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A Challenge to Business Insider and Huff Post

Bruce Krasting's picture




 

 

Two liberal Emags have been pushing for the "Platinum Coin" as a solution to the upcoming debt ceiling crisis.

 

bi1

 

huffpost

 

bi2

 

Adding to the push by the liberal media, the White House is sponsoring a petition to “force” the Treasury to issue a coin for a trillion or two. I want to barf at this talk.

 

wh

 

 

In my opinion, there is no substance to the coin solution. In theory, it does resolve the debt limit issue that is just months away from a crisis. But that would be a terrible outcome for the country. Any chance at achieving fiscal discipline and a sustainable debt path would be lost.

 

Yesterday, the Fed indicated that it was closer to ending and reversing QE than had been previously been thought. If you believe the Fed (I don’t), then you should expect QE to end before the end of the year, and the long process of unwinding the Fed’s balance sheet will begin. But if a coin is used to replace the bonds the Fed has in inventory, the Fed will be powerless to reverse QE. The coin makes prior QE permanent. I see that step as the ultimate “fold” on responsible monetary policy. It’s a cheap way to avoid the country’s “Speed Bump” on explosive debt creation.

 

Bottom line: The coin is a phony solution to a real problem.

 

BUT

 

I want to say in print that I will support the coin concept with all of the resources I can bring to bear. I will write about it, I will sign petitions, I will march on DC, and I will put up money to support the cause.

 

BUT

 

My support is conditional on a minor revision of the “plan” spelled out by Huff Post and Business Insider. My plan:

 

- Three coins are issued. Two for $500B; the other for a cool $1T. I would use these coins to extinguish $2T of debt.

 

- The $2T of debt reduction would be sufficient to bridge the country to 2015. As a result, the country would benefit from two years without a self-induced financial crisis. The $2T buys the country breathing space through the bi-elections. My coin solution would take politics out of the process for a much needed 24 months.

 

Like it so far? Now, the key difference between BI/Huffy and me:

 

- A $500B coin would be given to the Federal Employee Retirement System (FERS).

 

- A $500B coin would be given to the Military Retirement Fund (MRF).

 

- The $1T coin would be given to the Social Security Trust Fund (SSTF).

 

 

The government Trust Funds (TF) for FERS, MRF and SSTF are holding a whopping $4.6 Trillion today of government IOUs. My plan would reduce that by less than 50%.

 

The debt held by the TFs is more of an accounting entry than a real debt. The bonds held by the TFs do not, in any way, secure the promises that the government retirement funds have made to current and future beneficiaries. The benefit payouts are set by Congress; they can be changed at any time. The existence, and the size of the TFs, has nothing to do with benefits. Period.

 

I believe that my proposal is a substantial improvement to the one being pushed by the liberal media. It achieves everything that those folks have been pushing for. It does that without tying the Fed’s hands, or creating the risk of future inflation. What’s not to like with that result?

 

There is not one chance in a million that the likes of BI and Huff Post would go for this. These outfits do want to see the pesky debt limit problem disappear, but they LOVE Social Security.

 

My challenge to Arrianna Huffington, Henry Blodgett and Joe Weisenthal is to step up to the plate, and make a real stand on the coin. Do the “right” thing. Do the “smart” thing. Mint your coins; buy the time you think we need, just put those coins of yours in the tills of America’s Trust Funds.

 

My bet here? I never hear from Arianna, Henry or Joe. Their base of readers would crap in their pants over my suggestion. The readers would rip those Mags apart with criticism. Those “influential” supporters of the coin plan that BI keeps referring to would run away in droves. Those who want coins are also pregnant with their support of SS. BI and Huff Post can’t do the right/smart things. If they can’t do the right things, they should just fold their cards on the coin idea.

 

Note:

I wrote about using a coin to extinguish federal debt owed to Social Security on 10/31: How To Eliminate $4.5 Trillion of Debt.

 

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Sat, 01/05/2013 - 13:42 | 3125314 Swarmee
Swarmee's picture

What the fuck is the point of any of this? Are we going to pretend that by not extinguishing ALL debt through this method it's somehow a valid monetary policy?? It's like being a little pregnant.

If $1 Trillion is good, and Bruce thinks $2 Trillion is better than why beat around the bush at all? Just issue a single coin worth $100 Trillion Trillion Trillion Trillion and we're all set FOREVER, right? USA WINS!

Too much? Ok, why not issue a coin exactly equal to the current US debt and start the clock back at zero? Seriously, why would that be any different than issuing "only" $1 Trillion? We're just coining this out of thin air, right? We're assigning a nominal value to an arbitrary amount of an arbitrary resource, so why not just extinguish all debt with it?

Because it's a stupid idea that will completely debase the currency and remove any and all faith in US credit. It's stupid at a value of more than the debt, it's stupid at a value equal to the debt, and is STILL STUPID at any value less than the total debt.

Sat, 01/05/2013 - 01:16 | 3124708 Element
Element's picture

Can you use it at a Laundromat?

Fri, 01/04/2013 - 23:56 | 3124517 cranky-old-geezer
cranky-old-geezer's picture

 

 

Assuming BK is serious about this bullshit coin idea, then BK is bullshit, displaying his utter stupidity regarding monetary matters. 

A trillion dollar coin is no different from a trillion dollars of paper currency.  BK is promoting wild ass currency printing, not by the Fed, but by the US Treasury, which the Fed won't allow.

Say what?  Fed would accept this trillion dollar coin as collateral for a trillion more FRNs?   Bernanke isn't that stupid.

US govt has only one thing Fed will buy, treasury bonds, i.e. more debt, more interest. 

BK is serious about making these coins and putting them in FERS, SSTF, etc?   He actually takes this coin idea seriously?  What a MORON.

That's it BK, you just shot your credibility to hell.  Idiot.  Time for you to leave ZH dumbass.

 

Sat, 01/05/2013 - 07:26 | 3124921 Bruce Krasting
Bruce Krasting's picture

I give up. This was a challenge to BI and Huff P to stop with their push for the coin.

 

I said I would go along with it provided the coin went to SS FERS and MRS because I knew they would fold on that.

 

I guess sarcasm is above my readers. Alas....

Fri, 01/04/2013 - 22:14 | 3124451 pashley1411
pashley1411's picture

x

Fri, 01/04/2013 - 22:13 | 3124450 pashley1411
pashley1411's picture

You idiots aren't getting the gist of the story.   They Libs are going to give you a big stupid idea to debase the currency for $1t, so that one trillion $1 digitally-printed dollars looks like the moderate option.  

And the GOP is certainly stupid enough to buy it.      

The political class already specializes in catch-the-wind ideas like taking money from some people to give to others, treating people with different skin pigment color with legal preference, and consider giving different favorable legal treatment to persons depending on whether they screw a female or a male.   At this point the governing philosophy of the country is so far out into la-la land, wtf is a silly notion like "currency".  

Fri, 01/04/2013 - 21:01 | 3124330 DCon
DCon's picture

I have a much better idea.

 

Claim the moon. Give it a value of 1,000 trillion dollars.

 

Give the deeds to the Treasury.

 

 

Fri, 01/04/2013 - 20:35 | 3124285 DCon
DCon's picture

I have a better idea.

 

take 1 ounce of platinum and write a number on it totalling the amount of US debt that China holds

 

Send it to China. By DHL

 

 

Fri, 01/04/2013 - 20:54 | 3124322 cifo
cifo's picture

What would be the market value of the trillion dollar coin?

Fri, 01/04/2013 - 20:20 | 3124257 andrewp111
andrewp111's picture

Bruce is wrong about this:

But if a coin is used to replace the bonds the Fed has in inventory, the Fed will be powerless to reverse QE. The coin makes prior QE permanent.

It is exactly the opposite. Depositing 3 $1T coins with the Fed into the Government's account will eliminate the need for the Treasury to borrow, but will not lessen the demand for safe monetary instruments. The Fed might actually be foreced to sell off its accumulated Treasury bonds in order to prevent interest rates from going negative in nominal terms.  They might have to reverse some or all of their QE. Coin seigniorage would be the ultimate monetary easing. Mortgage rates could easily go below 1%. And the Pt coin itself can be reversed. The Fed could simply sell the coin back to the Treasury once the Treasury has new borrowing authority. There is nothing irreversible here.

Now what Japan is about to do - ordering the BOJ to tear up Japanese Treasury Bonds, is irreversible. The coin is a better idea because it can be reversed in principle if the economy ever starts growing by gangbusters again.

 

Fri, 01/04/2013 - 23:06 | 3124537 the grateful un...
the grateful unemployed's picture

you're wrong about this, this is money printing plain and simple (as opposed to the Feds QE) the money goes directly into bank accounts to be spent by consumers - now once that problem is resolved - how to pay SSN benefits - the USG is free to spend money as it sees fit - so without a whole lot of spending discipline, this is an inflationary idea, but then inflation is one way to get out from under the debt

Fri, 01/04/2013 - 20:13 | 3124247 Lokking4AnEdge
Lokking4AnEdge's picture

Forget the debt...anyway it will never be paid. How about using these "coins" to pay for all government expenditures and eliminate all taxes?  Might as well go all the way.......

Fri, 01/04/2013 - 19:53 | 3124204 AE911Truth
AE911Truth's picture

Yes, use the bogus $1T coins to pay off our bogus $200T debt.

Fri, 01/04/2013 - 17:56 | 3123967 Random_Robert
Random_Robert's picture

Does NO ONE see the glaring hypocrisy in all this Platinum coin talk?

The same socially retarded mental defectives who declare the gold standard to be some ancient work of Satan, are positively SWOONING over an idea that would effectivley put the United States on a Platinum standard...

I swear to the most mighty of all the Gods of the heavens that people (or: human beings, or: Homo Sapiens) are the MOST fucking STUPID creatures ever to populate this Universe.

Gold makes a TERRIBLE standard upon which to base money and credit....  but PLATINUM? Platinum is fucking AWESOME to use as money. Let's get right on that.

Why not have the fucking Treasury authorize Dolly Madison to bake up a fucking Trillion dollar fruit pie.

Then, we'd all be on the Fruit pie standard- which is right where this ass-fucked species of our belongs...

 

 

Fri, 01/04/2013 - 22:26 | 3124476 Mr Pink
Mr Pink's picture

Maybe the Treasury was in talks with Hostess about making a trillion dollar Ding Dong. When the Fed found out they had Hostess "JFK'd"

Fri, 01/04/2013 - 17:25 | 3123857 kaiserhoff
kaiserhoff's picture

Exactly what I predicted yesterday.  A cute, fraudulent, counterfeit way to CANCEL THE DEBT.

Fri, 01/04/2013 - 17:20 | 3123834 Downtoolong
Downtoolong's picture

Coins are supposed to be bearer instruments.

But, what are the chances the govt would honor this one if you presented it?

Any way you look at it, it's a farce.

 

Fri, 01/04/2013 - 17:15 | 3123818 Stanley Lord
Stanley Lord's picture

Exactly right.

Blodget is a charlatan hiding behind a Yale degree which makes him odious.

Fri, 01/04/2013 - 16:55 | 3123715 flacorps
flacorps's picture

In all seriousness, what's there to lose with this coin plan?

If it works, it works (not a snowball's chance in Hell, but you never know do you?).

If it doesn't work, it brings on the inevitable collapse that pretty much everyone agrees is better earlier rather than later. What better way to expose the ridiculous notions of the elites than to have them expose themselves by issuing a trillion dollar platinum coin?

So it's pretty much a win-win. Strike away!

Fri, 01/04/2013 - 16:55 | 3123517 Eric L. Prentis
Eric L. Prentis's picture

Only Ivy League twits, who are never held accountable for any of their failures, would advocate the silly Platinum Coin idea, to solve the country’s debt-ceiling problem.

Fri, 01/04/2013 - 16:08 | 3123500 notadouche
notadouche's picture

Why doesn't the gold we store already used to solve the problems that they believe  this magical platinum coin will? What does Uncle Warren think about the platinum coin solution?  I wish he would go on record as thinking this is a great idea. 

Fri, 01/04/2013 - 15:50 | 3123405 brokesville
brokesville's picture

I have a 100 trillion dollar zimbabwe note , gimme 100 of the coins

Fri, 01/04/2013 - 15:49 | 3123401 lasvegaspersona
lasvegaspersona's picture

save the platinum and make the coin out of wood...it make no difference does it?

Fri, 01/04/2013 - 17:51 | 3123957 mjcOH1
mjcOH1's picture

How about plutonium?

Or maybe they could make a really impressive city-block sized one out of dog shit.  

Fri, 01/04/2013 - 15:36 | 3123313 DR
DR's picture

And what public portraiture, either past or present, gets to be put on the coin?

 

I vote for T. Geithner, soon to be ex Treasury Secretary!

Fri, 01/04/2013 - 15:33 | 3123303 Big Ben
Big Ben's picture

The platinum coin is a great idea! The only problem is that it doesn't go far enough. I think we should give the Fed a $16 trillion platinum coin which it could use to buy up all outstanding US government debt so the country would be debt free. And we should give the Fed another platinum coin to cover all US government expenditures for 2013. Then we could eliminate taxes and the government would be funded by issuing debt that the Fed would immediately buy up.

Seriously though, does anyone really expect that the Fed will ever unwind QE? So in fact, the platinum coin idea really just a way of making it clear that QE is just monetizing the country's debt.

Fri, 01/04/2013 - 15:37 | 3123279 DR
DR's picture

Bruce,

 

Fun article by the Huff but I would like like you to expound a bit more on your statement:

"If you believe the Fed (I don’t), then you should expect QE to end before the end of the year"

 

You are saying that you don't believe the Fed is going to end QE this year. What is your reasoning?

 

I thought this was pretty big news and was expecting you to do a post on the subject.

Sat, 01/05/2013 - 07:28 | 3124922 Bruce Krasting
Bruce Krasting's picture

Working on it.......

Fri, 01/04/2013 - 15:29 | 3123273 edwardo1
edwardo1's picture

Winston Churchill once observed that "You can always count on The Americans to do the right thing, after they've tried everything else."

Seemingly little has changed since Winnie uttered that remark.

Let's keep it simple, though not necessarily simplistic.

CBs from here to South Korea and all points in between have an asset that can be monetized so as to extinguish debt in any size. Physical gold is that asset, and there are myriad good reasons why it, and not platinum, silver, copper and wampum, etc. etc. is the asset that will be monetized to reduce, if not entirely eliminate, the crushing debt load. Bruce and these Huff Poo, er Huff po nincompoops really need to stop trying to re-invent the wheel. There are hundreds of millions of Indians and Chinese and more folks from all over the non-western world who understand what I am talking about. So, do please get with the freaking program.

Fri, 01/04/2013 - 15:29 | 3123272 NoTTD
NoTTD's picture

I can't tell if your alternative is meant to be sarcasm or not.  For your sake, I hope it is.

Fri, 01/04/2013 - 17:42 | 3123917 fonzannoon
fonzannoon's picture

Give 500 bill to FERS?

Bruce, I just lost all respect for you. Sorry man. But that is total bullshit.

Wow.

Sat, 01/05/2013 - 07:29 | 3124924 Bruce Krasting
Bruce Krasting's picture

FERS has $1T of paper today. I want to give them a $500b coin. I would be taking, not giving.

Fri, 01/04/2013 - 15:28 | 3123262 tango
tango's picture

Bruce, what is to keep the EU or Britain or China or Japan from issuing their own trillion currency notes?  This is the key, I think.  If we state that such nonsense is "legal" then we can hardly castigate others for doing the same.

Sat, 01/05/2013 - 07:31 | 3124925 Bruce Krasting
Bruce Krasting's picture

I think Japan will do this at some point.But they would not be doing as a dodge of a debt limit. The motivations are different.

Japan has debt/GDP of 300% US = 100%. Japan is much more desperate than the US.

Fri, 01/04/2013 - 15:22 | 3123233 Roandavid
Roandavid's picture

I can't even believe that anybody takes Joe Weisenthal seriously enough to waste bits discussing anything that appears under his byline.

Fri, 01/04/2013 - 15:06 | 3123131 woolybear1
woolybear1's picture

Henry??? Fuck Henry, a fraudster, a liar and a douche bag. Ban that cocksucker from everythimg.

Fri, 01/04/2013 - 14:57 | 3123085 imbrbing
imbrbing's picture

Creating a trillions dollars out of thin air, by stamping the value on a coin. What makes that different than what the fed is doing now.

Zeros and ones, or on paper, or on a piece of metal. All the same, it wasnt there before and WALLA, there it is.

Next they will need a ten trillion dollar one for every resident in the US just to buy a loaf of bread.

Fri, 01/04/2013 - 14:57 | 3123083 onlooker
onlooker's picture

 

There are a couple of $ solutions not discussed in D.C.

 

IMPORT TAX:  All persons that enter the U.S. in a less than legal manner be charged a  $2000 import fee and $2400 a year user fee. All consumption of services (free medical) and goods (free food) are loans that are put on the Federal books as accounts receivable. These assets are then sold as US Bonds that are backed with real assets of verified debt backing. Shadow banking needs to be involved.

 

Some politician like maybe Feinstein should introduce a bill to ban and confiscate all  guns in the U.S. These guns could then be sold to Mexican Drug Lords with say .01 % down and the rest to be put on the Federal books as accounts receivable and a bond issued. It could be called Fast and Furious Feinstein. A new FFF Bond as it were.

 

Confiscation of Gold, as successfully accomplished by Franklin Roosevelt in the 1930s. Each 1 oz of gold would be exchanged for a genuine plastic coin with the current President on it with the inscription VENI, VIDI, VICI.

 

This thing is doable, we just gotta think.

Fri, 01/04/2013 - 14:56 | 3123079 Mercury
Mercury's picture

Wake up and smell the Mugabe bitchezz.

Fri, 01/04/2013 - 16:24 | 3123587 NoTTD
NoTTD's picture

Bingreka!!

Fri, 01/04/2013 - 14:55 | 3123077 Benjamin Glutton
Benjamin Glutton's picture

Yo genius...the coin is only practical for debt free deficit spending. You cannot use such a device to extinguish debt.

 

I assume the Fed would insist the new bills be printed without their name and thereby would represent our first debt free money since the greenback?

 

This Platinum Certificate payable to the bearer on demand one trillionth of one ounce of a corresponding serialized platinum coin against which it was issued....lol

Fri, 01/04/2013 - 14:47 | 3123032 monad
monad's picture

Lame. Ponder this on the tree of woe:

http://www.youtube.com/watch?v=-U4R36WjFCI

Fri, 01/04/2013 - 14:44 | 3123025 q99x2
q99x2's picture

Disclaimer: I don't know anything about the coins.

I would think that the US Treasury would fabricate fiat coins. That would eliminate the FED stock holders from assuming the worthless equivalent on their books. The FED stock holders are already pissed that the FED is accumulating worthless crap and if they can offload that onto the US citizens then they win and everyone else loses.

Fri, 01/04/2013 - 14:41 | 3123012 NEOSERF
NEOSERF's picture

Exactly, the coin doesn't actually weigh enough to be worth $1T, it just is minted with a nominal value of $1T...but why stop there...print a $20T coin and offset ALL debt with it.  In fact why stop there, create an inverse, bizarro world, black hole $20T GOV DEBT coin and then go throw it in the ocean...problem solved.

Fri, 01/04/2013 - 14:30 | 3122973 q99x2
q99x2's picture

Business Insider and Huffington Post are NWO fronts. Nothing to see here.

Fri, 01/04/2013 - 15:28 | 3123261 Tijuana Donkey Show
Tijuana Donkey Show's picture

Naw, they are just click whores. Twitter and Facebook are NWO tools, as BI and HuffPo need people who are willing to "read,"  which is a lost art, like federal budgets, or a middle class.

Fri, 01/04/2013 - 14:25 | 3122935 Salt
Salt's picture

Sorry Bruce, it's a bad idea. Not that it wouldn't work for the short haul but it doesn't fix the underlying spending problems Congress and the American paople bury their heads in the sand over. Also, Washington needs flushing. Every last one of them down the crapper. You'd buy them more time.

 

For shame.

Fri, 01/04/2013 - 14:23 | 3122930 Grinder74
Grinder74's picture

And how exactly would they get this magical coin to equal $1 Trillion?  Wouldn't that require a coin with 20,000 tons of platinum in it?

Fri, 01/04/2013 - 14:20 | 3122917 KingTut
KingTut's picture

Sorry Bruce, your idea is no better than Hernry's.  It shows that most of us don't even know what money is. Money is a representation of value, not value itself.  It is symbolic, not strictly real.  Coins are used as money, because the metal has some intrinsic value.  Even now, a penny has several cents worth of raw metal in it.  Paper money is even more symbolic, because it has little or no tangible value, it is purely symbolic.  The worst form of money is bank credit money (well, I guess airline miles are worse), which is just an entry in a set of books, credit money, backed up by some unpaid debt on the other side of the ledger. 

Minting a $1T coin that retains an approximate value to its content would require a 20,000 ton coin, about half the size of Titanic.  BTW: That's also about 100 years of mine production.  Otherwise, a smallish coin is purely symbolic in value, carrying no more intrisic value than a piece of paper, like, say a treasury bill?  And I'm sorry, but how does a ridiculous little coin extringuish any part of the $4.5T debt the Treasury owes Social Security?  I doesn't.  It's exactly the same as what they have now: a paper IOU.  It is only as good as the guys who wrote it.  This changes NOTHING!  The coin is actually a big debt, not real money at all.

While I like your choice of beneficiaries, the whole game is just a joke.  Unless of course, the government hyperinfaltes the dollar so that the Platinum in the coin becomes worth $1T, well then there you go, problem solved!

 

Fri, 01/04/2013 - 14:11 | 3122849 Kastorsky
Kastorsky's picture

I'm surprised at you gold bugs.

Why no one asks "why platinum?"

Platinum is cheaper than gold.

WTF?

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