Joe Firestone: The Platinum Coin Returns

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Yves here. As Lambert pointed out, it was the blogosphere that propagated the idea of the platinum coin, showing the power curve of references to the concept propagating through the media, and key phases in how the idea went from utterly fringe to being acknowledged as an emergency debt ceiling busting option, a classic case of moving the Overton Window. As Lambert wrote in 2013:

I make no judgment on outcomes…However, I do think the data presented here shows definitively that blogging is not dead and has a real impact on the discourse and the perception of policy alternatives. In addition, I think the phases (hat tip, letsgetidone) may turn out to be a useful analytical tool for other campaigns.

And as Lambert says, “Now the coin is in Brookings, the Inner Citadel!” Well, even if, as Joe Firestone points out, they can’t bring themselves to give it an intellectually honest treatment: “What’s their response? Marginalize it, of course!” But the fact that Brookings feels it has to address it at all is a form of progress.

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 New Economic Perspectives. Originally published at Corrente

Upon my oath, I didn’t intend to bring back the coin proposal until much later in the re-newed process of Republican hostage-taking over the debt ceiling. After all, there’s not much chance that the President would ever use the platinum coin option, because his budget policy direction of getting ever closer to a budget surplus, is best served by a “forced” compromise with the Republicans, that results in another few hundred billion in spending cuts for 2016, while allowing him to place the blame on them for that outcome. Using the platinum coin option would not have that result, because it would deliver a clear victory to him.

Of course, he doesn’t want a default due to Republican brinksmanship either, so if the Republicans do drag everyone too close to the cliff, then he may decide to take some extraordinary measures and the coin is one that is available, so it’s conceivable that he might choose this undoubtedly, from his point of view, distasteful option. It is for this reason, I suppose, that the Brookings Institution is warning him off the coin to weight his choice towards some more conventional approach.

The Brookings Warning

The warning was delivered in the form of… a paper by Philip A. Wallach, in which after devoting a good deal of attention to the historical and current political context of the coming probable crisis over the Treasury breaching the debt ceiling law he asserts the “enormity of the threat posed by a failed debt ceiling negotiation.” But nevertheless he also asserts that any of the solutions proposed by those advocating for a way around such a crisis would not work because:

. . . the political dynamics of the debt ceiling standoffs make it so that any deus ex machina capable of extracting us from our current fights will strike people as deeply illegitimate, heighten political tensions, and potentially accelerate the constitutional crisis it is meant to ward off. A brief consideration of two of the most-discussed options shows why this is the case.

This is not really an argument, but a conjecture, and one that is a matter of opinion, certainly not backed by any empirical evidence, and not blindingly obvious to many people, including myself. Wallach claims this conjecture applies to all of the main proposals for getting around the debt ceiling, but focuses on two: first, a 14th Amendment-based challenge to the debt ceiling law accompanied by continuing debt issuance in violation of the debt ceiling legislation; and second, the President using the Platinum Coin authority, accorded to the Treasury in a 1996 law to have the Treasury Secretary order the US Mint to create a trillion dollar platinum coin, deposit it at the Federal Reserve, and then use the seigniorage from the coin to make debt payments, and to deficit spend to avert the current debt ceiling crisis.

I won’t discuss the constitutional challenge to the debt ceiling law using the 14th amendment in this post, because, for reasons I gave in much detail in my book on this subject, I don’t think it is a valid challenge to the law, until all other possible solutions to the debt ceiling crisis have been tried. In other words, I think that the 14th amendment move is a last resort, and that if the Court decides a case on this correctly, then it would throw out the breach of the debt ceiling as unconstitutional, if other ways of resolving the crisis by avoiding the debt ceiling rather than relying on the 14th, were available or remained untested.

So, my view is that there is a temporal priority here, and a constitutional challenge based on the 14th amendment isn’t even appropriate, unless alternatives like consols, the platinum coin, and other expedients are tried first and tested for constitutionality. For this reason, I’ll restrict my discussion here to consideration of Wallach’s critique of a platinum coin-based solution. Readers who are interested in a broad consideration of all the main alternatives can consult my book.

Wallach continues with this statement which he applies to all alternatives proposed to get around the debt ceiling law including using platinum coins:

This thinking is almost comically blind to the potential downsides of such a declaration, however. Congress, which has always worked to resolve debt ceiling confrontations in the past, would rightly see the executive branch (or judiciary) as attempting to usurp its constitutional borrowing power, now and forever after. There would be no way to de-escalate what would quickly become one of the most significant interbranch conflicts in American history, and it seems hard to imagine that Congress would have any other recourse than impeachment. As this epic battle played out, U.S. debt repayments would look less certain than ever and the country’s international reputation would (justifiably) plummet.

This is another political judgment of questionable value from Wallach, because it would be a highly partisan Congress that would provide such an interpretation of the use of an extraordinary measure to lessen or eliminate the leverage in negotiation they gain from using the debt ceiling law in the way they have. The American people are very unlikely to back their view that a counter move to free the government from Republican hostage-taking was a usurpation of power by the Executive, since it is probably the majority view now that using the debt ceiling to extract cuts in Medicare, Social Security, and other entitlements is a usurpation of power by a Congress, which was unwilling to get this done through its control of appropriations, and was now coming back to take a second, illegitimate bite at the apple, in spite of the opposition of a substantial majority of people to such cuts as measured in poll after poll.

How the legitimacy question would play itself out, however, surely depends on the particular alternative solution that the Administration decided to push. For example, if the President gave orders for consols to be issued by the Treasury department, I think it is very unlikely that the Republicans in Congress would be able to whip up a great deal of rage in the country to oppose this, since there is no basis at all in law for saying that the Administration’s debt issuance functions exclude issuing debt that is not subject to the limit, because its principal never has to be re-paid.

So, I think that all the public is likely to conclude from such a move is that just as the Republicans were pulling a fast one, and using a mere technicality, to get cuts in popular discretionary and safety net programs, the President was replying with a perfectly legal fast one of his own, using a technicality to avoid a government shutdown. Very likely, a majority of people would conclude that turnabout is fair play if consols were involved.

And it’s very unlikely that Congress would contest such a move in Court, since the case would be very weak, and the Courts would likely either refuse to intervene in such a dispute or decide that Congress as a whole has an authoritative remedy, namely specifically, prohibiting the practice of issuing consols. So, where is the “constitutional crisis” in all this. Not every instance of disagreement between the Executive and the Congress is a “constitutional crisis” is it?

Wallach raises the issue of impeachment regarding the President’s using an extraordinary measure to get around the debt ceiling law. Well, the Republican Congress can certainly try to impeach this President beginning one year before the next presidential election. But what are the chances of their doing that?

Their doing so, would certainly be seen as a partisan effort in response to a government shutdown crisis, precipitated by a highly partisan Republican Congress. By the time they got to the impeachment details, proceedings would have to be held in 2016, and the Republicans would be getting pilloried once again as the do-nothing party that doesn’t do anything but investigate Democrats, waste time in Congress, cause government shutdowns, and generally refuse to do the job of governing they were elected to do. What would that do to their chances of winning the presidency and holding the White House in 2016? What would that do to their chances of holding the Senate? What would that do even to their chances of continuing to hold the House? And what would happen in the 2016 elections to the Republicans who were the ringleaders in the impeachment proceedings?

In short, an impeachment move in retaliation for the President using a “trick” of some kind to save cuts to popular programs would be political suicide that whoever is the new Speaker of the House will not allow the Republicans to commit. And surely, Mitch McConnell would not be so politically stupid to give up whatever chance he may still have to sit once more in the Majority Leader’s Chair, just to chase the Republican’s white whale one more time, before a new President takes office.

Moving to the the platinum coin option specifically, Wallach says:

Very similar problems would attend any attempt to exploit legal technicalities as a way out of the debt ceiling bind. The most popular of these has been the platinum coin option, in which the Treasury would use a legal provision designed to allow it to create platinum coins of any denomination to mint coins with $1 trillion (or more) in face value, which could then be credited to Treasury’s accounts and allow timely payments to be made without raising any over-the-limit debt. Proponents of the idea concede that Congress never meant to give the Treasury such an unbounded power, but point out that it was put in place to generate seigniorage income (government profit reaped through issuing currency). And they argue that exploiting this loophole has policy consequences less egregious than playing out repeated debt ceiling confrontations. . . .

One person’s “legal technicality” is another person’s plain language in the law. The language clearly says that the Secretary has the discretion to specify the face value of any platinum coin he mandates be minted. That is not a “technicality” it is what the law says.

It is of no moment that no individual Congressman intended to give the Executive such broad authority. The fact is that Congress as a collective voted to give that authority to the Executive and then the President signed the bill into law. So, it is the law! Now the question is whether the President will use his authority or not. It is not whether he has that authority.

Once again this ignores the way in which a small chance of debt ceiling negotiation breakdown is replaced with an absolute certainty that Congress would feel that the president had inappropriately usurped powers that belong with the people’s branch. Once again de-escalation apart from complete congressional acceptance would be very difficult (though at least in this case statutory changes could clearly prohibit the maneuver in the future), and impeachment would be very likely.

This statement doesn’t take into account either the dynamics of the debt ceiling negotiation process, or the mechanics associated with the particular measure the Treasury might use. If the President were to use the platinum coin option, then this could be done within a few days of the Treasury running out of “head room” and being forced into auctions where it might lose control over the price of the debt instruments it sells. So there would be ample time for negotiations to be successful before then.

The President could also provide repeated warnings to the Congress that time was running out and that he would be constrained to take extraordinary measures to fulfill his constitutional duties to spend duly appropriated Congressional mandate. He could leave them guessing about exactly what he would do, and he could hold the exact measure he would take very, very close.

If the platinum coin were used, then no one need know that until the coin hit the Mint’s account at the New York Fed, and the seigniorage was then swept into the Treasury General Account (TGA). Only then, would what the President had done become public, and only then might negotiations break down.

And even then, negotiations would not have to break down, because the President could talk to the nation about why he was forced to mint the coin, offering his pledge to the people and to Congress, that he would not use the seigniorage in the TGA to either pay debt or cover deficit spending, provided Congress lifts the debt ceiling, and gives its pledge that it will respect the Constitution and obey the 14th amendment, Section 4’s stricture against questioning the debt of the United States, during the remainder of his term.

And, if the President is wise, then he will have the Treasury Secretary cause the minting of a platinum coin having a face value that is large enough to give Congress no incentive to remove the platinum coin seigniorage authority from the Executive branch, say a coin with a face value of $100 Trillion. That money could then sit in the TGA as a guarantee that debt ceiling political hostage-taking will be gone from the American political system for a long time to come.

A good rule of thumb for executives in troubled times: if you can help it, don’t do anything that can plausibly be characterized as a coup. Both strategies just discussed fail this test. For all of the certainty summoned by the champions of the “solutions” that they are legally in the right, they err in thinking that legal correctness is the crux of the matter. Such high stakes constitutional law is always to a large degree constitutional politics, and the maneuvers they propose would unquestionably escalate hostilities in our already troubled polity. The Obama administration’s explicit rejection of these options thus shows real prudence. . . .

I am not of the opinion that the President’s actions in the 2011 and 2013 debt ceiling crises have shown “prudence” and I think, that is yet one more mere opinion from Philip Wallach, solemnly intoned, but not shown to have any substance. Instead, I think that the President’s actions risked what has now become a series of hostage-takings that have cost the American people dearly and still have not ended debt ceiling politics. Nor have they avoided an escalation of hostilities with the Republicans, who have continued emitting extreme hostility toward the President, since he took office, and only intensified that hostility once they took over the House after the election of 2010, and then again, after he won in 2012.

In other words, I think he gained nothing with his “prudence” when it comes to de-fusing the hostilities. What he gained however, was a good many opportunities to perform ritual dances with the Republicans to reduce deficit spending at the expense of the poor and the middle class, while blaming those same Republicans alone for his dedicated efforts to reduce the deficit in a display of faux fiscal responsibility, which he now celebrates at every opportunity, whenever he beats CBO’s projections about how rapidly the deficit will shrink.

Instead of negotiating with the Republicans, the President should have used the coin in the Summer of 2011 when the coin proposals first surfaced. By not doing so, he played a critical part in the sequester, the fiscal cliff, and the spending cuts that damaged the economy seriously, slowed the recovery and delivered austerity to many.

It would have been much more “prudent“ to have acted quickly and decisively in the Summer of 2011 to fill the public purse so that Congress could no longer cry “we’re running out of money,” to rationalize their cruel and fiscally irresponsible budget cutting. And yes, the President would have risked impeachment by the Republicans going into the elections of 2012, if he had done that. But I think the risk would have been worth it, and that it was the President’s duty to take it because that is what would have been best for the country.

I do agree with Wallach that the solutions to debt ceiling crises are not just a matter of law, but also a matter of constitutional politics. But, I also think that the constitutional politics would have worked out much in favor of the President, especially if he had minted a coin with the kind of face value I proposed here. Had he done that, then a $100 T initial balance in the TGA, followed by very rapid payoff of the Intra-governmental debt, and the debt owned by the Federal Reserve would have sent two clear messages to the people. First, the idea that the Federal Government can run out of money is a fiscal myth (see my newest book); and second, the Federal Government now had enough money in its spending to both pay off “the debt” entirely, over a period of years, as it fell due, and also to cover any conceivable deficit spending on the part of the Congress for many years in the future.

The first message would have removed the debt issue from the political table for a very long time and perhaps for good, if the Treasury retained the authority to mint platinum coins for good. And the second, would have removed any possible claim that the Government of the United States, could not afford a proposed fiscal policy, because the money wasn’t there.

Austerity advocates would in those circumstances have been able to argue against spending proposals on grounds of their undesirable effects; but the filter of deficit neutrality repressing fiscal policy for so long would also have been removed from American politics, and that would have been a great legacy for this President whether or not it would have cost him impeachment — a possibility which I strongly believe would never have come about because of the great popularity he would likely have gained by sending these two clear messages and disarming the Republican fiscal myths blocking full economic recovery.

Finally, The overall impression I received from this Brookings effort of debt ceiling issues is that its orientation was profoundly conservative in the foundational sense that it assumes that change in institutional practices and procedures even when authorized by law is dangerous, disturbing and almost always worse than letting real problems fester over a period of years in such a way that people who are not among the wealthy suffer a deterioration in their conditions amidst an exacerbation of inequality over a period of years. Wallach is more worried about the consequences of a disagreement between the Executive and the Congress, and more worried about maintaining fiscal conservatism than he is about that. In this he shows the growing Brookings bias belying its long-standing reputation as an “objective” think tank that represents a “liberal” or “progressive” point of view.

When Wallach says:

A good rule of thumb for executives in troubled times: if you can help it, don’t do anything that can plausibly be characterized as a coup. Both strategies just discussed fail this test

I don’t think that Wallach is giving us a test for “progressive” executives. Rather, I think that is a traditional (not a tea party) conservative’s test. Progressives are more likely to think that today’s Republican party is always claiming that the President is guilty of a coup, and is acting beyond his constitutional authority. So, what’s new?

I noted the word “plausibly” in that quote, well enough. But, a progressive will wonder what that means in the context of minting the platinum coin. Yes, it is a new procedure for ensuring Treasury liquidity, but it is authorized by Law, and, in addition, it leaves intact the constitutional prerogative of the Congress to control the purse strings. Even with a $100 T coin, the Executive still cannot spend anything Congress doesn’t appropriate. The Congress still retains the purse strings, even if they are the strings to a full purse. Where is the coup in all this? I don’t see it, and I doubt that many other Americans will see it either.

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  1. washunate

    Republican hostage-taking over the debt ceiling

    This premise continues to be flawed. There is no actual funding crisis. The debt ceiling is kabuki theater, not a substantive problem. Bipartisan kabuki theater, not a Republican problem. The debt ceiling has never – ever – not been raised.

    Drug warriors and defense contractors and hospital executives and banksters like gettin’ paid. The USFG spends every dollar it wants to.

    1. Just Ice

      Plus the National Debt (actually, paying interest on it) is “corporate welfare” according to Professor Bill Mitchell and the banks themselves would soon scream for more of it.

          1. MyLessThanPrimeBeef

            That government insured account idea is such a welfare program that’s not based on need.

              1. MyLessThanPrimeBeef

                OK, no need for government insured risk-free storage then.

                In fact, no storage at all is to be provided by the government in et another government welfare program, as it’s based on how big one’s cash hoard is.

                  1. MyLessThanPrimeBeef

                    Then people can decide whether to go to private banks with checking service with privacy that is protected under the Constitution or by law, or pay storage and transaction fees at a Big Brother location.

                    1. Just Ice

                      Roughly speaking except:

                      1) The banks would be 100% private so your account would be at risk.

                      2) Privacy protection could be mandated for the Postal Savings Service or equivalent too.

                      3) Storage and transaction costs are tiny these days thanks to modern computers and communications.

                      So yes, take your pick.

                    2. MyLessThanPrimeBeef

                      Of course, people can pay for their private bank accounts to be insured up to a certain amount.

                      And no one is ‘forced’ to lend to banks.

                    3. Just Ice

                      The insurance would be purely private so you’d be taking a chance it would pay off.

                      And yes, people are forced unless you consider no real alternative = freedom?

                      In any case, private banks enjoy privileges from government. Are you for that?

                    4. MyLessThanPrimeBeef

                      Quasi public, I think.

                      FDIC is an independent agency, no congressional appropriations.

                      If the people have no problem with that idea, it will stay. If not, it will go.

                    5. Just Ice

                      The FDIC is implicitly backed by the Fed and that’s the public’s money.

                      Yes, either this generation will take on the banks or that honor will fall to a more worthy one.

                    6. j

                      Why wouldn’t they? Who needs the FDIC if people have a risk-free Postal Savings Service they can use?

                      Why should people wish to continue to enable the banks to inflate the value of their savings away? Is that your wish?

            1. Just Ice

              What you’re describing is the current system – at least up to the $250,000 limit. Beyond that, there is interest paying sovereign debt, another scam, to protect principal.

    2. TarheelDem

      It gets resolves with a bipartisan House action that rolls over the 40 or so folks who are blocking Hastert rule action. That means that the Republicans have to agree to the Democratic caucus’s price for that coalition. That price is likely a clean debt limit bill and a clean appropriations bill (well not tied to cutting Planned Parenthood).

      Will the GOP leadership capitulate to those Democratic demands is the question. My expectation from the Ryan acceptance of the speakership is that the answer is yes but Ryan will try to get as much back for the GOP as he can.

      1. washunate

        I disagree with the framing that it’s the GOP vs. the Democrats, though. Sure there is horse trading around the Politically Acceptable Wedge Issue margins amidst the general lesser of two evils posturing, but there is bipartisan agreement about the basic philosophical framework of a budget that gives money to defense contractors and hospital executives and agribusiness and so forth. Republicans kind of attack abortion – Planned Parenthood is Evil! – but don’t actually pass legislation defining induced abortion as murder, while Democrats pretend to support abortion – We Must Protect Women! – without actually funding comprehensive reproductive healthcare or universal paid time off.

        Also, most of what Firestone is talking about is politics between the Executive and Legislative branches, not within the Legislative branch. It was President Obama who was pushing things like tax cuts and entitlement spending cuts for his Madison Ave branded “Grand Bargain”. The Catfood Commission wasn’t a creation of Paul Ryan or John Boehner or Mitch McConnell.

        This notion that Obama is the good guy and the Congressional Republicans are the bad guys is remarkably stale yet Firestone keeps coming back to it. For example, take this paragraph, where he develops a rather stark Stockholm Syndrome attachment, seeking desperately to cast blame on the GOP:

        I think that the President’s actions risked what has now become a series of hostage-takings that have cost the American people dearly and still have not ended debt ceiling politics. Nor have they avoided an escalation of hostilities with the Republicans, who have continued emitting extreme hostility toward the President, since he took office, and only intensified that hostility once they took over the House after the election of 2010, and then again, after he won in 2012.

        Hostility toward the President? You must be joking. They have worked together to give many trillions of dollars to connected insiders over the past decade while protecting them from even the most basic of accountability, never mind prosecuting lawbreaking.

        1. jonf

          There is always the possibility that the debt ceiling or the funding issue can result in horse trading. And the President can use that to hide behind as in “the bad guys made me do it.” I have never been comfortable with Obama’s objectives ever since that Grand Bargain episode and his deal to sequester. But if he has enough spine he may still need some help to avoid default or a shut down. But unless Ryan already has the deal with his buddies worked out, he may not bring it to the floor without horse trading. Therein lies the problem.

        2. Joe Firestone

          You’re sure you read carefully.

          What did you think I was alluding to here?

          I am not of the opinion that the President’s actions in the 2011 and 2013 debt ceiling crises have shown “prudence” and I think, that is yet one more mere opinion from Philip Wallach, solemnly intoned, but not shown to have any substance. Instead, I think that the President’s actions risked what has now become a series of hostage-takings that have cost the American people dearly and still have not ended debt ceiling politics. Nor have they avoided an escalation of hostilities with the Republicans, who have continued emitting extreme hostility toward the President, since he took office, and only intensified that hostility once they took over the House after the election of 2010, and then again, after he won in 2012.

          In other words, I think he gained nothing with his “prudence” when it comes to de-fusing the hostilities. What he gained however, was a good many opportunities to perform ritual dances with the Republicans to reduce deficit spending at the expense of the poor and the middle class, while blaming those same Republicans alone for his dedicated efforts to reduce the deficit in a display of faux fiscal responsibility, which he now celebrates at every opportunity, whenever he beats CBO’s projections about how rapidly the deficit will shrink.

          Instead of negotiating with the Republicans, the President should have used the coin in the Summer of 2011 when the coin proposals first surfaced. By not doing so, he played a critical part in the sequester, the fiscal cliff, and the spending cuts that damaged the economy seriously, slowed the recovery and delivered austerity to many.”

          Also, haven’t you read any of my previous posts that are hugely critical of Obama and that outline his motivating role in creating austerity? I’ve done so many of them, I can’t believe you missed them.

          Anyway, I never cast Obama as the victim in cutting budgets. However, the aggressors with respect to the debt ceiling fights are the Republicans, and Obama’s role is to use them to get what he considers are “responsible” cuts in the safety net.

          Other than these specifics I agree about the neoliberal consensus in most of the Congress.

          1. washunate

            I would just point out that’s an interesting use of however.

            It looks like you didn’t respond to my original comment, though, so do you basically agree? High value platinum coins and other policy proposals are solutions in search of a problem.

            The problem is not the basic plumbing of the financial system; it is quite capable of spending trillions of dollars a year. We’ve been doing that for an awful long time. The problem is management.

          2. washunate

            Also while comment replies are still active, thought I’d point out there already is public discussion about the framework of a deal being reached to suspend the public debt limit until 2017.

            The debt ceiling simply doesn’t matter. Congress and the President will fund the programs they want to fund. Period.

  2. Just Ice

    Re consols:

    Can they be recalled and paid off with new, interest-free fiat or would they be a perpetual drain of needless interest from the US Treasury?

    1. Joe Firestone

      Depends on the consols, and the terms Treasury wants to offer, but the key point is that as long as the Treasury isn’t committed to pay the principal amounts, then consols aren’t counted towards the debt ceiling.

    2. washunate

      It doesn’t look like you have a response to that inquiry, so I’ll take a stab. I’m not a bond expert though, so take with a grain of salt. Short version: yes, they can be recalled any time.

      Which is why they are meaningless to the debt ceiling. No private actor would pay a lot of money for a low face value bond that could be called out from under them, while a high face value bond simply adds more obligations subject to the public debt limit. And no governmental actor with a big check book *ahem* FRB NY has the legal authority to purchase low face value bonds at high prices directly from the Treasury.

  3. Schofield

    It’s fairy tale time again for grown-ups. Because the big No. 1 Neoliberal tale tells you that market capitalism (despite the inequitable control of capital) always balances itself to provide a happy ending for everybody so there’s absolutely no need to do any accounting at the national level of the economy to see how the three sectors are balancing out with each other. Then it’s move onto believing fairy tale No. 2 in which your sovereign government can’t create money in its own right “rent” free and consequently government should budget itself like a household and run a surplus just in case some big bad “progressive/socialist” wolf comes along and upsets the apple cart. Jez will people ever grow up?

    1. Joe Firestone

      Not unless we keep hittin’ ’em up side the head thousands of more times! Make that millions!

  4. Bearpaw

    Where is the coup in all this? I don’t see it, and I doubt that many other Americans will see it either.

    I think here and at other places in this interesting article, you underestimate the ability of the Republicans to funnel their lies and distortions through the media to manipulate public perception. They aren’t always successful, but they’ve had quite a few grotesquely impressive efforts.

    1. Joe Firestone

      I agree. But Wallach referred to “plausibly” characterizing things as a coup, not simply creating a transparent propaganda tactic that may or may be successfully sold by Frank Luntz. I think the reality is that anything the President does is subject to demonization by the Right. But if they just get the usual 20 – 25% of the populace believing the worst then that won’t be much of a threat to governing. So, moves that are good ones have to be made, and we do have to frame them well and persuade people that they are the right ones. But if we refuse even to do the right things out of fear of the propaganda capabilities of the Republicans than they’ve beaten us before we start because they’ve shifted the Overton window way, way, over to their side.

  5. craazyman

    does it have to be platinum? why not make it out of some sort of carbon-fiber nano technology that at least shows the US can still lead the world in materials science? symbolism matters.

    Maybe something using a biodegradable substance for ecological sensitivity.

    of course you’d have to spend the money before the coin degraded, unless you kept it in a sealed and lightless vacuum. that would be a problem because some people wouldn’t believe it was there, like the gold in Ft. Knox. then it would just be “debt” and not real money backed by a trillion dollar coin.

    Also, whose picture would go on this coin? Andrew Jackson’s hahahahahah. sorry. I’m not sure if that would be a joke on or with Mr. Jackson. He’s already on the $20 anyway.

    OK, I know what everybodys’ thinking — put Milton Friedman’s picture on it! ahhahahahahahah That would be hilarious. On that back you could put an engraving of a coin operated laundry machine. It would be funny to see if anybody connected the dots.

    1. NOTaREALmerican

      I like the idea of “biodegradable” coin.

      Make it like an an Alka Seltzer. Plop plop fizz fizz oh what a relief it is…

      1. Lambert Strether

        Whenever people make jokes about the substance or physical characteristics of the coin, it betrays either ignorance or a desire to deflect; or possibly both. I grant this is a new joke.

        1. craazyman

          you give me too much credit (no pun intended) on both counts. but not enough credit as a comedian! that’s really all I am.

    2. craazyboy

      Why does it have to be a coin? It could be an expensive Edward Green shoe. Better yet, a pair of Edward Green shoes so we don’t need to do it again in 3 years! Maybe throw in some shoe strings every month for the DOD budget. To be on the safe side, stock some shoe polish in Ft. Knox for those unexpected financial crisis that come along now and then.

      But if it must be a coin, then who do we put on it is something to think about. I think if we put Jackson on the front then we should put Jefferson on the back. Have both of them laughing ’cause they were both right.

      I’d be tempted to put all the members of Pink Floyd on it, along with some miniaturized electronics playing the tune “Money”. It is $99999998000 of fiat currency, not merely platinum, after all.

      We should rule out Milton Friedman or any past or present Fed members. They wouldn’t be able to figure out how to inflate it. Just not their thing.

    3. Joe Firestone

      The law says platinum. Congress has only given the Secretary the authority to specify the face value of a coin using that metal. To bad, soooo sad; no Nanu Nanu coins for the foreseeable future.

  6. Alex Hanin

    The saddest thing is that most people would agree that you cannot pull money out of your **s. Minting such a coin is like cheating: you have to work hard to get money, because money is not seen has a mean to an end, but as an end in itself.

    Saying that the government can just create trillions out of thin air is simply to good to be true. There must be a catch. It doesn’t matter that people don’t know exactly what the catch is: they know there is one somewhere, and they are convinced pundits know where exactly, and to them that’s enough.

    On a positive note, I think MMT is slowly gaining ground since the crisis, year after year. Very slowly, though.

    1. Schofield

      @ Alex Hanin:-

      “The saddest thing is that most people would agree that you cannot pull money out of your **s.”

      Most never stop to think why a society has money in the first place. It’s there just like farting!

    2. Just Ice

      “The saddest thing is that most people would agree that you cannot pull money out of your **s. “

      Yet the banks do it every day: “loans create deposits.”

      1. Alex Hanin

        ‘Yet the banks do it every day: “loans create deposits.”’

        That’s another simple truth that seems hard to accept. According to the conventional wisdom, money is either something that materialized when you work hard enough, or a component of the economic kit bestowed to us by God.

        1. Just Ice

          “when you work hard enough”

          Unless you’re a banker: 3-6-3

          Note the rule above is obsolete but you get the idea: We work for the banks.

    3. washunate

      Agreed, but there is a catch. It’s called inflation.

      Look at the things that are extraordinarily expensive relative to median wages. They are precisely the areas of the economy where gobs of currency units are directing labor in unproductive ways: national security, healthcare, the legal system, the financial system, housing, higher education, etc.

        1. MyLessThanPrimeBeef

          Thanks to neo-liberalism imposed everywhere, and the global reserve currency status, it will take longer, a very long time, for certain types of inflation to show up here.

          Inflation in clothes, plywood, garlic, shoes, etc. will be low for a long time – too long for many slave laborers in the Third World.

          In the mean time, rent inflation and medical care inflation are already here.

        2. washunate

          I’m curious then, why did the original comment not name inflation? And why do you think people don’t know what the catch is?

          The cost of everything from decent housing to quality healthcare is a huge issue for most Americans.

      1. Just Ice

        “Agreed, but there is a catch. It’s called inflation.” washunate

        Not necessarily. Consider that a moratorium on new credit would be deflationary as existing credit was repaid with no new credit to replace it. Consider also that if the MBS owned by the Fed were jammed back on the banks that that would also be deflationary.

        Unless I’m mistaken, opposites can cancel each other.

        Consider also that Steve Keen’s “A Modern Jubilee” would be an ideal use of the monetary sovereign’s right to create new fiat.

          1. Just Ice

            You should read Keen’s proposal: He calls his jubilee “Quan­ti­ta­tive Eas­ing for the public.”

            1. MyLessThanPrimeBeef

              Calling it by the proper name is a good start.

              It’s QE for the People, or the Public. Not jubilee.

        1. washunate

          I’m not talking what could be done in the future, though. I’m talking about what has been done. I agree we could give every American $100,000. But that’s not what we have done to date.

          What has been done to date is that we have increased prices so much that a decent standard of living is unaffordable to tens of millions of working Americans.

          1. JTMcPhee

            …and “we,” whoever that is, have not only taken away the means for half of “us” to earn an “honest living wage,” from the labor and ingenuity at the decent scale of comity, those same very few special “we’s” have been “enclosing the commons” at a scale and in so many ways that Oops! somehow also Hoover up so much of the necessities of life, Liberty and even property that the rest thought, foolishly, that we owned…

    4. jonf

      The catch, if there is one, is the separation of powers. Congress holds the purse strings and unless they agree the Treasury cannot spend. Otherwise, just go ahead and print the money. The coin is merely a fiction.

      1. Praedor

        But that’s the thing, the congress has REQUIRED the Treasury to spend by creating MUST SPEND legislation. They cannot pass legislation creating things that MUST be paid for through the Treasury and then refuse to provide the money to do what they legislated. The legislation itself is the authority.

    5. Joe Firestone

      Well, the answer to this is to send them to the Constitution, and then tell them there is a catch and that is the possibility on inflation if we spend past full employment, so we won’t do that without taking corrective measures that will stop it. In addition, we have to keep taxing, not because we need a dollar for every dollar we spend, but because we have to ensure that people will find the money valuable, and taxes drive the value of a currency by making it necessary for people to have it to pay their taxes and settle their legal debts. Bitcoins won’t do for these things.

  7. Jim Haygood

    ‘If the platinum coin were used, then no one need know that until the coin hit the Mint’s account at the New York Fed, and the seigniorage was then swept into the Treasury General Account (TGA). Only then, would what the President had done become public.’

    It would be like Nixon’s 15 Aug 1971 Sunday night speech all over again:

    Now, what is this action–which is very technical–what does it mean for you?

    Let me lay to rest the bugaboo of what is called devaluation.

    If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today.

    The effect of this action, in other words, will be to stabilize the dollar.

    Of course, quite the opposite was true. The dollar collapsed, treating Americans to not one but two Oil Shocks in the “decade of hard assets.” Got Deutschmarks and Swissies, comrade?

    Whenever some sleazeball politician tells you it’s “very technical,” you may be sure that you are being defrauded. Seigniorage is government-licensed fraud, designed to pick the pockets of workers to enrich the financial elite.

    1. Just Ice

      “Seigniorage is government-licensed fraud,”

      No, it isn’t. A monetary sovereign is the ONLY proper creator of its fiat and it should be for the general welfare.

      But the gold standard was a fraud since it purported to use gold to back the value of fiat when, in fact, it was the taxation authority and power of government that propped up the value of gold.

      Should we have private monies for private debts only? Yes, if only to shut the mouths of hypocrites who want to create fiat themselves for private benefit.

      1. Jim Haygood

        ‘It was the taxation authority and power of government that propped up the value of gold.’

        That’s a good one. Gold has been valued throughout human civilization, under governments which ranged from effective to incompetent to nonexistent. That’s because it’s one of the best stores of value.

        If states stopped issuing marriage licenses, would people lose interest in romance? ‘It was the authority and power of government that propped up the value of sexual attraction.’

        History: it’s a lot easier when you can just make it up!

        1. MyLessThanPrimeBeef

          Of course, governments can order their central banks to sell gold, to manipulate its price up or down (trying to put it down lately).

            1. Just Ice

              You’ve already decided that or you wouldn’t ask.

              Anyway, I’ve done YOUR work for you and made the case for a Postal Savings Service. As well as fought off the gold-bugs. As well as …

              UR welcome.

        2. Higgs Boson

          The problem with gold as money is that there is a physically finite amount of it. Under that system foreign governments holding USD, could demand to exchange those USD into gold and cause the government’s gold reserves to physically leave the country. It’s a zero-sum game. Somebody’s got to lose.

          1. MyLessThanPrimeBeef

            It’s like science.

            Only the best possible solution today.

            And while governments exact tax payments to prop up the values of their currencies, they have to be nice to each other.

            No government trusts another government.

            Gold is one option.

            Another is when, like, Genghis Khan imposed his will and everyone had to accept his ‘flying money’ paper currency.

            “When a free tree zone appears, you can tell by the majesty of a rising hegemon.”

          2. craazyman

            there could be tons and tons of gold on Mars. And if I look at Saturn through a telescope I see a gigantic gold mine, no pun intended. Money is infinite. No matter what the medium of exchange.

            1. MyLessThanPrimeBeef

              Crawling among all the gold bars, you will find, hopefully, all my cockroaches, who are there to survive nuclear blasts. And they will.

              That’s my ten-bagger idea – harvest Martian cockroach protein to solve the world hunger problem on Earth.

            2. Higgs Boson

              There could be lots more gold “out there” but the amount of money it costs (in a gold-standard system) to go get it with current technology is extremely prohibitive. So no, with ANY commodity money there is not an infinite amount.

        3. Praedor

          That entire gold standard crap is just that: CRAP. It requires the taking of all privately held gold away from people, it requires the government to arbitrarily set “this much gold is worth this many dollars”, and it is based on nothing because gold is virtually worthless. It has no structural value, is only useful in electronics in vanishing small amounts, is useful in molecular biology/biochemistry in truely vanishingly small amounts (I once labeled a protein for X-ray scattering analysis with a molecule containing 12 gold atoms), and…that’s about it.

          The ONLY value to gold to people is, “Ooooo, shiiiiiiny…and puuuuurty”. Meh. Idiots.

          1. MyLessThanPrimeBeef

            Gold for the people is good.

            It’s bad to degrade Social Security, for example, using gold as an excuse.

            Among equal, non-exceptional governments, they need somw honesty to prevent cheating, absence some hegemon. Gold has been one choice.

            Looking at all these factors, it appears international trade (among nations), except with barter, is the cause.

            If the government was to distribute all the gold in Fort Knox, to the people, equally, what is not to like?

              1. MyLessThanPrimeBeef

                With the People’s (fiat) Money, it is not only inexpensive.

                It’s free to the people.

                1. Just Ice

                  Only initially since further increases in the fiat supply would require additional gold to be bought.

                  Or would you prefer no increases ever in the supply of fiat?

                  1. MyLessThanPrimeBeef

                    Who knows whether they are buying or selling.

                    They can just keep giving everyone however much or little gold they have.

                    The key is to give that to the People.

    2. Alex Hanin

      You could also say, and it would be much shorter and simpler, ‘big deficits = massive inflation’. That would sound rather silly though, hence the fancy historical comparison.

      1. MyLessThanPrimeBeef

        Big deficits (on weapons) could be deflationary if it leads to destruction of our global suppliers (in South China Sea or elsewhere).

      2. washunate

        But that’s the thing. It’s not about the quantity of money. That’s establishment monetary economics thinking.

        A different perspective is that it’s about the quality of money. How the money is spent, not how much is spent. It’s not a deficit that is inflationary. It’s waste and fraud that is inflationary, looting the productivity of the general populace for use by connected insiders. Similarly, productive investment is deflationary – even with a budget deficit – allowing us to produce more with less labor.

        I disagree with the hard money camp on here as far as re-instituting a gold standard, but that’s not some fancy historical comparison. The failure of the London Gold Pool and the collapse of the Bretton Woods system in the 1960s and 1970s is one of the most important developments in political economy in the post-war era. The ZIRP era we find ourselves in today is the natural endpoint of the speculative excesses accumulated over the past three plus decades of steadily falling interest rates and the past decade and a half of outright fraud and corruption. There’s nowhere to go below zero, which means some kind of radical change is coming.

        We just don’t know exactly what that will be at the moment.

      3. reslez

        > ‘big deficits = massive inflation’. That would sound rather silly though

        It would indeed sound silly because of how inaccurate it is. Massive deficits are the effect of sectoral imbalances between the public, private and external sectors. A crashing economy leads to a crash of tax income. The accounting ledger must by definition balance. And it does.

        A civilization that links its money supply to how much of a shiny rock they dig out of the earth, only to rebury it in bank vaults, deserves the deranged economy they create. Money supply can and should be linked to the expansion of economic activity. Save the shiny rocks for jewelry.

        1. MyLessThanPrimeBeef

          Money supply, for a long time, was primarily the intellectual field of the barons and kings…international barons and kings. Only they had money.

          Their main concern was dishonesty among themselves, and their main issue was that they didn’t trust each other.

          We have inherited that distrust. Absence a superpower, nations need something to prevent being taking in like fools.

          1. JTMcPhee

            The peasants tried to hold on to little bits of money. Barons and kings sent violent men and informers to “collect” those squirreled coins as fees and duties and taxes. Jeez, how did ordinary people manage daily living, in that environment? One wonders… And “we” may have to figure that out again, soon…

  8. TarheelDem

    The very purpose of creating debt ceiling crisis is to heighten the constitutional crisis we are currently in to the point of breaking the Obama administration. Of course, if the Obama administration uses any non-conventional ways to avoid default, the people pushing for default (and likely the Wall Street media as well) will holler about its illegitimacy.

    But at the same time, the administration cannot tip its hand in advance even if it eventually will use unconventional tactics to prevent a default. The GOP Freedom Caucus must be forced to look into the abyss as a negotiating tactic (or better said, must confront the wrath of their supporters who would lose big through default) if legislation expanding the debt limit is forced through. That’s the frame of this game of chicken. Lew just communicated that the executive does not have any road left to avoid default without those who are steering the car delivering an extension of the debt limit.

    In truth, the solution to push for is repeal of the debt limit legislation altogether. Congress sets the amount of the debt through what it authorizes and its architecture of the tax code. What it originally was was a end run to squeeze entitlements and social spending. It has never been a fiscal mechanism and always a political stunt.

    1. Jonf

      Those forty or so people are not a majority of the Rs. They do seem to have an outsize influence on the party though.

      Repeal is the only real solution. Get rid of this stoopid law.

  9. Ranger Rick

    Amusingly, the Fed would absolutely play along with these platinum coin shenanigans because they WANT inflation. Make the coin, then use the massive inflation resulting from the debasement of the currency (a trillion dollars just appeared out of nowhere!) to back the rate increase.

    1. Joe Firestone

      Ranger, first, a $100 T coin needs to be minted, since the object of the exercise is to allow repayment of all the debt instruments as they fall due and also to make it unnecessary to fund deficits with debt instruments for many years to come.

      And second, since the $100 T coin proceeds would not immediately be spent there would be no inflation resulting from its minting. It’s all explained in detail here. Gamble a stamp, then you’ll either agree and not make the objection again, or develop a stronger argument to show that inflation would result. Either way, you and we will gain something from the experience

  10. MyLessThanPrimeBeef

    From Wiki, about the 14th amendment:

    Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

    Does it (“shall not be questioned”) mean S&P can’t rate government debts less than AAA+++?

    Can all nations put that in their constitutions?

    1. Joe Firestone

      Yes, other nations can do that to if they wish. And, yes it does mean that the rating agencies are acting against the constitution when they rate US bonds at less than their highest category. However, enforcing the Constitution requires enabling legislation, so you need that. In addition, you need to have a Department of Justice willing to put the people in the ratings agencies in jail or fine them.

      On the legislation question, there is a criminal mischief statute that applies here:

      Criminal Mischief statute

      18 US 1361. Government property or contracts

      “Whoever willfully injures or commits any depredation against any property of the United States, or of any department or agency thereof, or any property which has been or is being manufactured or constructed for the United States, or any department or agency thereof, or attempts to commit any of the foregoing offenses, shall be punished as follows:

      If the damage or attempted damage to such property exceeds the sum of $1,000, by a fine under this title or imprisonment for not more than ten years, or both; if the damage or attempted damage to such property does not exceed the sum of $1,000, by a fine under this title or by imprisonment for not more than one year, or both.”

      The quote is from a comment by beowulf (Carlos Mucha) at Firedoglake. I don’t know if the link is still good. Carlos, for those who aren’t aware is the originator of the platinum coin proposal (the Trillion Dollar version).

      Bottom line the Government could shut down these agencies if it wanted to. Free speech should be no defense, because the 14th amendment, insofar as it conflicts with the 1st, amends it.

  11. Synoia

    Then he may decide to take some extraordinary measures and the coin is one that is available, so it’s conceivable that he might choose this

    No conceivable at all. Currently Banks has a monopoly on issuing new money as debt, and who’d not like that monopoly? The alternative, social program or increasing social security remove much power from the banks and their customers, the wealthy — the borrowers.

    Consequences or A Theory.

    It has the consequence that only those with collateral can accept the indebtedness, and to pay the indebtedness have to extract rent. It is an upward wealth extraction mechanism, much liked by its beneficiaries, and the paid lackeys, our representatives.

    This also explains the political manipulation of the housing market and the expansion of the student loan market – to easily increase the amount of funds loaned one had to increase the percentage of “home ownership, new car purchase and student loans.” The so called American Dream.

    The two items deemed essential for living the American Dream, a degree and a home (and a suburban home requires cars), are now the intense focus of creating new money and its consequent rent.

    The Government, Executive and Legislature, has every reason to increase the rent flowing to its paymasters.

    1. Just Ice

      “It has the consequence that only those with collateral can accept the indebtedness, and to pay the indebtedness have to extract rent. It is an upward wealth extraction mechanism, much liked by its beneficiaries, and the paid lackeys, our representatives.”

      You make me proud to be an engineer.

      Perhaps the biggest mistake the banks ever made was to disemploy people who can think honestly?

      1. Synoia


        I had a career based on observation and deduction – fixing problems and projects in trouble.

        I’m a firm believer in cause and effect, and the scientific method.

        If a theory fits the available facts, it is a good theory, until other data is produced. For exmaple, classical economics states the value of money is based on a basket of goods and services, but does not state precisely what goods and services are in the basket.

        This logic completely defies all high tech pricing schemes, and no one prices anything while considering the value of money, they consider the value of the product relative to the customers’ needs and costs.

        The classical definition of the value of money is equivalent to saying the definition of a foot (or inch) is dependent on the basket of heights of people being measured. We know that is nonsense, because we have Standards for measures.

        MMT provides a standard for the measure of value of a currency – the settlement of tax debt, which has been constant since the invention of taxes.

    2. Joe Firestone

      This is nt an objection to its conceivability; but just a political judgment that it can’t happen due to the plutocrats and their power. That may be correct; but I’m not in the habit of accepting such “resistance is futile” arguments. If they make you happy, then go ahead, but I’ll keep on keeping on, if you don’t mind, even if you do!

  12. Steven

    Firestone focuses entirely on the U.S. political and legal implications of issuing hundred trillion dollar coins. I can’t help but wonder what the country’s foreign creditors would think about the idea. There seems to be a widespread consensus across the political spectrum there is no alternative to an international monetary system based on the U.S. dollar – with the euro and yen playing supporting roles. Thus the US and its banking system ‘allies’ can go on forever creating ‘debt that can’t be repaid (and) won’t be’. At least with consols this ‘default’ is inherently explicit.

    Like Britain before it the U.S. (or rather its bankers) has been busy shipping the wealth created by preceding generations out of the country. Ferdinand Lundberg explained the trick in “America’s 60 Families”: if you convert real wealth into money (‘liquefy’ it) you can invest anywhere in the world where it will earn a greater return than can be had at home. And thanks to fractional reserve banking – and more recent innovations in financial engineering – you can leverage your wealth to earn multiples of what you might have otherwise realized had you confined your activities to old fashioned industrial capitalism and selling to increasingly saturated domestic markets.

    Like bankers US and other Western politicians love to create money. It gives them immense power over the lives and welfare of their constituents as well as, in the case of countries sharing the ‘exorbitant privilege’ of supplying the world with ex nihilo money, the lives and welfare of people beyond their borders. But I can’t help wondering how much longer leaders of countries like China – the world’s real wealth creators – are going to put up with the West’s continuing extraction of a ‘free lunch’ from their people. That ability to create real wealth was and continues to be the source of national power in the modern world. Countries like the US that have increasingly off-shored their wealth-creating abilities are left with fewer and fewer expedients as they become increasingly dependent on foreign ‘hosts’ for their free lunch.

    If the trillion dollar coin doesn’t work, what comes next? Some ‘game’ in which Western ‘leaders’ gamble the future of life on earth in the hope the 1% in their countries (their REAL constituents) will be allowed to continue increasing their claims on the world’s real wealth?

    1. MyLessThanPrimeBeef

      Very good point.

      The world is a continuum and interconnected.

      If the whole world is your supplier, it takes longer (a long time given all the poverty around the world and the speed of setting up production of cheap gadgets) to see inflation back home, when one prints the global reserve money.

      In fact, that tee-shirt from Pakistan might get cheaper, if you buy in volume (more volume, more discount).

    2. Alex Hanin

      ‘ But I can’t help wondering how much longer leaders of countries like China – the world’s real wealth creators – are going to put up with the West’s continuing extraction of a ‘free lunch’ from their people.’

      China seems rather happy with ‘the West’s continuing extraction of a ‘free lunch’ from their people.’ Accumulating huge trade surpluses is their own political choice, after all. When China stop doing so, the US trade deficit will fall and public deficit will follow suit.

      1. MyLessThanPrimeBeef

        Not really happy with what they deem to a transitional period.

        Currently, they are working on bilateral trade settlement deals and, with the IMF, on alternative to the current global reserve currency.

        Will they succeed? Who knows. Are they happy? Not really. Is anyone or any nation really happy? That would take a perfect world.

        1. Steven

          Not really happy with what they deem to a transitional period.

          That may be understating the case. Whatever China’s billionaires might think about the status quo, it’s political leadership can’t be too happy about an arrangement where China is forced to loan ever more money to its chief debtor to pay for China’s military encirclement (in addition to the electronic trinkets it sells to the West).

          What is interesting in this context are all the reports of China’s wealthy elite taking the money and running to foreign shores where there is less talk of socialist utopias and ‘expropriating the expropriators’.

        2. JTMcPhee

          Seems like C-Suite’ers and Blankdimonfein and Obama and all those Banksters and war contractors and related vermin are pretty happy, even REALLY happy, and that happiness depends on, and really can’t exist, without and in the absence of the misery and despair of billions of others…

    3. paulmeli

      The quantity of money has very little if anything to do with inflation.

      The quantity of money is a stock. A lake doesn’t flow (if it had flow it would have to be coming from somewhere else). An economiy is defined by it’s flows.

      Savings doesn’t flow, it accumulates. So long as it’s getting bigger it isn’t possible to be spending it. You can only spend income until it’s exhausted, then you can start spending your savings.

      So the quantity of money in the world can’t cause inflation, which is a consequence of too much spending, i.e. trying to buy more than is for sale. There is a whole lot out there for sale that isn’t being bought…labor and all it can produce.

    4. Joe Firestone

      Please pay attention. I am not advocating for the Trillion Dollar Coin, but for the $100 Trillion coin. So, if my proposal is implemented, then the creditors won’t count anymore, because they’ll all be paid off when their debt instruments fall due, and after that Treasury will issue no more debt. So, it doesn’t matter what they think.

      And again, the whole $100 T won’t be spent at once anyway. In fact, no more will be spent than congress has already appropriated in the short term except for debt repayments that are due in the short term and for debt purchases from public institutions or from the Fed Banks that would not spend the repayment funds into the economy either.

  13. Praedor

    What a crock (natch) is the Brookings Institute. The people will take any deus ex machina savior from busting debt ceiling as illegit? Bah. The entire idea that the debt is some immutable, REAL thing is illegitimate. The coin does the job of making it clear that US government funding, as currently set out, is BULLSHIT and totally unnecessary. Taxes are ONLY necessary to reduce income inequality and discourage harmful (to society) activities. Taxes are NOT needed to fund government just as cuts are not necessary to “balance the budget” because balance is itself bullshit. Mint the damn coin. No, mint THREE $1 trillion platinum coins and immediately use one to go over the “debt ceiling” fiction. If that doesn’t kneecap the GOP idiots, deposit the second, and then again, if needed, the third. Do so until it is CLEAR that balancing the budget is fiction, cutting programs is totally optional and mean-spirited (evil), and the entire basis of GOP economic arguments are lies. Of course, the entire basis of most Dem economics is the same lie too. Time to kill the lie, use taxes to reduce/prevent massive income inequality, and to discourage social harms.

    1. reslez

      There’s always plenty of money for war and Wall Street bailouts. The money only runs out when it might be used to benefit the citizens.

      1. Just Ice

        Yes, amoral money creation has led to immoral money creation.

        Funny dat …

        [love your antidotes, btw]

          1. skippy

            Wa da ya think…. inanimate objects embodied with human quality’s…

            Skippy…. tho the optics by which to measure such quality’s are another story….

  14. homeroid

    Print the 100T coin and they will roll out the F36. Goodbye 100T. Why does the 14th matter when the PTB have collectively wiped their asses with the parchment. In the end grandma still sleeps in a box under the bridge.

    1. MyLessThanPrimeBeef

      Monk: Master, how do I enter the Way?

      Master: Do you hear the sound of gentle breeze?

      Monk: Yes.

      Master: You enter the Way through there.

      How does one enter the kingdom of 0.01% wealth?

      Answer: Through the roaring sound of the Dow climbing 300 points.

      For no reason, except more easy, unearned, zero percent money (hey, it’s free. Freedom to be greedy), the market is up big.

    2. paulmeli

      “Print the 100T coin and they will roll out the F36”

      Another knowledge-challenged individual that doesn’t understand the meaning of “print”.

      Let’s review…

      Printing means spending, otherwise it has no functional relevance. Printing $100T and leaving it in a room is meaningless. Without a spending event there is no possibility a single dollar would ever see the light of day in the non-government (the economy). Money doesn’t grow on trees, it never rains money and banks don’t hand it out free.

      A $100T coin would never see the light of day in the real economy, it is a back-balance sheet accounting abstraction just as ‘public debt’ or the ‘Social Security Trust Fund’ is. I can keep track of useless stuff too, I just choose not to.

      Congress has to spend the dollar first, otherwise it doesn’t exist.

      Congress is unconstrained in it’s ability to spend. The only thing that can stop it (other than available real resources) is Congress, the only entity empowered by the Constitution to create money. Banks create credit, which is not the same as money created by Congress…it isn’t persistent. But the banking system was created by Congress. So Congress is it’s own constraint. It doesn’t need a $1T coin. It’s the morons in the electorate that believe they need one, or that it will kill them in their beds, take your pick.

      Congress already authorized the spending. Rather than refuse to pay it’s bills Congress should have refused to pass the spending bill…but it didn’t have the balls then.

      Why have a debt ceiling (which Congress is fully aware of) then pass spending bills that exceed it anyway?

      Because they know it would cripple the economy and aren’t willing to take the responsibility. And, they know they can use it down the road as political blackmail because the electorate is stupid (an understatement).

      The only real constraint on spending is that you can’t buy more than is for sale in your own currency. We aren’t even close to that constraint.

      The $1T or $100T coin is no more unrealistic than the average commenters understanding of the balances that keep track of our ‘liabilities’. No matter what the liability in your own currency there is no possibility you won’t be able to meet it if you issue the currency…not accounting for just plain stupid.

      1. homeroid

        So sorry, meant to say “imprint”. My bad.
        Nice rant though. Although i thought mine was more to the point with less verbiage.

  15. Oregoncharles

    “A good rule of thumb for executives in troubled times: i…..” This paragraph seems to be a quote from Wallach, but isn’t indicated as such. Is it possible to fix that? It’s pretty confusing – took me multiple readings to figure it out. (Thought process: “Gee, that doesn’t SOUND like Firestone…read it AGAIN. Oh, OK, there’s a mention in the next para that it’s Wallach.”)

  16. Oregoncharles

    I guess I’m a bomb-thrower; I’d rather. if he was serious, that the President address the constitutionality (or not) of the debt ceiling directly, rather than use a cute trick that’s easily portrayed as silly (and certainly beyond the intent of the law).

    Of course, the appeal to Firestone is that it would essentiallly institute MMT as policy; and as he implies at the beginning, that’s exactly why a right-wing president won’t do it. Actually, that’s the best bit in the essay: his vivid portrayal of the “dance” between Obama and Republicans that the rest of us would call collusion.

    1. Joe Firestone

      Thanks, OC. One thing about the cute trick and the 14th. It would be an invalid constitutional challenge to use the 14th until all the cute tricks were tried. The reason is that the debt ceiling is only in conflict with the 14th if it would force default on the Government. But if one of the cute tricks can work, then the conflict doesn’t exist. the best cute trick is the coin, so that’s what ought to be used. This is all explained in the e-book.

  17. Paul Tioxon

    Stock buy backs are the destruction of capital and the abandonment of property, a forfeiture. The government can claim this under escheat laws. The money can be deposited into the US Treasury and the Social Security Trust Fund. So, there is another deus ex machine waiting out there in legal technicalityville!!

    1. MyLessThanPrimeBeef

      I luv those ‘we got enough money in the world, let’s just redistribute it’ ideas.

      My preference to addressing Global Warming is similar. Not necessary for more GDP growth, but share more equitably what we have, and consume, collectively, less.

  18. casino implosion

    The Platinum Coin! Whose visage will be indited upon the surface of this paradigm breaking, manhole-cover sized piece of specie? Will it be Alexander Hamilton? Hyman Minsky? The tireless hack Joe Firestone (“Letsgetitdone”!) My mind’s eye strays to the grand procession which shall convey the Platinum Coin down Pennsylvania Avenue from the US Mint to the Eccles Building of the Federal Reserve, where it shall be stored in the subsurface vaults until the sun freezes over…an armored Division of the United States Army for security while marching bands from all 50 states play amid floats bearing allegorical figures and heroes of finance, as confetti flies…

    1. Joe Firestone

      Other suggestions are FDR, Eccles, Nixon (who gave us pure fiat) or Ronald Wilson Reagan (many can’t resist the irony).

  19. Jack Parsons

    Y’all are missing the point of the trillion dollar coin. It’s not about debt. It’s about exposing how money works in our modern state by putting forth an absurd example to illustrate the mechanisms of post-gold money.

  20. Richard

    Why does the Treasury need to issue trillion dollar coins when the Fed can just forgive a portion of the current national debt?
    As far as I can tell, the Fed is not prohibited from forgiving Treasury debt. If it were to do so, the Treasury debt limit would then be below the current debt limit set by congress. The Treasury could then auction off new debt, which would be deposited into the Treasury's general account at the Fed. The Fed of course can buy that debt from the debt holders. This cycle can be repeated indefinitely.

    The following links support this idea:
    A Modest Proposal: Why Doesn’t the Fed Forgive the Debt?
    The Fed Could Simply CANCEL $2 Trillion of Government Debt

    The debt limit legislation is empowered in the Federal Reserve Act which limits the Fed's purchase of debt to the 'open market' rather than directly from the Treasury. The debt limit itself is a proscription on the US Treasury, not the Fed:
    31 U.S. Code § 3101 – Public debt limit
    Direct Purchases of U.S. Treasury Securitiesby Federal Reserve Banks

    1. Jack Parsons


      The party that buys out and forgives US student loan debt will own the White House for 40 years.

      1. Richard

        While not within the scope of what I’m proposing above, I agree wholeheartedly that forgiving student debt would not only be feasible, but wonderful!

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