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View Full Version : The $5 trillion solution-- believe it or not...



Soflasnapper
07-30-2011, 03:32 PM
Ok, here it is.

The government's power to mint coinage is not covered under the debt ceiling.

The government is allowed to set whatever nominal price on these coins, despite whatever the underlying asset value.

Here's an explanation of how they could mint one coin, call it worth $5 trillion dollars (better be platinum or something, ya think?), put that in their checking account, and spend away.

Hard to believe, and certainly containing ample moral hazard (not to mention possibly sparking hyperinflation), but APPARENTLY, wholly legal as well.

This shows the plenary powers of a sovereign when it comes to the monetary power. Instead of having the government do this, we have assigned these powers to the privately owned regional banks known as the Federal Reserve. A power that they haven't proven to use wisely, or for the benefit of the people, and a power that may perhaps best be taken back.

One coin to rule them all! (http://www.slate.com/id/2300428/)

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> One option is coin seigniorage—aka, the "really-huge-coin workaround." The United States has a statutory limit on the amount of paper money in circulation, but no such limit on coins. The Treasury secretary has the authority to mint certain coins of any denomination, with no need for the value of the metal to equal the value of the coin. (It gets a bit technical.) But the idea is that Secretary Timothy Geithner could order the Mint to make a, say, $5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt.

The idea originated in the lefty blogosphere; FireDogLake writer "beowulf" wrote about this "escape hatch" or "subway tunnel" all the way back in January. Most commentators dismissed it as fanciful. But it does seem to be entirely legal, and is getting renewed attention and a wee bit of credibility as the negotiations drag on. Yale constitutional law professor Jack Balkin floated it as an option in a CNN op-ed this week.

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llotter
07-30-2011, 07:38 PM
It is a self-contradiction for someone from the left to be concerned about moral hazards.

cushioncrawler
07-30-2011, 08:14 PM
A nice solution, nice economix, i like it.
It iz very Keynsian. I think i hav sayd before that the usofa shood employ Keynsian economix every year, not just when/if in recession.
And if u take it all one step further u get Maconomix -- zero tax, all gov expenditure covered by a small pile of coins.
Just for starters Maconomix saves the cost of collecting etc tax etc. Collecting tax etc probly costs more than 1% of GDC.
In fakt, in Maconomix, striktly speaking, the coins dont even exist -- saves the cost of making a coin.
mac.

Soflasnapper
07-31-2011, 05:41 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: llotter</div><div class="ubbcode-body">It is a self-contradiction for someone from the left to be concerned about moral hazards. </div></div>

A. No it isn't, even if the term is naively construed.

B. It is a term of art, which means a little something different from what I take you to think it means.

Do you know the reference? Hint: it isn't to morality.