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A Challenge to Business Insider and Huff Post
Two liberal Emags have been pushing for the "Platinum Coin" as a solution to the upcoming debt ceiling crisis.
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.
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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That's good to know. I thought you had gone batshit crazy. Of course, we old world fascisti are notorious for our lack of any detectable sense of humor.
In that case Bruce, why not a $16.5 T platinum coin and wipe out all debt? Ludicrous
What Argos said and........
Heck, expand it even. Remember CA IOU's? Let the States print billions out of nothing and they won't have to go begging to the Congress (same same).
Not much to say about this except the proposer needs serious medical attention like an invol committal to an institution for the criminally insane.
I think this is a great idea. It may just shock people enough to get them thinking about REAL money. The entire basis of money is now absurd.
Sorry Argos, just saw that I kind of hijacked your post.
Does this mean they would have to revalue Platinum (thus gold) to make their coin actually worth $1 trillion. Or is it just a few thousands dollars of platinum with $1trn written on it....ie. inventened printed money from thin air.
Somebody should tell the Huffington Post that Zimbabwe already tried this, and that there is no difference between printing 100 Trillion on a piece of paper than a small piece of metal.
Next I suggest a perpetual motion machine and anti gravity machine to do away with oil.
Nope, it will be a fiat value just like all of the other coins in circulation.
Issue one coin per household.
Put it under your pillow and the fiat fairy will eliminate all your debt.
Any of the rating agencies feel like commenting on this?
S&P, Moody's, Fitch, Egan-Jones - chime in any time boys - the nazis in the White House are fucking America.
I'm sure Egan-Jones would if it wan't likely to be hauled over the coals again for stating the truth.
DavidC
go ahead... mint just one trillion dollar coin... and watch the bond market response..
To see the insane hypocrisy of the idea, just ask yourself this question: "Why don't they just print a couple of $1 trillion paper bills, and hand them to China and Japan to pay off most of their Treasury claims?"
Ans: Because both Japan and China know that paper with lots of zeros on it is worth the same as paper with no zeros on it. Nothing. Zimbabwe already printed up bills with 14 zeros on them; I have several of them. They're not worth anything.
So why the platinum ruse? Because....wait for it....striking it out of a scarce metal would make it seem MORE LIKE IT WAS REAL MONEY.
But giving someone $1600 worth of platinum in payment of a trillion dollar debt is STILL A DEFAULT.
You can smell the desperation. The end is not far off now.
What if they loaded it up with diamonds and rubys and made it look like a Super Bowl ring?
My bet? Like everything else of late, it would cause bonds to rise. Why? Because the worse the news, the more likely Benron will cook his books to absorb them. And hey, if you're gonna go retard, well, this is an area where it's all or nothing, so you might as well boost the "market" rather than merely support it.
Why don't they pull out the old red money scam too? We'd get velocity going again, and the economy would look great! (Trust us.)
The USA is looking more and more like the banana republic it is when people are taking this shit seriously. Are we really in this much trouble that we need to pull the rabbit out of the hat? (My answer is yes.)
And I don't believe the Fed will stop buying bonds in 2013 either....
Well why don't they make a two trillion dollar coin each year to cover the deficit and also save money as well....soon the US would be rich.
And why a coin, is made up of $1trillion of platinum?? Nope...so just print a $1 trillion paper note.
And why not a 100 Trillion paper note (or pretty coin if you wish).
There's allegedly a loophole to allow Timmah to mint platinum coins. I'd describe it in more detail, but I don't care enough about lawyer spew to investigate.
The law has specifics for other coins... design, words, denomination, etc. But platinum coins it is all at the SecTreasury's discretion. So he can make whatever platinum coin he wants.
It's the wording, instead of Platinum coin, it is a FatnDum coin. There solved... Timmah will be happy.
This is just another lie, stacked up on top of all the other lies. If no one could redeem a trillion dollar coin, why mint it? If this is done and $1T (or $2T, Bruce's full proposal) is tied up in a coin no one can redeem, is that not just another form of default?
Debts do matter; deficits do matter (Cheney isn't economically astute). Once we quit lying, the truth, however difficult, can be dealt with. Until we at least quit lying, it cannot even be addressed.
Prepare, the time grows ever shorter.
(Edit: two typos, "Chaney" and "dealth")
How about we fucking hang every person in the Federal Reserve.
Then we won't have to print no stinkin coins. We don't need no stinkin badges!
It's an epically bad idea. It's effective monetary debasement on a level that's unprecendented.
So here's what will happen, treasury issues this coin (it really doesn't matter what it is) and declares the value to be some absurd number like $1tr. The market for other things that are the same as this thing still exchanges at the same clearing price. Effectively the underlying asset doesn't remotely reflect its market value. This is mark to fantasy on a level that's laughable. Why not just outlaw accounting? Fuck it, assets don't have to equal liabilities. Take that, Logic!
Tomorrow, I declare my boogers to be worth their weight in gold. Make it so!
Just make sure you walk around in a dusty environment before you pick your nose...
But the real issue: What is to keep the EU from issuing a trillion Euro coin, pay off their massive debt and continue merrily "forward". Or why can't the UK issue a 3 trillion pound coin and give everyone a check? If it's real, why not give Greece a 50 billion euro coin instead of tranferring actual monies? It's a sign of the times that anyone is willing to make a fool of themselves by taking this seriously.
People voted for this insnae shit with islamo.
Yeah right, like there's some sanity left in the rest of the world...
BTW, do you think it would've been different if the other puppet got elected?
(That's a rhetorical one...)
Even better: outlaw Arithmetic.
It's just so darn inconvenient and it discriminates against the innumerate. Just make anything be whatever you want. There, I feel better already.
I have been playing golf like that for years. Approximate golf. Works for me & it's like totally relaxing, man.
End the fucking fed already, fuck those evil bastards.
Wait, this is just a spin-off of an Onion story, right? Make 3 coins? Thats the answer?
Lets just make 1,000 trillion dollar coins and be done with it. Drinks are on me!!
Some days I just look around at what is passed off as intelligent discourse, and can only wonder...
Crack or meth today?
Just some days?
Man, I envy you.
more like rock salts
Bath salts?
DavidC
This is the dumbest idea - EVER. It makes money, essentially, worthless.
Why work for a paltry stipend when you can just mint yourself into wealth? (yes, yes, only Treasury is *supposed* to be able to make money. See how that works after this stunt).
How about we act like responsible adults and have a budget that is balanced to income, and at least break even?
It's a start.
Absolutely, 100% agree.
DavidC
You two can blow me.
How about we use honest money and work for a living like everyone else in the world.
Balance this bitchez
Blah blah blah, the consequences of allowing years of massive fraud and the mis-allocation and mal-investment of capital and resources will be all too real (for those who survive).
Restore the rule of laws and contracts, protect individual wealth and private property, prosecute the fucking fraud. The laws of Nature and Physics will fix this imbalence eventually (when the supply lines break). History is very clear on the latter point.
http://www.youtube.com/watch?v=H833o5lnB2E
Time to take the law into our own hands, those that hold that office currently are the largest criminals in history. WTF is wrong with our military, why don't they take care of the program. They aren't corrupt too...
Bloomberg paraded Weisenthal around this morning to promote this idea saying it was as ridiculous as the debt limit. Where do these people think REAL capital comes from? Should Visa remove my credit limit and start accepting belly lint as payment?
I'm ready to leave for Galt's gulch.
Where do these people think REAL capital comes from?
These people believe "real capital" is a colonialist, racist, oppressive force and "real capitalists" should be euthanized (Keynes' term "euthanasia of the rentier").
These people believe they can do this by printing enough money so that the government crowds out all investment everywhere, and drives expected returns to zero. All private investors will be offered is "return-free risk" and there will be no bid. So governments become the market, and the rentiers...
These people believe they can do this without hyperinflation, because a) output gap will prevent wage/price spiral, b) phony statistics and MSM whitewashing and propaganda will hide cost-push inflation (i.e. it will become crimethink) and c) all other OECD countries are doing it ("harmonization") and oh yeah d) tax increases will prevent people from abandoning the FRN gerbil wheel - gotta keep earning those magic chits which (temporarily) extinguish your federal prosecution risk...
These people have cornered the market on vol, eliminated the possibility of any real financial crisis. There will be no "collapse", only a slow grind into serfdom, and they will end up owning/ruling everything of consequence.
These people have already brought anybody who matters on board - i.e. the critical mass of "real capital" which must be co-opted has bought in, exchanging future returns in any "real" market for a slice of the action and a shot at becoming a "made guy" in the new mafia. This includes millions of "soldiers" who are acting instinctively without being directly aware of the entire game.
These people have a lock on the soap boxes, the ballot boxes, the jury boxes, and the ammo boxes.
The only escape is into insignificance.
Sure, just take a right-angle to reality and you're there!
I can't think of anything that Weisenthal has said that agree with....there must be something but I can't think of anything. Much like Krugman.
DavidC
JW plays the stooge role perfectly. They let him believe he has credibility and he soaks it up not even realizing the joke is on him. Henry laughs all the way to the bank amused that 'click bait' still attracts investors.
Proof positive our system rewards failure over substance like no other time in our history.
What liberal media? Everything I see out there for the messes of masses is owned and operated by a dozen fat old fascists.
Same difference.
Agreed.
I am tired of this "liberal media" stereotype from the 70s/80s because when I think liberal I think of REAL liberal movements that freed people from oppression like the French and American Revolutions not some socialist symmetrical sharing system that is sold to us as being fair when there are still elites front-running every decision to reap more financial gain.
The problem with labels is that they are never fixed. Formerly, in the UK, liberals rallied against income taxes and a strong, authoritarian state. The reverse is now true with "liberals" strenuously arguing for a stronger State and ever higher taxes. This is partly explained by the makeup of their supporters. When folks say "liberal media" they mean the coast/academic media who dominate the airwaves and view the fly over areas with as much disdain as they glorify DC.