Trillion-dollar platinum coin could be minted at the last minute(axios.com)
axios.com
Trillion-dollar platinum coin could be minted at the last minute
https://www.axios.com/trillion-dollar-platinum-coin-mint-janet-yellen-223e7722-d7ba-47c9-b5f6-49a841d181de.html
102 comments
The entire story here is wildly bizarre. The fact that the honest-to-god solution to anything in today's world is to have a mint at the ready, just in case you need to swiftly stamp a coin of arbitrary value and then transport it with haste by helicopter to a particular location in time to keep the national economy on track is just completely bonkers.
It's not even half as bizarre as someone buying a GIF of some cartoon cats as a sort of cryptocurrency token.
> It's not even half as bizarre as someone buying a GIF of some cartoon cats as a sort of cryptocurrency token.
I think it is considerably more bizarre. People have always done strange things with their money; NFTs have made it maybe more visible, and have certainly dressed it up in new tech-y buzzwords, but they've hardly introduced the idea of spending money in strange and stupid ways.
But I am considerably more upset about whole countries' economies being founded on strange and stupid decisions than I am on individuals making such decisions. (Which is not to say that I could, or know how to, do any better; we're just comparing bizarre-ness, not solutions.)
I think it is considerably more bizarre. People have always done strange things with their money; NFTs have made it maybe more visible, and have certainly dressed it up in new tech-y buzzwords, but they've hardly introduced the idea of spending money in strange and stupid ways.
But I am considerably more upset about whole countries' economies being founded on strange and stupid decisions than I am on individuals making such decisions. (Which is not to say that I could, or know how to, do any better; we're just comparing bizarre-ness, not solutions.)
> I think it is considerably more bizarre
It's only bizarre when you believe that money is a concrete, tangible thing with unchanging intrinsic value.
When you believe that then of course it seems wrong and unnatural to create new money out of thin air.
It's only bizarre when you believe that money is a concrete, tangible thing with unchanging intrinsic value.
When you believe that then of course it seems wrong and unnatural to create new money out of thin air.
We can see it as a form of taxation.
Isn't the following approximately right: suppose that some country has a net worth of 10B (calculated somehow). The government decides that it needs some cash, so it prints another 10B of that currency and injects it into the system. Well, all it has done is devalue the currency by half, thereby looting half the economy of half its value, transferring that to the government. It's just a ploy to steal 5B by declaring it to be government property, which is possible since every instance of money is a tiny abstract contract which is controlled by the government's treasury/mint.
It's like issuing new stock to raise cash, without any increase in the total market valuation, which nothing but a cash grab from the current share holders made possible by controlling the issuance of stock.
Isn't the following approximately right: suppose that some country has a net worth of 10B (calculated somehow). The government decides that it needs some cash, so it prints another 10B of that currency and injects it into the system. Well, all it has done is devalue the currency by half, thereby looting half the economy of half its value, transferring that to the government. It's just a ploy to steal 5B by declaring it to be government property, which is possible since every instance of money is a tiny abstract contract which is controlled by the government's treasury/mint.
It's like issuing new stock to raise cash, without any increase in the total market valuation, which nothing but a cash grab from the current share holders made possible by controlling the issuance of stock.
The coin is used to offset bonds. It's not increasing the money supply.
The money supply is increased by government spending.
The US economy grows by approximately $700B per year. (23T * 3%). Therefore as a first approximation the money supply needs to grow at approximately $700B per year. If the government deficit is less than that, it acts as a brake on the economy.
When the government spends money, it buys stuff with that money. Whether that is inflationary depends on how rivalrous the spending is -- IOW if it's competing with private money for that stuff or it's buying stuff that nobody else would ever want to buy.
The money supply is increased by government spending.
The US economy grows by approximately $700B per year. (23T * 3%). Therefore as a first approximation the money supply needs to grow at approximately $700B per year. If the government deficit is less than that, it acts as a brake on the economy.
When the government spends money, it buys stuff with that money. Whether that is inflationary depends on how rivalrous the spending is -- IOW if it's competing with private money for that stuff or it's buying stuff that nobody else would ever want to buy.
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You can't buy a fucking gif! This fiction spread way too easily. All you're buying a token that mentions the gif. This gif itself lives on as if nothing had happened, just like if you bought a star.
But in that particular token-buying ecosystem, nobody else can buy that gif. Unless they change a pixel value, or some bit of metadata.
Suppose you actually approached the author of the gif, and bought the exclusive copyright to it, conventionally. The gif itself is still not affected any more by that transaction than of the non-fungible token purchase. Exact copies of it exist all over the place, shared by people who don't care about your copyright.
Suppose you actually approached the author of the gif, and bought the exclusive copyright to it, conventionally. The gif itself is still not affected any more by that transaction than of the non-fungible token purchase. Exact copies of it exist all over the place, shared by people who don't care about your copyright.
Also in that particular token-buying ecosystem, you can sell yourself the token representation of that gif multiple times, in order to fool people into thinking that there is a genuine market for the token corresponding to that gif.
Unless you buy that exact gif on a different blockchain.
We're talking about the government, not some random idiot.
It's as bizarre as the original Mona Lisa in the Louvre being about a billion dollars more expensive than an identical copy sold on the banks of the Seine.
Barring Star Trek level technology, it's not possible to make an identical copy of the Mona Lisa. That's part of why it's valuable.
We can get very close, but even if we had technology to make an indistinguishable copy the original wouldn't fall in value and none of the copies would be near it.
The Mona Lisa isn't valuable because it's a nice painting: it's valuable because of its history and meaning to the arts.
The Mona Lisa isn't valuable because it's a nice painting: it's valuable because of its history and meaning to the arts.
What happens if someone steals it in transit?
Do they invalidate it? Because 5 minutes before it was stolen, it was considered a valid currency.
Do they invalidate it? Because 5 minutes before it was stolen, it was considered a valid currency.
Legal tender is generally not invalidated unless destroyed. Stealing property does not grant you legal possession over it, so you'd be hard pressed to find anyone willing to accept that coin in exchange for anything since they could easily determine that you have no right to exchange it in the first place.
The most you could do is destroy it, the end result would be as if nothing happened and that's about it.
The most you could do is destroy it, the end result would be as if nothing happened and that's about it.
There's a market for stolen art; surely you could find a buyer for the coin. You'd get nothing near the face value though.
Pretty sure at that point a wormhole opens up at the center of the U.S. Constitution being held in the National Archive
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That is because once you understand the economy, you understand that is all built upon Smoke, Mirrors, Lies and Deceit on top of a foundation of sand....
Yeah, but you're not allowed to make it so obvious.
Well said
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Put so honestly in that way it reads like something out of Hitchhikers Guide to the Galaxy. The utter absurdity of it all.
Makes me think of the Simpsons episode where the US government prints a trillion dollar bill https://youtu.be/_KgHy3Pi5Yw
Apropiate. Also, Burns: "Priceless coins not used in vending machine. Yes, not bad." https://frinkiac.com/caption/S11E12/1184960
Well, to be fair, it wouldn't be bonkers, if it was a headline in The Onion. The problem is that it's in Axios.
I don't see why it's bonkers. The stamp represents a contract issued by an authority that gets its legitimacy from a vast population. All the issuance and transfer of this coin does is grant permission to distribute resources to various groups and as a society we've agreed that said permission is needed to lend legitimacy to our currency.
In principle it doesn't need to be transported by helicopter or transported at all, that's a formality that predates the Internet. It's not a particularly big detail that is worth changing, much like it's not a particularly big detail that a President must be sworn in by having a judge physically stand next to him and have him exhale CO2 in such a manner so as to produce vibrations within a narrow audible range.
Both things are just formalities to express intention.
In principle it doesn't need to be transported by helicopter or transported at all, that's a formality that predates the Internet. It's not a particularly big detail that is worth changing, much like it's not a particularly big detail that a President must be sworn in by having a judge physically stand next to him and have him exhale CO2 in such a manner so as to produce vibrations within a narrow audible range.
Both things are just formalities to express intention.
I think it's mainly how physical the process is. We can't just decide this stuff informationally, or even on a paper document, or ahead of time. We have to hike a chunk of metal somewhere else within a specific time window like it's The Amazing Race or something.
Who knew such theatric fuckery lay within the US treasury system? Based on the line below, I guess we should view the helicopter as the modern day folkloric finger of Hans[1] awaiting dispatch to plug the dike, stem the flood and save the country:
"In case of emergency, a trillion-dollar coin could be deployed to bridge any gap between the money running out and the debt ceiling being raised".
[1]https://en.wikipedia.org/wiki/Hans_Brinker,_or_The_Silver_Sk...
"In case of emergency, a trillion-dollar coin could be deployed to bridge any gap between the money running out and the debt ceiling being raised".
[1]https://en.wikipedia.org/wiki/Hans_Brinker,_or_The_Silver_Sk...
Congress mandate the spending, that’s their job. The executive is then legally required to implement the spending Congress mandates in its budgets. That’s it’s job. the executive is not allowed to not spend what Congress tells it to spend.
But Congress at the same time wants to have a silly law that tries to prohibit the executive from doing what it’s required to do in our system of government.
So in that case minting a coin actually seems to be what is required of the executive. It’s the only legal route out. This is all a farce.
But Congress at the same time wants to have a silly law that tries to prohibit the executive from doing what it’s required to do in our system of government.
So in that case minting a coin actually seems to be what is required of the executive. It’s the only legal route out. This is all a farce.
You can certainly construct a reasonable argument that (a) the executive is required to do everything possible/legal before failing to fulfill the budget, and (b) Congress has been aware of the coin loophole for years and has declined to close it, so (c) the executive is basically-required to try the coin before defaulting.
It's silly, but mostly as a representation of how the underlying situation is ridiculous.
It's silly, but mostly as a representation of how the underlying situation is ridiculous.
That's certainly how I interpret things. Either that or the debt ceiling is simply unconstitutional under the 14th Amendment section 4. If Congress makes contradictory laws that the President cannot obey without violating the Constitution, the Constitution takes precedence.
> without any impact on inflation
This seems like quite the assertion. Anyone want to explain how minting $1 trillion will definitely not have any impact on inflation?
This seems like quite the assertion. Anyone want to explain how minting $1 trillion will definitely not have any impact on inflation?
Treasury mints the coin.
Treasury trades the coin to the Fed for existing bonds the Fed already owns.
Treasury extinguishes the bonds.
Fed's balance sheet is unchanged, minus a trillion of bonds, plus a trillion of coin.
Treasury's balance sheet is unchanged.
Zero new money in circulation.
Treasury trades the coin to the Fed for existing bonds the Fed already owns.
Treasury extinguishes the bonds.
Fed's balance sheet is unchanged, minus a trillion of bonds, plus a trillion of coin.
Treasury's balance sheet is unchanged.
Zero new money in circulation.
It doesn't have any impact on inflation beyond what's already happening, I think is a better way of phrasing things.
The coin doesn't go into circulation, it just lets the member banks of the Federal Reserve have an asset (dollars) to borrow against and fund their current operations. This does have an impact on inflation, but it's not the same as dumping USD one trillion in bills into general circulation.
The coin doesn't go into circulation, it just lets the member banks of the Federal Reserve have an asset (dollars) to borrow against and fund their current operations. This does have an impact on inflation, but it's not the same as dumping USD one trillion in bills into general circulation.
I'd assume the thought is that the coin is not fungible in any meaningful way.
It's not going to enter the monetary supply, it's more of a loophole to avoid debt ceilings.
Now whether avoiding debt ceilings has an impact on inflation is up for debate (my vote is that it will, but I also don't like the debt ceiling in the first place)
It's not going to enter the monetary supply, it's more of a loophole to avoid debt ceilings.
Now whether avoiding debt ceilings has an impact on inflation is up for debate (my vote is that it will, but I also don't like the debt ceiling in the first place)
But it erodes faith in the currency and that is, ultimately, what gives it value.
sure, but as an outsider looking in - the thing that erodes my faith in the currency is not the minting of a trillion dollar coin, it's the complete disfunction of governance that leads to a situation where this is even considered.
And the harm is already done on that front.
This is relatively low impact compared to other shenanigans.
And the harm is already done on that front.
This is relatively low impact compared to other shenanigans.
A debt default or a sudden halt of US government spending, both resulting in economic collapse, would both be much more effective at eroding faith in the value of the US dollar.
Because none of it would enter the economy.
To summarize -- Congress has authorized a certain amount of spending, but they have also passed a law limiting the amount of money that the Treasury department can borrow. So ... how is the executive supposed to pay the bills?
tl;dr: Creating the trillion dollar coin does not commit to any spending not already authorized by Congress.
To summarize -- Congress has authorized a certain amount of spending, but they have also passed a law limiting the amount of money that the Treasury department can borrow. So ... how is the executive supposed to pay the bills?
tl;dr: Creating the trillion dollar coin does not commit to any spending not already authorized by Congress.
The debt limit has always been backdoor spending cap, Congress curbs their spending in part because they know they are going to have to fight over the debt limit
If there is in engineered way to create no spending limits for congress that congress will not spend 100% of that is moronically naive
If they make a 10 Trillion coin, congress will pass a spending measure to spend all 10 Trillion
to believe other wise is to be ignorant of history to a level that I don't believe is fathomable
This gimmick WILL CAUSE INFLATION. you can bank on that.
If there is in engineered way to create no spending limits for congress that congress will not spend 100% of that is moronically naive
If they make a 10 Trillion coin, congress will pass a spending measure to spend all 10 Trillion
to believe other wise is to be ignorant of history to a level that I don't believe is fathomable
This gimmick WILL CAUSE INFLATION. you can bank on that.
You're talking second order effects, and I do agree with you on that. But Congress has authorized the spending. And it is against the law (as passed by congress) for the executive to _not spend_ money that has been appropriated. And it is illegal for the executive to borrow money to achieve those spending goals.
I think someone called it a trilemma -- Congress has passed a rock-paper-scissors law, and left no legal action that can be taken by the executive. Except that there's a loophole that they can mint the coin. Congress can close that loophole if they want! But right now it exists.
If Congress wants to control spending they should control spending, not force the executive branch to choose which law to break because they are in contradiction.
I think someone called it a trilemma -- Congress has passed a rock-paper-scissors law, and left no legal action that can be taken by the executive. Except that there's a loophole that they can mint the coin. Congress can close that loophole if they want! But right now it exists.
If Congress wants to control spending they should control spending, not force the executive branch to choose which law to break because they are in contradiction.
> The debt limit has always been backdoor spending cap, Congress curbs their spending in part because they know they are going to have to fight over the debt limit
This seems to be the premise of a lot of later conclusions you're making, but it's basically wrong: Congress can print money at will. The debt ceiling is not the reason we don't do that. Reputation and inflation mostly are.
This seems to be the premise of a lot of later conclusions you're making, but it's basically wrong: Congress can print money at will. The debt ceiling is not the reason we don't do that. Reputation and inflation mostly are.
>> Congress can print money at will.
No Congress can not, the Federal Reserve can, which is not under the authority of congress at all really.
Congress can spend money, and Congress can Mint Coins (i.e this story) but it can not create federal reserve notes
If it spends more money than it take in from taxes it must issue Treasury bills that is has to sell to someone, Today almost no one wants to buy US Debt because congress is irresponsible like a child with a AMEX Black card.
So the only entity willing to buy US debt is the Federal Reserve who does so by money printing aka inflation of US Currency aka a tax on responsible people in society
No Congress can not, the Federal Reserve can, which is not under the authority of congress at all really.
Congress can spend money, and Congress can Mint Coins (i.e this story) but it can not create federal reserve notes
If it spends more money than it take in from taxes it must issue Treasury bills that is has to sell to someone, Today almost no one wants to buy US Debt because congress is irresponsible like a child with a AMEX Black card.
So the only entity willing to buy US debt is the Federal Reserve who does so by money printing aka inflation of US Currency aka a tax on responsible people in society
https://constitution.congress.gov/browse/essay/artI-S8-C5-1/...
They damn well can. There's nothing stopping congress from dissolving the federal reserve tomorrow if they'd like, other than the general dysfunction of congress that's spurred this whole discussion.
They damn well can. There's nothing stopping congress from dissolving the federal reserve tomorrow if they'd like, other than the general dysfunction of congress that's spurred this whole discussion.
It won't enter the money supply. If there's an effect on inflation, it will be from the borrowing and spending (already authorized by Congress) that the $1 trillion coin allows to proceed.
ummm no
if that were the case why not just make a 1000 Trillion Coin, and pay off all the debt for all of time
Because we both know that yes that money will enter the money supply, just not directly.
if that were the case why not just make a 1000 Trillion Coin, and pay off all the debt for all of time
Because we both know that yes that money will enter the money supply, just not directly.
The subtle detail is that making the 1000 Trillion Coin itself has no effect on inflation. However if it's used to pay off the debt, then that is what produces inflation.
The reason this distinction matters is that the President has the authority to create the trillion dollar coin, but does not have the authority to spend it. All he can do is grant permission to another authority to borrow against that coin, it's that other authority (the Federal Reserve) that would in turn affect inflation.
The argument is that since the Federal Reserve is going to end up doing that anyways, one way or another, that this trillion dollar coin itself really isn't the cause of any inflation to begin with; it's basically nothing more than a formality.
The reason this distinction matters is that the President has the authority to create the trillion dollar coin, but does not have the authority to spend it. All he can do is grant permission to another authority to borrow against that coin, it's that other authority (the Federal Reserve) that would in turn affect inflation.
The argument is that since the Federal Reserve is going to end up doing that anyways, one way or another, that this trillion dollar coin itself really isn't the cause of any inflation to begin with; it's basically nothing more than a formality.
It isn't being used to pay off the debt. That would be inflationary. It's being used to back the issuance of further debt, and in that sense it's a complete accounting trick. If we minted a quadrillion dollar coin for this purpose it would be equivalent to abolishing the debt limit.
> Because we both know that yes that money will enter the money supply, just not directly.
Sure, but it's going to do it through the borrowing/lending we presume will be allowed by congress (raising the debt ceiling) eventually anyways.
This just allows that to happen regardless.
This (to me) is not so much a financial tool as a political bludgeon to work around that fact that the US congress is essentially useless at the moment.
I still don't think it's a good idea, but bad ideas start seeming like good ideas if the people making the rules are utterly useless (see: congress).
Sure, but it's going to do it through the borrowing/lending we presume will be allowed by congress (raising the debt ceiling) eventually anyways.
This just allows that to happen regardless.
This (to me) is not so much a financial tool as a political bludgeon to work around that fact that the US congress is essentially useless at the moment.
I still don't think it's a good idea, but bad ideas start seeming like good ideas if the people making the rules are utterly useless (see: congress).
This is silly, but only about as silly as the entire debt ceiling issue. So they might as well go for it.
For those of you not paying attention or who are from less-silly countries, the USA has a two-part spending process. First, congress passes a budget that directs how the government is going to spend money. Second, congress authorizes the government to borrow money if needed in order to fund said spending.
This, yes, means that congress first votes on whether to spend enough that we'll need to borrow money, and then votes on whether we're allowed to borrow the money that's needed for the spending they legislated.
Once congress has passed the budget, it's (essentially) a law that requires that the money be spent, so those responsible for using the money literally aren't allowed to e.g. trim programs to make sure we come in under the debt limit.
For those of you not paying attention or who are from less-silly countries, the USA has a two-part spending process. First, congress passes a budget that directs how the government is going to spend money. Second, congress authorizes the government to borrow money if needed in order to fund said spending.
This, yes, means that congress first votes on whether to spend enough that we'll need to borrow money, and then votes on whether we're allowed to borrow the money that's needed for the spending they legislated.
Once congress has passed the budget, it's (essentially) a law that requires that the money be spent, so those responsible for using the money literally aren't allowed to e.g. trim programs to make sure we come in under the debt limit.
> "Voila, we'd have bought ourselves the equivalent of a trillion-dollar increase in the debt limit, without any impact on inflation," says Diehl.
> without any impact on inflation
This strikes me as absurd. Putting it on the other side of the balance sheet doesn't change its impact on the overall economy.
> without any impact on inflation
This strikes me as absurd. Putting it on the other side of the balance sheet doesn't change its impact on the overall economy.
$1T coin in case feds wimp out, piping hot on OpenSea, https://opensea.io/assets/0x495f947276749ce646f68ac8c2484200...
Hey, thanks for the free image! It's very high quality.
The Democrats are playing chicken with a stone wall, it is self sabotage of the highest order. If they fail to stop in time, they're merely hastening the demise of the Petrodollar.
I’m reminded of Zimbabwe (I believe?) and their hundred trillion dollar bills - some of which I still have somewhere.
It’s insane to think that’s how inflated their economy became.
It’s insane to think that’s how inflated their economy became.
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Sure, ok, if we’ve completely dropped the facade… why not make it a $2 trillion dollar coin? Maybe we get a powers of two economy and my binary skills become very handy outside of embedded programming.
Why stop there?
Let's make it a $10 trillion coin!
Let's make it a $10 trillion coin!
Precisely. If there is really no effect on inflation, as the ending quote claims, then why bother making it so small?
It was originally an arbitrary number picked by the person who came up with the idea. In practice, the only reason to make it a relatively low value rather than a septillion is because the White House would want to be in a position to argue that it was an emergency action to ensure continued compliance with the debt limit, the Impoundment Control Act, and the 14th Amendment. Their position would continue to be that it is Congress' responsibility to approve enough borrowing to fulfill their spending mandates, rather than that the President can unilaterally abolish the debt limit (which would itself be unconstitutional).
Trillions are so mundane, now. Why not a quadrillion?
I think the logic of a trillion dollar coin is that it will prevent the debt ceiling from being a crisis for a couple of election cycles, long enough for Congress to get their act together and remove one leg of the trilemma that they have created, but not so long as to make them not have to deal with it at all.
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Why a coin? It has to be a note because the coin+platinum could be a PR nightmare as people would do the math and realize that the amount of platinum in the coin is not worth 1 trillion dollars.
I know that even for small coinage the value we assign to them is arbitrary, but for the public it doesn't matter because it's just change.
If they want to use this solution they need to print a 1 trillion note, that would be in line with the arbitrarily assigned value to the smaller denomination notes.
I know that even for small coinage the value we assign to them is arbitrary, but for the public it doesn't matter because it's just change.
If they want to use this solution they need to print a 1 trillion note, that would be in line with the arbitrarily assigned value to the smaller denomination notes.
The laws that allow a platinum coin of arbitrary nominal value have already been created. Paper money, and all other coin metals, have their denominations defined. It's basically a bureaucratic loophole.
This is correct. Minting a platinum coin with any and unlimited value is already set in law just after the Great Depression, so the executive branch can do it alone. Anything else, including creating a new denomination in notepaper or other metals (or its alloys), needs the involvement of the legislature (power of the purse, power to... legislate), which right now... is in a deadlock.
I won't be shocked if this coin has been stamped there would be a court challenge, especially in terms of the said law's constitutionality.
(Edited because despite having "Depression" in my mind I still typed "Recession". The law was from the last century, not this century.)
I won't be shocked if this coin has been stamped there would be a court challenge, especially in terms of the said law's constitutionality.
(Edited because despite having "Depression" in my mind I still typed "Recession". The law was from the last century, not this century.)
No, it was from 1997 [1], not the Great Depression. It was intended to allow the minting of smaller denomination coins, but did not specify that in the text, so a textual reading will not forbid this usage.
[1] https://www.congress.gov/bill/104th-congress/house-bill/3610...
[1] https://www.congress.gov/bill/104th-congress/house-bill/3610...
Congress has delegated lots of its powers to the executive's bureaucratic apparatus, so I'm not sure why this would be any different.
I mean, controversial but (ultimately confirmed) constitutional laws has a tendency to be challenged anyway, especially when the person who disagrees is in the government. This is not specific to this law, but instead just a general commentary on who brings cases to the court.
Specifically to this case though, they might argue it's violating the so-called "power of the purse", which constitutionally is solely given to the Houses. I'm not sure if it will be enough (given common-law precedent), but I won't be shocked if someone will use this argument.
Specifically to this case though, they might argue it's violating the so-called "power of the purse", which constitutionally is solely given to the Houses. I'm not sure if it will be enough (given common-law precedent), but I won't be shocked if someone will use this argument.
> Specifically to this case though, they might argue it's violating the so-called "power of the purse", which constitutionally is solely given to the Houses.
Unlikely to work. The Appropriations Clause gives Congress control over spending; the debt ceiling only affects money that's already spent per Congressional appropriation.
Unlikely to work. The Appropriations Clause gives Congress control over spending; the debt ceiling only affects money that's already spent per Congressional appropriation.
Because the current make up of the court, as well recent rulings seems to indicate that the Supreme Court is willing to start looking at limiting the ability of Congress is just hand wave is responsibility of making defined laws away to the executive branch like they have been prone to do for the last few decades.
Congress needs to legislate not just demand the executive / Administrative state do all the things.
Congress needs to legislate not just demand the executive / Administrative state do all the things.
When was the last time we used coinage that was actually worth its face value? Seems meaningless to me
As I said there is a difference between 1$ and 1 trillion.
People don't question the face value of 1$ given the fact that it's cheap change.
People don't question the face value of 1$ given the fact that it's cheap change.
Our current coins in regular circulation are basically worthless in terms of metal content. On the other hand, US Mint-produced $50 gold eagles contain ~$1,800 of gold.
Political opinions aside, it seems obvious to me that the value of the metal content of US coinage is unrelated to the face value.
Political opinions aside, it seems obvious to me that the value of the metal content of US coinage is unrelated to the face value.
> Our current coins in regular circulation are basically worthless in terms of metal content. On the other hand, US Mint-produced $50 gold eagles contain ~$1,800 of gold.
That sounded so ludicrous that I thought you must be mistaken or exaggerating, but, as with all things currency-related, I think it's impossible to out-absurd the reality.
https://en.wikipedia.org/wiki/American_Gold_Eagle#Value
That sounded so ludicrous that I thought you must be mistaken or exaggerating, but, as with all things currency-related, I think it's impossible to out-absurd the reality.
https://en.wikipedia.org/wiki/American_Gold_Eagle#Value
Nobody cares about 1$ coins, people would care about a 1T$ coin.
No one expects a $100 bill to be made out of $100 worth of paper, nor 100x the paper of a $1 bill.
Can someone explain why minting a platinum coin is in any way more effective than writing "IOU $1 Trillion" on a napkin?
The goal here is to circumvent the debt ceiling. Writing a $1T IOU would add $1 trillion to the liability side (i.e. debt) of the bookkeeping (and presumably also to the asset side in the form of an addition to a federal reserve account), while minting a $1T coin only adds it to the asset side.
So then why not a note? And is there a rule somewhere that a physical thing needs to be minted at all?
It has to be a platinum coin because subsection (k) of https://www.law.cornell.edu/uscode/text/31/5112 is the special case that allows for issuing any denomination.
Notes are a liability of the Federal Reserve. Meaning they can be traded for balance on a Federal Reserve account. The treasury can't just create liabilities for the Fed out of thin air, I mean that would be wrong ;-)
(edit: just joking. The $1T coin would also be deposited at the Federal Reserve. I don't know why it can't be a note, other than that's how the law was written.)
Notes are a liability of the Federal Reserve. Meaning they can be traded for balance on a Federal Reserve account. The treasury can't just create liabilities for the Fed out of thin air, I mean that would be wrong ;-)
(edit: just joking. The $1T coin would also be deposited at the Federal Reserve. I don't know why it can't be a note, other than that's how the law was written.)
Thank you, this is the answer I was looking for
Because the 'ping' sound it makes as the coin hits the ground is much, much more satisfying than 'brrrrrr'
It's also much harder to slide a napkin into a payphone on a string and pull it back out to bankrupt the phone company.
I guess when you focus on the physical act there is no difference between someone coming into your house and taking the fridge, or someone you hired coming into your house and taking the fridge. In both cases it is someone taking the fridge, so they must be the same right?
But when it comes to authority, the constitution requires issuing IOUs that come with the full faith and credit of the US goverment originate in an act of congress. This is because "full and faith and credit" is not something that the executive can do on its own.
The constitution also gives the executive the right to mint coinage, but only up to spending limits, except for a loophole for various collectible coins made out of platinum. These were not intended to circulate, or be deposited at the Federal Reserve in exchange for reserves, which is why I am skeptical about the legality of using this coin. It would also be a huge political embarrassment. But if they cannot deposit it for reserves, then no one is going to get their bill paid with the trillion dollar coin.
In the past, congress had to pass a bill for each debt issuance, which was too much work as debt issuance ramped up. Then congress went to a debt ceiling authorizing the issuing of debt up to a certain amount. This was intended to give the administration flexibility. For the same reason, many spending programs authorize payments "up to" some amount in order to support flexibility. Should the executive do this, you can be sure this flexibility would disappear and things would get much more painful for the executive.
Now if you don't see anything wrong with bypassing congressional authorization because conceptually writing an IOU on metal and paper is the same, then we fundamentally disagree. It's not about the act, but the authorization behind it.
But when it comes to authority, the constitution requires issuing IOUs that come with the full faith and credit of the US goverment originate in an act of congress. This is because "full and faith and credit" is not something that the executive can do on its own.
The constitution also gives the executive the right to mint coinage, but only up to spending limits, except for a loophole for various collectible coins made out of platinum. These were not intended to circulate, or be deposited at the Federal Reserve in exchange for reserves, which is why I am skeptical about the legality of using this coin. It would also be a huge political embarrassment. But if they cannot deposit it for reserves, then no one is going to get their bill paid with the trillion dollar coin.
In the past, congress had to pass a bill for each debt issuance, which was too much work as debt issuance ramped up. Then congress went to a debt ceiling authorizing the issuing of debt up to a certain amount. This was intended to give the administration flexibility. For the same reason, many spending programs authorize payments "up to" some amount in order to support flexibility. Should the executive do this, you can be sure this flexibility would disappear and things would get much more painful for the executive.
Now if you don't see anything wrong with bypassing congressional authorization because conceptually writing an IOU on metal and paper is the same, then we fundamentally disagree. It's not about the act, but the authorization behind it.
This isn't bypassing congressional authorization -- it already has it. Congress has both authorized and forbidden the spending above the debt ceiling.
Because the Mint has the legal authority to mint such a coin. But the Treasury department cannot issue debt in excess of the debt ceiling.
Congress can fix all this with a stroke of a pen, but eliminating the debt ceiling or lowering appropriated spending below what the debt ceiling would require. This is just a cheap trick to allow the executive to bypass the debt ceiling/government shutdown shenanigans.
Congress can fix all this with a stroke of a pen, but eliminating the debt ceiling or lowering appropriated spending below what the debt ceiling would require. This is just a cheap trick to allow the executive to bypass the debt ceiling/government shutdown shenanigans.
Because then the US would look like Zimbabwe.
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Welcome to Debt Ceiling Shenanigans....
Waiting for Fast and the Furious 14 where the crew have to steal this coin.....
Waiting for Fast and the Furious 14 where the crew have to steal this coin.....
"I don't got inflation...
I got family."
I got family."
It's fun to imagine what the value of it would be on the open market. I mean, it's not like anyone could spend it. "Do you have change for a trillion?" The value would be limited to what a black market coin collector would be willing to pay, I suppose.
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I just read that as "fiat currency has failed."