Yes, why settle for a $1 trillion coin when you can make a $60 trillion coin? When I mentioned this possibility, I was met with a bunch of commentary about how the president couldn’t buy bling for himself because he would only be paying the bills that Congress had instructed him to pay. So, how does that work for the national debt? Can we just mint a coin and pay it all off? We have, in some sense, congressional approval to pay off our debts, do we not?
I really hate to say it, but I believe Tom Maguire has exposed a real problem with the whole Platinum Coin gambit. I think a lot of people who don’t know anything about the nomenclature of commemorative coins have read a statute incorrectly. I include myself in that, because I really had no idea what a bullion coin was and how it differed from other collectable coins. According to the U.S. Mint:
A bullion coin is a coin that is valued by its weight in a specific precious metal. Unlike commemorative or numismatic coins valued by limited mintage, rarity, condition and age, bullion coins are purchased by investors seeking a simple and tangible means to own and invest in the gold, silver, and platinum markets.
In other words, a trillion dollar platinum bullion coin actually would have to weigh more than the Titanic. And it is only bullion coins that the Treasury Secretary is authorized to mint.
But, whatever, might as well make it $60 trillion.
And who cares about the language in the bill. Legal scholars who know nothing about coins have already weighed in.
I don’t even care anymore. I think it would be just as legal to shoot any member of Congress who won’t extend the debt ceiling. The law no longer has any relevance. It’s just a matter of exerting power. If the Republicans act stupidly enough, we’re justified in ignoring them and the law and just running this place how we see fit. Right?
I mean, that’s what they’re trying to do, and they only control the House.
I missed the part where the weight-based valuation has to use the market price per weight. So the Fed and Trsy over-value platinum for two transactions. Big whup.
Sure, why not? Let’s make up whatever we want for all bullion coins. Why does it matter anymore?
Exactly. Why not join the Repugs in a post-factual world? In fact, why not just make a coin derivative based on the the odds of a flip of the coin and deliver that to the fed. Then you don’t even have to mint the thing.
I can’t believe you guys are still talking about this coin thing, jesus christ.
And cut it out with all the legal post-modernism. Our government is not in existential crisis. A redistributionist president straight out the French Socialist Party is negotiating against a house of congress that’s a better fit for Pinochet’s Chile (or I don’t know, modern day Kuwait, maybe, or a Confederacy that never lost the war).
Mysteriously, they are in deep conflict with one another. Not a big deal, they’ll both wuss out at the eleventh hour just like they’ve done every other time now and cobble some more bullshit together on the fly.
Precisely.
But…
Believe it.
Media-entranced, sleepwalking leftinesses, living in their own version of Alice In Wonderland.
Alice In Progressiveland.
AG
Blah, blah, blah. You can’t recognize fun when you see it.
Fun?
The whole nation is crazy, anachronarchist. Fun’s just about over. Time to move on.
1 Corinthians 13.11
This whole thing has now devolved into a childish game of King Of The Mountain, only real lives are at stake.
Time to stop funning and get down to real business. Should this farce actually play itself out right down the the coin mint we will see armed rebellion in this country. Watch. It is “legal” treason. A loophole-enabled coup. Are the people being couped some nasty sons of bitches? Yes, but they were elected according to the Constitution. Change the Constitution? Great. Let’s have a constitutional convention. But not this farce.
AG
It’s a farce alright. A big cosmic farce composed of farcical particals held together by farcical forces.
The other problem with the whole “coin” thing, besides its basic stupidity, is that it implies Obama can just wave a wand to solve the debt ceiling mess. This distracts everyone from focusing on Congress, where the responsibility actually lies.
It doesn’t distract Congress, as far as I can tell. The more ways that Obama can just give the House the finger over the debt ceiling, the more reasons they have to just do their jobs and raise the debt ceiling.
I’m afraid this is a really silly post.
The Statute in question refers to and authorises BOTH bullion and proof coins – the latter are coins where the denomination value bears no relationship to the metal value.
Booman Tribune ~ The Trillion $ Coin
And yes. The whole thing is silly. But no more silly than the book keeping convention that has one branch of the Government (the Fed – although it is actually controlled by private banks) creating money ex nihilo and then lending it to another branch of the Government – the Executive – and then charging them interest for the privilege.
All modern currencies are “Fiat” currencies. Ultimately they are worth (relative to each other) what the markets say they are worth.
Frank is correct. The trillion dollar platinum coin would be a proof coin. It’s a mistake to understand bullion coins as legally requiring the same denomination as their instantaneous spot market price — indeed no bullion coins have that characteristic — but you don’t even have to worry about that. It’d be a proof coin. (Read the damn law.)
Congress has authorized the Secretary of the Treasury to mint platinum proof coins in any denomination he sees fit. Yes, it would be legal to mint a $60 trillion denomination platinum proof coin. As I said, read the damn law. (Likewise, the Federal Reserve has unlimited legal authority to increase the money supply — and it certainly has, thank goodness. That’s fiat money: governments print it, mint it, and mostly just change numbers in computers to make it.) Nobody is proposing a $60 trillion denomination. The expectation is that the Treasury Secretary would exercise his platinum coin minting authority in the most responsible way possible given the circumstances he confronts. A one trillion dollar denomination would be consistent with a Congress (i.e. Republican Party) that fails to raise or eliminate the debt limit. A $60 trillion denomination would exceed prudence and good judgment — but it would also be legal.
No, the law does not say, “Subject to BooMan’s beliefs about what this law should have said.” There are plenty of dumb laws passed practically every day — sugar tariffs, corn ethanol subsidies, and the continuing existence of the paper dollar bill and penny, to pick three examples. Perhaps Congress granting full discretion to the Secretary of the Treasury to mint platinum proof coins in any denominations was a dumb law. But it’s far less dumb than the debt ceiling, and that’s the bloody point. So quit whining already, because you’re just digging yourself a deeper hole. The world — and particularly duly enacted, Constitutional U.S. federal legislation — does not respect your private sensibilities.
BBCWatcher…
Rough.
But thoroughly deserved.
And here is the truly frightening kicker in this post:
Tit for tat.
Tweedledum for Tweedledee.
A descent into madness on both sides of the edges of the UniParty. And not even just the far edges anymore. Booman articulates the positions of the moderately progressive wing of the Democratic Party. Hell, he’s some kind of consultatnt in that world. And he just said:
Wrong.
Unless you are advocating a true revolution…wrong.
But perhaps that is exactly what he is doing.
Can you imagine the furor in Leftinessland if a rightwing “consultant” said that about those legislators who are in the Obama camp?
Please.
Alice in Leftinessland.
Please.
We are going down the up staircase at an alarming rate.
Please.
AG
You may have missed the Dada intent of my post. My fault.
I didn’t miss it, Booman. It’s just that this whole situation is absurd enough that “Dada” could turn into “A done deal” in the blink of an eye. The signing of a paper.
In a world dominated by WMDs, eyeless drone assassin planes and mindless drone media, “Dada” is simply dangerous, superfluous nonsense. Turn away, and when you turn back again “Dada” has become mainstream politics. Do we not have enough nonsense and irrationality going on now? The line between sanitty and business as usual has already been almost completely obliterated. This idiocy could very easily become national policy. It’s really no more stupid than the actions of our fine ex-Preznit G. W. Butch.
Please.
Let’s talk about something that makes some sense.
AG
Oh that was an awesome post. Well done. I also liked that you called out the dollar bill and the penny; it was one piece of Tea party legislation I could get behind.
As an example of a “responsible” real world reason for minting the coin I could cite the 2012 Budget approved by Congress. It has a built in $1.3 Trillion deficit (= approved expenditure less expected revenues). So how is the President supposed to implement it without resorting to borrowing? And yet the House is trying to thwart the clear intent of the budget by refusing to raise the debt ceiling. And the House is also suing the president for failing to fully implement DOMA, so it would seem the President can’t just implement some parts of the Budget and not others (SCOTUS has also ruled line item vetos of Acts unconstitutional). Presumably the Senate, which also approved the Budget, could sue the President if he failed to (say) pay pensioners there full entitlement under the Budget.
This is an Alice in Wonderland not of the President’s making. So why are we surprised that the only options open to the President (Platinum coins, coupons, IOU’s) also have an unconventional ring to them? The bottom line is that the 14th. Amendment requires the President to find some kind of solution, with or without the cooperation of Republicans.
you know damn well what “proof” meant in this context.
Proof coinage – Wikipedia, the free encyclopedia
Yes, “a coin issue.”
In this case, “a bullion coin issue.”
A proof coin is tethered to a real coin that is issued in much greater numbers. The difference is the special polish job they do on the proof version of the coin.
So, we could make one coin the size of the moon made up of a $60 trillion of platinum, and then we could print another one, also as big as the moon, but with a very reflective coat. Although, I think this solution might screw up our tidal charts.
Or, we could stop pretending that this gambit is in legal in any normal sense. It’s not. It’s just a totally unreasonable reading of the law that would be rejected outright if the alternative wasn’t to shoot ourselves in the head.
I don’t know why you always bring bullion into it. In practice there are no bullion coins in circulation – i.e. coins where there metal value is close to but not equal to the denomination of the coin. Virtually all coins (and banknotes) have denominations which bear no relationship to their metal content or costs of production.
If you have difficulty with the notion of a single trillion $ coin, the same outcome can be achieved with 1000 Billion $ Coins, or a million million $ coins. The only difference is the costs of production and storage and the risk of theft or counterfeiting if kept at multiple locations.
The only reason they wouldn’t be of much use in transmitting value is that almost all large transactions are nowadays conduced electronically by computers with no actual coinage or notes at all.
I’m not actually wedded to the coin option – coupons or iOU’s could achieve the same effect – and have written that it is quite likely there would be an attempt to impeach the President if he went down that route.
But he did promise to be a transformational President, and bursting the bogus deficit hawk bubble would be a very good start in that direction. Stephanie Kelton refers to this debate as being between deficit hawks and doves. Just because you are a dove doesn’t make you much different to the hawks in anything but degree. The problem is that both sides accept same framing.
The truth is not that the Government spend taxpayer’s Money. The Government spend its own money (which it creates ex nihilo) and taxes some of it back to reduce long run inflation. The correct level of taxation is determined by whatever level of inflation you deem desirable.
To put in language the fundis might understand: The Pharisees sought to trap Jesus by asking him should Jews pay taxes to (the hated) Roman empire – i.e. was he going to support the Roman occupation. Jesus replied by asking them whose head was on the coin. They replied Caesar’s. So ye said “give onto God what is God’s and Caesar what is Caesar’s”.
The bottom line is that the Government – broadly defined – creates dollars ex nihilo (many more are created in the form of credit by banks and shadow banks with virtually no regulation). Traditionally and legally that regulatory role has been mostly delegated to the Fed. But it need not always be so.
I bring bullion into it because the proof coin is an early-issue, specially polished version of a coin issue.
So, let’s say that we’re going to issue a $10 commemorative coin celebrating Arbor Day. There could be a $50 proof version of it that is just for a limited number of coin collectors. But it would still be the same coin.
In this case, the coin would be a bullion coin, worth its weight in platinum (plus some marketing and productions costs).
Again, what I am arguing is that the law does not authorize the minting of trillion dollars coins. And, if it does, it’s a bullion coin, so it would be gigantic and contain more platinum than probably exists in the Solar System. This proof nonsense is just another misreading of the law in order to do something that is clearly just as illegal as defaulting on our debts. What makes the proof coin bullion is that it is a proof for a bullion coin.
This is also why the law doesn’t create an upper limit. The value and availability of gold, silver, and platinum, creates the upper limit for bullion.
I get what you’re saying, but you’re importing ideas into the statute that aren’t there.
The language specifically allows the Secretary to pick the specifications, designs, quantities and denominations of proof platinum coins. Those are the exact words of the statute. There’s nothing there that requires him to pick a denomination that already is issued, or to copy existing coins.
Your current argument is that the custom in the U.S. is to mint proofs only of coins that are in general circulation. Perhaps that’s right, but it doesn’t matter because that’s not what the law says. (It’s also a sign of trouble when you have to keep shifting the ground on which you’re arguing.) The platinum coin provision is an explicit exception to everything else in the statute, set out intentionally to be that way. You can’t read limitations that apply to other types of coins into this provision unless you can point me to something in the statute that applies those limitations here. Heck, the failure of Congress to include those limitations for platinum coins makes it harder, not easier, to argue that the custom of issuing proofs only for existing denominations is applicable.
As I’ve said in different ways before, I get that this is a lawyer’s argument, not a politician’s argument, and that clearly makes a lot of people uneasy (including me, but not in the same way it makes you uneasy). But if you want to argue against it, please stop arguing that the President and/or the Secretary would be obviously violating the law by issuing the coin because it’s not at all obvious. And please don’t compare the issuance of the coin to shooting members of Congress who vote against increasing the debt limit. It’s not remotely the same.
As you can see if you just peruse a thread on the relative merits of buying a proof coin vs. a bullion coin, the two are completely coupled in context. No one needs it to be specified for them. The proof coin is just an unnecessarily expensive version of a gold or silver or platinum investment. Most investors won’t touch them, and most coin collectors don’t bother with bullion.
From what I can ascertain, the quantity of metal is always identical in the two coins, the added value of the proof coming from a combination of increased production costs and some resulting aesthetic improvement (of no interest to investors in bullion).
The reason you do not mint a trillion dollar proof coin is because you can’t mint a trillion dollar bullion coin.
We’re talking about a reasonable interpretation of the law, here, and that goes to both the legislative intent and the clear language. The clear language doesn’t decouple the coins because it isn’t necessary to couple them.
Think about an “uncirculated coin.” It’s a coin that is minted but not sent out into the world to get nicked up and tarnished. Can you decouple it from the same exact coin that was circulated? They are all part of the same coin program.
It’s clear from the legislative record that neither Frank Lucas nor John LaFalce contemplated anything beyond allowing the Treasurer to mint bullion and they were merely adding the word “platinum” to a clause where it had been inadvertently dropped a couple of years earlier.
A thread on a discussion board is still a description of the custom, rather than of a legal requirement.
A proof is not necessarily a shinier version of a regular coin (also usually double-struck to make it crisper, as I recall). I suggest you look at the Mint’s own web site to see what I mean. You will find, among other things, silver quarters, sold as proofs. The U.S. doesn’t make silver quarters for circulation these days. The “coupling” you describe doesn’t exist for the silver proof quarters.
And I will say this again, because this is pretty important: If the language is clear, pretty much no court ever will look any further because the language is the clearest expression of the intent. While I wouldn’t go as far as Scalia to say that legislative history never matters, it definitely doesn’t matter if you can read the statute and figure it out without the legislative history.
I mean this in the gentlest way possible, but you really are letting your dislike of the idea get in the way of the legal analysis here.
Okay, you are right about the Silver Quarter, which does undermine a big part of my argument.
As for the estimation of Scalia’s interpretation, I haven’t never seen consistency as one of his philosophies. I’ve never seen a more outcomes-focused judge. I’d predict that he would not like the outcome and would find a way to rule against the administration, despite a history of hostility to legislative intent.
Of course, I don’t know how “standing” works for the House. Some very reputable scholars say that they would have no standing, but I find that strange. I can see the court telling Congress to fix the law, but I can’t see them saying that no one in Congress can show harm or argue in court that the law is being misconstrued by the administration.
It’s no good to debate with us the legality of minting the coin (or printing an IOU, whatever) — none of us that I know of are legal scholars. Lawrence Tribe is, and he’s very succinct on the matter: he sees no one who would have the standing to challenge the minting. But if he didn’t consider the points that you’re raising, his is the response that I’d be keen to get. In the meantime, I think it’s important to distinguish issues about legality from issues about optics, a line which I think has been getting blurred.
You keep making categorical statements about coins that are easily refuted.
What is this? It’s a gold proof coin. It has a face value of $10. If you want to buy one, you have to give the US Mint $1004 at the moment. The only thing that prevents the US Mint from making a $1000 gold coin is the direction of Congress.
The Treasury could direct the US Mint to make the same thing out of platinum. They could put a face value of $1T on it. That’s what the law you continue to argue about says. They can make any denomination platinum coin the Secretary of the Treasury tells them to “in the Secretary’s discretion”.
They could do so legally.
They could give it to the Federal Reserve. What would then happen is a matter of debate.
But it would have a value of $1T.
There are lots of things that can be argued about in this proposed method to prevent default due to not raising the debt ceiling. But there is nothing illegal about the US Treasury telling the US Mint to make a $1T platinum proof coin. It doesn’t have to be made of $1T in platinum.
Nobody is advocating it as a matter of course. It’s a last resort in case of default. That is all.
HTH.
Cheers,
Scott.
You seemingly don’t understand what I am saying.
You’re citing a gold commemorative coin that is clearly designed to be worth far more than its face value.
Can you take the proof of that coin and say it is worth a trillion dollars? No. No you can’t.
But what about the platinum coin? Well, it is supposed to a bullion coin. And bullion coins aren’t valued by what people think they are worth; they are valued by the market price of the metal. You can’t declare a bullion coin to be worth a trillion dollars.
So, what about the proof of the bullion coin, you say? It’s value is not strictly tied to the value of its bullion. We can make it any price we want.
I suppose you can. But only if you read the statute to provide for the making of proof coins for nonexistent coins.
So, we’re making an artificial distinction about proof coins to give the Treasurer the right to print any amount of money, up to and exceeding infinity, just because.
Then people come back and tell me that, no, it’s only legal because it’s only an insignificant trillion dollars. Well, either a reasonable reading of the statute authorizes this nonsense or it doesn’t. The amount doesn’t change anything about the statute.
The truth is that it isn’t legal. It’s a joke. But not doing it could be just as illegal.
If I’m not understanding you, it’s because you’re saying things that are different from what you mean. The words you’re using are clear – they’re just wrong.
You seemingly don’t understand what “bullion” and “proof” actually mean. You also seemingly don’t understand the importance of the face value (“denomination”) in this discussion.
A bullion coin is made of bullion. Bullion is a (nearly) pure precious metal. It’s meant to be contrasted with a coin like a copper penny (previously made from a non-precious alloy of copper and zinc) or a “clad” coin made from layers of different non-precious metals.
The US Mint can make any face value on any coin that it produces, subject to the laws and the direction of the Secretary of the Treasury. In the case of platinum coins, the US Treasury Secretary alone has discretion on the denomination.
American Eagle Platinum Bullion Coins have face values up to $100 at present. But if you want to buy one, you can’t buy it for $100, of course. The platinum is worth more than the face value. You can get “proof” versions as well. Proof versions are made in special dies that have a better polish and higher quality engravings. It is shinier and rarer so it costs more. “Proof” coins aren’t legally different from “uncirculated” coins. I could take my proof quarters and go buy a pack of gum with them if I wanted…
Coins out of the US Mint have a value at least as high as the face value. End of story. You can take a 1849 US $1 gold coin to a US bank an get a crisp new $1 bill in exchange if you like. It’s worth more on the private market, but it’s worth at least as much as the face value. Just as a $100 bill isn’t made of $100 worth of linen, plastic and ink – it costs around 12 cents to make. Currency and coins are worth what the Treasury Secretary tells the Bureau of Engraving and Printing and the US Mint to put on the face as the value.
Clearer?
Again, there is nothing that says the US Secretary of the Treasury cannot direct the US Mint to make a $1T face value platinum coin. The law is clear. Your attempts at legalistic arguments about proof and bullion and so forth are a distraction from the clear language of the law (that has been posted here many times). What happens after it’s made is another question that can be argued over, of course, and one that would make more sense and be more interesting, IMHO.
Now, if it’s legal to make a $1T platinum coin, why hasn’t it been done before? One important reason certainly is that it would infuriate Congress. Cabinet Secretaries have to report to Congress and if they’re smart they don’t do things that infuriate Congress. But sometimes it’s necessary, and in those cases, the Secretaries take their lumps.
That’s not my argument. Mine is: It’s legal because the clear language of the statue says the face value (denomination) of platinum coins is set by the Secretary of the Treasury at his discretion. End of story.
Please step back and think about what we and the former director of the Mint have been trying to tell you. There’s a difference between something being clearly legal by the clear language of the statue, and something being practical or sensible or reasonable to do even in extreme circumstances.
Treasury says it’s not going to do it anyway, but look at the reasoning:
Not that they can’t make Pt coins have face values as large as they want, but because they don’t want it used for the purpose of bypassing the debt ceiling.
HTH.
Cheers,
Scott.
the word ‘can’ seems to be the most important.
One thing you missed about why no one has ever minted a trillion dollar coin that is actually worth only a few thousand dollars is that no one would buy such a thing, even if they could.
The Fed won’t buy it either.
That’s why $100 bills are worth $0.12, huh.
Our currency, including coins, are worth what the Treasury tells the Mint they are worth.
Please review this FAQ at the US Mint. There is nothing that prevents a bullion coin having a larger face value than the bullion value. Just as there’s nothing preventing a simple piece of paper being used for a $9 B check.
Again, the law says:
There is no requirement for the platinum coin to have enough platinum value in it to exceed the face value.
Since the coin won’t be made to bypass the debt ceiling, we won’t know if the Fed will take it, will we?
I think I’m done.
Can we talk about something else now? Pretty please? 🙂
Cheers,
Scott.
My comment should be slightly amended to reflect that the coin you presented was already a “proof.”
If you go here and scroll about 60% of the way down the page, you will come to the pricing standards for Platinum Proof Coins. It changes depending on the price of platinum, but right now a coin would be valued at $1892.
So, that’s the price of a American Eagle platinum proof coin right now.
It’s pegged to the price of platinum to the exact same degree that gold and silver proofs are pegged.
But we are supposed to believe that the language of the platinum coin statute is supposed to allow a total breakdown in the system. Suddenly, proof coins have no connection to their underlying bullion coins, and there is no binding formula for pricing platinum coins. This is seen as a reasonable way to create a trillion dollars from scratch, as if we were awarding someone a $10,000 tax break.
Dada doesn’t even begin to describe this argument.
Given that none of us are experts in the coin minting business, perhaps the former Direct of the National mint who co-authored the provision might be allowed his say:
Former head of U.S. Mint: The platinum coin option would work
Here’s a write up and clip of Chris Hayes’ take on the coin from this morning’s show. Excellent clip.
I like how suddenly everyone’s an expert on coins.
I’m waiting for the Sean Bean “brace yourselves everyone is about to become an expert on coins” facebook photo to start circulating.
Hell let’s put Sean Bean on the coin.
Make it out of Avatar’s unobtanium.
Yes! Bright blue please with sparkley, dangley things like that cool tree.
I find this whole debate bemusing. If you step back–really far and squint if you need to–the value of currency has always been arbitrary. And what is valued in our society, the things for which we pay this currency, is really arbitrary and often the most expensive things are the very things that are most destructive to our lives and well being.
It is an agreement we all make to give value to our currency–every single time we use it. I would argue that the reason we have so many rules, procedures, and processes to sanctify our currency is precisely because it has no value without it.
Mint the coin, don’t mint the coin I really don’t care. We are in this situation because of a ridiculous turn of events (which has followed several thousand years of ridiculousness surrounding currency and value) because one branch of our legislature has a bunch of batcrap, crazy people who are so miseducated that they are incredibly dangerous. And far from fostering humility and service, their perverted understanding of religion emboldens them in their callousness and inhumanity.
So if the President wants to make a damned coin- I say mint it. Make it out of wampum, put Sadam Hussein’s disembodied head on the thing (to remind us of one of the more disgusting ways we got into this fiscal mess) and really piss them off.
UP with Chris Hayes this morning was excellent and dove right into the coin question along with their review of the Guithner legacy.
Sometimes the worst reason to do something is simply because you can.
If the Republicans act stupidly enough, we’re justified in ignoring them and the law and just running this place how we see fit. Right?
Well, no. It’s much more limited than that. If the Republicans act stupidly enough, Obama may be put in a position where he has to choose between defying Congress and letting the nation’s credit rating and the global economy collapse. Personally, if they don’t raise the debt ceiling, I want him to keep paying the nation’s debts anyway.
But how? He could say he’s acting under the authority of the 14th Amendment, but he also needs a mechanism to get the funds int he Treasury. That’s where the coin comes in. The alternative would be to raise some funds without any statutory justification whatever. Which I’m sure could be done, but it’s better to act under a dubious legal theory than none at all.
This is all moot unless they fail to raise the debt ceiling, anyway. But when Obama said he wasn’t going to negotiate on the debt ceiling, he basically committed to having a plan for the worst-case contingency. If he has to defy Congress, I don’t know if there’s any legal justification he could come up with that would be mroe than a fig leaf. So really the point of the coin would just be to buy some time if the worst case comes to pass.
Which is all I’ve been saying. It’s ain’t legal. But neither is welshing on our debts.
Basically, put together, the laws make no sense.
It’s ain’t legal. But neither is welshing on our debts.
Which is the point of the platinum coin idea. You’d be breaking the law either way. So what’s the least bad alternative. I don’t see how you don’t understand that. In a non-banana republic the debt ceiling would have been dealt with a few weeks ago. But we’ve become a banana republic 13 years or so ago.
What don’t I get? All I’ve said from the beginning is that the law doesn’t authorize a trillion dollar coin. I didn’t say that you couldn’t get Laurence Tribe to say that it does. I didn’t say not to mint the coin. I basically just said “this is bullshit.” I won’t carry water for this lie.
Are you saying you are a water-carrier?
the opposite.
You can carry my water anytime, boo.
Of course, no one is talking about the really important question, which is who or what should be on the coin. I would like to propose a triple portrait of Boehner, Cantor, and Ryan. Admitting that it is a ridiculous idea, you’d want to remind everyone who made it necessary.
Has to be Reagan, the godfather of our debt, on the face, and Boehner’s phone number on the obverse.
I vote for Barney the Dinosaur. Or Paul Krugman.
Front:
Like the images on Mt. Rushmore: Ayn Rand, Milton Friedman, Ronald Reagan, Alan Greenspan
Reverse:
“You know, Paul, Reagan proved that deficits don’t matter.”
Does that nail down the responsibility enough?
Who cares. The point is not to mint a trillion dollar platinum coin, the point is to a) get the wingnuts in the House to think Obama might mint a trillion dollar coin (and they already think everything he’s done is illegal and unconstitutional anyway, ’cause the constitution in their heads says a black guy can only be 3/5 of a president or something); and b) by so doing, to make a joke out of their whole fiscal cliff tantrum.
The question inquiring minds (me anyway) really want to ask is, does the 14th amendment provide grounds for impeachment of members of the House who won’t allow our debt’s to be paid?
And FYI, it would be about a third the weight of the Titanic.
There is no impeachment of House or for that matter Senate members. The only way they get kicked out is that the members of that body vote to kick them out.
So, very unlikely.
Members of Congress are not impeached, they are sanctioned or expelled.
But…that raises a legal question I would like some legal beagle to answer. Does the 14th amendment strip government immunity from members of Congress who are responsible for the debt not being paid. That is, can the creditors then sue those members of Congress individually for repayment of the debt? Yes, it’s a dumb question based on the notion in corporate law of piercing the “corporate veil” to individually sue directors of a corporation who behave with other than due diligence.
“That is, can the creditors then sue those members of Congress individually for repayment of the debt?”
Wow, let that question be discussed publicly the way the coin is now being discussed… and the whole question of whether to vote to raise the debt ceiling would disappear in a flash!
To answer your question about a $60 trillion coin.
The issue you first would run into is the fact that the Fed’s own account only holds $1.7 trillion of the federal debt (which is why the first proposal sized the denomination as $1 trillion). Any additional payment of the federal debt would have to come from buying back all of the T-bills in the world from their holders, including states, retirement funds, and so on. That essentially destroys the secondary T-bill market, which a whole lot of folks depend on for their most conservative investment. Of course, to avoid inflation, the Fed would have to take the T-bills out the market at a measured pace that takes account of the funds that folks don’t reinvest in other vehicles but instead spend.
So that takes around $16 trillion or so with the current debt, leaving around $44 trillion or so as the value the Fed holds. Remember, the coin for the Fed is an asset that has its value only because the Fed accepts it at that value.
So what happens next? The government no longer has a debt, is no longer paying $300 billion a year in interest payments, and is no longer redistributing $300 billion a year from taxpayers to holders of T-bills (a redistribution from the less well off to the rich).
The contingencies that folks are saving those T-bills for–retirement funds, college education, healthcare costs–could be provided from better Social Security, grants to colleges and universities, and Medicare for All. Effective regulation of the financial industry could allow for the replacement of a conservative investment vehicle with good rate-of-return from the private sector for other savings purposes.
The Fed’s holding of what is now a government surplus could be managed as a savings account for financial contingencies. Instead of paying interest on the federal debt, the federal government could replenish the fund in prosperous high-revenue years.
The Fed’s open-market activities could remain unaltered with regards to managing the money supply and the federal government’s fiscal policy could schedule infrastructure creation and maintenance counter-cyclical to the business cycle. There would be no debt, and the value in the Fed account could remain close to $60 trillion so long as Congress was prudent.
That last sentence is the rub. But that is the same issue that you have with any scheme for financing government.
Sounds like a great idea but I am greedy. How much do you think it would take to pay off all our debts and then buy every tangible asset that exists in the world?
Depends on what individual folks would accept. Corporations are fictions. Tank ’em all. How many of your debts are to individuals?
Being greedy is a cultural issue. Always has been.
The fundamental problem is engineering the smoke and mirrors that allow for a just distribution of goods and services. Adam Smith thought he had it nailed, but it depended on a sense of connection and sense of shame. Read Smith’s The Theory of Moral Sentiments to see what kind of culture he was assuming. And Ayn Rand selfishness was not his assumption.
People are acting like creating that much money at a storng is mystical sorcery or, in Booman’s case, vain farce. But don’t we “create” greater sums each year? The government creates money to pay it’s debt all the time. It just does it through a massive and venerable system of financial skimmers otherwise known as banks, and it does it in a way to never threaten the primacy of the debt that private capitol holds against the government. Would it be a good idea to create a 15T coin to pay off our debt all at once? Perhaps there are plausible economic arguments against it. But then FIRE got 10+ trillion in no interest loans from the government when they pooped their pants in a self-created credit bubble (but all the important people did just fine). Maybe the government should take some more chances as a lender on the people as a whole and less on a bunch of useless plutocrats.
Seriously, by what statute do the banks get trillions in secret and no interest loans? Is that statute somehow more respectable than the one under discussion? Or was that purely a matter of the “discretion” of the Fed?
The Fed won’t let itself be defrauded, so the debate is over.
That, more than the law, always was the hitch. It has nothing to do with “fraud”. To say it was fraud would be to question the good faith and credit of the United States government.
The Fed, being run by bankers, has a vested interest in a debt-financed government and even a partial seignorage system would undermine that.
But the reality is IMO that President Obama doesn’t want a easy way out of the crisis except for a clean raising of the debt ceiling. With the decision related to the 14th amendment and this decision, he essentially has thrown the steering wheel out of the car.
Will Boehner and crew cave?
coin, read Billmon
Best and more comprehensive thing I have read yet, from any source, regarding the platinum coin idea. Thank you.