WTFudge is this "trillion dollar platinum coin" nonsense?

Patrick Henry

Patrick Henry

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http://www.businessinsider.com/sudd...n-dollar-coin-idea-to-save-the-economy-2013-1

This is really thrilling.

An arcane idea that started on finance blogs in the summer of 2011-- that Tim Geithner should mint a trillion dollar platinum coin to avert the debt ceiling -- is now seriously taking off.

The premise of the idea is this: Although the Treasury can't just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins, and the thinking is that Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Fed's account.

The first blog to really promote the idea was Cullen Roche's Pragmatic Capitalist. We jumped on it soon thereafter, as did others. Of course, once the debt ceiling was solved, people forgot about it.

But there's a new debt ceiling looming, and this time, LOTS more people are talking about it.
We noted our surprise back in early December that an actual 3rd party research firm brought up the idea.
Now it's going even more viral.

Paul Krugman discussed it yesterday.

In an interview with Capitol New York, Representative Jerry Nadler came out in favor of the solution (Nadler has an above-average understanding of economics in our experience).

Josh Barro at Bloomberg is now endorsing it, and that's spread a huge conversation about it among DC journalists and policy folks on twitter.
Barro explains why it's the perfect "solution" to the debt ceiling fiasco:

Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.

Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.

This is basically the right way to think about it. Yes it's silly to think of funding yourself with a coin, but it's even sillier to think that defaulting might be a good idea, so you might as well do it.

One economics point must be addressed: Lots of people, when they hear the idea, say one of two things:
This would cause massive inflation!

Well if we did this, why not a $100 trillion dollar coin?
Neither of these are legitimate rejoinders.

This would not result in massive inflation, because we wouldn't have a gigantic injection of new money into "the system." That is only achievable through massive spending beyond which the economy can handle. But this loophole would in no way let the government spend beyond which Congress has allocated through the budget.

And the point about the $100 trillion coin misses the point as well. The current economic constraint is not what we can raise or spend, but rather a dumb law (the debt ceiling) that we would like to get around legally. A $1 trillion coin accomplishes this goal just as easily as a $100 trillion coin does. Remember, the constraint isn't money, the constraint is law.

So yes, this is very thrilling, and we hope Obama puts an end to this nonsense tomorrow by unveiling the coin.


Read more: http://www.businessinsider.com/sudd...idea-to-save-the-economy-2013-1#ixzz2GxyZj0Gf
Click to expand...
 
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I'm no economic expert. But I don't think it's that simple. Wouldn't the coin have to be WORTH $1 Trillion in platinum? Otherwise it seems it would be the same as the Fed printing all that counterfeit it is so fond of.

Does the government even have a trillion dollars worth of platinum?
 
John F Kennedy III said:
I'm no economic expert. But I don't think it's that simple. Wouldn't the coin have to be WORTH $1 Trillion in platinum? Otherwise it seems it would be the same as the Fed printing all that counterfeit it is so fond of.

Does the government even have a trillion dollars worth of platinum?
Click to expand...

The premise of the idea is this: Although the Treasury can't just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins, and the thinking is that Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Fed's account.
Click to expand...

The 'technicality' described above supposedly allows Congress to assign an arbitrary value to the coins, but it is specific to platinum coins.
 
the blithering idiot quoted in the OP said:
This would not result in massive inflation, because we wouldn't have a gigantic injection of new money into "the system." That is only achievable through massive spending beyond which the economy can handle. But this loophole would in no way let the government spend beyond which Congress has allocated through the budget.
Click to expand...

Yeah, right - 'coz we all know how Congress would never, *ever* engage in "massive spending" beyond its means. :rolleyes:

A trillion dollars would be plonked down in a Fed account, and Congress would just let it sit there without "allocating" it ... just like they didn't "allocate" any of that Social Security "trust fund" money ... oh, waitaminnit ... :o

So: this is it, then. This is the wit's end of the desperation to find a way - *any* way, no matter how droolingly moronic - to keep the spend-and-consume economy-thrasher running at maximum RPMs.

the blithering idiot quoted in the OP said:
And the point about the $100 trillion coin misses the point as well. The current economic constraint is not what we can raise or spend, but rather a dumb law (the debt ceiling) that we would like to get around legally. A $1 trillion coin accomplishes this goal just as easily as a $100 trillion coin does. Remember, the constraint isn't money, the constraint is law.
Click to expand...

Oh, I see! So when I "max out" my credit card and can't buy any more stuff with it, the constraint isn't money. The constraint isn't my inability to pay back what I've borrowed. Oh, no, not at all!

The constraint is just some silly ol' number (my "credit limit") that some stupid ol' credit issuer came up with out of thin air - just to give me a hard time and stop me from buying stuff I can't pay for!

Those mean ol' bastards! What the hell do they know? I should just be able to borrow and spend whatever the fuck I want!
 
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And another thing ...

the blithering idiot quoted in the OP said:
Well if we did this [mint a trillion dollar platinum coin], why not a $100 trillion dollar coin?
Neither of these are legitimate rejoinders.

[...] the point about the $100 trillion coin misses the point as well. The current economic constraint is not what we can raise or spend, but rather a dumb law (the debt ceiling) that we would like to get around legally. A $1 trillion coin accomplishes this goal just as easily as a $100 trillion coin does. Remember, the constraint isn't money, the constraint is law.
Click to expand...

IOW: asking why we shouldn't just go ahead and mint a 100 trillion dollar coin instead of a (mere) one trillion dollar coin is NOT to be considered a "legitimate rejoinder" and "misses the point" - because [so the story goes] there would be NO REAL DIFFERENCE between the two for purposes of dodging the debt ceiling.

So riddle me this: if the blithering idiot who concocted this bullshit really believes what he's talking about, then why doesn't he say, "You want a 100 trillion dollar coin? Hell, no problem! Let's do it! After all, that'll accomplish the goal of dodging the debt ceiling just as easily!" (Hint: it has to do with differences between the two apart from purposes of dodging the debt ceiling.) Understanding why he doesn't say that is key to understanding why the whole notion of conjuring up trillion dollar coins - or 100 trillion dollar coins - is extremely foolish & dangerous. It is also key to realizing that people who spout this nonsense are deluded fools, towering ignoramuses and/or malignant deceivers.
 
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GunnyFreedom said:
wouldn't that be a 40 million pound coin? Platinum is worth less than gold right now...
Click to expand...

From the OP article: "there is a technicality in the law that says the Treasury has special discretion to create platinum coins"

Presumably, this "technicality" (whatever it may be) would allow the minting of a platinum coin with a face value independent of the actual mass of platinum involved.
 
Whats the point?

Give it to China and balance the books for a few months.
 
If they open the door that the platinum coin is worth FACE VALUE vs the value of the precious metal content it may open the door for business owners to pay their employees with gold coins at FACE VALUE vs the value of the precious metal content.
 
Occam's Banana said:
From the OP article: "there is a technicality in the law that says the Treasury has special discretion to create platinum coins"

Presumably, this "technicality" (whatever it may be) would allow the minting of a platinum coin with a face value independent of the actual mass of platinum involved.
Click to expand...

I'm glad I'm not the only one that saw the massive logic fail.
 
Can Trillion Dollar Coins Save the Economy?

http://news.yahoo.com/trillion-doll...-end-around-110038545--abc-news-politics.html


...While there are laws in place to regulate how much paper, gold, silver or copper currency can be circulated by the government, there is nothing so clearly stated when it comes to platinum. That door open, the Treasury could have the U.S. Mint melt and mold a few trillion dollars of it, then ship the goods over to the Federal Reserve for safekeeping until the time comes to pay the bills....
Click to expand...
These fuckers are just getting blunt. Since "there is a law how much paper, gold, silver or copper currency can be circulated" they are just going to go around it by using another metal. Why not just use bull shit as currency?
 
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So my first guess was that they were going to mint 1 trillion worth platinum coins but actually they plan to mint coins with a denomination of 1 trillion dollars.WHO THE HELL WOULD BE SO BRAIN DEAD TO ACCEPT THOSE COINS AS A PAYMENT.
 
Demigod said:
So my first guess was that they were going to mint 1 trillion worth platinum coins but actually they plan to mint coins with a denomination of 1 trillion dollars.WHO THE HELL WOULD BE SO BRAIN DEAD TO ACCEPT THOSE COINS AS A PAYMENT.
Click to expand...

If it's declared legal tender, with a value declared by Congress? Oh, anyone with an outstanding debt that needed to be paid.

You have two choices: Accept the legal tender when offered, or accept nothing, and consider your debt paid in full, with no recourse after that.

There needs to be a Constitutional Amendment that states that Congress isn't allowed to "declare" (regulate) the value of anything at all.
 
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