UPDATE: Suddenly, Lots Of Influential People Are Talking About The Trillion Dollar Coin Idea To Save The Economy
Joe Weisenthal | Jan. 3, 2013, 4:42
Read more: http://www.businessinsider.com/suddenly-lots-of-influential-people-are-talking-about-the-trillion-dollar-coin-idea-to-save-the-economy-2013-1#ixzz2H8vPxCTU
This is really thrilling.
An arcane idea that started on finance blogs in the summer of 2011-- that Tim Geithner should mint a trillion dollar platinum coin to avert the debt ceiling -- is now seriously taking off.
The premise of the idea is this: Although the Treasury can't just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins of any denomination, and the thinking is that Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Treasury's bank account.
The first blog to really promote the idea was Cullen Roche's Pragmatic Capitalist. We jumped on it soon thereafter, as did others. Of course, once the debt ceiling was solved, people forgot about it.
But there's a new debt ceiling looming, and this time, LOTS more people are talking about it.
We noted our surprise back in early December that an actual 3rd party research firm brought up the idea.
Now it's going even more viral.
Paul Krugman discussed it yesterday.
In an interview with Capitol New York, Representative Jerry Nadler came out in favor of the solution (Nadler has an above-average understanding of economics in our experience).
Josh Barro at Bloomberg is now endorsing it, and that's spread a huge conversation about it among DC journalists and policy folks on twitter.
Barro explains why it's the perfect "solution" to the debt ceiling fiasco:
Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.
Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.
This is basically the right way to think about it. Yes it's silly to think of funding yourself with a coin, but it's even sillier to think that defaulting might be a good idea, so you might as well do it.
Now quick detour into economics that must be addressed: Lots of people, when they hear the idea, say one of two things:
This would cause massive inflation!
Well if we did this, why not a $100 trillion dollar coin?
Neither of these are legitimate rejoinders.
This would not result in massive inflation, because we wouldn't have a gigantic injection of new money into "the system." That is only achievable through massive spending beyond which the economy can handle. But this loophole would in no way let the government spend beyond which Congress has allocated through the budget.
And the point about the $100 trillion coin misses the point as well. The current economic constraint is not what we can raise or spend, but rather a dumb law (the debt ceiling) that we would like to get around legally. A $1 trillion coin accomplishes this goal just as easily as a $100 trillion coin does. Remember, the constraint isn't money, the constraint is law.
So yes, this is very thrilling, and we hope Obama puts an end to this nonsense tomorrow by unveiling the coin.
Now the question everyone is asking is:
Important Q — whose face would be put on the $1t coin?
Read more: http://www.businessinsider.com/suddenly-lots-of-influential-people-are-talking-about-the-trillion-dollar-coin-idea-to-save-the-economy-2013-1#ixzz2H8vpbdKH
i think zorgon should be on this coin...and that's all i have to say ::)
Will laundromat machines be able to give change for it? ???
A clever and creative idea. A better thought is to stop accounting for meaningful energy expended... That will end the Fed completely.
Sky,
Great story!
One thing, this would be freeing to the U.S.,
and her people.
I dont think the bankers like that, The Fed has
record profits last few years.
>:(
What is at the heart of that....greed.
It would be nice though, its a dream.
well after reading this next article i am thinking this isn't so funny anymore...
maybe it should go to the money thing
whoa..having a hard time believing these guys
http://www.huffingtonpost.com/2013/01/07/trillion-dollar-coin-solution_n_2426333.html?ref=topbar
Mark Gongloff
The Trillion Dollar Coin Solution, Or One Coin To Rule Them All: An Idiot's Guide Posted: 01/07/2013 4:58 pm EST | Updated: 01/07/2013 10:59 pm EST
If you've watched business TV or read Paul Krugman lately, you may have stumbled across a strange and maybe frightening debate among policy wonks and pundits about something called a trillion-dollar coin.
What is this coin, and why should you care about it? The second part of that question is harder to answer, but the first part is easily explained. It's a gimmick that, as Krugman wrote on Monday, President Obama could and possibly should threaten to use as a solution to a potentially devastating fight with Congress over the debt ceiling. Here's how it--
Wait? Debt ceiling? What is that?
The debt ceiling is the maximum Congress lets the government borrow. Back in ancient times (World War I), Congress started setting a big old debt limit so that it wouldn't have to constantly approve new borrowing, its job under the Constitution. This gives Congress the power to vote on whether to let the government borrow more money to pay off its old debts and other stuff for which it's on the hook, including stuff it may regret now, like that unfortunate leather sofa it bought at Raymour & Flanigan, or Iraq.
Usually this is no big deal. Congress is constantly having to boost the debt ceiling. But the historically terrible 112th Congress darn near let the ceiling be breached last year, trying to wring spending cuts out of Obama. That meant the government was nearly unable to pay its debts, which would have been an economy-destroying default by the world's biggest borrower and one of its soundest credits. The whole fiasco led to the U.S. government getting its credit-rating downgraded by Standard & Poor's, and it set the stage for all that fiscal-cliff nonsense we just went through.
Fiscal cliff? Ugh, not that again.
Yeah, I'm sick of hearing about it, too. Unfortunately, this new debt ceiling fight is much, much, much worse than the fiscal cliff. It will involve some of the fiscal-cliff spending cuts left over from that fight, now with the added fear of a possible government default. Oh, and the current federal budget expires soon, meaning we might also get a government shutdown on top of it. This is the big one, Elizabeth.
Crap, this is not the Doomsday I was Prepping for. I bought so many sandbags! Wait, you said there was a magic coin that could save us?
Indeed there is. Theoretically, at least. The idea was first floated on the Firedoglake blog way back in January 2011 by somebody calling him- or herself Beowulf.
I totally read that in high school.
That may have been the last thing many of us actually read in high school. Anyway, Beowulf pointed out that there are a couple of obscure laws from the 1990s that let
rest of the article here and as with all idiot's guides...it's looooooong
http://www.huffingtonpost.com/2013/01/07/trillion-dollar-coin-solution_n_2426333.html?ref=topbar
http://www.huffingtonpost.com/2013/01/07/paul-krugman-trillion-dollar-coin_n_2427160.html
KRUGMAN URGES: MINT THE COIN
Paul Krugman: Trillion-Dollar Coin A 'Silly But Benign' Debt-Ceiling Fix
Posted: 01/07/2013 5:11 pm EST | Updated: 01/07/2013 6:32 pm EST
Paul Krugman is arguing for a rather outlandish solution to solving the debt-ceiling crisis: Minting a $1 trillion coin.
The idea, which gained (ahem) currency in recent weeks, could prevent Congressional Republicans from holding the country's financial health hostage in exchange for spending cuts, Krugman argued in a recent blog post.
"Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely," Krugman wrote. "He will, after all, be faced with a choice between two alternatives: one that's silly but benign, the other that's equally silly but both vile and disastrous."
After a tough fiscal cliff battle, Republicans have said that they plan to demand major spending cuts in exchange for raising the country's borrowing limit, according to the Financial Times. If Congress does nothing to deal with the debt limit, the country could lose its ability to meet its financial obligations by as early as Feb. 15, according to a report from the Bipartisan Policy center cited by CNBC.
But there is a loophole: The Treasury has the ability to mint a coin in any denomination, deposit it into its Federal Reserve account and use it to pay off its debts -- essentially getting rid of the debt ceiling threat for now. A petition to the White House to use the coin had more than 4,000 signatures as of Monday afternoon.
Still, opting for the trillion-dollar coin solution would be difficult. Rep. Greg Walden (R-Ore.) is introducing a bill to stop Obama and the Treasury Department from minting the coin, which ironically raised the profile of the out-of-the box idea.
Be Ready To Mint That Coin
January 7, 2013, 9:05 am274 Comments
Be Ready To Mint That Coin
Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that's silly but benign, the other that's equally silly but both vile and disastrous. The decision should be obvious.
For those new to this, here's the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.
And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can't pass through normal constitutional processes.
Enter the platinum coin. There's a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector's items — but that's not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.
So why not?
It's easy to make sententious remarks to the effect that we shouldn't look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you've been living in a cave for the past four years.Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it's just ridiculous — far more ridiculous than the notion of the coin.
So if the 14th amendment solution — simply declaring that the debt ceiling is unconstitutional — isn't workable, go with the coin.
This still leaves the question of whose face goes on the coin — but that's easy: John Boehner. Because without him and his colleagues, this wouldn't be necessary.
http://krugman.blogs.nytimes.com/2013/01/07/be-ready-to-mint-that-coin/