Obama's Trillion Dollar Coin Option

[chemgator]

http://www.usnews.com/opinion/blogs/peter-roff/2013/01/08/trillion-dollar-platinum-coin-trick-doesnt-pass-the-laugh-test

It turns out that, legally speaking, Obama has the authority to mint platinum coins and assign them any value that he deems necessary. Apparently, there is talk of him minting some trillion dollar coins and depositing them with the Federal Reserve, which will instantly give him the ability to raise the debt ceiling (or lower the floor on the value of a dollar). I would think that even hard-core liberals would be bright enough to see why this is a bad idea.

[wgbgator]

Its a better idea than defaulting.

[Matthanuf06]

Its a better idea than defaulting.

We wouldn't default. The govt would shut down but we'd be able to pay our legally owed bills

[g8trjax]

http://www.usnews.com/opinion/blogs/peter-roff/2013/01/08/trillion-dollar-platinum-coin-trick-doesnt-pass-the-laugh-test

It turns out that, legally speaking, Obama has the authority to mint platinum coins and assign them any value that he deems necessary. Apparently, there is talk of him minting some trillion dollar coins and depositing them with the Federal Reserve, which will instantly give him the ability to raise the debt ceiling (or lower the floor on the value of a dollar). I would think that even hard-core liberals would be bright enough to see why this is a bad idea.

I think you would be incorrect. Hard cores will do anything to keep the ponzi scheme alive.

[gator996]

Tell that to the military veterans who who wouldn't get their govt funding & benefits

Shutting down the govt is defaulting on the obligations we've committed to paying already

[wgbgator]

We wouldn't default. The govt would shut down but we'd be able to pay our legally owed bills

For a short time anyways. Nevermind that when the gov't shuts down, SS checks arent going out, fed employees don't get paid, etc.

[Matthanuf06]

For a short time anyways. Nevermind that when the gov't shuts down, SS checks arent going out, fed employees don't get paid, etc.

If that what it takes to get the left to realize we have a spending problem, then so be it

[G8trGr8t]

But if Democrats were reasonable about cuts and deficit reduction coins nor shutdowns would be required but they do not want to stop the intergenerational theft so they are willing to manufacture a crisis to get something done that otherwise rational people would not do....steal from their kids

[wgbgator]

Things would be better if you took away the loophole to mint the coin, and the loophole that allows us to spend but not borrow by raising the debt ceiling to cover spending that we alread owe. That should be the deal. Otherwise, its a perfectly valid option to #mintthecoin.

[Matthanuf06]

Things would be better if you took away the loophole to mint the coin, and the loophole that allows us to spend but not borrow by raising the debt ceiling to cover spending that we alread owe. That should be the deal. Otherwise, its a perfectly valid option to #mintthecoin.

Minting the coin would end America as we know it.

[wgbgator]

If that what it takes to get the left to realize we have a spending problem, then so be it

And that's why the coin should be minted. Because we don't have a spending problem, and the House GOP has turned what was once an opportunity to grandstand over debt (but otherwise predictable and routine vote) into a weapon to extract policy outcomes by threatening default. The coin would be a bad precedent, but the bad precedent was already set by these debt ceiling showdowns.

[wgbgator]

Minting the coin would end America as we know it.

LOL. I think you'd be surprised when business continued as usual if that happened. Meanwhile, it's you who said we should shut down the gov't.

[orangeblueorangeblue]

It wouldn't end anything, but it might illuminate the way our monetary system works to people who otherwise never paid attention.

Now, for those who understand fiat and that fiat currency is nothing but a symbolic conduit for the trade of the value of work, this isn't a problem. The issue is most people don't see money that way. They think that money itself must tangibly represent that value.

This would be nothing more than an alternate qualitative easing, which we seem to do without much thought these days.

[Matthanuf06]

LOL. I think you'd be surprised when business continued as usual if that happened.

Depends how you define usual. Sure we'd all wake up and go to work. I wasn't saying the gates of hell would open up and we'd have lava flowing all around us.

At that point it would be obvious to all that we'd be in a full blown dictatorship with no reason to have confidence in the US economy or the USD long term. The dollar is already losing its spot as be worlds currency, if Obama did that then kiss that goodbye.

[wgbgator]

It wouldn't end anything, but it might illuminate the way our monetary system works to people who otherwise never paid attention.

Now, for those who understand fiat and that fiat currency is nothing but a symbolic conduit for the trade of the value of work, this isn't a problem. The issue is most people don't see money that way. They think that money itself must tangibly represent that value.

This would be nothing more than an alternate qualitative easing, which we seem to do without much thought these days.

This.

[orangeblueorangeblue]

The truth is we print money out of nothing every day, we just get to shroud a lot of it in secrecy due to our public-private central bank.

I'd trade the Fed for a wholly public central bank any day. It would actually solve a lot of our problems with that move alone.

[Matthanuf06]

And that's why the coin should be minted. Because we don't have a spending problem, and the House GOP has turned what was once an opportunity to grandstand over debt (but otherwise predictable and routine vote) into a weapon to extract policy outcomes by threatening default. The coin would be a bad precedent, but the bad precedent was already set by these debt ceiling showdowns.

How can you possibly conclude that we do not have a spending problem? That defies all semblance of logic.

[wgbgator]

Depends how you define usual. Sure we'd all wake up and go to work. I wasn't saying the gates of hell would open up and we'd have lava flowing all around us.

At that point it would be obvious to all that we'd be in a full blown dictatorship with no reason to have confidence in the US economy or the USD long term. The dollar is already losing its spot as be worlds currency, if Obama did that then kiss that goodbye.

But shuting down or threatening to shutdown the government every 1-2 years to extract policy concessions (which have nothing to do with spending already owed), and possibly downgrading our credit rating doing so would increase confidence in the US economy? Ok.

[orangeblueorangeblue]

We have - without a doubt - a spending problem. A huge one.

[orangeblueorangeblue]

But I would agree that the debt ceiling stuff is nonsensical; a largely designed distraction, like the "fiscal cliff."

[channingcrowderhungry]

As long as the back of the coin has all of the presidents having a party, with Jimmy Carter passed out on the couch, I'm cool with it.

[gatordowneast]

But if Democrats were reasonable about cuts and deficit reduction coins nor shutdowns would be required but they do not want to stop the intergenerational theft so they are willing to manufacture a crisis to get something done that otherwise rational people would not do....steal from their kids

Democrats reasonable? Maybe a couple are. One has to have the ability to reason to be reasonable. That is like saying you can negotiate with a lefty libbie or a 3 year old. Ain't happening. It's all about emotion and wants. They want their lollipop now!

[wgbgator]

How can you possibly conclude that we do not have a spending problem? That defies all semblance of logic.

With the right tax structure, we could easily cover our spending. That's why we don't have a spending problem, per se. The only problem we have is refusing to fund properly what everyone already wants the gov't to do. You could call just as easily call it a revenue problem and be correct. Its a budget problem, and depending on your POV you are going to view it though the prism of more revenue/less spending. Which is why I don't buy the notion of "crisis" - because at some point if spending is indeed out of control, there will be actual need to work out a revenue/spending deal and both parties will see the need to compromise, rather than punt.

[Matthanuf06]

But shuting down or threatening to shutdown the government every 1-2 years to extract policy concessions (which have nothing to do with spending already owed), and possibly downgrading our credit rating doing so would increase confidence in the US economy? Ok.

Our government always uses one thing as leverage for another. Why does this shock you? Obamas clan doesn't want to let crisis go to waste? Remember that? And every single bill is loaded with pork. It's how it works.

And even still that doesn't apply here. We easily have enough revenue to cover expenses owed. Easily. Your definition of owe is very loose. You are lumping in services not rendered, future planned spending increases, future promised hand outs, etc as something we owe. It is not owed. We owe to pay the interest on our debt, , to pay for work already completed, as well as any other contractual obligation.

The debt ceiling is highly relevant because we cannot continue to borrow at this clip to pay for these promises.

[Matthanuf06]

But I would agree that the debt ceiling stuff is nonsensical; a largely designed distraction, like the "fiscal cliff."

It's like the politicians build in future battles as part of their "concession" in order to give themselves leverage. It's about winning and it's become a game of chess. It hasn't been about the best interest of the country in a long time.

[wgbgator]

Our government always uses one thing as leverage for another. Why does this shock you? Obamas clan doesn't want to let crisis go to waste? Remember that? And every single bill is loaded with pork. It's how it works.

And even still that doesn't apply here. We easily have enough revenue to cover expenses owed. Easily. Your definition of owe is very loose. You are lumping in services not rendered, future planned spending increases, future promised hand outs, etc as something we owe. It is not owed. We owe to pay the interest on our debt, , to pay for work already completed, as well as any other contractual obligation.

The debt ceiling is highly relevant because we cannot continue to borrow at this clip to pay for these promises.

Maybe you don't understand the difference between mandatory and discretionary spending? 60% of the budget is legally required spending. Some might consider that an obligation too.

[wgbgator]

Our government always uses one thing as leverage for another. Why does this shock you? Obamas clan doesn't want to let crisis go to waste? Remember that? And every single bill is loaded with pork. It's how it works.

And even still that doesn't apply here. We easily have enough revenue to cover expenses owed. Easily. Your definition of owe is very loose. You are lumping in services not rendered, future planned spending increases, future promised hand outs, etc as something we owe. It is not owed. We owe to pay the interest on our debt, , to pay for work already completed, as well as any other contractual obligation.

The debt ceiling is highly relevant because we cannot continue to borrow at this clip to pay for these promises.

You do understand that the debt ceiling is for borrowing to pay on past spending (i.e. not promises, but services rendered), not future spending (i.e promises), right?

[orangeblueorangeblue]

There is actually very little reason why we can't functionally continue spending this way for the foreseeable future. It just is unnecessary, and slowing it in relation to generalized GDP growth would permit natural public spending increases within budget as well as mitigate future economic downturns.

[dadx4]

Tell that to the military veterans who who wouldn't get their govt funding & benefits

Shutting down the govt is defaulting on the obligations we've committed to paying already

No it's not, shut the government down and you make the payments based on priority. We need to shut it down until we get rid of the 16Trillion in debt, that 6Trillion is BO's, soon to be $10Trillion at least. Even the most liberal liberals out there have to admit that the spending is out of control.

[gator996]

No it's not, shut the government down and you make the payments based on priority. We need to shut it down until we get rid of the 16Trillion in debt, that 6Trillion is BO's, soon to be $10Trillion at least. Even the most liberal liberals out there have to admit that the spending is out of control.

So where do the veterans sit on the priority list versus the FBI, DEA, ICE, military contractors, the Securities & Exchange Commission, air traffic control, etc.

Shutting down the government will do nothing to reduce the $16T that outstanding debt...kinda like the balance on your credit card.

By choosing not to use it doesn't reduce the balance.

[dadx4]

So where do the veterans sit on the priority list versus the FBI, DEA, ICE, military contractors, the Securities & Exchange Commission, air traffic control, etc.

Shutting down the government will do nothing to reduce the $16T that outstanding debt...kinda like the balance on your credit card.

By choosing not to use it doesn't reduce the balance.

From the last debt ceiling debate the military was after ss and medicare payments. And YES you can get the debt to zero by shutting down the government.

[wgbgator]

I could cancel/cover my debt by stopping paying for it and not bringing in new revenue until my creditors give up. I suppose that would work, but I'd also completely and utterly f$&k myself doing it, and I would never, ever be able to borrow money again.

[gator996]

From the last debt ceiling debate the military was after ss and medicare payments. And YES you can get the debt to zero by shutting down the government.

Explain how.
Alot of upside down homeowners would love to learn that trick.

Given the list of priorities, I guess FDIC insurance isn't that important right?

For all of the "civil war starting immediately" talk...you want access to the money in your bank account don't ya?

:laugh:

[orangeblueorangeblue]

From the last debt ceiling debate the military was after ss and medicare payments. And YES you can get the debt to zero by shutting down the government.

This makes 0 sense, dad.

[wgbgator]

Explain how.

Default, then convince people the debt isnt sovereign or legitimate. Then create a new country or countries.

[gator996]

Default, then convince people the debt isnt sovereign or legitimate. Then create a new country or countries.

And how would you "convince" someone of that?

Talk about living in la-la land and not offering a reasonable voice to a serious issue.


Funny, basically you're acting like those subprime homeowners...

Default on your contracts & obligations...


What a solid citizen you are...

[wgbgator]

And how would you "convince" someone of that?

Talk about living in la-la land and not offering a reasonable voice to a serious issue.


Funny, basically you're acting like those subprime homeowners...

Default on your contracts & obligations...


What a solid citizen you are...

I was just explaining how it was possible. I'm not advocating it as a serious option. I would assume my posting history made that obvious.

[Matthanuf06]

Well shutting down government would drastically reduce the deficit. Revenues would still exist. It's simple math on how a smaller government would be beneficial in handling the debt. The 16T still has to be paid. Shutting down the government gives us the funds to begin to pay it down, or at least dramatically reduce the growth of the bar tab.

[gator996]

To be honest wgb, i thought that was dad4x's response...

Hence I thought it was his "serious" response to How?

Didn't even look at the poster...If I had, I would have recognized that
it was a theoretical response.

My apologies.

[gator996]

Well shutting down government would drastically reduce the deficit. Revenues would still exist. It's simple math on how a smaller government would be beneficial in handling the debt. The 16T still has to be paid. Shutting down the government gives us the funds to begin to pay it down, or at least dramatically reduce the growth of the bar tab.



How are you collecting revenues without a government?
Who's accounting for them?

[wgbgator]

To be honest wgb, i thought that was dad4x's response...

Hence I thought it was his "serious" response to How?

Didn't even look at the poster...If I had, I would have recognized that
it was a theoretical response.

My apologies.

Its cool, I've made the same mistake before.

[wgbgator]

How are you collecting revenues without a government?
Who's accounting for them?

I'm sure the IRS will work for free, and people will keep paying taxes for services they won't receive. ;)

[Matthanuf06]

How are you collecting revenues without a government?
Who's accounting for them?

Shouldn't be too expensive to keep the government debit card active for deposits from employers.

[gator996]

And the Treasury dept will keep on working for free so that we can pay back the Chinese for all of that $16T in bonds they'll be redeeming over the next 30 years.

[wgbgator]

To be perfectly serious, if some of these posts are any indication of the thinking of the majority of the House GOP, Obama should mint that coin post haste.

[Matthanuf06]

And the Treasury dept will keep on working for free so that we can pay back the Chinese for all of that $16T in bonds they'll be redeeming over the next 30 years.

Keep them working. What's your point? Gov shutdown doesn't mean absolutely everything to do with government ceases. Collect revenue and pay coupons.

[wgbgator]

Keep them working. What's your point? Gov shutdown doesn't mean absolutely everything to do with government ceases. Collect revenue and pay coupons.

I seem to remember when the government shut down in the 90s, that that went over very well. Good luck winning an election when those SS checks fail to go out and Medicare goes unfunded, and you've got the president hammering you for it ceaslessly.

[Matthanuf06]

I seem to remember when the government shut down in the 90s, that that went over very well. Good luck winning an election when those SS checks fail to go out and Medicare goes unfunded.

Oh well. A politician should be focused on the best interest of the nation rather than buying votes.

[wgbgator]

Oh well. A politician should be focused on the best interest of the nation rather than buying votes.

One would think keeping the government fuctioning and keeping its promises would be in the best interest of the nation, but that's just me.

[gator996]

Keep them working. What's your point? Gov shutdown doesn't mean absolutely everything to do with government ceases. Collect revenue and pay coupons.

So now you want a partial shutdown?

An admission that the federal government isn't 100% the debil? :devil:

I'm going to consider the we can solve the debt by shutting down the government conversation closed...it will not payoff the debt. OK?

But on a more serious note, what else in the non-100% shutdown needs to stay open?

Come on conservatives tell us what's essential...what's the "right" size of government?

[g8trjax]

To be perfectly serious, if some of these posts are any indication of the thinking of the majority of the House GOP, Obama should mint that coin post haste.

I'm in favor of minting 1 or 2 hundred coins. Obama could then give us a sweet fifty year income tax break.

[Matthanuf06]

One would think keeping the government fuctioning and keeping its promises would be in the best interest of the nation, but that's just me.

Short term pain is certainly better than economic collapse in a decade or so. With these debt and deficit levels there will be pain. Would we rather a lot of pain in the future or a little now?

And I know SS payments aren't a "little" pain to the recipients, but its nothing compared to what will happen if the dollars is crushed to pay the debt

[g8trjax]

To be perfectly serious, if some of these posts are any indication of the thinking of the majority of the House GOP, Obama should mint that coin




post haste.

I'm in favor of minting 1 or 2 hundred coins. Obama could then give us a sweet fifty year income tax break.

[wgbgator]

Short term pain is certainly better than economic collapse in a decade or so. With these debt and deficit levels there will be pain. Would we rather a lot of pain in the future or a little now?

And I know SS payments aren't a "little" pain to the recipients, but its nothing compared to what will happen if the dollars is crushed to pay the debt

A false dilemma if I've ever heard one.

[Matthanuf06]

So now you want a partial shutdown?

An admission that the federal government isn't 100% the debil? :devil:

I'm going to consider the we can solve the debt by shutting down the government conversation closed...it will not payoff the debt. OK?

But on a more serious note, what else in the non-100% shutdown needs to stay open?

Come on conservatives tell us what's essential...what's the "right" size of government?

I'm only concerned with paying off our t-debt. That would defeat the entire purpose of the shutdown if we defaulted on our sovereign debt.

We can certainly solve the debt problem via govt shutdowns. Maybe you are under the impression that we'd shut it down forever and the savings would be able to pay our debt? Sure I guess that technically true, but it's a negotiating tactic. The left will only be willing to make needed cuts if it has to, and stopping the government gravy train may be the only tactic that will work. Maybe after a couple of weeks of the Dems constituents not getting paid off they'd realize 80% is better than 0%. Point is: it's the only leverage responsible Americans have

[Matthanuf06]

A false dilemma if I've ever heard one.

I'd suggest you become educated in economics and finance. Your solution is the future generations default rather than pay it off. What kind of solution is that? Although at least you are honest, by definition that is the leftist position. They would just rather debase the currency to do it. Props for your honesty to screw the future

[wgbgator]

I'd suggest you become educated in economics and finance. Your solution is the future generations default rather than pay it off. What kind of solution is that? Although at least you are honest, by definition that is the leftist position. They would just rather debase the currency to do it. Props for your honesty to screw the future

Props for your honesty about defaulting now and screwing real, and not hypothetical people in the present.

[corpgator]

Short term pain is certainly better than economic collapse in a decade or so. With these debt and deficit levels there will be pain. Would we rather a lot of pain in the future or a little now?

And I know SS payments aren't a "little" pain to the recipients, but its nothing compared to what will happen if the dollars is crushed to pay the debt

We are nowhere near economic collapse. Not even several decades hence. A little inflation and a better economy and suddenly all our problems are gone.

Repubs are just sensing an opportunity to use our currently bad economy to get certain democratic programs cut while increasing their own favorites.

[orangeblueorangeblue]

I think what people fail to understand is that - unlike a household budget - we are able to pay debt based on the future prospect of us having money. In other words, we generate actual money simply by the expectation of us making money later.

When we generate money - something we do with some frequency - it doesn't go into our federal pockets. Rather, it goes to feed the people who will both buy and re-sell our future debt. There ultimately isn't much (if any) money lost on a repaid debt by the federal government because it's largely a closed ecosystem. Now, foreign debt (which is a small percentage) is a different tale, but we pay extraordinarily low interest on that. It's almost negligible.

[orangeblueorangeblue]

In other words, the absolute worst thing you can do is to compare an economic ecosystem to a household budget. Yet people do it daily. The minute you can turn future earnings into actual cash today or print your money is the very minute that becomes a valid comparison.

[orangeblueorangeblue]

Same with inflation. The fact that the dollar experiences inflation is one of the biggest selling points of the bond market. The graduation of the value of the dollar (and inverse buying power in certain time periods) is what makes a bond purchase exciting to someone who would otherwise keep their wealth in a more volatile investment or currency.

[tegator80]

We are nowhere near economic collapse. Not even several decades hence. A little inflation and a better economy and suddenly all our problems are gone.

Repubs are just sensing an opportunity to use our currently bad economy to get certain democratic programs cut while increasing their own favorites.

This take is a little bit simplistic. Yes we have resources but we are not showing that we can do anything that resembles a sense of responsibility towards the future of our country. You know that there used to be a saying that "a billion here and a billion there and you begin to get into some real money," well now we are talking about trillions instead of billions. And the longer you wait to do something the more the interest on the debt prevents us from doing something constructive. In the past we could look at government debt as an investment for future gains. Now it it merely to maintain the standard of living for our current citizens. And to hell with our kid's future.

If the debt ceiling fight has any merit it is that it is the canary in the mine. The Tea Party types are waving a dead bird around and asking if anyone is paying attention. Based on the election results I believe that the answer is an emphatic NO.

[Gatoragman]

OBOB makes the most sense in this argument. When I first heard of the Trillion dollar coin I was floored that here we go again with some ivory tower economic theory not based in reality. But when you compare it to the QE's we have been doing there really is not much difference. We print money with no real value behind it so how about 16 platinum coins with no real value behind them, we just tell you they have value. Not sure how it would be looked at in the world economy and may cause the dollar colapse but then again is there any real difference in this compared to QE?

[Gatoragman]

Also not sure why the argument is continually made that the debt ceiling fight last time lead to a downgrade. It was raised, no "REAL" spending cuts and the ceiling fight is being blamed. I think the downgrade was based more on our inability to find solutions to slow our spending. A 3 trillion dollar or more government is out of control, we get it back to 2 or so and watch how the world economy reacts.

[FrolfGator]

Also not sure why the argument is continually made that the debt ceiling fight last time lead to a downgrade. It was raised, no "REAL" spending cuts and the ceiling fight is being blamed. I think the downgrade was based more on our inability to find solutions to slow our spending. A 3 trillion dollar or more government is out of control, we get it back to 2 or so and watch how the world economy reacts.

There's no need to guess why S&P lowered the credit rating, they came out and said it: the fact that the extreme-right Republican House would seriously hold the full faith and credit of the United States hostage as an anti-democratic means to enact their radical agenda. In the past it's always been the House minority party that has (token) voted against raising the debt ceiling. The extremist Tea Party Republicans are the first time this has been threatened by the House majority party.

[orangeblueorangeblue]

OBOB makes the most sense in this argument. When I first heard of the Trillion dollar coin I was floored that here we go again with some ivory tower economic theory not based in reality. But when you compare it to the QE's we have been doing there really is not much difference. We print money with no real value behind it so how about 16 platinum coins with no real value behind them, we just tell you they have value. Not sure how it would be looked at in the world economy and may cause the dollar colapse but then again is there any real difference in this compared to QE?

It would have 0 impact on the way the dollar is viewed globally. Shy of a lot of jokes and maybe a few days of market downturn, I doubt it would do much at all.

[Matthanuf06]

Same with inflation. The fact that the dollar experiences inflation is one of the biggest selling points of the bond market. The graduation of the value of the dollar (and inverse buying power in certain time periods) is what makes a bond purchase exciting to someone who would otherwise keep their wealth in a more volatile investment or currency.

What? Inflation is bad for bonds. You are giving a stronger currency and receiving a weaker one.

[Matthanuf06]

It would have 0 impact on the way the dollar is viewed globally. Shy of a lot of jokes and maybe a few days of market downturn, I doubt it would do much at all.

1 trillion more dollars impacts something called supply. More supply in an already depressed demand environment = dollar weakening.

In your analysis you are grossly ignoring the impacts the printing presses will have on the dollar. We've been saved, if you want to call it that, by a few features in this current environment. But it won't last forever.

Once any US creditor realizes the only way we can pay off the debt is via, supply from printing and reducing the value of the USD, then why on earth would you touch it at reduced rates? You are already seeing this at some points in the curve. It's all artificial manipulation that can't and won't last

[MichiGator2002]

We are, put simply, humped. If the only serious discussion going on about handling the scale of American debt and spending (our unfunded liabilities now outpacing global GDP and all that) is whether or not the President should act on a highly dubious claim of legal authority to mint a trillion dollar coin that, in truth, would have to be cut to the dimensions of a quarter to be worth anything beyond the metal itself, we are... over.

[orangeblueorangeblue]

1 trillion more dollars impacts something called supply. More supply in an already depressed demand environment = dollar weakening.

Our supply has been increased 3 times that at various times in the past 15 years

In your analysis you are grossly ignoring the impacts the printing presses will have on the dollar.

Not really. At least not historically. And in fact, a temporary release of funds directly to the government has much less impact than a distributed release of funds ala direct stimulus.

Once any US creditor realizes the only way we can pay off the debt is via, supply from printing and reducing the value of the USD, then why on earth would you touch it at reduced rates?

Most of our creditors are U.S. citizens and institutions (including the Fed).

[orangeblueorangeblue]

To wit, I don't think this is a good idea in the least. But it also would not be catastrophic as some seem to think.

[Matthanuf06]

To wit, I don't think this is a good idea in the least. But it also would not be catastrophic as some seem to think.

I don't think it would be a huge economic collapse, although I don't see how it wouldn't impact the USD. The collapse in my eyes more of a political one. I believe you hit it more clearly than I, it would bring the light how centrally controlled we are. While most of the enlightened already know we are an oligarchy at best and a dictatorship at worst, this coin would cement it into any thinking brain.

[Matthanuf06]

Our supply has been increased 3 times that at various times in the past 15 years

Not really. At least not historically. And in fact, a temporary release of funds directly to the government has much less impact than a distributed release of funds ala direct stimulus.

Most of our creditors are U.S. citizens and institutions (including the Fed).

Why would a US citizen want to loan money to our government? The point is the same. We are quickly reaching the point where the only option is to debase the currency and have significant inflation. It's a vicious cycle. It doesn't matter if its you or China. You will demand higher rates. Higher rates means more debt. Only way to pay that off is with a cheaper dollar. Which only forces you to raise rates even more. While this is QE infinity, it really cannot go on forever.

[orangeblueorangeblue]

Actually, the biggest issue with our monetary system is that we aren't centrally controlled.

[wgbgator]

To wit, I don't think this is a good idea in the least. But it also would not be catastrophic as some seem to think.

I haven't seen anyone say that this is a "good" idea. Silly, but preferable, and mostly harmless when faced with other really harmful alternatives. Really, some sort of reckoning has to happen, because simply minting the coin doesnt make the debt ceiling go away, it would have to be raised again.

[orangeblueorangeblue]

Why would a US citizen want to loan money to our government? The point is the same.

Because it's been a historically low-risk, low-reward investment. That isn't going to change.

We are quickly reaching the point where the only option is to debase the currency and have significant inflation. It's a vicious cycle.

This isn't really the way the U.S. monetary system works. What tends to happen is small batches of natural inflation followed by a graduation either organically or artificially. This has been happening for more than a century.

It doesn't matter if its you or China. You will demand higher rates.

It kind of does matter if it's you or China, because of the relative value and stability of the currencies.

Higher rates means more debt. Only way to pay that off is with a cheaper dollar. Which only forces you to raise rates even more. While this is QE infinity, it really cannot go on forever.

No offense, but this is actually the opposite of the way things are working now. We're delivering more volume at a lower rate of return.

[wargunfan]

I love the way you people throw inflation around as if it were nothing. Tell that to the scores of millions of Americans who live on fixed incomes.
Why would any thinking person buy a bond with a fixed coupon when they know that they are going to redeem that bond with dollars which buy less than the dollars which bought the bond? Why would anyone buy a $1000.00 30 year bond which, when mature, will pay back dollars which will buy $300.00 in goods?
Why are the Europeans forcing austerity on Greece and Spain and Ireland. Why don't they just print a trillion Euros as needed and keep the party going? Why do the Europeans care about their currency and we don't? What do we know that Germany doesn't? Germany shouldn't be concerned about supporting the PIGS. Just turn on the printing presses and party on.
The EU imposes austerity and the geniuses here say that their finest economists are stupid. We print and spend as if there will never be a day of reckoning and the left applauds. Someone is devastatingly wrong and from what I know of history it is the United States.
There will be a day of reckoning. The only question is which of us will be alive when it comes.

[orangeblueorangeblue]

I love the way you people throw inflation around as if it were nothing. Tell that to the scores of millions of Americans who live on fixed incomes.

We are (and have been) talking grand scheme. Incremental inflationary periods have been hurting people forever, long before qualitative easing, long before the Fed.

[Matthanuf06]

Because it's been a historically low-risk, low-reward investment. That isn't going to change.

This isn't really the way the U.S. monetary system works. What tends to happen is small batches of natural inflation followed by a graduation either organically or artificially. This has been happening for more than a century.

It kind of does matter if it's you or China, because of the relative value and stability of the currencies.

No offense, but this is actually the opposite of the way things are working now. We're delivering more volume at a lower rate of return.

The whole point isn't that this is just some normal occurrence. It's extremely flawed to use historical scenarios in this case.

And rates are low because the Fed is artificially keeping the rates low. QE infinity...infinity and beyond.

And how do you know that it'll always be a low risk investment? That seems really naive at these debt levels. Of course it depends on how you define risk, if its just default, then I agree. But if you define risk as impairment of capital, which you should, then there is certainly no guarantee at these debt levels. It's incredibly naive.

[wargunfan]

We are (and have been) talking grand scheme. Incremental inflationary periods have been hurting people forever, long before qualitative easing, long before the Fed.

Your "Grand Scheme" will cause millions of Americans to suffer because this government refuses to get its house in order.

[Matthanuf06]

We are (and have been) talking grand scheme. Incremental inflationary periods have been hurting people forever, long before qualitative easing, long before the Fed.

Incremental inflation? Lol

Look, we want a little bit of inflation. But if you don't think the risk is there for more than that then I have some ocean front property in Arizona to sell you.

How do you think we can pay off this debt without debasing the currency when we are at a pace of doubling it every handful of years?

I understand we don't have to pay the whole thing off.

The growth option is really far fetched because we've exhausted our government expenditures as part of the equation. In fact, it's going to become a drag. Sure, another tech revolution could save us...but to bank on that?

[wargunfan]

When this inflation hits it will make Jimmy Carter look like an economic genius.

[ChartsandGrafs]

I'd trade the Fed for a wholly public central bank any day. It would actually solve a lot of our problems with that move alone.

No, not really. Large private banks and corporations would still control the election process and determine who reaches key political positions through their control of campaign financing and the media. Instead of a private cartel with private shareholders, you would end up with a government agency under the indirect political control of wealthy private interests.

How would that solve anything?

[gator10010]

We are (and have been) talking grand scheme. Incremental inflationary periods have been hurting people forever, long before qualitative easing, long before the Fed.

Incremental inflationary periods? I guess if you trust the CPI numbers.

Question, what do you think would happen if/when foreign central banks start selling all of the US dollars they are sitting on, ultimately sending all of the printed fiat currency back to America?

Would this scenario qualify as an incremental inflationary period?

[chemgator]

There's no need to guess why S&P lowered the credit rating, they came out and said it: the fact that the extreme-right Republican House would seriously hold the full faith and credit of the United States hostage as an anti-democratic means to enact their radical agenda. In the past it's always been the House minority party that has (token) voted against raising the debt ceiling. The extremist Tea Party Republicans are the first time this has been threatened by the House majority party.

BALONEY!!! Prove it. You can't, because it didn't happen. They said that it was a contributing factor, not a deciding factor. If you don't understand the difference, this discussion is not for you. They never came out and gave a clear explanation of the cause, with a deciding factor. Inability to balance the budget was also cited as a factor, so why don't you play up that angle?

The bottom line is that the credit rating was lowered under Obama multiple times. The first time in history that this has happened. A lot of what was unsaid is that Obama's unwillingness to negotiate in good faith with republicans is the cause of these "extreme" budget battles. Obama promotes his budget cuts that total 0.02% of the federal budget, in exchange for massive tax increases.

Only a halfwit would believe that there is anything radical about the generic Tea Party agenda (not the specific things that occasionally come out of their mouths--just like Biden's crazy speeches doesn't represent the democrat's viewpoints). They believe in cutting gov't spending. I fail to see how that's radical at all. In fact, it's called austerity, and several countries (like Germany) have implemented it successfully over the long term. And, no, they didn't do it by proposing 0.02% budget cuts and cranking up taxes as the solution.

[orangeblueorangeblue]

Incremental inflationary periods? I guess if you trust the CPI numbers.

Question, what do you think would happen if/when foreign central banks start selling all of the US dollars they are sitting on, ultimately sending all of the printed fiat currency back to America?

Would this scenario qualify as an incremental inflationary period?

It might, except our monetary policy also has methods for mitigating this.

Incremental inflation? Lol

Look, we want a little bit of inflation. But if you don't think the risk is there for more than that then I have some ocean front property in Arizona to sell you.

The risk is there and I never said it wasn't. But it isn't there for $1T of money that doesn't go directly into the economy. That's a pretty simple distinction. What this does instead is impact two primary economic forces: the federal government and the Fed. Very little of this will be turned into currency and injected into the economy.

In other words, if they talked about printing $1T and pushing it into the general economy I would be far more concerned.

How do you think we can pay off this debt without debasing the currency when we are at a pace of doubling it every handful of years?

I'm not sure that's the government's goal, honestly. The last time we weren't in debt was some time in the 1810s, no? You certainly have a lot more leniency in these regards when:

1. You control the money supply
2. Everyone to whom you owe money uses that same currency

As long as those two things are happening, I do not expect the government to really focus much on reducing debt. Deficit? Maybe. Hopefully the pressure will eventually get Washington to make a move in this regard.

Your "Grand Scheme" will cause millions of Americans to suffer because this government refuses to get its house in order.

As has been the case for centuries. The trillion dollar coin option is the same trick from a different angle.

Please don't refer to it as "my" grand scheme, I'm just giving some macro input on it. I don't agree with it (as I've said several times in this thread already).

[tegator80]

When this inflation hits it will make Jimmy Carter look like an economic genius.

As I have said before, The Fed isn't playing with fire in keeping the rates artificially low and buying up our debt, they are playing with nitroglycerin. When it goes, it will go off BIG. And there won't be any effective steps to keep it in check.

That is why I call the financial situation our future train wreck. It will be sudden and ugly. But then we can begin to implement austerity measures today and start to wean people off of the free stuff. And then civil disobedience becomes the norm...and it will be ugly. But at least we we are trying to right the ship.

Guess which one will win out in the end? Hint: it won't be the latter.

[chemgator]

It's all a big foolish gamble. The only way that Obamanomics works is if the next "internet revolution" starts here soon, and the economy grows exponentially, driving the GDP high enough to make the current debt levels irrelevant. Yet Obama is doing little to nothing to make this revolution happen. Increasing taxes on Americans will have minimal effect on the deficits--everyone knows that. You either have to dramatically grow the economy, or reduce federal spending. Otherwise, we keep marching towards becoming Greece. A slower march, perhaps, but a certain one. I can't fathom why liberals cannot understand the parallels between excessive gov't spending and economic collapse the way Greece has demonstrated. Equally incomprehensible is the incredibly naive liberal idea that you can increase taxes and income for the federal gov't, and Congress won't increase spending as a result. I guess liberals are naturally gullible.

[g8trjax]

It's all a big foolish gamble. The only way that Obamanomics works is if the next "internet revolution" starts here soon, and the economy grows exponentially, driving the GDP high enough to make the current debt levels irrelevant. Yet Obama is doing little to nothing to make this revolution happen. Increasing taxes on Americans will have minimal effect on the deficits--everyone knows that. You either have to dramatically grow the economy, or reduce federal spending. Otherwise, we keep marching towards becoming Greece. A slower march, perhaps, but a certain one. I can't fathom why liberals cannot understand the parallels between excessive gov't spending and economic collapse the way Greece has demonstrated. Equally incomprehensible is the incredibly naive liberal idea that you can increase taxes and income for the federal gov't, and Congress won't increase spending as a result. I guess liberals are naturally gullible.

If a pub was in power...well, you know.

[madgator]

Minting the coin would end America as we know it.


what america exists today that would be destroyed?


we're already LOOONG gone

[gator996]

madgator... :no:

http://www.youtube.com/watch?v=A23snMkbZ1I

[llm85]

Our government can't even keep track of $100 Medicaid payments. How are they going to keep track of a One Trillion Dollar coin? At some point this coin would come up missing, unless we put it on public display 24/7.

I can just imagine lines of people in the future walking by this little coin and saying "so, that's what we're paying all this debt-interest for."

[orangeblueorangeblue]

Well if it makes you feel any better, it'd be held at the Federal Reserve.

[llm85]

Well if it makes you feel any better, it'd be held at the Federal Reserve.

Oh, I feeeeeeeeeeel so much better.

[MichiGator2002]

Well if it makes you feel any better, it'd be held at the Federal Reserve.

Why bother? Who would steal it other than as novelty? The only thing I think that people understand implicitly about the theorized coin is that it wouldn't, would not, actually be worth a trillion dollars.