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Ben B. Nixed The Coin - What Does That Mean?
In the past 24-hours I've been reading the postmortems on the Coin; I just watched the Sunday morning shows. In my opinion, the Press is missing the story.
The key sentence from the White House that killed the Coin for good:
“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit”
I think the line "Treasury nor the Fed", is baloney. It was the Fed, in a message delivered by Bernanke, that caused Obama to back off on any consideration of the Coin. There might have been wiggle room in existing law to print a Coin, but there is nothing that says that the Fed had to take it. And Bernanke said, "No". When Obama ditched the Coin, he did it because it was no longer an option. Bernanke took the option off the table. The WH statement makes it sound as it it was their decision, that's just smoke and mirrors.
What bothers me about this is the timing. Why would Treasury/WH go public with its position on the Coin weeks before the deadline was reached? There are at least 14 days left before the SHTF, so, "Why now?"
Did Bernanke put pressure on the WH with a threat to go public that he was unwilling to accept a Coin as valid payment? If so, the WH would have wanted to get ahead of the Fed, so Treasury came out with the nix.
I think Bernanke got some calls from other Central Banks. They told him it would be a dangerous precedent for America to do this. If there are coins to be printed, it would be better if some other country (possibly Japan) do it first. After all, the dollar is still the #1 reserve currency. The foreign CBs have some say in this.
I also think that Bernanke got calls from Republican leaders. Heavy hitters, like Richard Shelby (R, Al), can get Bernanke on the phone. I'm sure that these folks told Ben that if the Fed facilitated the Coin, they would raise hell. They would rake Bernanke over the coals.
But guys like Bernanke don't just roll over when someone whistles. And old timers like Shelby don't make one sided-deals. So what could have been winked, nodded and agreed to by all of the actors on this stage?
Take the Debt Limit debate completely off the table.
Republicans have everything to lose if they force the country to functionally default on the debt. If they did that, they would get murdered. Kiss-off the Republican party for another eight years. The Reds would probably lose the House bi-elections, and their majority; and they know this.
If Congress passed a 6-12 month extension of the Debt Limit, it would not diminish the Republican bargaining position at all. In fact, it would strengthen their position, and improve their public perception (from the current level of +0.01).
The Debt Limit is not the only line in the sand for Republicans. They have the Sequestered Amounts they can fight over, but even that is a sideshow. The real issue that will trip up the Administration is the need for a Continuing Resolution. The CR is required by law, if there is no budget approved by the House. It is now 1,350+days since the US has had a budget. There is no way in hell we are going to have one in the next 90 days.
If the Republicans want to shut down the government, they have a much better issue to do it over than the Debt Limit. (The CR will do the "job" ) So watch for what appears to be a "concession" from some Republicans this week. Don't cheer too loudly if this happens (the markets will - at first). It doesn't change the fact that a showdown is coming, and it's coming pretty quick. The chance for a big brawl, that ends up shutting the government down, is still very much in the cards.
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btw- why did they decide platinum as the medium knowing its price is decided by the market?
issuance of money by the sovereign has no growth requirement
or interest associated with it while liquidity or money
creation through debt at interest does and does so
terminally. the coin idea is and would be seen as
a repudiation and default of the existing monetary
system. it may have been used as a mild and half
hearted threat or bargaining "chip" for backroom
negotiations? we have recognition of a failing and
fatally flawed system coming up more than a political
brawl, imo
Where they really screwed up was in not calling it a quadrillion dollar coin. That would have worked for sure.
Wait for it...
Bruce, love ya man, but this one is a bowser. The debt ceiling, fiscal cliff, and budget melodrama are all kabuki theatre amounting to nothing. The important thing to remember is that revenues do not even come close to outflows and neither set of politicians is inclined to take the action necessary to make sure that they match. So the debt will be monetized. There is no other alternative. And that will continue until at some point it can't. The $64 quadrillion question is the timeline.
the platinum coin was a trial balloon, bernanke had the job of popping it, not that it matters, trial balloons are never meant to fly. there might be a platinum coin lite, however. you seem to be confusing the idea of a single coin, with a plan to mint platinum coins, which does nothing new. minting gold and silver coins would accomplish the same thing. the single coin idea says we will print money and back it with precious metal, although how much and where will the metal be held, are all speculation, the real news is they would print money and pay their debts with that money, which is highly inflationary even with some bogus claim to backing it with some offstandard precious metal and technically they're not printing money, they're minting it. (wonder how that affects platinum users?) they just want to see if anyone is listening and how much the public confidence can stand, a) printing money with no backing b) printing money backed with other than standard precious metal, so as not to roil existing PM markets, and drive up the costs c) creating (fiat) currency using other than the usual means. in CA there was a plan to borrow against future lottery revenues. they're running the insanity meter to see how much insanity the public will tolerate in regards to the money supply. i think they should count gold in the ground just as they count oil in the ground. and then gold on other planets, and gold on asteroids.
Gold in other Galaxies; just text them on the hydrogen 21cm. line; "all yur gold is rz". simple.
It would appear that they can not only peg the insanity meter but break the needle and there will be little in the way of consequences.
It means Ben prefers minting one thousand of $1 billion dollar coins made of Rhodium instead. Or something like that.
Bruce,
You are kidding, of course.
The whole idea was a 'banker's joke' on the world---a cartoon nothing more. The real joke turned out to be how serious the media idiots and fools who watch that shit---took the joke and turned it into a full-length cartoon!
I know that you enjoy the 'tongue-in-cheek' more than most, but, please, 'fess up---
You are just having fun----you never believed it was real---not for even a minute
Please, keep up the satire and fun stuff like this; it is the reason I always find the time to read your articles thanks om
You thinking the Banksters did this? Not so. This was brought to you by the likes of Paul Krugman, about as far from a Bankster as you could get. A fool maybe, but not a crook.
Now, on the other hand, if you said that the banksters called up the Fed, and leaned on Ben to put an end to the silly talk, well that I might believe.
You've got the wrong version of events.
The coin and printing press are just euphemisms for the country going bankrupt. The Bernank doesn't print money, he writes bad checks. If he printed money, he'd do it in ever increasing quantities forever. In reality he will soon choke. He will tell them (behind close doors) to cut their deficits in half very soon. People on food stamps didn't cause this. Jobs going to China along with the tax revenue on employee wages and tax on the corporate profits caused this. Food stamps and social services were a knock on effect. It will keep going until it doesn't and then the things in the store wont be shipped from the other side of the world anymore. It's obvious the government can't control a slow train wreck, it'll be a boom type wreck.
The country is broke b/c it's businesses don't produce any value and never have.
Our economy makes junk. It has been making junk since the Industrial Revolution began. We've been borrowing for centuries to keep this charade going ... Now we have to pay ... there is nothing to pay with.
Our shite isn't worth anything, value has been fed into the furnace. No fiddling with banking or money will make a difference. We have to change how we live, instead.
That or (finger cutting throat gesture).
A 1936 Auburn Speedster wasn't junk then and sure the hell isn't now.
Joke yes, on whom? However, there were over 6000 that signed-up for the Coin petition.."Platinum coin petition signed by 6,000".
Maybe they were all Gold Bugs signing the petition...but its still amazing people believed it was an option.
Rome burns.
@Hardly Zero green for a great question!
The joke is always on those who take it personally.
There is not a thing personal in the universe om
BK,
It was a joke as you damn well know it was!
I like the joke---cartoon-time---a Banzi special in words----Who cares 'banksters/ krugman/ bernanke/obama/orhismama/bugsbunny?
They are all on the same team---excluding my favorite wabbit---
I'm sending this back to you to see what comes next
You and the Banzi are the only ones here with a sense of humor since all of the old Tylers retired.
Keep having a good time, Bruce-------you are a very funny dude! om
- The bankers hated the coin, the idea that the Treasury can issue currency to retire debt (ledger repayments for ledger loans) is anathematic to banks. It renders them useless.
- The Treasury issuing currency is a declaration of war vs the banks. No way the Treasury would go this route except under greatest duress (The US Government, for, by and about the banks).
- The Fed hated the coin. Treasury issue -- demand notes, US notes, specie, 'Greenbacks' -- would reduce the Fed to a marginal role managing Forex flows.
- The coin's effects on interest rates are a mystery ... with US$800 trillion in derivatives, 80% of those being interest rate and currency exchange swaps looming in the background. Too much risk.
- Wall Street feared the coin ... it was advertisement for hard times ... all that happy talk was and is a lie.
They qualified their response with "believe".
That means at any time in the future they can change their opinion.
What's really scary is that it had to be officially squashed.
I don't like think other CBs called the Fed. I think the Primary Dealers did. Once you do the "print as much money as you need" gambit to fund the government, why have bond auctions? And you don't need bond auctions, why bother with collecting taxes? The coin idea is just forcing the Fed to print up the money you need to operate. It's really no different than the debt monetization, but the difference the bond traders get paid. A lot of powerful people would have a lot to lose by pulling something like the trillion dollar coin idea.
I'm telling you, the reason the Fed nixed the $trillion coin idea is because it would take the Wall Street banks our of the profit loop of money creation and manipulation. That wouldn't be good for the people, right? (see end of line 1).
We have a winner!
The coin would be created by the government instead of by the Fed. Profit and control would go first to the government instead of the puppetmasters who own the Fed. It brings the treasury a dangerous step closer to its Constitutional role of creating silver coins for circulation. Most importantly, the coin wouldn't be debt money. The government wouldn't have to pay interest on it. That would be the beginning of the end of the puppetmasters' gravy train. Imagine if they paid off all their debts with more coins?
The coin is highly inflationary but we will have hyperinflation one way or another. Better to crash the system sooner, and not on the bankers' terms. Yes, the coin is insane and irresponsible and it might wreck everything... I say bring it on!
I don't know why they even bother to have a debt ceiling charade discussion... why not take it away completely after all it is much good at keeping the US below it as as having a snowfall measuring device in the Sahara
Anything to distract from the spending problems, the growing police state, and the overall destruction of the USD. Isn't anyone else getting tired of this smoke and mirrors bullshit?
Bruce is getting delusional-does he think anything presented on "Sunday Morning News Shows" really reflects what's going on behind the scenes in DC? It's beyond ludicrous that this coin is even being discussed. Why not just use a Chuck E Cheese token picked at random instead of bothering to mint a platinum coin??
Because you can buy a pizza with a Chuck E Cheese token.
Well, I tried to convey something that was not in the Press or on TV. That was the point. I'm pretty sure I said so in the first line or two.That part I put in bold, underlined, to make the point? You skip that?
the Press is missing the story.
Am I that hard to read?
No, Bruce - more like it is hard to believe you are as naive as you like to portray yourself.
The "press" isn't bright enough to get a job pounding sand. The only stories they get are the ones fed to them.
This was old news 20 years ago out here in fly over country. How is it possible to be so far out of the loop living in New York?
Even the sheeple ... hell, even NPR has caught on to the "SQUIRREL !!!" tactic of the coin idea.
So ... why not play nice and explain to people what would happen to global FX markets if any country tried the "trillion dollar coin" idea?
There is NO Story Bruce! There is no credenc to the Plat coin thing therefore DEMws / CBs cannot use it against REPs for negotiation in debt ceiling.
The only story is that you asnd your fellow Krugmanites at the NYT are trying to make it a story.
Nice try...you have been outed .
the real story is that its all bullshit.... the government is impotent, this is all show. but that would be crazy talk, wouldn't it? well what do you do when reality is too awful to face? For too long even intelligent americans have played along, for fear of "seeming crazy." don't worry, by the looks of things, reality will soon reassert itself.
"For too long even intelligent americans have played along, for fear of "seeming crazy." don't worry, by the looks of things, reality will soon reassert itself."
Is that not because of political correctness and multi-culturalism? I agree reality (truth) always reasserts itself.
I believe the "go along to get along" mentality is coming from the media, the meds, and perhaps the water supply. The sociopaths in charge want the sheep as docile as possible.
It just means that Democrats will demonize Republicans about the debt ceiling until they fold. Like the French at Dien Bien Phu.
Seriously, there is NO WAY to continue growing spending and debt without government seizure of property. Hide yo assets!!!
http://confoundedinterest.wordpress.com/2013/01/12/debt-star-federal-deb...
How will being fiscally responsible "demonize" the GOP ?
Just because the SHEEP don't know SPENDING is the problem, doesn't mean we're all supposed to be ignorant.
We can't scream for the pols to act in the countrys best interest, then favor them acting for political expediency.
Anyone who suggests a cut in spending other than possibly defence, will be "demonized". Everyone knows spending is the problem, just not their spending.
Au contraire. A black president is all it takes to stick it to the common people with relatively minor repercussions.
Obama will get 'er done, I have no doubt. "Entitlement Reform" coming up!
The little cocksucker will then pat himself on the head and pronounce himself "The Adult."
There will probably be another Peace Prize before he closes his final four year engagement.
Press Release No. 13/01
January 2, 2013
Mr. Gerry Rice, Director of External Relations at the International Monetary Fund (IMF), issued the following statement today:
“We welcome the action by the U.S. Congress to avoid sudden tax increases and spending cuts, including through an extension of unemployment benefits during 2013. In the absence of Congressional action the economic recovery would have been derailed.
“However, more remains to be done to put U.S. public finances back on a sustainable path without harming the still fragile recovery. Specifically, a comprehensive plan that ensures both higher revenues and containment of entitlement spending over the medium term should be approved as soon as possible. In addition, it is crucial to raise the debt ceiling expeditiously and remove remaining uncertainties about the spending sequester and expiring appropriation bills.
http://www.imf.org/external/np/sec/pr/2013/pr1301.htm
Brace yourselves, folks. We are about to enter the Twilight Zone.
There will be a collapse and a fundamental transformation of the US before he's done. Maybe you thought he was only kidding?
That is an interesting take, and similar things HAVE happened before. But, I do not see Obama doing this, as I think he really believes in socialism...
I don't think he believes in anything but watching others suffer.
All this talk about who wins,almost like there will be future success for the ecconomy.
I don't give a sh-t who "wins", who comes out looking better or what the damn unwashed public thinks. Neither of these political parties has any guts to stand up and do what is RIGHT but maybe unpopular: STOP BORROWING.
Its a shame since this Trillion Coin is such a scam. I think all 3 parties (Fed, Treas, WH) needed to answer the question ASAP since the world is snickering at the USA now...and to pull out this rube is such an assault on the monetary system...it needed to be SHUT DOWN IMMEDIATELY.
The fact all 3 responded is 'telling' how desperate and corrupt the entire system has become. Even discussing the Trillion Coin is an assualt on decency and morality.
So, my belief is that even discussing this Coin concept at the top levels of government indicates complete COLLAPSE of fiat.
Discussing this coin concept is the TIPPING POINT of the entire discussion. Game over.
If the 'best' solution is completely vacuous...and similar to a Tulip Mania...means we are toast.
The only question is WHEN the markets collapse...the fate is sealed.
The story is the Coin discussion in the first place...it means we are near the end of this fiat fantasy.
Thank You Bruce...we only have ourselves to blame, and discuss why this Coin thing is such a big thing.
Too bad the Whitehouse shot down the DeathStar idea... :>D
Yeah, but they did it with real style.
Why don't they just pass a constitutional amendment abolishing insolvency?
would that be public or private, (they play by different rules than the rest of us)
An Executive order already did that I thought.But only if your connected.
...and hang it next to the school signs that say "No Guns."