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Trillion dollar coin to pay off debt?

A plan is being promoted to get around the national debt ceiling:  Have the Treasury mint a one trillion dollar denominated platinum coin. Yahoo explains the scheme this way:

Last week, Treasury Secretary Tim Geithner made it official: Federal borrowing has reached the $16.394 trillion debt ceiling.

Treasury, which runs the government's debt-issuance operation, is busy creating about $200 billion of headroom by employing what it calls "extraordinary measures." That should cover about two months' worth of borrowing.

When the two months expire, Treasury will no longer be able to pay the country's bills -- that is, it won't be able to borrow more money to pay for spending already authorized by Congress.

If Congress does not act to raise the debt ceiling, the U.S. will default on its debts. Not good. But this is where the platinum coin comes in. Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to "mint and issue platinum bullion coins and proof platinum coins."

This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.

With a $1 trillion coin in hand, Treasury could deposit the money into Fed accounts, and pay its debts in that manner, instead of relying on bond issuance.

And none of this requires Congressional consent. Talk about an elegant solution.

The White House unsurprisingly hasn't commented on the idea. But Rep. Jerrold Nadler is on board. "I'm being absolutely serious," he told Capital NY. "It sounds silly but it's absolutely legal."

What Yahoo fails to explain is that, once such a coin is deposited with the Fed, the magic act really begins. The Federal Reserve would then issue the Treasury in its account a credit for one trillion dollars from which the Treasury could drawn down Federal Reserve notes, or wire dollars to creditors, to pay its bills. Viloa, money printed out of thin air.

But what is everyone getting excited about here? The Fed creates money out of thin air everyday. In fact, a trillion dollars for the Fed is kind of a "been there done that" event. Since the financial crisis hit in 2008, the Fed's balance sheet has expanded by $2 trillion

Bottom line: It's all magic tricks in one fashion or another. Some just seem a little more insane than others. They are all insane, just the form is different. Printing paper money or minting a trillion dollar platinum coin is all the same, it doesn't increase the productive part of the economy, it just provides the government with more money to bid against you, for the products and services that are available.

BTW: There is already a debate going on as to whose likeness should be stamped on the face of the coin. I suggest the president of Zimbabwe, Robert Mugabe, is the only person that makes sense.

The man is a master at the trillion dollar money print (though he is now a reformed money printer). But, back in the day, pretty much everyone in Zimbabwe was walking around with a hundred trillion Zimbabwe dollars in their pocket, as Mugabe  printed and printed more money, and as the country dove deeper and deeper into economic collapse because of the money printing.

The Zimbabwe money printing sent many Zimbabweans into poverty, but it was that money printing that kept Mugabe in some interesting threads.

by Anonymousreply 2701/14/2013

Here is the link

by Anonymousreply 101/04/2013

The Trillion Dollar Platinum Coin Solution (No big deal edition) A plan is being promoted to get around the national debt ceiling:  Have the Treasury mint a one trillion dollar denominated platinum coin. Yahoo explains the scheme this way:

Last week, Treasury Secretary Tim Geithner made it official: Federal borrowing has reached the $16.394 trillion debt ceiling.

Treasury, which runs the government's debt-issuance operation, is busy creating about $200 billion of headroom by employing what it calls "extraordinary measures." That should cover about two months' worth of borrowing.

When the two months expire, Treasury will no longer be able to pay the country's bills -- that is, it won't be able to borrow more money to pay for spending already authorized by Congress.

If Congress does not act to raise the debt ceiling, the U.S. will default on its debts. Not good. But this is where the platinum coin comes in. Normally, the Federal Reserve is charged with issuing currency. But U.S. law, specifically 31 USC § 5112, also grants Treasury permission to "mint and issue platinum bullion coins and proof platinum coins."

This section of law was meant to allow for the printing of commemorative coins and the like. But the Treasury Secretary has the authority to mint these coins in any denomination he or she sees fit.

With a $1 trillion coin in hand, Treasury could deposit the money into Fed accounts, and pay its debts in that manner, instead of relying on bond issuance.

And none of this requires Congressional consent. Talk about an elegant solution.

The White House unsurprisingly hasn't commented on the idea. But Rep. Jerrold Nadler is on board. "I'm being absolutely serious," he told Capital NY. "It sounds silly but it's absolutely legal."

What Yahoo fails to explain is that, once such a coin is deposited with the Fed, the magic act really begins. The Federal Reserve would then issue the Treasury in its account a credit for one trillion dollars from which the Treasury could drawn down Federal Reserve notes, or wire dollars to creditors, to pay its bills. Viloa, money printed out of thin air.

But what is everyone getting excited about here? The Fed creates money out of thin air everyday. In fact, a trillion dollars for the Fed is kind of a "been there done that" event. Since the financial crisis hit in 2008, the Fed's balance sheet has expanded by $2 trillion.

Bottom line: It's all magic tricks in one fashion or another. Some just seem a little more insane than others. They are all insane, just the form is different. Printing paper money or minting a trillion dollar platinum coin is all the same, it doesn't increase the productive part of the economy, it just provides the government with more money to bid against you, for the products and services that are available.

BTW: There is already a debate going on as to whose likeness should be stamped on the face of the coin. I suggest the president of Zimbabwe, Robert Mugabe, is the only person that makes sense.

The man is a master at the trillion dollar money print (though he is now a reformed money printer). But, back in the day, pretty much everyone in Zimbabwe was walking around with a hundred trillion Zimbabwe dollars in their pocket, as Mugabe  printed and printed more money, and as the country dove deeper and deeper into economic collapse because of the money printing.

The Zimbabwe money printing sent many Zimbabweans into poverty, but it was that money printing that kept Mugabe in some interesting threads.

by Anonymousreply 201/10/2013

Do I particularly care what Libertarian idiots think about the Trillion Dollar Coin?

No sir, I do not.

Obama probably doesn't have the nerve to do it anyways. It's just there to make idiots like you nervous.

by Anonymousreply 301/10/2013

What I don't understand is, why not then mint five of them? Or 100? Is it just that it would seem gauche to do so?

by Anonymousreply 401/11/2013

Don't these fools realize this coin will only tempt the likes of Catwoman and the Riddler?

by Anonymousreply 501/11/2013

Meanwhile, warmonger Obama keeps the military spending going up and up. The Times just had an article about the military developing a weapon that shoots laser guided lightning bolts. Drones, the missile defense system in Europe...we could save a lot of money.

by Anonymousreply 601/11/2013

R4, because there's no need. And because it's an accounting gimmick, not a real coin. And because the Treasury Department can only spend what Congress authorizes, so even if they minted a hundred of them, they couldn't do anything with that money.

Here's how it works:

1. The Treasury Department mints the coin.

2. The Fed buys the coin, giving the Treasury $1 trillion.

3. The debt ceiling is now no longer a factor, since the Treasury now has the money it needs to meet its obligations (obligations imposed by Congress). The Treasury Department uses that money to continue to pay US debts and to keep the government afloat.

4. Obama uses the coin as leverage to get the idiotic Republicans to do their job properly and the debt ceiling finally gets raised, just as everyone knows it eventually will be.

5. The Treasury Department sells bonds to investors, just as they have done thousands of times before, and buys the coin back from the Fed.

6. The Treasury Department destroys the coin.

It's an accounting gimmick; nothing more. Obama isn't threatening to spend a trillion dollars (and, in fact, he cannot, as Congress still controls the purse) and he isn't adding a trillion dollars in debt. When all is said and done, it will be as if the coin never existed. The net damage to our economy is zilch, far less damage than a default would cause, which is why people are taking the proposal seriously.

In any case, the Obama administration has already said it will not do this, so the point is moot.

by Anonymousreply 701/11/2013

Oh, and R4, if they really could mint and spend a million of them, then runaway inflation would destroy the country.

by Anonymousreply 801/11/2013

Since they can print dollars, why not do this? It would pay of the deficit and shit, and help us all!

by Anonymousreply 901/12/2013

ROFL.... Dear heart, if you're trying to demonstrate that you really know nothing at all about economics, you're succeeding admirably!

by Anonymousreply 1001/12/2013

I know it's embarrassing for you to realize that you really didn't understand the concept behind the trillion-dollar coin (that the Obama administration has now firmly said it will not employ) but, really, dear, you should just stop digging. That hole is getting awfully deep.

by Anonymousreply 1101/12/2013

The best comment I've read was the suggestion that they mint it and make the front of the coin a portrait of Speaker of House John Andrew Boehner .

by Anonymousreply 1201/12/2013

R12-

It should be Bohner, Obama and Reid.

You cannot end a debt issue by borrowing more money. Duh.

by Anonymousreply 1301/12/2013

This is too confusing. Let's talk about clothes.

by Anonymousreply 1401/12/2013

[quote]2. The Fed buys the coin, giving the Treasury $1 trillion.

Not quite. The treasury deposits the coin it's its account at the Fed and the Fed credits the treasury's account. Same thing that happens when you make a deposit at your bank.

No question the face honor belongs to Newt Gingrich, founder of the "if you don't have the votes, hold the nation hostage to get your way" school of Republican politics.

by Anonymousreply 1501/12/2013

Why did the threads that showed the utter ignorance of Paul Krugman get deleted?

by Anonymousreply 1601/12/2013

This sounds like a great idea. Thanks for sharing, OP, usually only Paulbots who lack basic knowledge of monetary systems are the only ones who discuss monetary policy.

by Anonymousreply 1701/12/2013

[quote]This sounds like a great idea.

It is. Sadly, the Obama administration has ruled it out.

[quote]Thanks for sharing, OP, usually only Paulbots who lack basic knowledge of monetary systems are the only ones who discuss monetary policy.

Actually, the OP is one such Paulbot. He was posting the article disapprovingly.

Oh, and R16, you already know why your Krugman threads got deleted. You were spamming them, repeatedly, just as you spammed a dozen threads last night with the same drivel you posted in R18. Trying to get more threads deleted, are you?

by Anonymousreply 1901/13/2013

So? They have a no-limit credit card called Taxpayers Platinum.

by Anonymousreply 2001/13/2013

[quote]Why did the threads that showed the utter ignorance of Paul Krugman get deleted?

Actually, that was lucky for you, R16, since those threads revealed not Krugman's ignorance, but yours!

by Anonymousreply 2101/13/2013

Obama wants to move us towards austerity. It's the reason he was put in office in the first place by the 'powers that be'.

by Anonymousreply 2201/13/2013

Upset over the awful parking situation at the Fed, the guy with the coin finally sees a car pull out of a nearby space and he pulls in, gets out, and quickly shoves a coin in the parking meter. Oops!!!!

by Anonymousreply 2301/13/2013

What if you try to use it at 7-Eleven?

by Anonymousreply 2401/13/2013

Krugman is brilliant, but he is a pathetic apologist. He eviscerated the fiscal cliff deal, then said it 'wasn't so bad' after it passed so Obama wouldn't look bad. He criticizes Obama at times, then backs off after Obama caves. I wish he'd stick to his guns.

by Anonymousreply 2501/13/2013

Obama dismissed this idea because he's hoping Republicans will be their usual obstructionist selves on the debt ceiling issue. This would, yet again, make them look bad, put public favor behind the President, and back them into a corner.

by Anonymousreply 2601/13/2013

Heavens! I must have put it in the jukebox!!!

by Anonymousreply 2701/14/2013
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