Slog
News & ArtsMonday, January 7, 2013
Politics What Do You Think of the Trillion-Dollar Coin?
Posted by Paul Constant on Mon, Jan 7, 2013 at 11:35 AM
Last Thursday, a new whitehouse.gov petition urged President Obama to mint a trillion-dollar coin to avoid the next debt crisis:
With the creation and Treasury deposit of a new platinum coin with a value of $1 trillion US Dollars, we would avert the absurd-yet-imminent debt ceiling faceoff in Congress in two quick and simple steps! While this may seem like an unnecessarily extreme measure, it is no more absurd than playing political football with the US — and global — economy at stake.
This is an idea that started circulating on blogs and there's no evidence that President Obama is considering it at all. But lots of people are taking the idea seriously, and a Republican congressman from Oregon says he's going to introduce a bill to make the trillion-dollar coin illegal. But the more Republicans push against the trillion-dollar coin, the more Democrats will want to embrace it; the coin is going to be a major conversation piece for the next few weeks. Where does Slog stand on it?
3
There's no option for "I don't understand all the implications of minting a trillion dollar coin, but we should have Nicholas Cage on our currency anyways"
5
It would literally be no different than just raising the debt ceiling, from a money supply standpoint.
"Destroying our standing with the world" is a ridiculously extreme option for this poll that doesn't make any sense, since it would be saving that exact standing by NOT defaulting on all of our debts.
"Destroying our standing with the world" is a ridiculously extreme option for this poll that doesn't make any sense, since it would be saving that exact standing by NOT defaulting on all of our debts.
6
@4 I think they nixxed that option, as then people would be hammering at their trillion dollar coins, whacking them over and over on the face.
8
I think it's a terrible idea, but still preferable to letting the Republicans cause yet another train wreck. Obama doesn't have the balls to do it, though, so it's a moot point.
10
Considering the absurdities inherent in how money comes into being, circulated, and destroyed, --and the farcical nature of "debt" in the modern day anyway--, I think this is a perfectly reasonable (aka "equally absurd") proposal.
Although, I would bet (a trillion dollar coin...) that there will be unimagined/unanticipated bizarre consequences if they do mint it.
Although, I would bet (a trillion dollar coin...) that there will be unimagined/unanticipated bizarre consequences if they do mint it.
11
@5 Meh, hand-wringers are saying it will offend other countries that own portions of our debt. They'll be scared that we will just hand them a trillion dollar coin and say "There! Paid off!"
Of course, this "problem" is retarded, but people that know nothing about economics feel justified making these accusations.
Of course, this "problem" is retarded, but people that know nothing about economics feel justified making these accusations.
14
On that note should we at all be alarmed that our federal politics has devolved into Simpson's episodes...
16
Goldy Mon, Jan 7, 2013 at 9:46 AM: "Is there any Obama decision short of resignation that Republicans would support?"
Paul Constant on Mon, Jan 7, 2013 at 11:35 AM:"The more Republicans push against the trillion-dollar coin, the more Democrats will want to embrace it".
False equivalency alert. From Welfare Reform to the Afghanistan surge to health insurance exchanges, Democrats have proven many times over that they don't have to knee-jerk oppose everything Republicans say. The manichean ideologues are the Tea Party and Fox News, not the mostly centrist Democratic Party.
But I like the trillion dollar coin. I'm sick of hearing about this absurd issue. You can't just not pay your debts. If Republicans want to cut the budget, they should cut the budget. Not turn us in to a deadbeat country.
Paul Constant on Mon, Jan 7, 2013 at 11:35 AM:"The more Republicans push against the trillion-dollar coin, the more Democrats will want to embrace it".
False equivalency alert. From Welfare Reform to the Afghanistan surge to health insurance exchanges, Democrats have proven many times over that they don't have to knee-jerk oppose everything Republicans say. The manichean ideologues are the Tea Party and Fox News, not the mostly centrist Democratic Party.
But I like the trillion dollar coin. I'm sick of hearing about this absurd issue. You can't just not pay your debts. If Republicans want to cut the budget, they should cut the budget. Not turn us in to a deadbeat country.
17
@15, Disagree. Nixon. He got us into this mess in the first place by taking us off the gold-standard to fund the Vietnam war.
18
I think it is actually a terrible idea to produce such a concrete demonstration of the fact that the only reason our money has any value at all is because enough of us agree that it does.
19
Furthermore, we should have a nationwide election to name who goes on the thing. My vote is for Bill Murray.
21
@15, 17 - if they put Reagan on it, the Republicans will have to vote for it. They can't dis their hero by voting no.
23
Wait, I have an idea.
One side has Reagan.
The other has Fidel Castro imposed over Cuba with "60th US State" emblazoned over it.
One side has Reagan.
The other has Fidel Castro imposed over Cuba with "60th US State" emblazoned over it.
25
The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin must be “determined by legislation,” creating the potential for another congressional impasse.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin must be “determined by legislation,” creating the potential for another congressional impasse.
26
@18 That's one of the definitions of money, a communally-agreed-upon store of value. Every dollar bill is a similar concrete demonstration.
27
@21 - Put Jesus on it, keep it in a museum in, say, Atchison, Kansas, and charge admission to see the holy Jesus coin. Proceeds from the Jesus coin go to futher bolster Social Security. Any other problems that need fixing? I'm sure the Jesus coin can do it.
28
@26--Sure, but I promise you that the overwhelming majority of people don't actually realize that, and I'd argue that that's one of the reasons it works. Doing something as unusual as this would pull back the curtain more than most people are probably ready for.
I realize that sounds terribly elitist and condescending, but I really mean it.
I realize that sounds terribly elitist and condescending, but I really mean it.
29
@21, @25 - The Sec of Treasury has sole discretion on design of a platinum bullion coin; it doesn't have to have design review, it doesn't have to be voted on by Congress, or anyone else. That's the beauty of the idea. If Obama decides to do it (and there has been ZERO from the WH saying its a consideration), then there is nothing that the GOP can do about it, Reagan-face or not. Except bitch and moan.
30
Personally, I think showing that the Treasury could create money simply at the will of the Administration would be a horrible precedent, and would blow up the dollar, if not the world's financial systems.
While also dicey, I think the Administration could make a reasonable-sounding legal argument that the Debt Ceiling is a void construct, since it serves no purpose. Congress already votes on all appropriations, as well as tariffs, taxes and most other revenues. Since Congress has its own Budget Office, we should expect that a) they know what they're doing, and b) if they're approving deficit expenditures that they're at least implicitly granting permission to borrow the money to effectuate their legislation.
The markets would accept this argument. The current Debt Ceiling is illogical. How can the Congress order spending money that the Treasury doesn't have and then refuse to allow them to borrow the money to pay the bills? The Administration just has to have the Solicitor General write up the case for it, present it to Congress, declaring their ability to default on our debts null and void, and let Congress petition the Supreme Court to stop it.
Congress will lose that one, sanity will win, and the markets will be much relieved, if not euphoric. It will be clear that Congress still has the power of the purse, because money could only be borrowed pursuant to Congressionally-approved spending, and the national economy will be safe from the suicidal bomb-throwers of the Tea Party.
While also dicey, I think the Administration could make a reasonable-sounding legal argument that the Debt Ceiling is a void construct, since it serves no purpose. Congress already votes on all appropriations, as well as tariffs, taxes and most other revenues. Since Congress has its own Budget Office, we should expect that a) they know what they're doing, and b) if they're approving deficit expenditures that they're at least implicitly granting permission to borrow the money to effectuate their legislation.
The markets would accept this argument. The current Debt Ceiling is illogical. How can the Congress order spending money that the Treasury doesn't have and then refuse to allow them to borrow the money to pay the bills? The Administration just has to have the Solicitor General write up the case for it, present it to Congress, declaring their ability to default on our debts null and void, and let Congress petition the Supreme Court to stop it.
Congress will lose that one, sanity will win, and the markets will be much relieved, if not euphoric. It will be clear that Congress still has the power of the purse, because money could only be borrowed pursuant to Congressionally-approved spending, and the national economy will be safe from the suicidal bomb-throwers of the Tea Party.
31
@30
No, it's not inflationary. The money isn't going into circulation. You're just wrote a big pile of words about a thing you don't comprehend.
The simple version is this: Congress has already decided to spend this money. That means the debt must be paid. The legal choice to go into debt was made when it was spent. They cannot go back on that choice when the time rolls around to pay the bill.
What the Republicans are doing is playing legalistic games Obama has every right to play legalistic games to put this nonsense to rest. Obama actually has a duty do take care of this; the Constitution days the President must pay our debts.
No, it's not inflationary. The money isn't going into circulation. You're just wrote a big pile of words about a thing you don't comprehend.
The simple version is this: Congress has already decided to spend this money. That means the debt must be paid. The legal choice to go into debt was made when it was spent. They cannot go back on that choice when the time rolls around to pay the bill.
What the Republicans are doing is playing legalistic games Obama has every right to play legalistic games to put this nonsense to rest. Obama actually has a duty do take care of this; the Constitution days the President must pay our debts.
32
Put John Boehner's spray tan face on that thing, call it the Boehner'.
Make that shthead carry that "honor" forever.
Make that shthead carry that "honor" forever.
33
I like the trillion-dollar coin, except that befitting its denomination it should be really, really large.
Make it out of a trillion dollars worth of something (like that cheap-ass shit pennies are made of these days), so it's big enough to roll over and crush an entire city or a small state ... and then we can finally have a serious dialogue about the "crushing burden of the national debt".
Make it out of a trillion dollars worth of something (like that cheap-ass shit pennies are made of these days), so it's big enough to roll over and crush an entire city or a small state ... and then we can finally have a serious dialogue about the "crushing burden of the national debt".
34
@31 I don't think we're essentially disagreeing with each other, but I do think maybe I didn't make my point adequately.
Either approach, minting the coin, or shooting down the debt ceiling directly, accomplishes the goal of quashing the insurrection/extortion in Congress. I just think that minting the coin is too independent an act of the Administration. It implies they could make as many as they want and avoid Congressional budget controls entirely. While you're correct, that it's just a trick and a paper entry, I think the markets will view it as somehow more dangerous.
On the other hand, if through a spitting and legal battle, Obama could strip the Congress of this separate budget ceiling approval nonsense, and claim the right to raise all needed funds to fulfill Congress' budgets as a matter of course through borrowings, I think the markets would accept that. After all, if Congress doesn't budget money for outlays, the Administration couldn't borrow it to pay for them. The two are directly linked.
Minting the coins, though, is one order of separation too many, though, in my humble opinion.
Either approach, minting the coin, or shooting down the debt ceiling directly, accomplishes the goal of quashing the insurrection/extortion in Congress. I just think that minting the coin is too independent an act of the Administration. It implies they could make as many as they want and avoid Congressional budget controls entirely. While you're correct, that it's just a trick and a paper entry, I think the markets will view it as somehow more dangerous.
On the other hand, if through a spitting and legal battle, Obama could strip the Congress of this separate budget ceiling approval nonsense, and claim the right to raise all needed funds to fulfill Congress' budgets as a matter of course through borrowings, I think the markets would accept that. After all, if Congress doesn't budget money for outlays, the Administration couldn't borrow it to pay for them. The two are directly linked.
Minting the coins, though, is one order of separation too many, though, in my humble opinion.
35
I hate to say it but 5280 is right. Obama hasn't ever had the balls to do anything this controversial before and he hasn't grown them that I've seen. I think using the coming debate over the debt ceiling would be a great moment to keep the momentum in the shaming the republicans over their pro rape stances. Making people feel responsible for their attitudes and philosophies is the fastest route to change for the better.
36
Why not make it a 10 trillion dollar coin and end all the republican bickering about the debt? If the debt suddenly went from "nearly Greece" to "the most insolvent government in the history of solvency" it would at least shut them up for 8 hours. And to all the haters, yes the constitution gives congress the power to both create and destroy money and they have the power to declare what is and isn't considered "legal" tender. We can create whatever reality we want and we don't have to live in a society full of debt slaves. Debt is immoral, it's slavery, and anyone who supports any part of the debt chain that's destroying humanity is suspect of not being human at the very least. I get that debt can happen responsibly, but what we have today is an entire world based on debt, it's based in slavery. We'd do the world a great justice to end debt, but we're not exactly in the business of justice right? We're in the business of suffering. That's why America would never forgive her debts, would never create her own way out of this money problem we created for ourselves. We're slaves to the banks. In every sense of the word. Humans are all slaves to the dollar, and banks love it. The people who think congress shouldn't have the power to print money are no better than the slaveholders of the south who continued to own slaves after the war. It's disgusting to live in a place like this, we have so much potential and we waste it being slaves. For fucks sake.
37
The trillion dollar coin would not cause inflation in any way, because how much physical money the government makes does not actually cause inflation, nor would this trillion dollars ever actually be circulated. It would not actually increase the money supply by one trillion dollars.
It just means that instead of raising the debt ceiling and printing out a trillion dollars worth of government bonds, the coin is instead essentially converted to a trillion dollars worth of government bonds,
It is just an accounting trick to lock congress out of the debt ceiling debate. If anything, people should be complaining about a possible abuse of executive power (not that I would argue that).
38
@20 Not entirely. Here's a little of the explanation, from Wikipedia:
After the Second World War, a system similar to a Gold Standard and sometimes described as a "gold exchange standard" was established by the Bretton Woods Agreements. Under this system, many countries fixed their exchange rates relative to the U.S. dollar. The U.S. promised to fix the price of gold at approximately $35 per ounce. Implicitly, then, all currencies pegged to the dollar also had a fixed value in terms of gold.[1]
Starting under the administration of the French President Charles de Gaulle and continuing until 1970, France reduced its dollar reserves, trading them for gold from the U.S. government, thereby reducing U.S. economic influence abroad. This, along with the fiscal strain of federal expenditures for the Vietnam War and persistent balance of payments deficits, led President Richard Nixon to end the direct convertibility of the dollar to gold on August 15, 1971, resulting in the system's breakdown (the "Nixon Shock").
39
@18: Sorry dude, but that's all fiat currency ever is. The only reason to accept a medium of exchange that you can't eat, drink, or smoke, is that you believe that another will do the same.
40
@29
Well, yes, in the narrowest sense. Section (k) of 31 USC § 5112 says that:
The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
Of course, there is one small problem: Platinum is currently selling for about $1,590 a troy ounce. So a $1 trillion bullion coin would weigh 26,221 “troy tons,” which might present a bit of a transportation problem getting from the mint to the Federal Reserve. There is also the problem that nowhere near that much platinum has ever been mined since the metal first came to the attention of chemists in the 1740s. Last year a grand total of 211 tons was mined worldwide, almost all of it from South Africa, Russia, and Canada.
Well, yes, in the narrowest sense. Section (k) of 31 USC § 5112 says that:
The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
Of course, there is one small problem: Platinum is currently selling for about $1,590 a troy ounce. So a $1 trillion bullion coin would weigh 26,221 “troy tons,” which might present a bit of a transportation problem getting from the mint to the Federal Reserve. There is also the problem that nowhere near that much platinum has ever been mined since the metal first came to the attention of chemists in the 1740s. Last year a grand total of 211 tons was mined worldwide, almost all of it from South Africa, Russia, and Canada.
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