landlines on December 5, 2012 at 7:43 PM

The biggest problem with the gold standard is the same entity that overspends also sets the standard – government. Hence, it’s not really a standard, much less a firewall against government overspending or inflation, but for the few who have private holdings of gold, a government-guaranteed better-than-government-caused-inflation investment (at least until the next FDR comes along and simply seizes the gold, which incidentally is the second-biggest problem with the gold standard).

As for the author of the proposal, I agree. He got his degree from Turbo Tax Timmy’s School of Tax Evasion and Economics. Let’s see if I can paraphrase his inane babblings:

- Debt ceiling? What debt ceiling? After all, despite the fact that the 14th Amendment doesn’t address who can issue federal debt, it strips from Congress any ability to control it because any debt issued in the name of the federal government, regardless of who issues it or whether Congress authorized it, is “valid”.
- Increase the money supply by $60 trillion? Nope, won’t cause any inflation because the Federal Reserve promises to simply put the 60 coins in between the couch cushions.
- Repudiate the debt swapped from the Fed because simply buying maturing debt from the Fed won’t keep the total debt from hitting the ceiling? Even though he just asserted that all debt, whether or not authorized by Congress, is “valid”, not a problem.
- When the Treasury burns through the $4 trillion in debt the Fed currently holds, simply use some of that $60 trillion in coins that, despite being real, don’t really exist, to buy off every other bond holder? Why, there won’t be hyperinflation from the sudden injection of $7 trillion in greenbacks into the economy because they’ll do what the Fed did with the 60 coins.

What I want to know is, where can I get some of Snake Plissken’s bluebacks?

That would be a mighty big coin.
Maybe an acre or two.

NeoKong on December 5, 2012 at 6:41 PM

Not quite that big – it would be somewhere around 56 tons if its physical value matched its face value. Of course, the Mint doesn’t have to follow that rule-of-thumb.

The Platinum Coin proposal is silly.

Unless ALL currency is linked to the precious metal, nothing will be accomplished.

The whole point of making currency represent something of tangible value is to keep government printing presses from turning out worthless paper.

landlines on December 5, 2012 at 7:43 PM

This was precisely the point of the gold/silver standard.

It wasn’t to keep gov’t from mishandling money period, just to keep them from printing worthless paper, and also to help keep our economy from generating ‘wealth’ that was basically also worthless paper without the fancy printing.

For all that people whine about how it would’ve slowed down our economy, I ask you where the Fiat Money Express is about to take us. What’s that you say? Right off the cliff? Gee, imagine that!

Unless ALL currency is linked to the precious metal, nothing will be accomplished.

The whole point of making currency represent something of tangible value is to keep government printing presses from turning out worthless paper. Simply creating two or more classes of currency, SOME of which can be redeemed for precious metal, accomplishes absolutely NOTHING: the printing presses will still be running full speed churning out the most worthless of the currencies.

The author of this proposal merely demonstrates that he needs an ECON 101 refresher course.

In the case of such an asset swap, it’s “money” on both ends of the transaction, so no debt is issued in the process. It’s just a mechanic to turn the value of seigniorage (the difference between the cost of manufacturing a currency unit and the face value of that currency) into a spendable balance.

After the swap, instead of an electronic balance of X billion dollars, the Fed ends up with X billion in platinum coinage, and Treasury ends up with a balance which can be applied towards appropriations.

It’s pretty sick, but legal as far as anyone can tell. It just makes it marginally more clear that any sovereign (including the US) manufactures “money” out of thin air via the process of seigniorage.

Ha ha, I know, right?

The thing is though, the Democrats have to be careful. If we get instant hyperinflation that would probably bring out the rioters (the real ones, not the paid protestors and bored/drunk college kidz). Inflation is certainly Obama’s policy, but the idea is to cause it in a somewhat orderly manner to get people used to this “new normal.”

I personally think that at some point the central planners will lose control anyway, but I think even they are smart enough to avoid suicide by minting a $1 trillion platinum eagle coin.

Doomberg on December 5, 2012 at 5:38 PM

Hyperinflation didn’t stop the Weimar Republic, Argentina, Zimbabwe,….

So, it seems that the Fed would have to print up trillions in paper to get these laughable coins issued, anyway. I don’t see the great advantage over having the Fed just print up trillions in paper as it’s doing, now (but at a greatly increased rate, of course).

ThePrimordialOrderedPair on December 5, 2012 at 5:51 PM

And the problem is, other than hyperinflation?