A real U.S. President would mint those trillion dollar coins

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29 Jul 2011, 4:09 pm

That's a great solution being offered to the Debt Ceiling Artificial Crisis and even the Economist is saying good things about it. Mint a couple of those coins, deposit them in an account at the Fed and draw the money from the account to pay those bills.

Master_Pedant
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29 Jul 2011, 4:11 pm

Nevermind, found it:

http://www.economist.com/blogs/freeexch ... /sf/freeex

The Economist wrote:

AS THE date on which Treasury runs flat out of money grows nearer, various harebrained ideas to workaround the statutory limit on borrowing and keep paying the bills have been getting more attention. This one, one of my favourites, seems like it just might work:

Quote:

Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time. Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

To prevent the money from contributing to too rapid inflation, the Fed could simply conduct reverse QE—sell some of its enormous stock of government debt to absord some of the new money in the system. Though it's unlikely that inflation would be too serious an issue; indeed, it could be helpful.

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Last edited by Master_Pedant on 29 Jul 2011, 4:17 pm, edited 1 time in total.

xenon13
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29 Jul 2011, 4:15 pm

The Chartalists (aka MMT, Modern Monetary Theory) are very pleased that one of their ideas is getting play particularly as they say that they are the ones who understand the monetary system whilst the elites are hiding this truth from the rest of us. They of course are right, the Chartalists are.

One more thing. The Fed created 16 trillion dollars worth of money in recent years and gave it to the banks for practically zero interest, this according to the recent audit. All that money created out of thin air and where's the hyperinflation? So if there's no danger for doing this with 16 trillion then surely there can't be any for 2 trillion.

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29 Jul 2011, 4:54 pm

Lovely how CNN uses a constitutional law professor as an authority on whether minting trillion dollar coins is feasible (he doesn't offer or at least CNN doesn't air, any constitutional arguments).

[youtube]http://www.youtube.com/watch?v=M69niBpX9kw[/youtube]

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xenon13
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29 Jul 2011, 5:33 pm

"I talked to my lawyers...they were not persuaded"? When your lawyers showed scepticism over your violation of the War Powers Act you just told them to get lost!

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29 Jul 2011, 10:25 pm

I've got a better idea: take measures to start paying the debt down.

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xenon13
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30 Jul 2011, 11:35 am

These two trillion dollars would go a long way to reducing the debt.

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30 Jul 2011, 2:26 pm

I see a few problems:

1) It uses a loophole to avoid Congress' authority. The legislation was not intended to provide the Secretary of the Treasury to mint money at will, but rather to create bullion coinage. Congress may have given the Executive Branch carte blache but it would be unwise, I suggest, to attempt to use it that way.

2) It requires the Federal Reserve to contract the money supply in order to avoid inflationary pressure. But this will result in an increase in interest rates and pretty much kill consumer confidence when consumer confidence is precisely what is required to maintain the recovery.

3) It establishes a precedent would allow the executive branch can rule without Congress. Congress cannot repeal the legislation without Presidential approval, so the result would be that the Executive can completely finance government of any size that it wants through coinage, and need never come to Congress for anything ever again. Granted, the monetary policy chickens will come home to roost, eventually, but it's not like that's not happening, anyway.

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30 Jul 2011, 6:12 pm

Presidents have no power to mint money on their own initiative. That must be done by Congress and with a bill that originates in the House of Representatives.

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31 Jul 2011, 1:32 am

John_Browning wrote:

I've got a better idea: take measures to start paying the debt down.

Because taking trillons out the economy during a period of weak economic growth is job-killing?

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31 Jul 2011, 1:51 am

Master_Pedant wrote:

John_Browning wrote:

I've got a better idea: take measures to start paying the debt down.

Because taking trillons out the economy during a period of weak economic growth is job-killing?

Bah, details. Next thing you'll tell us, you'll say that constant and predictable inflation doesn't matter as it doesn't impact most exchanges which are based upon real money rather than nominal money, and to that I'll just say "Silly M_P, we all know the gold standard is holy, sacred, and instituted by God Himself for all monetary uses".

blauSamstag
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31 Jul 2011, 1:57 am

John_Browning wrote:

I've got a better idea: take measures to start paying the debt down.

I agree.

End two wars and start taxing the rich.

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31 Jul 2011, 2:33 am

Awesomelyglorious wrote:

Master_Pedant wrote:

John_Browning wrote:

I've got a better idea: take measures to start paying the debt down.

Because taking trillons out the economy during a period of weak economic growth is job-killing?

How could I be so blind! The US doesn't have sovereign currency, there's still a gold standard maintained by the Illumanti! :wink:

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visagrunt
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31 Jul 2011, 12:30 pm

ruveyn wrote:

Presidents have no power to mint money on their own initiative. That must be done by Congress and with a bill that originates in the House of Representatives.

ruveyn

Have you missed the backgrounder? The legislation already exists. Congress has already authorized the minting of platinum coinage in any denomination.

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ruveyn
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31 Jul 2011, 4:00 pm

visagrunt wrote:

ruveyn wrote:

Presidents have no power to mint money on their own initiative. That must be done by Congress and with a bill that originates in the House of Representatives.

ruveyn

Have you missed the backgrounder? The legislation already exists. Congress has already authorized the minting of platinum coinage in any denomination.

Yes. But the President cannot on his own initiative produce the coin and put it in circulation. That still requires an act of Congress starting with a bill in the House. The constitution does not grant the President any power to appropriate funds or mint coins.

Congress cannot give the president (legally anyway, any power not granted to him by the Constitution).

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31 Jul 2011, 8:33 pm

Deeper explanation, by a Modern Monetary Theorist:

http://neweconomicperspectives.blogspot ... -over.html

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