Joe Firestone: Return of the Platinum Coin?

Yves here. Just as sumer is icumen in, so to are budget fights. And that means another opportunity to talk up the platinum coin as a way around budgetary tactics designed to inflict austerity on ordinary Americans.

By Joe Firestone, Ph.D., Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director of KMCI’s CKIM Certificate program. He taught political science as the graduate and undergraduate level and blogs regularly at Corrente, Firedoglake and Daily Kos as letsgetitdone. Cross posted from New Economic Perspectives

The last few weeks have seen at least two posts calling attention to the potential use of the platinum coin in America’s political economy. The first to appear was Rob Urie’s piece in Counterpunch provocatively titled: “The Trillion Dollar Catshit Coin” And the second was Mike Sandler’s post in The Huffington Post called “Greece and the U.S. Senate: Economics for the 99%.

Let’s begin looking at these with Sandler’s effort. He reports on two challenges to austerity. The first is from Syriza’s victory in Greece and its promise to Greek voters that it will end austerity. The second:

The austerity mindset faces a new foe in the U.S. Senate as well. The re-shuffle of the last U.S. election that put austerity-minded Republicans in power has ironically resulted in a new anti-austerity economist being hired by Senator Bernie Sanders (I-VT) in the Senate Budget Committee — Professor Stephanie Kelton of the University of Missouri-Kansas City. Professor Kelton is a proponent of Modern Monetary Theory (MMT), a very pro-stimulus economic approach. Her hiring represents the biggest step forward for MMT, since the PR coup of the Trillion Dollar Platinum Coin in 2013. At that time, Kelton reportedly created the #mintthecoin hashtag that was featured in columns by Paul Krugman and others.

Sanders’ hiring of Kelton is a break from the more conciliatory “balanced budgeting” approach of some Democrats, such as former treasury secretaries with ties to Wall Street and fiscally-conservative “deficit hawks.” Kelton and her MMT colleagues go beyond the traditional Keynesian stimulus of short-term deficit spending. They seek to unleash the power of monetary policy to circumvent the scarcity mindset imposed on government action, perhaps even bringing the Trillion Dollar Coin back into the discussion.

Of course, Sandler means to say fiscal policy in the above, since MMT economics greatly favors reliance on fiscal, rather than monetary policy, in spite of the “monetary” in its name. But apart from that, he projects that we may see the platinum coin come back into prominence soon.

Rob Urie’s article is even more focused on the likely return of the platinum coin. He says:

Some fair proportion of readers are already aware of the proposal to have the U.S. Mint produce a $1 trillion face amount coin to be deposited at the Federal Reserve and credited to the account of the Treasury Department to pay Federal bills. The $1 trillion would render the ‘debt ceiling’ debate irrelevant because it wouldn’t be funded with debt. It would demonstrate the contrived nature of the austerity ‘debate’ in Washington. . . .

This isn’t quite right because money issued by the US Government is a liability of the Government; a debt in the sense that it is a tax credit that must be accepted in payment of taxes by the Government. However, had Urie said “interest bearing debt” rather than debt, then he would have been right, since Government issued money, cash or reserves, isn’t interest bearing debt that counts against the debt ceiling.

Urie’s point that using a $1 Trillion coin to render the debt ceiling irrelevant would demonstrate the “contrived nature of the austerity ‘debate’ in Washington . . . “ is however, right on. It’s also true, in addition, that the larger the face value of the coin is, the more convincing would be the demonstration that the ‘debate’ is a contrivance to fool people. So, if that coin were to have a $100 Trillion face value, then the contrivance aspect of the debate would be clear to all but those willfully blind to the truth that the Constitution provides the Government with the authority to create as much money as it wants to create to fill the pubic purse.

Urie goes on:

What is useful in the platinum coin idea, and the central point of derision amongst protectors of the status quo, is if taken to its logical conclusion, there is no need for debt—government could create and distribute as much money as is needed via public policies in the public interest. . . .

And so it follows that:

What the platinum coin idea should generate is a robust dust-up over the use by plutocrats and their servants in government of contrived emergencies such as the debt ceiling and the ‘fiscal cliff’ to pose existing institutional arrangements as immutable facts in order to push ever more social wealth up the income and wealth ladders. . . . the direct issuance of money by the government would remove the rationale for the moral chide over government spending from deficit hawks and could explicitly establish serving the public interest as the goal of government spending.

Or as I’ve said elsewhere, using the platinum coin, especially with extremely high face values in the many trillions of dollars would be a progressive game-changer in politics, because it would remove the moral foundation of austerity in claimed scarcity of Government money. And the new standard for fiscal policy could not be either deficit reduction or budget balance, but always and everywhere would have to be whether Federal spending, deficit or otherwise, was intended to accomplish the public purpose. So, the platinum coin would enable the economics for the public purpose that John Kenneth Galbraith envisioned in the 1970s.

So, Urie ends with this very significant point:

Regardless of whether or not official Washington uses the idea, radical versions of the platinum coin idea should continue to be put forward. The broad frames used in political-economic debates in Western Capitols are designed to bring about outcomes in line with the interests of Western plutocrats. In fact, without effectively calling into question these frames the cognitive disjuncture needed to shift these institutions back toward the public interest won’t be found. The existing money system is at the heart of these institutions and it is not socially ‘neutral.’ And only by putting it forward as if it was does the existing order retain control of ‘the conversation.’

That is a conclusion I heartily endorse, and I would also add these thoughts on how to break the austerity frame.

– There are two key Congressional deadlines coming up that may be occasions for more fiscal crises that Republicans will use to try to impose further austerity on the nation. First, there will be a deadline, unknown at this time, for the Republicans to agree to raise or suspend the debt ceiling. Right now, the debt ceiling, suspended since February 14, 2014 is scheduled to be re-instituted on March 16, 2015. Shortly thereafter, the Treasury will have to take extraordinary measures to continue to spend its mandated 2015 appropriations.

At this point, we don’t know whether it will be a month or two or three until those measures and the Treasury’s credits at the Fed are exhausted. But at that time the Government will be facing another shutdown and a hard negotiation with the Congress that may result in hurting millions. As has been the case since 2011, such negotiations can be avoided by minting a very high value platinum coin and depositing it at the Federal Reserve. Will the President do it this time?

The only chance that he will is if enough people know about and believe in the platinum coin option that the President comes to know very well that if he refuses to mint the coin with a high enough face value to remove the rationale for austerity from the playbook of Republicans and Democrats that have used spending cuts and austerity morality as their coin of the political realm, he will be unmasked entirely as the servant of the plutocracy that so many already think he is. There is no guarantee, of course, that he fears unmasking himself so much that this will provide the motivation needed to get him to move. But perhaps this, along with the humiliating terms the Republicans impose on him, will be enough to get him to do it. For if he does not, he will then be the proverbial lame duck, unable to mobilize the Democratic wing of the Democratic Party for anything he may want to do for the rest of his term.

– The second upcoming deadline is the date on which a 2016 budget resolution is due from the Congress. That date is April 15, 2015. Of course, the Republicans might postpone that and let the pressure build until the Government needs a continuing resolution to avoid a shutdown at the end of September or the beginning of October. Then again they will negotiate for more tax and spending cuts crying poverty all the while. Of course, a huge balance in the Treasury’s spending account, would make it very hard for them to justify draconian cuts by pleading poverty. So, again, the platinum coin would break the framing of their argument.

– The platinum coin if used with extremely high face values introduces cognitive dissonance in the ideological belief that the Government is just like a large household that must live within its financial means, because this belief is inconsistent with the demonstration that the Treasury suddenly has, for example, $100 Trillion in financial resources to repay all its interest-bearing debt instruments as they fall due, and also “pay for” all deficit spending appropriated by Congress for many years to come without issuing any more interest-bearing debt instruments counting against the debt ceiling. This dissonance would kill the Government is like a household belief in short order. And then the political debate over spending and tax cuts would have be carried out on the basis of what serves the public purpose and then the red herring of financial poverty would be gone from our politics as we move into the election of 2016. But for all this to happen, the President will have to act. He will have to mint the coin.

So, will we see the return of the coin? I think the President will do what he can to stop its return to the public debate because it makes things much more difficult for the plutocrats to maintain their long-term mission to increase inequality and end political democracy.

Since this is the case, it will be up to us to bring the coin back again, and this time not to cease talking about until the public knows that there is no reason to cut or privatize Social Security or to have unemployment, or to tolerate the most stingy and inadequate social safety net among Western so-called Democracies, or to avoid addressing the many, many, problems that are currently casting a dark shadow across the future of the United States and our Grandchildren. It is the platinum coin and its use that will allow us to take back the frame of acting in the name of our children and grandchildren from the plutocratic austerians who have stolen that rhetoric from progressives. Time to take it back!


  1. Carlos Fandango

    If we look at austerity and neoliberalism as an extension of moral values where for example debtors and creditors are categorized as less worthy or more worthy. These viewpoints are so entrenched in our culture. Wouldn’t the platinum coin just give a few people an “aha” moment, then the system would inexorably grind away until it is once again aligned with the moral values of it’s sponsors. It is too complex for the average Joe to understand and the cognitive dissonance from the rest would be deafening.

    Only a long term investment in better education, social justice and critical thinking will change anything.

    1. financial matters

      Good points. But one thing that the crisis has shown is that the money is there for bank bailouts, war, increased security state. So it’s just necessary to ask if this is what we want or do we want better health, education and employment programs. The platinum coin is just a way for Congress to face the reality of what they are capable of and not be able to hide behind a false idea of a debt ceiling. The same thing that Syriza is trying to do with the ECB. Not that money can be freely given but that it can be used for better purposes than to drift up to the already well off.

      1. susan the other

        Yes. I looked at the poorly described offer Varoufakis made to the ECB for Greek long term obligations and thought that his idea is as close as the EU can come to solving the sovereignty problem. We don’t have that extra layer of fiscal obstruction; so we can simply do this. That we haven’t or that we have to fight for it and demand it is very revealing. Precisely because our fiscal rights are never acknowledged – even tho’ we have them – it is a taking. We are being deprived of our sovereignty just as surely as EU countries are.

        1. Joe Firestone (LetsGetitDone)

          Yes, specifically we’ve been fooled into not using the policy space to run deficits provided to us by our monetary sovereignty. Now we face new proposed new international agreements that will further constrain our monetaey and fiscal sovereignty.

      2. jrs

        I suspect war is necessary to maintain the relative privilege enjoyed by people in the U.S. even if that’s not the main goal of it (the main goal may be exclusively the few and yes the privilege to everyone else is unevenly distributed but benefits many to some degree).

        I don’t’ support war, I don’t support the empire. It’s just that it may be realistic to expect the U.S. without empire might be worse off than the U.K. post-empire.

    2. Lambert Strether

      A counsel of despair. There’s no reason why the education in critical thinking shouldn’t begin now. In fact, it has.

      1. Carlos Fandango

        Well….. since Thatcher/ Reagan the neolibs and plutocrats have been on an almost non stop winning streak. I get a little cynical some days.

        1. OpenThePodBayDoorsHAL

          I think it’s OK to posit value to each side (makers and takers of debt), but the field of play requires capitalist consequences for each side. If I take too much debt I go bankrupt and lose my collateral. But if I make too much debt I don’t bear any consequences, Ben Yellen and ultimately the holders of the scrip they issue are the ones who end up holding the bag. Lots of screeching about how it’s the fault of irresponsible borrowers like NINJA loan (or Greek) borrowers but nary a word about the issuers of said obligations. Similarly in markets we require two sides of a transaction to have at least a semblance of equal (or priced) risk…but when the guy on one side of the poker table has an unlimited supply of chips (QE fantasy chips) it’s like trying to bet against the ocean.

          1. skippy

            Exactly Joe…. [!!!!].

            The push back you note is actually a good sign in my book, as witnessed by that little episode with RMM [MMR snicker]. And I’m getting the same sort of observation across a wide spectrum of political – financial – econ media sites.

            A weird mixture of proclamation and desperation, frantic revisionist history, which does not square even to simplistic rationalization.

            Skippy…. down right trench warfare tactics…

      2. skippy

        Yeah but [as my kids are want to say]… Can critical thinking be commodified and hence become a stock to be traded thingy….

        The Falling Rate of Learning and the Neoliberal Endgame

        David Blacker makes a powerful case that in the present phase of capitalism, our rulers are abandoning the previous era’s principle of universal education

        “The marketisation that is well underway in the American and British school sectors is also explored by Blacker. Teachers have become wearily accustomed to relentless pressure from above to pursue quantitative targets and conform to centralised orthodoxies of classroom practice. Both aspects of this neoliberal agenda are disguised as drives to raise standards but, in fact, have the combined effect of undermining the enjoyment of education, both for pupils and teachers.

        Blacker makes a powerful argument for the notion that this phase of capitalism has abandoned the principle of universal education that was a cornerstone of its previous incarnation. He notes how the dynamics of capitalist development in the West from the end of the nineteenth century to the end of the twentieth required the cultivation of a workforce educated to a high level. This contextualisation of educational policy in the framework of wider socio-economic factors is one of the strengths of Blacker’s approach. As he puts it in a striking image: ‘schools are still an integral organ within capitalism’s respiratory system, rising and falling in rhythm with their encompassing chest cavity’ (p.192).

        He persuasively argues that as the system has now entered a new era of crisis it is rejecting its previous commitment to what in Britain was known as the comprehensive ideal. The ruling class now no longer needs a significant layer of educated professionals with a commitment to the public sector ethos. In the period after World War Two, that was necessary in order to reconstruct devastated social and economic structures. Blacker baldly states that the neoliberal version of capitalism also definitely no longer desires the working class to be encouraged to raise their expectations: ‘what capitalism gave, capitalism also hath taken away. Just as the era of universal schooling began with massive changes in the plate tectonics of capitalism, it is now beginning to recede in accord with further changes within those same tectonics’ (p.199). Gove’s recent suggestions that writing lines, picking up litter and mopping floors be restored as appropriate school punishments would seem to indicate Blacker is right to detect this new mind-set among the elite.”

        Skippy…. just though I would flick that in there for a critical thinking game…

        1. sleepy

          Thanks for the link.

          “to pursue quantitative targets and conform to centralised orthodoxies of classroom practice”

          My wife and I have taught at a small public college in Iowa. That about sums up the trend over the past 3 or 4 years. Thank goodness my wife is retiring soon. The relationship between administration and faculty is near poison. Ten years ago, it was good and mutually respectful.

    3. Joe Firestone (LetsGetitDone)

      I think first, that you’re over-simplifying the “moral values” construct. The thing to remember is that there are many moral values and may relationships among them perceptions, opinions, attitudes, value orientations and a variety of psychological phenomena. Also, all of these things often come into conflict with one another and the conflicts have then to be resolved in some way by the processes of mind. Certainly “austerity” and “neoliberalism” are consistent with many psychological orientations and predispositions that exist in our culture, but so are competing ideologies including those forming around post-keynesianism and MMT. These days we are increasingly experiencing value and framing conflicts and we don’t who which of these will be come dominant. What we do do know is that the failures of neoliberalism in the past 7 years are leading to a weakening of its values, attitudes, and frames.

      Second, you ask: “Wouldn’t the platinum coin just give a few people an “aha” moment, then the system would inexorably grind away until it is once again aligned with the moral values of it’s sponsors?” No I don’t think so, though I do think that this may depend on the face value of the coin. If only a Trillion Dollar coin is minted, then I think this will be viewed as an aberration that doesn’t change the fundamental structure of the political economy’s environment, and consequently, it may be that the system will just adjust in the way you expect.

      However, if a $100 T coin is minted, then this will introduce a fundamental change in the situation, because, those who are against austerity will constantly point to the Treasury spending balance and the constant payoff of the Federal debt as proof that the US has plenty of spending money money which it can create at will. It doesn’t matter whether the public fully understand how the minting of the $100 T coin created the transformation into $100 T in reserves in the Treasury Spending Account, it only matters that the $100 T was put there and that it is being used to deficit spend and to pay off the national public debt. Those brute facts are cognitively inconsistent with the idea that the Government can run out of money, so people will accept that the Government can’t run out of money, that it is not like a household, and that the moral values of “austerity” and “neoliberalism” do not apply to federal Government budgeting. The very big coin breaks the austerity/neoliberal frame beyond repair and that is all there is too it. henceforth people will have to apply these values to Governments that are currency users and not sovereign fiat currency issuers.

      Third, I agree that long-term investment in better education, social justice, and critical thinking are needed to change many things in our society and that we should certainly engage in them and in education to persuade people that Governments like the United States can never have solvency problems and need never be concerned about public debt or the debt to GDP ratio. However, I also think that this change process can be given a great kickstart by the President’s minting a $100 T coin immediately. Once that is done the country will see the debt ceiling problem immediately disappear, and it will also see the Republicans become ridiculous when they try to cut social programs and discretionary funding that we cannot afford them. They still may cut them. But robbed of their fig leaf they will pay dearly at the polls in spite of all the propaganda they will can unleash.

      Change is coming. And the platinum coin can be a very important factor in that process.

      Btw, I enter this thread when the comments have reached 36, and I want to compliment the NC commentariat on the excellence of the exchanges so far, which are at a much higher level than I see at many other sites.

  2. bkrasting

    Yes, by all means lets have some platinum coins.

    There is a perfect application for the coin right in front of us. It would be very simple to ‘test’ the platinum coin concept out using the Trust Fund at Social Security. The fund has $2.8 Trillion of “bonds” that could be replace with a single coin. Magically, all of the government debt could be wiped out in a second.

    17% of the total federal debt would be eliminated. This could be the prototype for additional uses for the Coin in the future.

    WHAT!!?? The same liberals who love the coin also believe that SS is sacrosanct. Do Not Touch. 60m seniors would go nuts. Bernie Sanders would be screaming No! No! No! Maxine Waters would faint. Paul Krugman (who loves the coin) would also be running away from this idea because of his support for the “liberal base”. The AARP would spend tens of millions fighting this plan. No Republican would support it, and neither would any Democrats.

    The idea of the coin works on paper, but when you to put it into application you would find that the level of support is close to nil. The idea of a Coin for SS would not get a mention in blogs like NC. Go figure….

    1. Lambert Strether

      Please stop ranting. (1) “WHAT!!?? The same liberals who love the coin.” Simply not true. (2) “Paul Krugman (who loves the coin) ” Simply not true.

        1. Joe Firestone (LetsGetitDone)

          Bruce, they were supportive of the Trillion Dollar Coin, not of HVPCS in magnitudes of $30 T or more. They were worried that such a thing would undermine the confidence of markets. It never occurred to them that that kind of seigniorage would end the market in new Treasury Bonds, and, of course, due to a shortage of supply, increase the value of debt instruments not yet retired.

          In short, neither Wiesenthal, nor Josh Barro, or even Krugman are either very “progressive” or in love with platinum coin seigniorage. They are mere supporters of the present system who didn’t want to see it disturbed by periodic debt ceiling crises.

    2. financial matters

      I think Joe would find some support for his handling of social security. This is from his critique of Senator Sanders agenda..

      Sanders: 11. Millions of seniors live in poverty and we have the highest rate of childhood poverty of any major country. We must strengthen the social safety net, not weaken it. Instead of cutting Social Security, Medicare, Medicaid and nutrition programs, we should be expanding these programs.

      Firestone: Right; but it would be good to have some specifics. Right now, even the most “progressive” Democrats are only advocating for a $750 annual expansion in SS benefits, an average of $62.50 per month. What both SS recipients and the economy need is more like a doubling of SS benefits to make American pensions comparable to the Government-provided pensions in other OECD nations. Why won’t Senator Sanders advocate for that?

      1. Jim Haygood

        ‘What both SS recipients and the economy need is more like a doubling of SS benefits to make American pensions comparable to the Government-provided pensions in other OECD nations.’

        Agreed. Why are SocSec benefits so pitifully low in a rich country? Because SocSec is (a) massively underfunded and (b) invested in a low-return all-bond portfolio instead of incorporating equities as all other pension and sovereign wealth funds do.

        1. financial matters

          I would suspect you wouldn’t want your retirement future completely invested in today’s US stock market. Fully invested in the equity potential of the US labor market would be a different story. I think a secure retirement is better vested in productive (tangible and non-tangible) full employment.

        2. Auburn Parks

          Underfunded is a meaningless term for Federal Govt programs, and your use of the term only shows that you still dont understand how the system works. Congress makes law, and these laws must be followed by the TSY and Fed, Congress is the boss. If Congress decrees that SS spending gets doubled, all the accounting shenanigans after the fact are largely irrlevant. No govt agency has the authority to defy Congress. Congress effectively creates money by passing appropriations bills, TSY and the Fed just work to implement the spending, thats how the system works. Congress has an infinity capacity to create money by simply passing spending laws, trust funds and TSYies are all after the fact minutiae

          1. Joe Firestone (LetsGetitDone)

            Hi Auburn, that’s right, of course. But this part:

            No govt agency has the authority to defy Congress,

            gives me pause.

            That may be true formally speaking, but certainly the CIA and the NSA have been doing a pretty good job of defying Congress without the formal authority to do so.

            1. Praedor

              The office of the President defies Congress all the time. All the Prez has to do is say, “National Security” or even better, “Executive privilege” and it’s done.

        3. bh2

          (b) is a consequence of (a). No responsible pension fund management would ever invest solely in US bonds with a rational expectation to generate long term returns sufficient to catch up with (never mind exceed) the long-term effects of monetary inflation. Indeed, such an “investment” would surely produce negative returns with respect to inflation, just as the existing SS program empirically demonstrates.

          Imagineering a coin having a “face” value created solely by stamping it on precious metal would be only another new “progressive” scheme to pretend new wealth can be magically created by government edict, just as it does not by stamping it on paper — because changing the medium doesn’t change the method.

          If that worked in the real world, Zimbabwe could have instantly transformed itself into the richest nation on earth instead of having its national currency go to zero.

          1. Carlos Fandango

            Zimbabwe and the Weimar republic both destroyed productive assets, so there was nothing to buy with the money. Inflation would just be an inconvenience for Joe, if there is full employment and plenty of things to buy.

            Oh look ….Greece has had her productive assets trashed. Reducing Government spending has been so successful …… how the people suffer.

            It comes down to faux morality again, inflation can benefit debtors, deflation can benefit creditors.

            1. Joe Firestone (LetsGetitDone)

              I agree with Carlos’s remarks. But also, and please note this carefully. MMT doesn’t hold that creating a coin with a face value creates real wealth. It holds instead that creating a coin with a face value great enough to place enough electronic credits in the Treasury accounts to repay the national debt subject to the limit and cover likely deficit spending for the next 25 years will allow the Federal Government to have the political and policy space to maintain full employment and solve the other serious problems of the United States is Congress chooses to make the necessary appropriations. Whether or not this leads to the creation of new real wealth, as opposed to nominal financial assets, depends on the actions of Americans in the private sector who benefit from the resulting Federal spending.

              In view of this, MMT “progressives” like myself, certainly don’t believe what you say they believe. So, having been corrected, I hope you’ll cease making this false claim.

              1. bh2

                Joe: “In view of this, MMT ‘progressives’ like myself, certainly don’t believe what you say they believe. So, having been corrected, I hope you’ll cease making this false claim.”
                Any new working capital must come either from issuance of new debt or from unspent surplus (“savings”). Stamping out new fiat money on a platinum coin or a paper bill is a sovereign privilege. However…

                Just as all denominated paper fiat money is debt, all denominated platinum fiat money is debt to the extent the perceived exchange value of the metal is notably less than the denominated value.

                Setting the interest rate to zero by calling a metal debt instrument an interest-free “coin” only means repayment by the debtor is entirely optional, with no consequences to anyone but the general public if “things don’t work out”.

                They won’t work out, of course. There’s no positive incentive. Indeed, there is only adverse incentive.

                It’s swell to sweepingly articulate a grand prescription to create greater “policy space” for a course correction for the nation, but no past behavior by politicans and bureaucrats of any stripe (or any era) suggests such a change of course comes about voluntarily from a political class so plainly and shamelessly bought off by powerful private interests.

                As long as lawmakers create and enforce laws for the benefit of themselves and their well-heeled patrons (not all of them on Wall Street), it’s naive to expect a huge new delunge of funny money showered on these reptiles to spend as they see fit might produce a qualitatively different outcome.

                Hope springs eternal, of course, but just bear in mind the Helmsley Rule: “We don’t pay taxes. Only the little people pay taxes”.

                1. Lambert Strether

                  The problem with this argument — which, for some reason, is regarded as a trump card by those who play it, to be held in reserve until the decisive moment — is that it proves too much. If we accept it, we accept that no collective action by “the little people” can net out positive for them. Obviously, that’s simply false historically.

                  1. bh2

                    I did not say “the little people” are powerless to act. Nor did I say no possible collective action by “the little people” can net out positive for them.

                    What I do say is no superficially clever policy “solution” which merely spreads more gravy on a corrupt and entrenched political class absolutely can possibly yield that result.

                    HIstory teaches very few greater lessons.

    3. Ben Johannson

      You want us to convert $3 trillion in securities to $3 trillion in cash and then . . . do what with it? Stuff it under the national mattress? It has to be put in assets that are minimal risk. That isn’t equities, it isn’t real estate, it isn’t mortgage backed securities. Guess what financial asset carries the least risk of all: that’s right, U S. Treasurys, which is why the dollars are parked in securities accounts in the first place.

      1. Auburn Parks

        Come on Ben, you know as well as anyone that $’s in reserve accounts earning .25% interest are virtually indistinguishable from $’s in securities accounts earning .1% interest

          1. Auburn Parks

            What on earth does the interest income the SSTF get have to do with anything? Those funds are irrelevant to SS spending, and as such the amount interest they receive from their TSY holdings are also irrelevant. SS spending comes from Congress passing law not from the trust funds

              1. Auburn Parks

                I did, although that wasnt my point. I originally responded to your comment about what are we going to do with that $3 trillion in securities accounts if there are no longer securities accounts. Well, that $3 trillion would remain in reserve accounts. So the money would be in checking instead of savings.

                Either way its irrelevant wrt SS spending, defense spending has no trust fund with numbers in some digital ledger and there is no need for SS spending to be organized that way either. All the trust funds do is confuse people and force irrelevant conversations like the one we are having.

                What difference would it make to SS spending if the govt used its computers to delete that $3 trillion altogether? It would make no difference at all, SS checks would still go out, and the private banks would still credit customer deposits and have their reserve accounts credited in return. Much ado about nothing.

                1. Ben Johannson

                  What Krasting suggests would require a significant change in legislation to eliminate the trust fund, hence the question: then do what with it? Current law would require it be put right back into the same structure, so what is the point of even contemplating the notion? We’re talking about a possible course of action under current law.

                2. DCR

                  “What difference would it make to SS spending if the govt used its computers to delete that $3 trillion altogether”

                  The $3 trillion (actually $2.67 trillion) in the Social Security Trust Fund was raised through excess FICA taxes and spent by prior governments on other initiatives. As soon as you delete that accounting entry, everyone else who owns U.S. Treasury securities would dump them all, so be prepared to monetize all of them and watch the dollar collapse versus all alternatives.

                  1. Yves Smith Post author

                    Huh? These facts are already known and the dollar is trading high relative all other currencies. The Chinese and Japanese are not selling their Treasuries because to do so would cause their currencies to appreciate, the last things they want to do. Both are committed dollar holders, and they prefer to hold them in Treasuries for some incremental yield rather than cash.

                    Keep spreading these goldbug myths….

      2. John Casper


        1. Health care Per Warren Mosler, let’s give every US adult an annual $5,000 medical/dental debit card. $1,000 is use it/or lose it. That’s for preventible stuff. Whatever you don’t spend of the remaining $4,000, you keep. Health care cost >$5,000, you’re covered by a really robust Medicare-for-All.

        2. Green infrastructure rebuild. Solar, wind, microgrids, biogas, aka natural gas from green sources as a bridge to hydrogen????

        3. Education. Is giving every high school graduate $80,000 a good idea? I don’t know, but it would sure cause higher education to do a lot of extra hiring.

        4. A federal job guarantee.

        Once you’re back to full employment, that fills up the tax rolls of the local and state governments.

        1. Joe Firestone (LetsGetitDone)

          I know and generally like Warren’s proposals. He’s thought them through carefully and will hold his own in any debate about them. Everyone should read them. That said, I’m not fully persuaded by each of them if implemented individually. As a program however, they make a lot of sense together, and if one disagrees with anyone of them then I think a critique should occur in the context of one’s own alternative agenda.

      3. Joe Firestone (LetsGetitDone)

        Ben, I want that too, not because it matters from a financial point of view, but because it removes the faux political issue of whether or not there’s an SS “trust fund” from the table. In addition, replacing those bonds with reserves would show people that a large portion of the debt subject to the limit can be repaid at will. That demonstration is very useful in getting people to understand the reality that fiat sovereigns cannot become insolvent, and that is the first lesson we want people to learn.

        1. Ben Johannson

          Joe, my point of objection is this: “The Trust Fund shall consist of the securities held by the Secretary of the Treasury for the Old Age Reserve Account on the books of the Treasury on January 1, 1940, which securities and amount the Secretary of the Treasury is authorized and directed to transfer to the Trust Fund, and, in addition, such amounts as may be appropriated to the Trust Fund as herein under provided.”

          The statute specifies the fund hold securities, which means we’d need a legislative fix. Should an attempt be made to liquidate the fund I think you would agree the legal challenges would be quite a barrier. It isn’t enough for us to have the capacity to swap portfolio composition, we have to authorize ourselves to do it.

          1. Joe Firestone (LetsGetitDone)

            Thanks, Ben. I hadn’t seen that language, but a way around would be readily available, I think. Set up a sub-account of the Treasury General Account and allocate it to Repayment of that part of the public debt due to the SS Trust Fund. Then introduce a bill in Congress allowing reserves to be swapped for the securities in the account. Add to the bill allowing the Treasury to pay off the principal on any securities held by the Fed. When the Rs refuse to pass it beat them up for blocking repayment of a about 7 trillion of the public debt. When you win the next election pass the bill, repay the debt and continue with the program.

    4. Torsten

      Thanks, Mr. Krasting. Without your input the mention of a platinum coin for SS would likely not get a mention on a blog like NC. It is more likely, some goldbug libertarian blog, funded by the Koch brothers, will launch a massive “education” campaign explaining how the Democrats really want to use the platinum coin to gut Social Security. Of course it is the goldbug libertarians, not (all the) Democrats who most want to do gut Social Security, but the libertarians’ immediate purpose will be to strike sufficient fear into the herd to immobilize it while the austerian slaughter continues.

    5. Carlos Fandango

      While we are dreaming, I was hoping the NSA, after devising a trojan-worm-virus to wipe out the Russian banking system accidentally released it through the back doors they created on their own citizens computers. Wiping the 1’s and 0’s from all American bank accounts. The look on their faces as they wonder what to do next.

      1. casino implosion

        That info is all backed up on air gapped data storage pods in hardened sites with emergency power. I’ve worked on the structures in Jersey that house all that stuff.

    6. Joe Firestone (LetsGetitDone)

      Bruce, Paul Krugman reluctantly supported using the Trillion Dollar Coin to break the deadlock in the debt ceiling in January 2013. He never supported using PCS in magnitudes of $30 T and above. I’m not aware of Bernie Sanders or Maxine Waters or any “progressive” Senators or House members advocating using PCS in magnitudes greater than a few $Trillion at a time. So advocates of game-changing uses of the coin have not been found among well-known “progressives” who all appear to be afraid of abandoning FDRs “political” method of “justifying” SS by claiming that people’s FICA contribution justified their SS entitlement in favor of his much superior, in my view, later justification in his economic bill of rights advanced in 1944. There the right to a pension great enough to allow retired people to live in dignity was recognized as one of a number of economic rights. In the long run, that is a much superior justification to “we paid In so we’re entitled,” especially since it matches so well with the idea of using whatever means, including seigniorage, the Government must employ to implement that economic right.

      Nor do I agree that there would be no support for a President who used the coin and quickly followed up with massive debt repayment and also had a bill immediately introduced into Congress to double SS payments. On the contrary, I think that President would get 85% of the votes of registered seniors in the next election provided the opposing party blocked the bill.

      Btw, I suggested that the SS “trust fund” be turned into reserves sometime ago as part of my original HVPCS proposal for minting a $30 T platinum coin in the Summer of 2011 at Correntewire.

  3. Steven

    The broad frames used in political-economic debates in Western Capitols are designed to bring about outcomes in line with the interests of Western plutocrats.

    IMHO this is another such frame. One conservative political truth is that inflation is about as regressive a form of taxation as those plutocrats could devise. How about taxing those plutocrats directly? Reinstating the ‘death tax’ could even allow the resurrection of the best part ‘old time capitalism’ by allowing genuine ‘wealth creators’ to enjoy more of whatever money can buy – DURING THEIR LIFETIMES.

    But that of course would require a society – and an economics profession – that had at least a clue about what genuine wealth really is. Hint – it isn’t money, even trillion dollar coins. Minting trillion dollar coins without taking an honest look at the last several centuries of economic history – and particularly the 20th – accomplishes nothing but constructing a shiny new cover for extending the Empire of Debt, for funding more neo-conservative adventures abroad.

    The Industrial Democracies (?) have spent several centuries sparing no opportunity to turn employment over to machines – and increasingly thinking and judgment over to computers. The West’s definition of wealth creation is any activity that produces money. It really doesn’t matter whether that includes producing bullets and bombs or sending the remaining opportunities for ‘full employment’ beyond its borders so long as it is ‘legal’. (The old timers didn’t call it “political” economics for nothing.)

    This country’s decline started when the children of the Robber Barons turned their money over to the nation’s bankers, just as Britain’s began with the financialization of its economy. If indeed many of the 99% have become “useless eaters”, the 1% (and shrinking) have only themselves to thank. There is a bitter irony in the West’s plutocracy having bankrupted itself (using any honest standard of accounting) in its attempt to conquer the world with debt. I fully subscribe to not letting money stand in the way of “serving the public interest as the goal of government spending” and attending to our obligation to future generations.

    But pretending any of this will be accomplished by simply funding full employment (raking rocks? more military Keynesianism?) is simply dragging out a discredited palliative that saved ‘capitalism’ (SIC) with a century of war and waste. The one great idea the MMTrs have advanced is putting the world’s oligarchy on a desert island and letting them use the money they have accumulated in an attempt to feed themselves.

    1. Torsten

      Why refer to gardening with the pejorative “raking rocks”? This country needs better gardens desperately.

      1. susan the other

        Yes, and along that same rocks-and-gardens line, this country needs all sorts of socially beneficial things – there is no lack of good projects we could put our labor to … but oh, I forgot, they are useless and valueless because they aren’t part of the conversation … it’s the conversation that counts … oh well… we’d better just give our last dying breath to the oligarchs and consider ourselves lucky.

    2. Rosario

      Good points. I really can’t stress enough how important a healthy society and politics are to any monetary model, and with this, a sound sense of what is essential for the health of a society in the long term. The free market/hyper-individualist dogma has become so common it has even infiltrated the previously critical branches of the hetrodox economics crowd. Your point regarding what we would do with stimulus spending is right on. In the current investment culture (if we want to call it that) who knows. Tourist rocket flights to space, more fracking by wildcat developers, convenience gadgets by Google/Apple, etc. In contrast, roads and utilities are degrading, electricity distribution models are outdated, energy production methods are outdated and ecologically costly, public/efficient transit models are either backward or only progressive in rich, gentrified cities, and on and on. Seems that standing right behind our unserviceable debt is the ideology of individualism gone too far. If we don’t believe in “society”, why bother pretending we have one, why have a currency at all.

  4. casino implosion

    The platinum coin! They should have a parade to bring it from the Mint to the Federal Reserve or whereever they keep the thing…a platinum coin the size of a manhole cover, escorted by an armored division while Randall Wray and Warren Mosler deliver W.J. Bryant style orations to cheering thousands.

    1. MartyH

      It should have an image of a Deficit Owl on one side. I haven’t figured out what ought to be on the other side.

      Stephanie Kelton should be carrying the Murrican Flag in the parade.

    2. craazyman

      That’s a good idea. To make it huge like a manhole cover. If it’s small, somebody might lose it through a hole in a pocket. That would be bad.
      They’d get to the bank, reach in the pocket and find the coin is gone! Holy Smokes, God knows where it is. It could be anywhere from under the car seat to in the gutter someplace out on the streets. What if somebody found it and thought it was a Canadian dime or quarter? What if they put it in a laundry machine? I’ve done that, put foreign coins in a laundry machine. It acctually worked once and I save 25 cents. I think it was an Italian coin from way back. it might go back to the machine supplier and get deposited with all the week’s coins, and the next day their bank account has $1,000,000,003,457.00 dollars in it.

      A manhole sized coin solves all these problems, but there”s one new problem. If you take it to a bank, how the hell is the teller going to get it deposited? you’d have to roll it on its edge through the teller window and it’s too big to fit in their coin drawer. And no coin counting machine could take it.

      That would be horrible. To go to all the trouble making the coin only to find out it’s too big to use.

      1. craazyboy

        The other problem with making a really big platinum coin is it would be kinda expensive. I think they meant making one out of one ounce of platinum – that way it would only cost around $1500, maybe $1600 if they had a union guy pour the mold.

        You can’t spend a lot on a coin if you want a lot of left over purchasing power on it. See?

        1. craazyman

          You could make it small and weld it to a manhole cover sized disc, but what if the welder melted it by accident. Would it still be worth a trillion? I guess it would be if the govermint says it is, but that would be an unauspicious beginning that;s for sure.

          You could have a backup ready in case the welder ruined the first one, but you’d have to make sure the backup doesn’t get lost. Jesus. what if the first one worked and the back up was the one that got lost? Then you’d have 2 trillion dollar coins deposited in the banking system if somebody found the 2nd one and tried to wash clothes with it.

          It would be an awesome responsibility, to make sure this works like it’s supposed to, Maybe they should start with a 50 billion dollar coin, to iron out any problems. Sort of like pre-season football

          1. craazyboy

            Yes, I think caution is in order here. Maybe crazy glue the 1 oz coin to a dinner plate so it’s harder to lose and no one can stick it in any kind of vending machine?

            Going for just 50 or a 100 billion for starters seems prudent too. Plus if you say you are going to pay the defense budget with it, then it sounds like you are being responsible and not wasting money on social spending garbage. Just pour a dozen or so, then you’re ready to go after paying them the first one.

            It’s important not to mess up – because then people will laugh and you run the risk of making a joke of your money!

            1. Joe Firestone (LetsGetitDone)

              No problem. Just give the 1 oz. coin to a team of Secret Service with one having custody of in/his her pocket. No thief interested in financial gain alone will try to rip off the coin to get credit at a bank, because they can’t negotiate it. So what we’re looking at is people wanting to embarrass the US paying thieves to lift it. A team of 100 Secret Service agents should be enough to deter any thief. If you think 100 isn’t enough then give an alternative number. Whatever it is, I’m sure it will be enough to secure the coin and deliver it to the New York Fed where it will be deposited, and then placed in the vault at that bank as a permanent asset.

      2. Carlos Fandango

        The accidentally pocketing a trillion dollar coin nightmare unfurls.

        “I’m sorry sir I don’t have enough change for that …. I’ll just pop next door to see what they have in their float”

      3. Joe Firestone (LetsGetitDone)

        Fun fantasy, but if the coin were lost or stolen, it could not be used, because whenever someone tries to transact with it, they would obviously be presenting stolen property of the Treasury or the Fed.

        Forgive me, I know these fantasies are all in the spirit of fun, but if the fun isn’t based on the reality of the coin, all it will do is feed the silly myths about the coin which only serve the plutocracy.

      4. Lambert Strether

        Jokes about the physical nature of the coin are always a sign that understanding has gone off the rails.

        The importance of platinum, in this connection, derives not from that metal as such, but from the legislation that enables the coin to be minted, which specifies platinum. If the legislation specified the stone wheels of Wap, we’d be talking about $60 trillion stone wheels.

    3. Joe Firestone (LetsGetitDone)

      Sorry, the Treasury isn’t authorized by Congress to have the Mint create a platinum coin whose face value is specified at the discretion of the Secretary that weighs anything other than 1 oz. So, unless that manhole cover-sized coin can weigh only 1 oz. I’m afraid Randy Wray and Warren Mosler won’t be able to treat the millions of parade onlookers to their oratory.

  5. James Tennier

    Trillion dollar coin(s) render “investor class” obsolete as there would no longer be a need for “their money” to fund the activities of the rest of us.
    Biblical references to “money lenders” and Sharia law are clearly on to something.
    I would preface the issuance of these coins with a debtors’ jubilee.

    I have spent a life “earning money,” that is enough to live on comfortably, nothing more. I have no regrets at having not been a member of the “others:” the investor class, who extract their living from the sweat of others.

    1. DCR

      While some members of the investor class do, in fact, “extract their living from the sweat of others”, many more members of the investor class are actually just people who produce more than they consume, and are essential to the current standard of living of the many today who consume far less than they produce..

      1. Joe Firestone (LetsGetitDone)

        Who are these who “produce” much more than they consume? Name some. The Kochs? The hedge funders? Bill Gates? Warren Buffet? Ginny Rometti? I think what we have to keep in mind here is that most of us “produce” less than we consume by ourselves, because while we consume as individuals, most of what we “produce” is only done through our social networks of various kinds, which means that none of us as individuals really “produce” what we claim to. Aristotle knew that, but today’s Randians do not!

  6. Jim

    So Joe, does the framework that you support also imply, through its focus on the issuer nature of the platinum coin, that the U.S.Treasury, in its present form, is also a currency issuer rather than a currency user?

    1. Joe Firestone (LetsGetitDone)

      The issuer of high-powered Government money is the US Congress acting in concert with other parts of the Government to which it has delegated authority to issue coins, currency, and reserves. Reserves are the province of the Fed, currency is ordered by the Fed and actually still physically created within the Treasury Department by the Bureau of Engraving and Printing. Coins are created within Treasury by the US Mint.

      So, the answer is that the authority to issue platinum coins delegated to the Treasury and the Mint by the Congress doesn’t make the Treasury a currency issuer. But it does give the Treasury the authority to create coins which along with other authorities it has from Congress enables it to force the Fed to credit its accounts with the face value of platinum coins in the form of reserves which Treasury can spend provided Congress has either appropriated the spending or the spending is necessary to repay debt the Treasury is obligated to repay under the 14th amendment.

  7. Fair Economist

    Regardless of his personal inclinations, Obama is strategically cautious and is never going to mint the platinum coin to stop austerity. He’ll mint it only to save the banking system. He’ll never risk the kind of invective he’ll face if he really does blow away all the illusions of a money-limited federal government. I suspect he personally accepts the VSP claim that printing money in a depression leads to hyperinflation (he’s not an economist and defers to conventional wisdom), but even if he’s really a MMTer at heart, he’s still not going to mint the coin unless forced.

    1. Joe Firestone (LetsGetitDone)

      I think you’re probably right that Obama won’t use the platinum coin authority to mint a coin with a high enough face value to change the political game supporting austerity, but here are some qualifications to your reasoning.

      First, he’s not strategically cautious across the board as we can see from the foolhardy actions of the US in Ukraine and in pursuing the drone policy in the way that it has.

      Second, he ‘ll use either the platinum coin authority or perpetual bonds called consols to avoid a default on US debt if he’s pushed to the wall by Republicans who insist on his dismantling the ACA, or on other things like privatizing SS right now, in return for raising the debt ceiling.

      Third, on the other hand, I’m sure there are very harmful things the Republicans can persuade him to acquiesce to, or to appear to acquiesce to, in return for avoiding a default, such as cutting various entitlements, sacrificing net neutrality, or passing the Keystone Pipeline legislation, if it’s brought up for consideration again after he vetos it the first time.

      Fourth, he can’t be an MMTer at heart and also believe “the VSP claim that printing money in a depression leads to hyperinflation.”

      And fifth, I think it’s now the conventional wisdom of people like Larry Summers, and probably Gene Sperling too, that limited use of the platinum coin, say minting $1 T to avoid both a default and giving up something he doesn’t want to give up right now, won’t create hyperinflation.

      Indeed, I think a scenario in which Obama mints a $1 T coin, heads off a default, and then makes Josh Barro’s “betrayal” deal with Congress to give up the platinum coin authority in return for the low price of Congress repealing the debt ceiling for good is perfectly possible sometime during this round of negotiations. It’s the kind of deal Obama would to make it appear he’s getting something in a negotiating, when really he has the power not to give away anything at all.

  8. Randy

    So what was Hamilton versus Adams all about if the USG can issue money at will? I recognize trade is inherently good. Money should move at a high velocity. But what you propose sounds like a departure from reality.

  9. Jimmy

    Re: Platinum Coin – Maybe I’m missing something, but it seems that QE involved essentially the FED “temporarily” making a lot of “bad debt” become invisible as if it was still “good debt”. So financial corporations seem to have benefited most (by surviving) – then the stock market including financial stocks (as long as interest rates are low) – and pension funds and social security and medi-care could continue as it nothing was amiss. It seems to me that virtually all of the impacts of zero interest deficit spending are already taken into consideration by the “global markets”. Minting a Trillion Dollars here and there as needed just doesn’t seem like a big deal – Again, I may be missing something, it seem Minting is cheaper that selling Federal Debt – until it isn’t.

    1. Joe Firestone (LetsGetitDone)

      Right, but I’m not advocating limited use of the coin. I’m advocating for a coin great enough in face value to eliminate Treasury’s issuing debt instruments for many years, not because it’s cheaper to do that then to issue debt. Any difference in amount spent isn’t important to the ability of the Federal Government to afford it. But because it removes the debt subject to the limit as a political issue conservatives can use to block an activist federal Government from solving problems and achieving public purpose.

      1. Clifford Johnson

        IMHO, the Treasury’s issuing coins in the amounts you propose would violate separations of powers, in that Congress intended no such unbounded delegation. But I do agree that the threat of default activates the Fourteenth Amendment, authorizing issues in amounts reasonably necessary to avoid default. Without an imminent danger of default, the unilateral issuance of fiat currency (other than low denomination coins minted to meet public demand) would seem governed by 31 U.S.C. § 5115(b), which limits the circulation of US (versus Fed bank) notes to a mere $300 million maximum, and bars their use as reserves. Despite its literal limitation to United States paper money, the statutory purpose was surely to bar the unilateral production of substantial amounts of fiat money/reserves by the government (versus the Fed). The statute allowing for unilateral platinum coin issues without setting a limit was intended merely to take full advantage of bullion market opportunities, not to permit vast issues of fiat money to pay off the public debt.

  10. casino implosion

    Whenever this platinum coin/MMT stuff comes up, I imagine three high level people sitting somewhere, maybe the Hamptons, maybe the executive club in the NY Fed building, drinking scotch…

    PERSON ONE: Wow, can you imagine what would happen if the average Joe in this country understood how the monetary system actually works?

    PERSON TWO: Never happen.

    PERSON THREE: From your mouth to God’s ear!


  11. davidgmills

    Joe, I have one Constitutional issue with this. The power to coin money under Article I, Section 8 of the Constitution lies with Congress, not with the Executive. When Lincoln did it with his greenbacks, he did not do it himself: Congress actually did it at his request when the government had no ability to finance the civil war.

    I know there are statutes that give the President authority to coin money through the Treasury. But I doubt that Congress had in mind printing trillion dollar coins when the statutes gave authority to the treasury to coin money. I think the hooting and hollering would be extreme.

    But I love the idea anyway. Perhaps it could be done incrementally, the same way Presidents seem to get us into war.

  12. Clifford Johnson

    I agree that Urie’s important point is that using a $1 trillion coin to render the debt ceiling irrelevant would demonstrate the “contrived nature of the austerity ‘debate’ in Washington.” I do not agree that “the larger the face value of the coin is, the more convincing would be the demonstration that the ‘debate’ is a contrivance to fool people.” On the contrary, the $1 trillion coin would seem already too large for the public to take seriously in the first place.

    Surely a $10? million coin, issued in quantities only as occasion demands sufficient to avoid default would gain more traction—not to mention constitutional credibility? Moreunder, I see in the $1 coin a far realer and readier tool to first so inform public debate, as set forth in How The One Dollar Coin Can Cure The Economy at

    Since 1990 half a dozen plus GAO reports have estimated the benefit to the government of eliminating the $1 Federal Reserve note (a privately-issued bank note, printed on demand for the Fed banks at cost), in favor of a $1 United States coin. These estimates have uniformly and grossly suppressed the full reduction in the reported public debt that would automatically accrue from redirected and increased seigniorage, as follows. Assuming that the public will choose to hold 50% more $1 coins than $1 notes:

    (1) The GAO does not count the face value of any new $1 coins, although the public debt will be reduced by $1 per new $1 coin (regardless of whether a $1 note is correspondingly retired). However, the GAO does purport to count the interest saved by this scrupulously unreported reduction in the public debt. (If anyone knows of any source showing that circulating coinage is counted in the official public debt, please correct me on this. The mere fact that coins must be accepted if offered in tax payments would seem besides the point even if it were not up against the well-known black-letter IRS injunction NOT to tender any cash.)

    (2) The GAO presumes that the retirement of $1 notes drives an equivalent sale of Treasuries, thereby reducing the interest (Fed profits) that is returned to the government; whereas, the new norm of excess reserves (which Fed guidance projects indefinitely) has thoroughly decoupled the sale of Treasuries from the retirement of $1 notes (a causal relationship in any case dubious).

    Pressing the GAO for amended estimates of the benefit of the $1 “coin-swap” is the avenue that I am following, in hopes of ultimately promoting public education as to the artificiality of austerity. Recent correspondence with the GAO on this issue is at

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