Here’s the latest wild fantasy from the government the majority have created in their own fiscally irresponsible image.
http://economy.money.cnn.com/2013/01/04/platinum-coin-debt-deiling/
They’re actually aready doing this with the program of buying their own Treasury debt… just without the coin.
I saw one article on this that suggested John Maynard Keynes as the portrait for the obverse side. An apropos motto might be: In debt we trust.
There’s a deep dishonesty at the heart of this coin. Maybe Kant’s picture should be on it–or Peter Keating’s.
Basically our Congress has voted for spending, low taxes, and debt, but would now like to cause the machinery of our government to be even more inefficient by tampering with its normal operation–the normal operation that they demanded with their votes.
No Republican who does not vote for a motion to abolish Social Security immediately (or the fiscal equivalent) has a moral right to vote against the debt ceiling. To fail to vote for the former and not vote for the latter is to intentionally inflict harm on the US for no reason short of pure Nihilism.
Obama is absolutely correct in threatening to bypass this political theater with this “coin”, and I hope a few dozen coins are minted just in case. We don’t need this distraction from the real issues and neither do the markets.
If Congress wants to cut spending (or raise taxes) then they should have the political balls to do so. Anything else is dishonest and needlessly wasteful–or betrays a bizarre form of wishful thinking.
I doubt Obama would use a gimmicky loophole in the law, clearly violating the spirit of the law in order to get around the debt ceiling. I doubt he would be stupid enough even to threaten it (though some left-wing flunkies seem to be talking up this idea). However, one never knows.
I’m glad the U.S. has the debt ceiling. It is obviously contradictory to approve a certain amount of spending, while also imposing the debt ceiling. However, clearly the debt ceiling is not a ceiling. It is a legal technicality that allows the discussion of U.S. fiscal policy to be brought to center-stage.
Well, we’ll see on both counts I guess. Both have to do with the public perception of the issue and the actual detrimental effects of the situation (which depends on the former).
Obama could make the entire “episode” go away in an instant by using the magic coin trick. Yes, he’d hear many voices go apoplectic over it, but those voices go apoplectic almost every day anyhow.
The worst case is that people really think they are “going blow it all up” and it screws up our markets and makes planning impossible for tons of economic activity, inflicting very real damage on a large swath of Americans.
The best case is that people treat it like those doomsday predictions and treat it like a curiosity–and sure, maybe an excuse to discuss the overall issue, to worry about deficits, and so forth.
In the last episode it was much closer to the worst case in terms of the effects. With any luck the next one won’t have the same impact.
This too will be something Obama weighs up in creating the magic coin. If he sees detrimental effects being caused by the ensuing mayhem, then he can make himself look like a hero in making the whole problem go away in an instant. If the markets start going into the crapper over it then people won’t care and will just want the whole problem to go away.
However, if the episode is met with a big yawn, and there are no real detrimental effects, then Obama could look like an asshole for using the law in a way never intended and so forth.
In thinking this through as I write this, I bet that a) Obama implicitly threatens to use the coin as a “backstop” to basically ensure the markets that no matter what the government won’t stop even temporarily; and B) the overall reaction to the next episode is very small compared to the last one, and becomes a sort of a “veteran’s day” for the national debt.
The trillion dollar coin, introduced as a way to avoid the debt ceiling, is a perfect illustration of how the US dollar has become a floating abstraction. We can just mint a coin worth, maybe, $1,500, and then declare that it is worth a trillion dollars. Why not a quadrillion dollars, or maybe a googolplex? The bond is broke. The social contract is lying in shreds on the floor of the White House.
There’s a deep dishonesty at the heart of this coin.
That dishonesty perfectly matches the dishonesty of the political majority who indulge in the fantasy that credit is capital. For they are the ones who are responsible for the shared mindset of those who they elected to government office.
It’s no mystery how a government drowning in its own debt would be created by people drowning in their own debts.
The trillion dollar coin, introduced as a way to avoid the debt ceiling, is a perfect illustration of how the US dollar has become a floating abstraction. We can just mint a coin worth, maybe, $1,500, and then declare that it is worth a trillion dollars. Why not a quadrillion dollars, or maybe a googolplex? The bond is broke. The social contract is lying in shreds on the floor of the White House.
The bond has been broken for a lot longer time than the recent Administration. You can go back to the Lincoln Administration when the government issued “greenbacks” in 1863 which were not redeemable in metal. Also the government attempted an income tax which under the Constitution of that time was not legal. That is why we have the 16 th amendment. In the Woodrow Wilson administration the government became overtly Fascist. The privately owned railroads were nationalizes (because of the war effort) and were not returned to private management until 1922. This complete flout the Constitution provision which enable government seizure of private property under eminent domain. The railroads were hijacked in the name of the war effort (The Great War aka World War I). No payment was made to the owners of the railroads so it was pure government hijacking and theft.
The Constitution has been shredded for almost 100 years.
ruveyn1
The bond has been broken for a lot longer time than the recent Administration. You can go back to the Lincoln Administration when the government issued “greenbacks” in 1863 which were not redeemable in metal. Also the government attempted an income tax which under the Constitution of that time was not legal. That is why we have the 16 th amendment. In the Woodrow Wilson administration the government became overtly Fascist. The privately owned railroads were nationalizes (because of the war effort) and were not returned to private management until 1922. This complete flout the Constitution provision which enable government seizure of private property under eminent domain. The railroads were hijacked in the name of the war effort (The Great War aka World War I). No payment was made to the owners of the railroads so it was pure government hijacking and theft.
The Constitution has been shredded for almost 100 years.
ruveyn1
Completely agree but I would add that the social contract is itself a floating abstraction, and is never valid.
Canada has a million dollar coin. However, that’s nothing like the Trillion dollar proposal, because the Canadian one is actually worth much more than a million dollars while the one being suggested for the U.S. would essential be fiat currency.
Though I cannot imagine Obama bypassing the Fed with such a fiat coin, it is unclear if the SCOTUS will consider such a coin to be legal.
Why are you guys so afraid of a trillion dollar coin? Monetary base has already increased by nearly $2 trillion since 2008:
We still have low and stable inflation. Or are you guys part of the brigade who continually and obstinately predict hyperinflation, in the face of all evidence and absolutely refuse to adjust your economic models to reality?
Hint: The reason such large increases in the base do not mean hyperinflation is because the economy is in a liquidity trap: http://en.wikipedia.org/wiki/Liquidity_trap Anyone worth listening to on economics has adjusted their models to incorporate this theory.
There is no other way to hold the above graph and the current inflation rate of 1.8% simultaneously in your mind. Ie to not acknowledge a liquidity trap is to engage in massive cognitive dissonance. So do the smart thing and adjust your thinking to reality!
PS: If anyone questions that the CPI is being miscalculated or manipulated to hide hyperinflation then that really does take the dumb award of the day, so don’t even bother.
Oooooo, we’ve all been burned.
I don’t think this “coin” would increase the Monetary Base. The net effect would be no different than if Congress simply increased the debt limit. It’s just a gimmick to counteract another gimmick.
Why are you guys so afraid of a trillion dollar coin? Monetary base has already increased by nearly $2 trillion since 2008:
We still have low and stable inflation. Or are you guys part of the brigade who continually and obstinately predict hyperinflation, …
I can’t speak for anyone else, but I just bought some long-term U.S. government bonds.
Meanwhile, in answer to your strawman, I assume you think the U.S. government can simply mint a few million coins, each a million dollars, and hand one out to each citizen. Problem solved!
Wooden nickles and trillion dollar coins. Wood doesn’t care what is inked on it, Metal doesn’t care how it is embossed.
Canada has a million dollar coin. However, that’s nothing like the Trillion dollar proposal, because the Canadian one is actually worth much more than a million dollars
Indeed. It’s gold melt value today is $5,300,000.
Right now, gold trumps government issued paper big time. Of course it doesn’t always in the short term, but it always does in the long term because human nature never changes.
while the one being suggested for the U.S. would essential be fiat currency.
…which is a perfect match for the values by which the majority in America are living. But this is nothing new. This is the fourth year with no Federal budget. What nation hasn’t eventually debased their currency? And now that every nation is engaged in the same scam, the currencies only appear to rise and fall in relation to each other… while all have gone over the cliff.
Though I cannot imagine Obama bypassing the Fed with such a fiat coin, it is unclear if the SCOTUS will consider such a coin to be legal.
The government has already decreed that it is legal to create money with which to buy its own debt. That fact renders a Tcoin lagrely irrelevant.
Why are you guys so afraid of a trillion dollar coin?
Solvent productive Americans have absolutely nothing to fear… because for them “dole” is just a brand of pineapple. 
I don’t think this “coin” would increase the Monetary Base. The net effect would be no different than if Congress simply increased the debt limit. It’s just a gimmick to counteract another gimmick.
All coins and paper money are directly counted in the monetary base.
Meanwhile, in answer to your strawman, I assume you think the U.S. government can simply mint a few million coins, each a million dollars, and hand one out to each citizen. Problem solved!
No, such a solution would work in the short term but not the long term. As the economy exits the liquidity trap, there would be no mechanism for the Fed to take back the coins. Whereas QE money and a trillion dollar coin can be destroyed at will thereby negating inflationary effects. Because I have an accurate model of how the economy works, I can make such predictions, whereas without an accurate model economic analysis becomes the repetition of dogmatic statements.
As the economy exits the liquidity trap, there would be no mechanism for the Fed to take back the coins. Whereas QE money and a trillion dollar coin can be destroyed at will thereby negating inflationary effects. Because I have an accurate model of how the economy works, I can make such predictions, whereas without an accurate model economic analysis becomes the repetition of dogmatic statements.
This has become farcical.