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  1. #1
    Iohannes fac totum
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    Krugman - Print the Coin

    I always thought this was a joke, but he's serious.


    http://www.nytimes.com/2013/01/11/op...zies.html?_r=0


    Be Ready To Mint That Coin - NYTimes.com

    The White House says........absolutely not.....but if the WH says it can't and won't happen, why does Krugman belive it should?

    Trillion-Dollar Coin? WH Says No Way | ABC News - Yahoo! News

  2. #2
    Ricardo Cabeza
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    further evidence that Krugman is an idiot:

    And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.
    Apparently Krugman doesn't consider that theft of purchasing power through inflation, from everyone and from poor people and people on fixed incomes specifically, constitutes "economic harm".
    Whenever the legislators endeavour to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people who are thereupon absolved from any further obedience, and are left to the common refuge which God hath provided for all men against force and violence - John Locke

    SuperAndy's Garage

  3. #3
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    Because the "debt ceiling" is a strange, ridiculous artifice. I liken it to the old 640k barrier of computer memory -- the laws effects in the present day could not possibly have been forseen by its authors. I cannot see how it makes any sense to have this strange two-step:

    The authority to borrow money via the issuance of government debt should be assumed when the Congress passes a law which creates more spending than revenue.

    The debt ceiling essentially says:

    "We are going to pass a law which requires that we spend more money than we expect to bring it, but we are not going to make it legal for us to create the money which the law we passed requires us to spend."



    What I think Krugman means -- and he's a very smart guy, even though I don't think the $1t coin is a good idea -- is that the economic harm caused by the imbalance of spending and revenue is the problem. The money supply issue is secondary.

    The notion that the $1t coin is "printing money to pay off the nation's debts" is an inaccurate oversimplification, in the way that most people consider it.

  4. #4
    Milk was a bad choice.
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    Quote Originally Posted by Andy69 View Post
    further evidence that Krugman is an idiot:



    Apparently Krugman doesn't consider that theft of purchasing power through inflation, from everyone and from poor people and people on fixed incomes specifically, constitutes "economic harm".
    but, but, but... he has a PhD and a Nobel Prize! It seems the criteria for both of these are getting quite lax.

  5. #5
    libtard
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    Quote Originally Posted by Andy69 View Post
    further evidence that Krugman is an idiot:



    Apparently Krugman doesn't consider that theft of purchasing power through inflation, from everyone and from poor people and people on fixed incomes specifically, constitutes "economic harm".



    ......

  6. #6
    libtard
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    Rage Against the Coin

    Well, the trillion-dollar-coin thing — deal with the debt ceiling by exploiting a legal loophole to have the Treasury mint one or more large-denomination coins, deposit them at the Fed, and use the cash in the new account to pay bills — has really taken off. Last month I spoke with a senior Fed official who had never heard of the idea; these days it’s all over.

    There seem to be two kinds of objections. One is that it would be undignified. Here’s how to think about that: we have a situation in which a terrorist may be about to walk into a crowded room and threaten to blow up a bomb he’s holding. It turns out, however, that the Secret Service has figured out a way to disarm this maniac — a way that for some reason will require that the Secretary of the Treasury briefly wear a clown suit. (My fictional plotting skills have let me down, but there has to be some way to work this in). And the response of the nervous Nellies is, “My god, we can’t dress the secretary up as a clown!” Even when it will make him a hero who saves the day?

    The other objection is the apparently primordial fear that mocking the monetary gods will bring terrible retribution.

    Joe Weisenthal says that the coin debate is the most important fiscal policy debate of our lifetimes; I agree, with two slight quibbles — it’s arguably more of a monetary than a fiscal debate, and it’s really part of the broader debate that has been going on ever since we entered the liquidity trap.

    What the hysterics see is a terrible, outrageous attempt to pay the government’s bills out of thin air. This is utterly wrong, and in fact is wrong on two levels.

    The first level is that in practice minting the coin would be nothing but an accounting fiction, enabling the government to continue doing exactly what it would have done if the debt limit were raised.

    Remember that the coin is supposed to be deposited at the Fed, which is effectively just a semi-autonomous government agency. As the federal government proper drew on its new Fed account, the Fed would probably respond by selling off some of its $3 trillion balance sheet. In effect, the consolidated federal government, including the Fed, would be financing its operations by selling debt instruments, just as always.

    But what if the Fed decided not to shrink its outside balance sheet? Even so, under current conditions it would make no difference — because we’re in a liquidity trap, with market interest rates on short-term federal debt near zero. Under these conditions, issuing short-term debt and just “printing money” (actually, crediting banks with additional reserves that they can convert into paper cash if they choose) are completely equivalent in their effect, so even huge increases in the monetary base (reserves plus cash) aren’t inflationary at all.

    And if you’re tempted to deny this diagnosis, I have to ask, what would it take to convince you? The other side of this debate has been predicting runaway inflation for more than four years, as the monetary base has tripled. The same people predicted soaring interest rates from government borrowing. Meanwhile, the liquidity-trap people like me predicted what would actually happen: low inflation and low rates. This has to be the most decisive real-world test of opposing theories ever.

    So minting the coin would be undignified, but so what? At the same time, it would be economically harmless — and would both avoid catastrophic economic developments and help head off government by blackmail.

    What we all hope, of course, is that the prospect of the coin or some equivalent strategy will simply take the debt ceiling off the table. But if not, mint the darn coin.

  7. #7
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    Quote Originally Posted by 88 rex View Post
    I always thought this was a joke, but he's serious.


    http://www.nytimes.com/2013/01/11/op...zies.html?_r=0

    Be Ready To Mint That Coin - NYTimes.com

    The White House says........absolutely not.....but if the WH says it can't and won't happen, why does Krugman belive it should?

    Trillion-Dollar Coin? WH Says No Way | ABC News - Yahoo! News
    Title should be --- CONGRESS: DEADBEATS or PAYS THEIR BILLS
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  8. #8
    libtard
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    Quote Originally Posted by Argentius View Post
    Because the "debt ceiling" is a strange, ridiculous artifice. I liken it to the old 640k barrier of computer memory -- the laws effects in the present day could not possibly have been forseen by its authors. I cannot see how it makes any sense to have this strange two-step:

    The authority to borrow money via the issuance of government debt should be assumed when the Congress passes a law which creates more spending than revenue.

    The debt ceiling essentially says:

    "We are going to pass a law which requires that we spend more money than we expect to bring it, but we are not going to make it legal for us to create the money which the law we passed requires us to spend."



    What I think Krugman means -- and he's a very smart guy, even though I don't think the $1t coin is a good idea -- is that the economic harm caused by the imbalance of spending and revenue is the problem. The money supply issue is secondary.

    The notion that the $1t coin is "printing money to pay off the nation's debts" is an inaccurate oversimplification, in the way that most people consider it.
    LOL... I'll finally be completely switched over to 64bit by the end of the week.

  9. #9
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    durr hurr

    .
    .
    .

    anything that has to do with money or currency hits terminal velocity LOLZ real quick around here.

  10. #10

  11. #11
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    Compared with the relatively tame subjects of gun control and religion?

    Yes, we know - it is a challenge for anonymous people on the Internet to remain civil.

    Yours Truly would gladly have a beer and a bike ride with anyone here...

    Quote Originally Posted by bricoleur View Post
    .
    .
    .

    anything that has to do with money or currency hits terminal velocity LOLZ real quick around here.

  12. #12
    Iohannes fac totum
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    Quote Originally Posted by Argentius View Post
    Because the "debt ceiling" is a strange, ridiculous artifice. I liken it to the old 640k barrier of computer memory -- the laws effects in the present day could not possibly have been forseen by its authors. I cannot see how it makes any sense to have this strange two-step:

    The authority to borrow money via the issuance of government debt should be assumed when the Congress passes a law which creates more spending than revenue.

    The debt ceiling essentially says:

    "We are going to pass a law which requires that we spend more money than we expect to bring it, but we are not going to make it legal for us to create the money which the law we passed requires us to spend."



    What I think Krugman means -- and he's a very smart guy, even though I don't think the $1t coin is a good idea -- is that the economic harm caused by the imbalance of spending and revenue is the problem. The money supply issue is secondary.

    The notion that the $1t coin is "printing money to pay off the nation's debts" is an inaccurate oversimplification, in the way that most people consider it.
    I agree with the whole debt ceiling being kind of odd, but I don't understand, as Andy mentioned, how this does "no economic harm."

  13. #13
    Iohannes fac totum
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    And gun threads are tiring.

  14. #14
    libtard
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    Quote Originally Posted by 88 rex View Post
    I agree with the whole debt ceiling being kind of odd, but I don't understand, as Andy mentioned, how this does "no economic harm."
    I haven't pored over every line of what Krugman has said about all of this but has he or anyone else claimed with 100% certitude that there is zero risk of economic harm?

    Edit, found it:

    Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.
    It seems to me there is a risk of economic harm not from such actions by the Treasury and the Fed but instead from the risk being misunderstood or misinterpreted and thus scaring investors (e.g. inflation).

    Is the risk of the coin greater than default? I highly doubt it.

  15. #15
    libtard
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    Debt in a Time of Zero

    Now, it turns out that there really is a problem, or actually two problems — but they’re a bit subtle.

    First, as a legal matter the Federal government can’t just print money to pay its bills, with one peculiar exception. Instead, money has to be created by the Federal Reserve, which then puts it into circulation by buying Federal debt. You may say that this is an artificial distinction, because the Fed is effectively part of the government; but legally, the distinction matters, and the debt bought by the Fed counts against the debt ceiling.

    The peculiar exception is that clause allowing the Treasury to mint platinum coins in any denomination it chooses. Of course this was intended as a way to issue commemorative coins and stuff, not as a fiscal measure; but at least as I understand it, the letter of the law would allow Treasury to stamp out a platinum coin, say it’s worth a trillion dollars, and deposit it at the Fed — thereby avoiding the need to issue debt.

    In reality, to pursue the thought further, the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back. So this is all a gimmick — but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.

    But leaving the debt ceiling on one side, isn’t it true that since spending can currently be financed by Fed money printing, we shouldn’t care at all about the notional debt owed to the Fed? Alas, no.

    It’s true that printing money isn’t at all inflationary under current conditions — that is, with the economy depressed and interest rates up against the zero lower bound. But eventually these conditions will end. At that point, to prevent a sharp rise in inflation the Fed will want to pull back much of the monetary base it created in response to the crisis, which means selling off the Federal debt it bought. So even though right now that debt is just a claim by one more or less governmental agency on another governmental agency, it will eventually turn into debt held by the public.

  16. #16
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    Quote Originally Posted by Andy69 View Post
    further evidence that Krugman is an idiot:



    Apparently Krugman doesn't consider that theft of purchasing power through inflation, from everyone and from poor people and people on fixed incomes specifically, constitutes "economic harm".
    This ^^^^. The left wing Rush Limbaugh.

  17. #17
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    Quote Originally Posted by 88 rex View Post
    I agree with the whole debt ceiling being kind of odd, but I don't understand, as Andy mentioned, how this does "no economic harm."
    Honestly, the libs should love it. It is a gigantic tax on wealth.

    Our money supply is only worth what we can trade it for. It is only worth our products that we produce that can be purchased with our money. Unless we simultaneously produce an extra trillion in products, all this does is lessen the value of every USD outstanding. No different than a company issuing new stock. Printing the coin is simply diluting the existing equity holders (those with USD savings).

    This would likely hit those that saved diligently for their retirement the hardest. Their savings would shrink in value and they will be more dependent on government social security to survive.

    It really is a brilliant political move.

    Not so much economically.

  18. #18
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    Quote Originally Posted by Argentius View Post
    Compared with the relatively tame subjects of gun control and religion?

    Yes, we know - it is a challenge for anonymous people on the Internet to remain civil.

    Yours Truly would gladly have a beer and a bike ride with anyone here...
    I'll take the bike ride before the beer. I don't drink and ride.
    I try to be perfectly civil, until someone really pisses me off.

  19. #19
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    Because it does not change any rational person's calculations.

    Banks, both other Central Banks and private ones, have already discounted the value of the US currency with the expectation that the money supply will increase to resolve the federal debt.

    The only other option is for the government to repudiate - not pay - the debt, and nobody thinks that is going to happen.

    Whether there will be a commensurate monetary contraction from some other means -- retiring other debt through increased revenue, say -- has no bearing on "the coin."

    Monetary policy follows fiscal policy in this case, it does not lead it.

    Quote Originally Posted by 88 rex View Post
    I agree with the whole debt ceiling being kind of odd, but I don't understand, as Andy mentioned, how this does "no economic harm."

  20. #20
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    Quote Originally Posted by Argentius View Post
    Because it does not change any rational person's calculations.

    Banks, both other Central Banks and private ones, have already discounted the value of the US currency with the expectation that the money supply will increase to resolve the federal debt.

    The only other option is for the government to repudiate - not pay - the debt, and nobody thinks that is going to happen.

    Whether there will be a commensurate monetary contraction from some other means -- retiring other debt through increased revenue, say -- has no bearing on "the coin."

    Monetary policy follows fiscal policy in this case, it does not lead it.
    No. The other option is to cut spending. No one says not to pay the debt. Pay that first. If there is not enough left over for Obama's bribes. Too bad.

  21. #21
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    Cutting future spending is something I would advise but does not change the 2013 deficit.

    Are you suggesting that the Congress -- because it is the Congress, and not the President, which has the power to tax and spend -- should contract federal spending IN 2013 by approximately $1 trillion, eliminating the need to increase the debt ceiling?

    Recall how hard the Republicans were hammering President Obama during the campaign not to cut spending by the amount required in the "fiscal cliff" law.

    A fiscal contraction by 7-8% of GDP in 2013 would be the ultimate "job-killer."

    Is that what you suggest?

    Quote Originally Posted by NJBiker72 View Post
    No. The other option is to cut spending. No one says not to pay the debt. Pay that first. If there is not enough left over for Obama's bribes. Too bad.

  22. #22
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    Quote Originally Posted by Argentius View Post
    Cutting future spending is something I would advise but does not change the 2013 deficit.

    Are you suggesting that the Congress -- because it is the Congress, and not the President, which has the power to tax and spend -- should contract federal spending IN 2013 by approximately $1 trillion, eliminating the need to increase the debt ceiling?

    Recall how hard the Republicans were hammering President Obama during the campaign not to cut spending by the amount required in the "fiscal cliff" law.

    A fiscal contraction by 7-8% of GDP in 2013 would be the ultimate "job-killer."

    Is that what you suggest?
    I am suggesting prioritizing payments. First the debt. Then set other priorities. With nothing including "mandatory" pork off the table.

    We have plenty of revenue to pay the debt.

  23. #23
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    Quote Originally Posted by Argentius View Post
    Cutting future spending is something I would advise but does not change the 2013 deficit.

    Are you suggesting that the Congress -- because it is the Congress, and not the President, which has the power to tax and spend -- should contract federal spending IN 2013 by approximately $1 trillion, eliminating the need to increase the debt ceiling?

    Recall how hard the Republicans were hammering President Obama during the campaign not to cut spending by the amount required in the "fiscal cliff" law.

    A fiscal contraction by 7-8% of GDP in 2013 would be the ultimate "job-killer."

    Is that what you suggest?
    Bold emphasis mine.

    Quote Originally Posted by NJBiker72 View Post
    I am suggesting prioritizing payments. First the debt. Then set other priorities. With nothing including "mandatory" pork off the table.

    We have plenty of revenue to pay the debt.
    Translation: Yes.

  24. #24
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    Quote Originally Posted by TerminatorX91 View Post
    Bold emphasis mine.



    Translation: Yes.
    In favor of cutting wasteful spending and paying our debt.

    I know a novel concept for some.

  25. #25
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    Then the Congress should pass a law to this effect detailing what spending programs ought to be cut.

    Since it has not, it is incumbent upon the Fed and Treasury to manage the money supply to best support the spending programs that the Congress HAS decided to enact.

    It WOULD be a dramatic overreach of executive power if a Cabinet-level secretary, the Secretary of the Treasury, and an appointee of the President, the Chairman of the Federal Reserve, decided to ignore what Congress had directed them to do and instead created their own spending program, or, cuts, to balance the budget by fiat.

    They just don't have the authority to do that.

    Their options are therefore either default, or, finding some way to service the debt that IS within their mandate.

    Weird loopholes have been used to do such things before -- accounting tricks and the like -- but I think the Platinum Coin would set an uncomfortable precedent and that the Congress really should act to clean up the mess it created.

    Quote Originally Posted by NJBiker72 View Post
    In favor of cutting wasteful spending and paying our debt.

    I know a novel concept for some.
    Last edited by Argentius; 01-13-2013 at 12:31 PM. Reason: spelling

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