WTFudge is this "trillion dollar platinum coin" nonsense?

[Steven Douglas]

Steven, all I'm saying is that a fundamental problem with an aggressive monetary policy is the amplification & accumulation of money. It's a factual numerical problem that is also an observed empirical fact. If you print money and have no way to recycle it, it's going to indefinitely increase in volume & accumulate. This is a numerical, mathematical fact.

My assertion that it's THE underlying problem with Keynesian economics is a slightly different issue, but the fact that accumulation & amplification of money is a numerical problem still stands.

My point is that there's a numerical accumulation problem (monetary inflation which leads to price inflation) in both scenarios, with or without amplification.

Fiat currency that it LENT into existence is initially inflationary, then deflationary as the loan (plus interest) is repaid. Continual expansion of credit in the aggregate is the only thing that assures (for as long as it works) that it's inflationary on net.

Fiat currency that is SPENT into existence, on the other hand, is strictly inflationary. Unless you have a mechanism for calling that currency back in for destruction. It also leaves the problem (the artificial pseudo-issue) of who are the lucky few chosen recipients that will be the first users of counterfeit funds before its effects permeate through the market, devaluing all other currency through dilution.

You wrote, "You start handing money out for free, it tends to accumulate in the wrong places."

That addresses the question of how debased counterfeit currency is allocated (introduced to the market). However, no matter what, counterfeit currency ALWAYS goes to the wrong places -- because it's counterfeit. It cannot be 'lent' or 'spent' into existence without stealing value from others, regardless how or whether or not it accumulates, or even how it is 'recycled'.

In my opinion, it doesn't matter if counterfeit currency was dropped out of Uncle Ben's helicopters, amplified or loaned into existence by fractional reserve lending institutions, or simply spent into existence by a print-happy Congress that gets to forgo that pesky inconvenience of actually having to tax directly (and be politically accountable to taxpayers as a result). Saying, "Well, at least all that stolen value didn't go to Goldman Sachs!" is absolutely no consolation to me at all, any more than the argument that, "Well, at least when we steal and redistribute this way, the currency has a chance of recycling -- trickling down to those who are not front-line recipients.

It doesn't matter to me who benefits from CONFISCATED WEALTH REDISTRIBUTION, or which THEFT CHANNELS are more likely to 'recycle' some of that STOLEN VALUE to me or anyone else. The fact that such a thing is not possible without theft still stands, as does the inescapable fact of the numerical problem of aggregate accumulation and growth via a perpetual dilution of the fiat currency supply.

 

[furface]

Steven, first of all I hope I don't give the impression that I claim to know definitively what I'm talking about. These are non-trivial, and to a large degree unanswered questions in economic theory in my opinion.

The issue with fiat money versus commodity backed assets like a gold standard isn't as simple as it may first appear. First of all trust is a big issue. Do you trust a government when it says it has a certain amount of gold? It's actually an issue today with questions about how much gold governments really possess. Do you trust that a government will really trade a gold certificate for gold, even when there may be a run on gold?

You can possess gold yourself, but that has a fairly high cost of possession, theft prevention, fraud prevention, and fractionalizability. As a direct exchange instrument, gold is very poor for these reasons & more.

The other thing is fiat money actually is secured by the entire asset collection of the coining nation state or collection of states. In so much as the state has the ability to "recycle" money like I mentioned above through taxation or other means, and the state contains valuable assets & resources.

I would argue that with good economic management it's actually much more secure than commodity standards. We don't have good economic management, though, and maybe the same problems of trust exist for fiat money that exist for asset backed standards. I don't know. It's a very tricky question.

 

[Steven Douglas]

The issue with fiat money versus commodity backed assets like a gold standard isn't as simple as it may first appear. First of all trust is a big issue. Do you trust a government when it says it has a certain amount of gold? It's actually an issue today with questions about how much gold governments really possess. Do you trust that a government will really trade a gold certificate for gold, even when there may be a run on gold?

I actually personally don't give a fig about gold. It's one more commodity (of many) that could be used as money, so it's not a question for me of gold standard vs. no standard. That's another false choice, along the lines of people who insist that Ron Paul is advocating "a return to the gold standard".

You can possess gold yourself, but that has a fairly high cost of possession, theft prevention, fraud prevention, and fractionalizability. As a direct exchange instrument, gold is very poor for these reasons & more.

You might personally view those as downsides, but so long as artificial barriers to entry are piled up on top (for all commodities as money, not just gold), it doesn't matter what anyone thinks. Ultimately we would be talking about PERSONAL preferences. No committee deciding what is undesirable. I can make a case for Apple or Microsoft until I'm blue in the face, but there's always going to be the Linux-loyal, and the rest of the world, and their opinions, can kiss their asses. And that's how it should be. No one-size-fits-all for anyone.

The other thing is fiat money actually is secured by the entire asset collection of the coining nation state or collection of states.

That's fuzzy thinking that I will gladly attack. The "entire asset collection" IS NOT OWNED by the coining nation or collection of states, and fiat currency can NOT be said to be "backed" by GDP or anything else. That's a bullshit abstraction, because FRN's are not individual titles to assets. As fiduciary media they are evidences of LIABILITIES ONLY. Plus, in that same context you might as well say that FRN's are backed by Pesos and Euros, simply because they can be exchanged for them.

Anyway, the idea that a "coining nation state" can be said to "back" its currency with everything inside its borders, INCLUDING PRIVATE PROPERTY, is absurd, to wit:

...and the state contains valuable assets & resources.

(emphasis mine)

Did you see how loosely you used the word 'contains'? Is the word 'contains' intended to imply 'owns' in a kinda sorta-ish way, as a statist abstraction?

I would argue that with good economic management it's actually much more secure than commodity standards.

I don't know about "better", but I agree in principle: with good economic management anything CAN be secure. And I would argue that it does not matter to me, nor should it, as I would advocate for natural checks and balances, not artificial ones. If it's that good and "secure", then LET IT COMPETE. And if a commodity-backed currency (free of ALL artificial barriers to entry) has so many downsides that it can't compete, let the market make that determination.

We don't have good economic management, though, and maybe the same problems of trust exist for fiat money that exist for asset backed standards. I don't know. It's a very tricky question.

It's only tricky if you fall for it as an EITHER/OR proposition, or phrase it as a false choice, as if we really were just one big happy giant of a collectivist committee that goes around deciding everything for everyone en masse. Then it's not "tricky" - it's more of the same insanity, with corruption and an ultimate fall (and well deserved I might add) pretty much guaranteed.

 

[mrsat_98]

http://dictionary.reference.com/browse/remedy

http://en.wikipedia.org/wiki/Legal_remedy

If the system does something unconstitutional or illegal to you or to "the People" i.e. all of us they cannot deny us a remedy. This is the remedy built into the Banking law. Bo Gritz used to talk about this twenty years ago.

 

[Occam's Banana]

Trillion-dollar coins are like a bad penny ...

https://twitter.com/axios/status/1445375095262879756

 

[Invisible Man]

These points at the end of the OP are infuriatingly moronic!

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.

Congress spending money without any limitation on the resulting debt *is* massive spending beyond what the economy can handle. The "loophole" doesn't need to let government spend beyond what Congress allocates, because it will instead allow Congress to allocate as much as it wants without limitation!

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.

This person thinks there's such thing as a free lunch.

 

[Invisible Man]

..

 

[Occam's Banana]

These points at the end of the OP are infuriatingly moronic!

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.

Congress spending money without any limitation on the resulting debt *is* massive spending beyond what the economy can handle. The "loophole" doesn't need to let government spend beyond what Congress allocates, because it will instead allow Congress to allocate as much as it wants without limitation!

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.

This person thinks there's such thing as a free lunch.

I feel ya, I feel ya.

And they're still using the same "logic" they were using 8-1/2 years ago.

This is what comes of allowing politicians and bureaucrats to run an economy, rather than buyers and sellers.

 

[oyarde]

I've been needing one of these for my coin collection. Will it be a whole ounce of Platinum ( 992.00 ) or a fractional ?

 

[wizardwatson]

I think the nonsense is simple.

They are presenting the Weimar/Zimbambwe option like it's some sort of "far out" technicality that some nerd came up with to save the country from certain fiscal doom at the last minute.

"I've got it sir! The Constitution gives us the power to coin money. What if we changed the number of zeroes on the coin, in order to-temporarily of course-have the necessary deposits for payment."

"Will it work?

"It has to."

"Damn it boy, you may have saved this country! We will have to be careful though. In the wrong hands, such power could be dangerous."

lol.

Yeah, folks. Interesting times indeed.

Parents are terrorists, the government can cure the common cold, and bankers in 2021 just recently discovered that they can simply print money.

 

[acptulsa]

I've been needing one of these for my coin collection. Will it be a whole ounce of Platinum ( 992.00 ) or a fractional ?

It's overpriced.

Wait a few months until the value of the FRN plummets a bit more.

 

[dannno]

 

[oyarde]

that headline certainly has the right face on it.

 

[BortSimpson]

I think the nonsense is simple.

They are presenting the Weimar/Zimbambwe option like it's some sort of "far out" technicality that some nerd came up with to save the country from certain fiscal doom at the last minute.

"I've got it sir! The Constitution gives us the power to coin money. What if we changed the number of zeroes on the coin, in order to-temporarily of course-have the necessary deposits for payment."

"Will it work?

"It has to."

"Damn it boy, you may have saved this country! We will have to be careful though. In the wrong hands, such power could be dangerous."

lol.

Yeah, folks. Interesting times indeed.

Parents are terrorists, the government can cure the common cold, and bankers in 2021 just recently discovered that they can simply print money.

Agreed that it's the Weimar option. The fact that it's even being discussed shows how nutty things are right now. It's also amazing that most of the country is asleep as to what's going on (not just on the coin, of course).