’t change that reality.

Yes, spending will increase — in exactly the same way as it would if the debt ceiling went up by 1 trillion, and the treasury just issued more bonds.

This is not difficult. Spending will go up, in the identical way that it would go up if Congress just raised the debt ceiling. This is just a way for Obama tell Republicans to get lost during debt ceiling negotiations — nothing more.

jd3181 on January 4, 2013 at 10:44 PM

OH WAIT we DO need the spending… but we won’t spend the coin. We’ll borrow against the coin and spend the money we borrow; which is magically different.

Try again… that’s not a difference. We’re spending an extra trillion dollars. Putting a coin in a drawer somewhere didn’t change that reality.

Yes, spending will increase — in exactly the same way as it would if the debt ceiling went up by 1 trillion, and the treasury just issued more bonds.

This is not difficult. Spending will go up, in the identical way that it would go up if Congress just raised the debt ceiling. This is just a way for Obama tell Republicans to get lost during debt ceiling negotiations — nothing more.

jd3181 on January 4, 2013 at 10:44 PM

We’re talking about those suck…er, people willing to pay the Stupid Ta…er, play the lottery in the dream of getting rich. They’re the ones who want two in the bush.

Steve,

I should declare to you now that my posts were not truly advocating the scheme I proposed. It was a “modest” proposal (Apologies to Swift) which I entertained to suggest that the very low information population which supports redistribution is most likely to become the victims of it.

Rich H on January 4, 2013 at 10:56 PM

jd3181 on January 4, 2013 at 10:44 PM

I’ll say it slowly this time so it might sink in:

The additional coinage used in lieu of Treasury securities would not eliminate the non-QE-Fed cash that would have gone into Treasury securities. Instead, that cash would be added to the cash that is already chasing every other good, service or investment vehicle. More cash chasing the same number of items means inflation.

Steve Eggleston on January 4, 2013 at 10:59 PM

Steve,

I should declare to you now that my posts were not truly advocating the scheme I proposed. It was a “modest” proposal (Apologies to Swift) which I entertained to suggest that the very low information population which supports redistribution is most likely to become the victims of it.

Rich H on January 4, 2013 at 10:56 PM

Noted, though it actually makes more sense than trillion-dollar coins deposited in the Federal Reserve.

Steve Eggleston on January 4, 2013 at 11:00 PM

I just found an old sock I don’t need. America can have it. It’s worth 20 trillion. I sent it to China already so they owe us 4 trillion now.

sorry if I’m repeating some one else’s snark. I don’t have time to read tonight.
Here, if I repeated your material in my post please take this 3 trillion, on me. **blink** I just blinked it over to you. Drinks are also on me.

BoxHead1 on January 4, 2013 at 11:06 PM

I’ll say it slowly this time so it might sink in

The problem is not the speed of what you are saying, but rather the fact that what you are saying is not accurate. You are saying that the Fed would take the money from the coin and “spend it,” and that just isn’t what the Fed would actually do. The Fed would sit on the coin (as if the coin were a bond, or didn’t even exist), because it doesn’t want to add additional money to the economy beyond what it would already add with QE.

jd3181 on January 4, 2013 at 11:07 PM

Just shut down the government for 4-5 days, it will save as much money as we are going to raise with tax increases.

Tater Salad on January 4, 2013 at 11:08 PM

OOPs, we don’t owe China 16 trillion. They just ripped me off.

BoxHead1 on January 4, 2013 at 11:09 PM

You are saying that the Fed would take the money from the coin and “spend it,” and that just isn’t what the Fed would actually do. The Fed would sit on the coin…

jd3181 on January 4, 2013 at 11:07 PM

You really don’t think Quarterly Easing has any effect on the economy do you? It’s just magical free money to you.

sharrukin on January 4, 2013 at 11:13 PM

The problem is not the speed of what you are saying, but rather the fact that what you are saying is not accurate. You are saying that the Fed would take the money from the coin and “spend it,” and that just isn’t what the Fed would actually do. The Fed would sit on the coin (as if the coin were a bond, or didn’t even exist), because it doesn’t want to add additional money to the economy beyond what it would already add with QE.

jd3181 on January 4, 2013 at 11:07 PM

You’re the one who keeps on contradicting yourself. In one breath, you say that the coin wouldn’t be spent, yet in the next, you say that it would be spent just as readily as the new issues of Treasury securities it would replace is spent.

The ashheap of history is littered with examples of what you want, and all of them ended poorly.

Steve Eggleston on January 4, 2013 at 11:13 PM

jd3181 on January 4, 2013 at 9:55 PM

You are using a laughable and very convoluted non-logic here… Printing money beyond a certain point will cause massive inflation or else we can print 100′s of trillions of dollars do not need to worry about the f***ing debt and inflation… Now minting trillion dollar coins not only will cause massive inflation but will turn us indeed into a banana republic and the laughing stock of the world…

You seem to be a communist scum who supports Obama but afraid to come out and say it openly…

mnjg on January 4, 2013 at 11:31 PM

Sooo… we can just mint up a platinum coin, deposit it and pay off our debt. Wow, who knew? Say, why don’t we mint a few of them and have a huge surplus? I tell you these Democrats are geniuses!

ghostwalker1 on January 4, 2013 at 11:32 PM

You’re the one who keeps on contradicting yourself. In one breath, you say that the coin wouldn’t be spent, yet in the next, you say that it would be spent just as readily as the new issues of Treasury securities it would replace is spent.

The ashheap of history is littered with examples of what you want, and all of them ended poorly.

Steve Eggleston on January 4, 2013 at 11:13 PM

This jd3181 is an idiot using the most laughable convoluted non logic… He seems to be a communist scum who supports Obama but afraid to come out and say so…

mnjg on January 4, 2013 at 11:32 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

He’s thinking of economics as hard science. He’s assuming this is all done in a sterile non-human environment. The reality is that congress will have just found some magic coins that make debt go away, and then off we’d go to the races. His analysis is correct, but it’s also the same kind of fake economic “science” that go us here in the first place.

DFCtomm on January 4, 2013 at 11:35 PM

This jd3181 is an idiot using the most laughable convoluted non logic… He seems to be a communist scum who supports Obama but afraid to come out and say so…

mnjg on January 4, 2013 at 11:32 PM

In fact, I’ll wager he/she is a foreigner hoping for America’s collapse. It won’t end well for him/her either.

Steve Eggleston on January 4, 2013 at 11:36 PM

Just shut down the government for 4-5 days, it will save as much money as we are going to raise with tax increases.

Tater Salad on January 4, 2013 at 11:08 PM

I wonder if the House has the balls to do it?

They can shut down the gvt if they want..

But will it get us anywhere (either in budget or elections)?

ccrosby on January 4, 2013 at 11:39 PM

He’s thinking of economics as hard science.

Except as I am sure you know, it’s a confidence game. Money has value only as long as people continue to believe that it does. Otherwise it’s just pretty paper.

The reality is that congress will have just found some magic coins that make debt go away, and then off we’d go to the races. His analysis is correct, but it’s also the same kind of fake economic “science” that go us here in the first place.

DFCtomm on January 4, 2013 at 11:35 PM

And the same folks who brought Greece, Spain and the Euro to their current glorious impasse.

There are some ideas so wrong that only a very intelligent person could believe in them. – George Orwell

sharrukin on January 4, 2013 at 11:43 PM

Reading these comments are worth the price of the coin.

Thanks, HotAirians, for making my night.

Cleombrotus on January 4, 2013 at 11:51 PM

You’re the one who keeps on contradicting yourself. In one breath, you say that the coin wouldn’t be spent, yet in the next, you say that it would be spent just as readily as the new issues of Treasury securities it would replace is spent.

Again:

1. The mint would mint a 1 trillion dollar coin.

2. The Fed would exchange 1 trillions of treasuries (obtained from QE) with the Treasury, for that coin. This would lower America’s debt subject to the debt limit by 1 trillion dollars.

3. The Fed would keep the coin as vault cash, and not spend it.

Once again, the Fed would NOT spend the 1 trillion dollar coin, or do anything with it other than keep it in a vault.

4. The Treasury would make a 1 trillion dollar debt offering — exactly as it would if the debt limit were just raised the normal way.

5. The Treasury would spend the proceeds (cash) of the debt offering — exactly as it would if the debt limit were just raised the normal way.

jd3181 on January 4, 2013 at 11:52 PM

Good night all, have a great weekend!

ccrosby on January 4, 2013 at 11:54 PM

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

…and let’s save on Obama’s outrageous jet fuel costs by having him pull up real hard on his shoelaces for takeoff!!!

/moronic_ideas>

landlines on January 4, 2013 at 11:57 PM

3. The Fed would keep the coin as vault cash, and not spend it.

5. The Treasury would spend the proceeds…

jd3181 on January 4, 2013 at 11:52 PM

What possible difference do you think it makes that The Fed won’t spend it, but Treasury will?

sharrukin on January 4, 2013 at 11:57 PM

What possible difference do you think it makes that The Fed won’t spend it, but Treasury will?

If the Fed spent the coin, AND the Treasury spent the proceeds of the debt sale, that would actually introduce more money into the economy chasing fewer goods (causing inflation).

But if the only the Treasury spends the proceeds of the debt sale (with the Fed not spending the coin, and holding it until the Treasury reverses the transaction after the debt ceiling is raised), there would not be one extra dime chasing any goods — no inflation.

jd3181 on January 5, 2013 at 12:12 AM

The point is you’re not going to see trillion-dollar plastic coins.
Steve Eggleston on January 4, 2013 at 9:37 PM

A single coin made out of feces would do for this exercise.

Monetary policy left the rational world a while ago. Most people should have realized the issuing and buying your own debt with paper would be considered criminal in the real world.

As they have not, let’s have a pink cup-cake coin – it makes exactly as much sense.

CorporatePiggy on January 5, 2013 at 12:13 AM

But if the only the Treasury spends the proceeds of the debt sale (with the Fed not spending the coin, and holding it until the Treasury reverses the transaction after the debt ceiling is raised), there would not be one extra dime chasing any goods — no inflation.

jd3181 on January 5, 2013 at 12:12 AM

So…the only point you are actually trying to make is that this is a neato end run around the constitution?

sharrukin on January 5, 2013 at 12:18 AM

jd3181 on January 4, 2013 at 11:52 PM

A truly novel idea: “exchange” a coin for something of value, but then keep the coin, …so you don’t “spend” it!!!

And when they come to take you away, you can babble something about having invented “self-replenishing cash,” or “non-negotiable money,” as they lock you in a padded cell and confiscate your assets.

/foolishness>

DEFINITION:

VALUE: a fair return or equivalent in goods, services, or money for something exchanged

So an asset which cannot be exchanged has no “fair return,” and hence no “Value”…by definition!!

landlines on January 5, 2013 at 12:18 AM

What possible difference do you think it makes that The Fed won’t spend it, but Treasury will?

sharrukin on January 4, 2013 at 11:57 PM

They already have, and thinking like this will ensure there is no speed limit or upper ceiling on the accumulation of government debt.He is discussing, in a simple and rational way, the engineering specs of an economic doomsday device.

DFCtomm on January 5, 2013 at 12:23 AM

So an asset which cannot be exchanged has no “fair return,” and hence no “Value”…by definition!!

It’s not that the coin can’t be exchanged. It is valid legal tender, valid for paying all debts by law. In fact, the Fed would be forced by law to accept it for payment of the debt.

The Fed simply would choose not to exchange it with anyone else (but the Treasury), once the debt ceiling is later raised. In that way, it does not become circulating currency.

jd3181 on January 5, 2013 at 12:25 AM

He is discussing, in a simple and rational way, the engineering specs of an economic doomsday device.

DFCtomm on January 5, 2013 at 12:23 AM

He seems to believe that politicians will restrain themselves despite a very long history of them doing nothing of the sort.

sharrukin on January 5, 2013 at 12:26 AM

He seems to believe that politicians will restrain themselves despite a very long history of them doing nothing of the sort.

Congress has frequently passed deficit reduction bills. They had both spending cuts and tax increases. And despite the mythology that the spending cuts never materialized, they actually did — money was not spent that if not for the agreement, would have been spent by law. (Usually, the phrase “the spending cuts never happened” is actually used to mean that the raw, non-inflation and non-population-adjusted value of total spending did not go down. Which, if you think about it, is kind of obvious, given that population grows and inflation isn’t 0.)

The only difference is that this time, Republicans are trying to win the size-of-government by threatening immediate economic doomsday if they don’t get what they want. All this mechanism lets Obama do is ensure Republicans don’t get what they want without compromise.

jd3181 on January 5, 2013 at 12:34 AM

Congress has frequently passed deficit reduction bills.

And yet the deficit never actually gets reduced.

money was not spent that if not for the agreement, would have been spent by law.

Sure, and we also saved 4.3 trillion dollars by not going to war with China, so add that to the fabulous savings as well.

(Usually, the phrase “the spending cuts never happened” is actually used to mean that the raw, non-inflation and non-population-adjusted value of total spending did not go down. Which, if you think about it, is kind of obvious, given that population grows and inflation isn’t 0.)

Yeah, really. How could those folks be so uneducated as to think that a reduction was actually…you know, a reduction? Rubes!!! /

The only difference is that this time, Republicans are trying to win the size-of-government by threatening immediate economic doomsday if they don’t get what they want.

Well, no actually, the Republicans will p!ss and moan like impotent jerks and then bend over and take it up the tailpipe.

All this mechanism lets Obama do is ensure Republicans don’t get what they want without compromise.

jd3181 on January 5, 2013 at 12:34 AM

This ‘mechanism’ is a constitutional violation, but being a progressive doubtless you see that as a feature.

sharrukin on January 5, 2013 at 12:42 AM

Congress has frequently passed deficit reduction bills. They had both spending cuts and tax increases. And despite the mythology that the spending cuts never materialized, they actually did — money was not spent that if not for the agreement, would have been spent by law. (Usually, the phrase “the spending cuts never happened” is actually used to mean that the raw, non-inflation and non-population-adjusted value of total spending did not go down. Which, if you think about it, is kind of obvious, given that population grows and inflation isn’t 0.)

The only difference is that this time, Republicans are trying to win the size-of-government by threatening immediate economic doomsday if they don’t get what they want. All this mechanism lets Obama do is ensure Republicans don’t get what they want without compromise.

jd3181 on January 5, 2013 at 12:34 AM

See, Congress has in the past agreed to cut the scheduled increase in spending, so we are not currently in debt at all, thanks to population increases and inflation! If we were however, still in debt, which we aren’t, then this would be a clever accounting trick that would never, ever, ever, ever be misused. He pinky swears.

DFCtomm on January 5, 2013 at 12:43 AM

Well, no actually, the Republicans will p!ss and moan like impotent jerks and then bend over and take it up the tailpipe.

sharrukin on January 5, 2013 at 12:42 AM

Who does he think he’s dealing with? %75 of them would be secretly rooting for the magic beans coins, and %20, the NE RINOs, would be openly rooting for this solution. You have maybe %5 of the Republicans in Congress that might put up some real resistance.

DFCtomm on January 5, 2013 at 12:56 AM

And yet the deficit never actually gets reduced.

What are you talking about? You do know about the actual surplus at the end of the Clinton administration, right?

Sure, and we also saved 4.3 trillion dollars by not going to war with China, so add that to the fabulous savings as well.

Current law does not state that we will go to war with China. I’m talking about spending reductions relative to current law — not spending reductions relative to your fantasy.

Yeah, really. How could those folks be so uneducated as to think that a reduction was actually…you know, a reduction? Rubes!!!

Negotiations happen over changes to law — not changes to any other baseline. Republicans would not lower spending relative to the current dollar amount of spending, even if they get 60 Senate seats and the presidency. It would scare off too much of their own base, much of which is over 65 and would be directly affected by the large required cuts to SS and Medicare.

This ‘mechanism’ is a constitutional violation, but being a progressive doubtless you see that as a feature.

If by “constitutional violation” you mean “taking care that the laws be faithfully executed,” as written, you are correct.

jd3181 on January 5, 2013 at 12:56 AM

My bad — screwed up quotes.

And yet the deficit never actually gets reduced.

What are you talking about? You do know about the actual surplus at the end of the Clinton administration, right?

Sure, and we also saved 4.3 trillion dollars by not going to war with China, so add that to the fabulous savings as well.

Current law does not state that we will go to war with China. I’m talking about spending reductions relative to current law — not spending reductions relative to your fantasy.

Yeah, really. How could those folks be so uneducated as to think that a reduction was actually…you know, a reduction? Rubes!!!

Negotiations happen over changes to law — not changes to any other baseline. Republicans would not lower spending relative to the current dollar amount of spending, even if they get 60 Senate seats and the presidency. It would scare off too much of their own base, much of which is over 65 and would be directly affected by the large required cuts to SS and Medicare.

This ‘mechanism’ is a constitutional violation, but being a progressive doubtless you see that as a feature.

If by “constitutional violation” you mean “taking care that the laws be faithfully executed,” as written, you are correct.

jd3181 on January 5, 2013 at 12:57 AM

Who does he think he’s dealing with? %75 of them would be secretly rooting for the magic beans coins, and %20, the NE RINOs, would be openly rooting for this solution. You have maybe %5 of the Republicans in Congress that might put up some real resistance.

DFCtomm on January 5, 2013 at 12:56 AM

It probably feels like more of a Boys Adventure Series if there’s a villain involved, and the Republicans will just have to be shoehorned into that role regardless of how ill suited they may.

sharrukin on January 5, 2013 at 1:00 AM

If by “constitutional violation” you mean “taking care that the laws be faithfully executed,” as written, you are correct.

jd3181 on January 5, 2013 at 12:57 AM

Yeah that Obama fellow has sure been a stickler for following the law, and adhering to constitutional authority. /

sharrukin on January 5, 2013 at 1:09 AM

The problem here is that only a tiny proportion of the American public even realises that current government spending and debt is unsustainable. The vast majority have no clue whatsoever that America is speeding towards total economic collapse.

If the GOP had any PR sense whatsoever they would be on TV right now putting forward the case that no amount of taxation is going to help- that current spending levels are crippling America- that, left to its own devices, entitlement spending is consuming America. They could be explaining that if the government actually confiscated the entire wealth of the Forbes rich list that it would cover government spending for just a year. They could be explaining that Democrats have failed to produce even a budget for four years.

Most Americans don’t know these simple facts- and unless the GOP does something now, Obama and Reid will create the narrative for the debt ceiling limit talks, they’ll paint Republicans as villains who are going to stop unemployment checks, etc going out.

It’s incredible- Democrats are spending America into oblivion. Unless it’s reformed now, entitlements are finished- the GOP is in the right, they have the winning argument and the right answer- but they keep letting Democrats and their propagandists in the media get the upper hand in framing the debate.

Jay Mac on January 5, 2013 at 5:33 AM

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

You’re completely right. He knows people are stupid and easily manipulated with language. That his words have no relationship with reality is inconsequential. He tells people what they want to hear and they’re more than willing to swallow the lies.

Even the starkest, most naked lies are persuasive from him because it’s what people want to hear. Lies like, “If I take money from the evil rich and give it to you, our economy will be great.” Well gee, who doesn’t WANT to believe that? I don’t know quite what it is about him that makes him better at this kind of deception than most other libs, but he’s a master.

MJBrutus on January 5, 2013 at 5:42 AM

Hey, let’s feed the lot of you to the lions after you make your coin!!

Sherman1864 on January 5, 2013 at 6:26 AM

Imagine what happens when you try to exchange that coin for smaller change… there goes the old money supply… just sayin’….

ajacksonian on January 5, 2013 at 6:39 AM

You mean to tell me that we’re seriously debating this thing instead of laughing our butts off at it?

We really ARE screwed, aren’t we?

Cleombrotus on January 5, 2013 at 8:05 AM

How about selling baseball cards? Enough of Obama’s sick, left wing theatrics. Let him bring the country to its knees, then after it crumbles around our feet we’ll sort through rubble and rebuild this once great nation. Attempting to reason with this man is hopeless, so stop it completely.

rplat on January 5, 2013 at 8:10 AM

My God these people are insane.
What’s even more insane is a lot of people are listening & thinking that this madness is a good idea.
Of course, there were a lot of people who thought the rise of the 3rd Reich was a great idea as well.

Yeah. I went Godwin on ya’ll.
STFWHAT?

Badger40 on January 5, 2013 at 8:12 AM

I know I’m late, but why hasn’t anyone suggested minting a seventeen trillion dollar coin, which Obama could use to pay off the debt? With a few hundred billion left over to party!!! ?!?

(Tongue Firmly In Cheek) (you hope)

Squiggy on January 5, 2013 at 8:37 AM

Is this Zero’s answer to the Rs magic beans and fairy dust? If the Rs can magically create an economy booster then dear leader can, too. What comes after a trillion? To infinity and beyond.

Kissmygrits on January 5, 2013 at 9:11 AM

It’s come to this

Her musings were suddenly interrupted when her date asked a decidedly unromantic question: “What’s your credit score?”
“It was as if the music stopped,” Ms. LaShawn, 31, said, recalling how the date this year went so wrong so quickly after she tried to answer his question honestly. “It was really awkward because he kept telling me that I was the perfect girl for him, but that a low credit score was his deal-breaker.”

If the US government was trying to date, it would be destined to be a spinster.

J_Crater on January 5, 2013 at 9:20 AM

I think they should just mint a $16.5 trillion coin and get rid of that stinking deficit all together. It gives Owebama more flexibility.

katablog.com on January 5, 2013 at 9:41 AM

Cannot accept magic beans or faery dust as payment for wheelbarrows.

Bmore on January 5, 2013 at 9:56 AM

The republicans should pass a bill in congress dissolving the FFD and granting every US citizen the right to mint US money. After all it is only FAIR for every citizen to be able to make money as they need it, why have to wait for the gov to print it and deliver it?

The dollar could be redesigned so as to be printable on a standard laser printer with a downloadable program. For our special citizens who cannot afford or use a computer they could go to the local public library.

Whola end poverty end the “fairness” issue and everyone will have everything they could ever need over night. This would solve the debt also because we could raise taxes to anything short 100% and every citizens could just print off enough money to pay the taxes and still have all they wanted left over. Whoala. Just imagine in a few years no body would have to work but don’t worry we could just do like the gulf states and import workers who we could pay with our printed money hell we could even pay them a super duper executive salary if wanted, we just print more.

Ridiculous yes idiotic yes, UNSUSTAINABLE absolutely but if this is what the people want why go the slow road via O and one printer “if ya goin do it do it BIG” The repubs should get out front and win those low info voters with this. It would be awesome watching the dems explain against or if they approved it would be awesome watching the immediate crash after the world reacts, at least in the knowing now today we at least have enough good hard working americans left to put up a fight against the low info hordes we will face if we continue on our current path.

C-Low on January 5, 2013 at 10:40 AM

CORRECTION “FFD” is supposed to be as most would have guessed FED

C-Low on January 5, 2013 at 10:41 AM

What are you talking about? You do know about the actual surplus at the end of the Clinton administration, right?

jd3181 on January 5, 2013 at 12:57 AM


Wrong answer buckwheat.

SWalker on January 5, 2013 at 10:45 AM

What are you talking about? You do know about the actual surplus at the end of the Clinton administration, right?

jd3181 on January 5, 2013 at 12:57 AM


Wrong answer buc.kwheat.

SWalker on January 5, 2013 at 10:46 AM

Why not? These are the same people who are going to supply the power grid with wind farms and algae.

I would tweak it a bit. Deposit a pair of Obama’s dirty boxers and declare them to be worth a trillion. Democrats would make pilgrimages to smell/or touch them. Treasury could charge for that and viola we’d soon have a huge surplus.

bluesdoc70 on January 5, 2013 at 11:11 AM

These idiots run a country. That is mind boggling.

ORconservative on January 5, 2013 at 11:23 AM

A few years back the government of Zimbabwe could not purchase paper to print their funny money with. Paper companies wouldn’t accept Zimbabwean currency in payment. However, the government had plenty of rolls of tissue, problem solved temporarily. This had the added benefit of making the money useful again: You could wipe your bum with it when hyper-inflation made your 100 Trillion notes worthless.

We should learn from Zimbabwe: If we issue these coins, we should change our paper to tissue. It will save money and provide value.

theCork on January 5, 2013 at 11:52 AM

I am so tired of this crap.
Devalue the Dollar run up inflation and get it over with, decades of trade imbalances and imprudent spending have left no option.
otherwise we could start selling our coal reserves to China

notalemon on January 5, 2013 at 12:00 PM

Why stop at 1 coin? Why not give every American a million dollar coin? Poverty wiped out in this country with the thump of a press. Hell, why stop there? Send a shipload of those magic coins overseas. Worldwide poverty cured overnight! Simple.

HotAirian on January 5, 2013 at 12:35 PM

3. The Fed would keep the coin as vault cash, and not spend it.
Once again, the Fed would NOT spend the 1 trillion dollar coin, or do anything with it other than keep it in a vault.
4. The Treasury would make a 1 trillion dollar debt offering — exactly as it would if the debt limit were just raised the normal way.
5. The Treasury would spend the proceeds (cash) of the debt offering — exactly as it would if the debt limit were just raised the normal way.
jd3181 on January 4, 2013 at 11:52 PM

Pretty sure that those normal debt offerings involve the purchase of those bonds with actual money from the existing supply. Although if you’re suggesting that we be allowed to buy treasury bonds with magic beans directly I’m sure you’ll have a large fan base.

TexasDan on January 5, 2013 at 1:07 PM

Sorry if already suggested:
I think the President should use his effective campaign methods of sending mass emails and using his .gov websites to request donations from his ‘patriotic’ constituency to donate their platinum rings, jewelry etc for melting. I’m sure they would want to do their fair share.

darlus on January 5, 2013 at 2:03 PM

We might want to save the schemes for the Health care scam, billions & billions!

arand on January 5, 2013 at 2:49 PM

Here’s a plan. The Fed’s QE program is buying $40 / mo in debt. Step that up to $400 billion a month and in 41 months the $16.4 trillion in debt will have been absorbed by the Fed. It can then write it off as a bad investment. Doesn’t even require that $1T coin. Just twiddle away on the Fed’s magic keyboard.

Dasher on January 5, 2013 at 3:54 PM

Jd3181 is exactly right.
It is, quite simply, a gimmick to get around the debt ceiling.

So the correct argument is about “what is the purpose of the debt ceiling”.

And the answers to that are numerous:
1) Inflation
2) the party in power being able to buy votes to stay in power
3) disincentive to work
etc…
All of which lead to a bleak future.

Oh we’ll… The republic was fun while it lasted.

connertown on January 5, 2013 at 4:55 PM

Picture a “trillion dollar” worthless coin minted with the face of Barack Hussein Obama. The irony is stunning.

labrat on January 5, 2013 at 6:41 PM

We have mickey mouse as SOT, WOW, JUST WOW.

jake49 on January 5, 2013 at 11:58 PM

Comment pages: 1 2 3 4