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Brodsky's Thompsonesque Trip Into The World Of Monetary Idiots Vs Krugman's Barbarians

Tyler Durden's picture




 

Submitted by Paul Brodsky of QBAMCO,

Speaking of monetary abstractionism, there has been recent talk of a fiscal gimmick called “The Trillion Dollar Coin,” in which a platinum coin valued at $1 trillion would be created by the U.S. Mint for the Treasury Department. Treasury would then rid itself of its pesky fiscal deficit in one fell swoop by simply keeping the coin on deposit at the Fed.

The TDC idea is a marvel of political imagination and public ignorance (and so it seems to have legs!). As with most clever illusions, the TDC is based on sound logical footing, one in fact we have argued in favor of: asset monetization. But there is a fundamental difference separating the Fed monetizing Treasury’s gold to devalue the dollar, followed by a re-pegging of dollars to gold at the higher fixed exchange rate (our idea), and assigning an arbitrary value to an asset no one else is allowed to own.

After declaring the coin to be worth $1 trillion there would be no market-based discipline. In its aftermath, twice or half the amount of global platinum could not be exchanged in the marketplace for double or half the amount of dollars. (It is reminiscent of the Weimar Germany scheme to back Papiermarks with agricultural land. Brilliant! Er, but how do its users exchange the money for the land?) Not only would it be difficult to value extant platinum, it would be almost impossible to value anything in the world (at least in dollars).

Once the coin were struck, it would become obvious to the global marketplace – producers, consumers, savers, investors and trade partners – that future global purchasing power would be left exclusively in the hands of the US Treasury. Treasury would be able to simply outbid everyone on the planet for everything.

We suspect the Japanese Ministry of Finance would soon mint a ¥100 trillion pair of chopsticks and put them on deposit with the BoJ. They could then purchase most if not all of the oil on the market today for future consumption! We are confident oil exporters would not raise their prices because they would have the magic chopsticks as collateral. And why wouldn’t all the world’s treasury ministries simply create priceless flux capacitors and use them to create all the taxes needed to self-fund their governments? (To do so Ben Bernanke would have to hand over its proprietary technology – the Fed “has a technology called a printing press…”)

Obviously, the TDC idea is a political ploy with a targeted mission: to rid the US Treasury of its debt ceiling, which is an increasingly frequent and embarrassing public reminder of government ineptitude. Everyone knows government-led de-levering is not a serious threat. However, the irony of the scheme and its MMT (Modern Money Theory, is espoused by imaginative economists technically proficient in double-entry bookkeeping and deficient in confidence that free marketplaces can provide accurate valuations) / liberal Keynesian promoters could not be more delicious. The scheme exposes the forty year-old charade, otherwise known as the global monetary system, better than any mind-exercise we have been able to come up with.

As we considered the plan, Hunter S. Thompson’s observation sprang to mind: “in a world of thieves, the only final sin is stupidity.” Though the TDC idea would work from an accounting standpoint, it seems awfully unlikely Americans and the rest of the world would let the US Treasury enjoy a very visible monopoly on fraudulent monetary accounting.

 

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Wed, 01/09/2013 - 21:53 | 3139334 knukles
knukles's picture

I quit

Wed, 01/09/2013 - 21:55 | 3139340 A Lunatic
A Lunatic's picture

You'll be needing the extra time to bag rice, bury PM's , and clean your guns. Good call.

Wed, 01/09/2013 - 22:05 | 3139364 Michaelwiseguy
Michaelwiseguy's picture

To piss off Dr Sandi;

I've been researching the 14th Amendment;

I don't think anybody is questioning the validity of the national debt however, I am questioning how and in what manner payment of the debt will be made.

We can make payment to the Federal Reserve for the portion of US Treasury Bonds they hold with a $1 Trillion Platinum coin/coins. That doesn't mean the platinum coin is redeemable in physical platinum either.

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. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

http://www.law.cornell.edu/constitution/amendmentxiv

Wed, 01/09/2013 - 22:18 | 3139395 Snakeeyes
Snakeeyes's picture

Is Paul Krugman really Dr. Evil? "One trillion dollars!"

We are now Zimbabwe with (soon to be) trillion dollar collars and a President that disarms the population, but arms Mexican drug dealers and Islamicists.

http://confoundedinterest.wordpress.com/2013/01/06/pennies-40-ton-trilli...

Wed, 01/09/2013 - 23:01 | 3139475 Big Slick
Big Slick's picture

Brodsky gives some SPECTACULAR interview podcasts on Chris Martenson's site.  Among his observations is the disparity between bank assets and currency in circulation and the need for massive printing to reconcile.  He also estimates a value of $8-$10,000 per ounce of gold for the re-peg he mentions above.  Note that this would NOT be a gold standard in a dollar-backing sense, but instead the creation of a bid/offer of gold for dollars by the US Treasury, say $8000 x $8020.  If too many sellers emerged, the UST would drop the price.  I think this would be an attempt to regain control following some massive loss of public confidence in the dollar itself.

Thu, 01/10/2013 - 00:43 | 3139673 Big Slick
Big Slick's picture

I want to make a comment and introduce my own theory that relates to Brodsky’s prediction of (1) monetization of Treasury’s gold to devalue the dollar, followed by (2) a re-pegging of dollars to gold at the higher fixed exchange rate.  Brodsky's is a highly consequential proposition that bears examination.  In previous interviews he theorizes event #2 as a sudden creation (following, say, a long weekend) of a bid/offer market of gold for US dollars by the US Treasury (e.g., $8000 x $8020 per ounce).  Thus, ‘pseudo-pegging’ the fiat US dollar back to something of material value, and perhaps a resumption of confidence following a significant negative confidence event.

 

Brodsky’s idea has always struck me as a good one, especially if there were a tipping point in negative sentiment or public confidence in the US dollar.  Something that has bothered me though has been the lack of a broad base of participants in such a market due to the relatively small base of gold owners (ZH’ers excluded).  Such a broad base is not inherently necessary for the market to work mechanically, but might be necessary for the resumption of widespread confidence.

 

Over the past few days ZH has reported on the recent record selling of gold and silver by the US Mint.  One thing that has bothered me has been the discontinuity between the seeming tremendous demand, and relative invariant PM prices.

 

At the local gun show last week, pre-ban Colt AR-15's were going for $3-4,000 or about TWO TIMES their price a month ago.  Prices rose with demand.  A key question I (and I’m sure MANY ZH’ers) have is this: Why are PM prices are not currently rising in a similar fashion with seeming tremendous demand – especially over the past 2 months?

 

Is it possible that the US Mint is content to sell gold cheap as a method of wider dispersal so that there is a broader base when/if Brodsky’s event #2 occurs?

 

Going back to my AR-15 model, imagine a hypothetical scenario in which the US (the largest owner of M-16s in the world) suddenly saw the need for every American to own an M-16 to prevent some foreign attack it foresaw as likely sometime in the future (this is my model, so stay with me for a minute)...

 

...As demand for M-16’s increased because the public became more aware of this attack, the US government would NOT raise prices to take advantage of demand (in an Economics 101 sense) but instead may prefer to maintain an invariant price of the M-16 to promote broader public ownership and increased national security.

 

In this manner, is it feasible to imagine the US government content to meet unprecedented demand for Treasury gold by selling PM at a relatively low and stable price?  All in an effort to encourage wider ownership?

 

I’m normally not a conspiracy theory-type guy, but I wondered if this is a possibility.

 

Flaws in my theory would include questions as to why gold dealers (the middleman) are not marking prices up themselves to meet demand.  Also the uncertainty and lack of control of PM & PM prices by paper contracts/leasing/commodities trading/etc.

 

Additional support would come from the systemic suppression of gold prices over the years buy someone with enough firepower to do this (there may be only one entity big enough).  Martenson and others have submitted great evidence and analysis supporting such price suppression.  Again, the US government is a prime suspect.

 

Thu, 01/10/2013 - 00:46 | 3139763 Bohm Squad
Bohm Squad's picture

I think a good argument is that the paper markets are delivering...paper.  If you look at the physical market (say ebay), you'll note a premium in the neighborhood of 10% or more to paper prices.  One could look at this one of two ways...either a premium for physical or a discount for paper.

 

For example, what is the promise of an AR worth today compared to an actual AR?

 

The problem with the paper market is that no one seems to actually want the physical...the exchanges know (and count on) this.  However, in the physical market, product must be delivered and that product DOES have finite supply, and its prices reflect that limitation.

 

Edit to answer your last part:  Anyone selling at prices lower than ebay (Mint/Apmex/Whoever) will quickly lose their inventory to arbitrage.  It's not sustainable.

 

 

Thu, 01/10/2013 - 00:59 | 3139788 Big Slick
Big Slick's picture

"in the physical market, product must be delivered and that product DOES have finite supply, and its prices reflect that limitation."

But they seem to not be.  That's my point.  ZH is reporting record demand/delivery of physical bullion from the US Mint (a finite supply, as you correctly point out).  If so, and the delivery of physical has greater effect on price (your premium on physical/discount on paper model), where is the increase in price these days with physical moving out the door of the Mint to meet record demand?

The economics don't add up to me and I'm wondering what other suppression forces are at play.  Thus my theory that weaves itself into Brodsky's envisioned scenario.  I'm just kicking these ideas around and I appreciate the input Bohm Squad :)

Thu, 01/10/2013 - 09:13 | 3140191 TheCanadianAustrian
TheCanadianAustrian's picture

Increased sales and increased demand are not the same thing. When the number of willing buyers increases and the number of willing sellers increases by a greater amount, aggregate demand is actually lower. Therefore, in a relatively fixed-supply market such as gold, prices will fall, even though sales are increasing.

This illustrates the important distinction between "demand" and "aggregate demand". What we're seeing right now is rising demand for gold, but with falling aggregate demand.

Thu, 01/10/2013 - 10:12 | 3140334 Big Slick
Big Slick's picture

A very important distinction that I failed to make, CanAus, thank you.  So it remains interesting to me that # of willing sellers (or sales by a large seller) seems to be rising with demand.  Like sellers ready on the sideline to meet demand.  Why would they not be interested in testing higher prices and making more profit?  Even if the offer went too far up, it could retrench back down.  Maybe this IS happening and I just don't see it.

Thu, 01/10/2013 - 00:17 | 3139706 Sockeye
Sockeye's picture

What IF the TDC went missing, or got stolen? I'm sure Tom cruise is working out a scenario right now.

Thu, 01/10/2013 - 00:11 | 3139696 andrewp111
andrewp111's picture

Krugman didn't come up with the idea. That clown is 2 years late to the party. The plan originated on pragcap.com in 2011. But Krugman has an important role to play. He is the official voice of the MSM with regards to economics, and no Democratic President can do something so radical without getting Krugman's approval first.  Krugman is giving Obama the MSM's official clearance to mint the TDC. This tells me that Obama will actually mint the TDC if the GOP tries to use the debt ceiling for leverage.

Wed, 01/09/2013 - 22:45 | 3139450 nmewn
nmewn's picture

Ok, enough of this shit.

Why a coin? They're doing the same thing with paper now aren't they? Have they lost "full faith & credit" in their paper to use a coin?

You thinking because they make something "legal" it has some merit or value? Couldn't they just spray paint a trillion dollars on a Yugo, park it at the Federal Reserve and say its WORTH a trillion dollars?

What part of this are you not getting?

Wed, 01/09/2013 - 23:00 | 3139498 Michaelwiseguy
Michaelwiseguy's picture

You're right nmewn. We understand Austrian economics here. But weather it's a fiat paper dollar or a fiat metal coin, it's still worthless fiat. But if that's what they want to use?

Wed, 01/09/2013 - 23:30 | 3139581 nmewn
nmewn's picture

Its not worthless when backed by proportionate value. We live (globally) in societies where peoples mouths/wants/desires/expectations have written checks that future generations can't cash.

This disregards all their needs.

It can never be my world...it is a complete narcissistic falsehood.

Thu, 01/10/2013 - 02:39 | 3139947 Matt
Matt's picture

The idea is probably derived from the $1 million gold coin that Australia minted:

http://www.csmonitor.com/Business/2011/1028/1-million-coin-Too-big-to-po...

Except the Australians are inept at financial chicanery, and put a face value lower than the smelt value by a factor of 55:1 at the time of minting.

Wed, 01/09/2013 - 23:54 | 3139648 Landrew
Landrew's picture

Only Congress can mint coin as per the Constitution. The treasury would then place the coin on deposit with the fed to then issue more bills, notes or bonds.

Thu, 01/10/2013 - 00:07 | 3139682 andrewp111
andrewp111's picture

Congress has only given the Treasury Secy full discretion with platinum coins. So platinum it must be.

Thu, 01/10/2013 - 00:06 | 3139678 A Nanny Moose
A Nanny Moose's picture

Indeed. I maintain that they should just print a Trillion Dollar Bill. Worked out well in Germany, and Zimbabwe.

Wed, 01/09/2013 - 23:01 | 3139503 booboo
booboo's picture

"but neither the United States nor any state shall assume or pay any debt or obligation incurred in aid insurrection or rebellion against the United States"

Well, there you have it, if congress and the Dipshit President would just admit the truth, that they have been incurring debt to over throw our republic we could declare it null and void and get on with hanging their ass. In fact, let me be the one to declare it null and void. Well! God damn, if they can declare a round of platinum worth a trillion I sure the fuck can declare them legally batshit loopy full on refuckingtarded and an enemy of the state.

 

Wed, 01/09/2013 - 23:25 | 3139543 Michaelwiseguy
Michaelwiseguy's picture

That angle makes a lot of sense. What they are doing to our Republic racking up that much debt is treason.

Thu, 01/10/2013 - 09:51 | 3140279 tbone654
tbone654's picture

It's the easiest way to bring down our capitalist society and install the godless liberal party communism as his (obama) father advocated...  Next step, take away the guns... easy

Wed, 01/09/2013 - 22:35 | 3139423 sitenine
sitenine's picture

@knukles - Same here. Fuck it! Let them print the damn thing! The whole fucking financial system is crashing down around us anyway - the sooner we accept it, the sooner we can get through the inevitable and start living our lives again.

Wed, 01/09/2013 - 22:47 | 3139458 RockyRacoon
RockyRacoon's picture

I'll agree with you.  Here's why from the article: "...it seems awfully unlikely Americans and the rest of the world would let the US Treasury enjoy a very visible monopoly on fraudulent monetary accounting."

Well, don't look now but that "invisible monopoly" has been in the making for 40 years and there has been nary a whimper from "Americans and the rest of the world."    Coining the zillion dollar coin would just be taking the exercise to the absurd.  After all, I have a piece of paper in my pocket that cost about 3.5 cents to produce that says "One Dollar" on it.  How absurd is that?

Wed, 01/09/2013 - 23:39 | 3139607 Cognitive Dissonance
Cognitive Dissonance's picture

We are all greater fools.....only this greater fool likes to think you are the problem Rocky. Since you are not me you must be one of them. And we all know them over there (officially known as 'they') are the problem and not us.

<Now, about that bridge I was talking about.> :)

Wed, 01/09/2013 - 23:44 | 3139625 Totentänzerlied
Totentänzerlied's picture

""...it seems awfully unlikely Americans and the rest of the world would let the US Treasury enjoy a very visible monopoly on fraudulent monetary accounting."

Well, don't look now but that "invisible monopoly" has been in the making for 40 years"

Dammit you beat me to it. Author is a shill.

Thu, 01/10/2013 - 00:05 | 3139674 andrewp111
andrewp111's picture

That is why Nixon's face should be on the Trillion Dollar Coin. He is the one who ditched the last vestiges of a gold standard and went to pure fiat.

Wed, 01/09/2013 - 23:16 | 3139556 km4
km4's picture

RT  The trillion dollar coin should be a peep show token with my face on one side and the first 9" of my dong on the other.

Thu, 01/10/2013 - 00:42 | 3139759 ball-and-chain
ball-and-chain's picture

We're in a depression.

But we've been through depressions before.

It'll be painful.

But we'll survive.

http://www.angrysinner.blogspot.kr/2013/01/wednesday.html

Thu, 01/10/2013 - 01:24 | 3139854 Yen Cross
Yen Cross's picture

 KNUCKLES,  you're ahead.

Wed, 01/09/2013 - 22:00 | 3139351 gimli
gimli's picture

I bet that coin will turn out to be platinum plated tungsten --- just out of force of habit

Wed, 01/09/2013 - 22:28 | 3139416 palmereldritch
palmereldritch's picture

...yes, that rarest of metals from the Treasury...Ponzium

Wed, 01/09/2013 - 23:16 | 3139558 Ignatius
Ignatius's picture

Note it's a platinum coin... anything to keep from saying "gold" in public.

Thu, 01/10/2013 - 00:20 | 3139712 palmereldritch
palmereldritch's picture

Good point.  That would be like garlic to the vampire.  I guess, being the fraud artists that they are, their preferred medium is counterfeit

Thu, 01/10/2013 - 02:59 | 3139962 Tall Tom
Tall Tom's picture

Yes Ponzium is of the same family of metals as Imaginarium. Just imagine a value that it has and lo and behold it has that value.

 

But why stop at $1 Trillion. We can mint one for $1 Quadrillion, pay off the debt, and make everyone Trillionaires overnight. Of course your portion will be given to you after a substantial handling fee has been charged. That is, of course, you are not one of the chosen elite.

 

Then we can praise Zimbabwe for showing us the wisdom of the Fiscal Policy.

Thu, 01/10/2013 - 07:47 | 3140116 spanish inquisition
spanish inquisition's picture

Can't print too much, that would be financially unsound.

Enough needs to be printed so the banks heads are above water and you need a straw to breath (that is owned by the banks)

Wed, 01/09/2013 - 22:00 | 3139352 Freddie
Freddie's picture

I want to sell all my gold and silver for a magic platinum coin.  Sadly I had a boat accident but I got to get a EBT/SNAP card and a magic platinum Oba/Krugman coin.

Wed, 01/09/2013 - 22:35 | 3139425 nmewn
nmewn's picture

Me too...and I saved my ObamaFawn by holding it over my head and swimming with one arm!

Thu, 01/10/2013 - 01:37 | 3139874 James-Morrison
James-Morrison's picture

This will ultimately end in a way that no one expects.

Wed, 01/09/2013 - 22:03 | 3139358 wildstylechef
wildstylechef's picture

That's ingenious, I'll just take my monopoly money to the bank and pay off my mortgage !

Wed, 01/09/2013 - 22:12 | 3139382 All Out Of Bubblegum
All Out Of Bubblegum's picture

Tyler, this needs a repost on the front page in honor of Krugsy's Keynsian barbecue relish fetish:

 

http://acrossthestreetnet.wordpress.com/2012/08/31/gold-is-a-barbeque-re...

Wed, 01/09/2013 - 22:18 | 3139392 joego1
joego1's picture

Why not just create a trillion dollars worth of ones and zeros on a magic disk drive at the fed. The only difference is who claims to be behind the green curtain.

Thu, 01/10/2013 - 00:03 | 3139672 andrewp111
andrewp111's picture

They have to follow the laws as written. Procedures must be obeyed. Even if he same effect could be done by other means, it does not matter. Rules are rules.

Thu, 01/10/2013 - 01:41 | 3139885 James-Morrison
James-Morrison's picture

I stand by my previous call:

(1) US Treasury issues a $1 Trillion coin per household.

(2) Put it under your pillow at night and let the Fiat Ferry remove all your debt.

DEBT JUBILEE

 

Wed, 01/09/2013 - 22:18 | 3139394 Tsar Pointless
Tsar Pointless's picture

Sure. I quit drinking, then they pull this shit.

Wed, 01/09/2013 - 22:57 | 3139485 Joe moneybags
Joe moneybags's picture

thanks, Tsar.

Thu, 01/10/2013 - 01:54 | 3139899 Curiously_Crazy
Curiously_Crazy's picture

That's ok. Do what most of us who quit drinking do. Switch to something else. Then take up drinking again.

Wed, 01/09/2013 - 22:18 | 3139396 drink or die
drink or die's picture

Krugman is mentioning Joe W. in his blog.  Besides Joe obviously jizzing his pants, it also means the world is about to end.

Wed, 01/09/2013 - 22:26 | 3139412 otto skorzeny
otto skorzeny's picture

those fucking hebes stick together

Wed, 01/09/2013 - 22:58 | 3139491 Joe moneybags
Joe moneybags's picture

you sound like you have the heebie jeebies.

Thu, 01/10/2013 - 00:02 | 3139667 andrewp111
andrewp111's picture

Krugman is giving Obama the MSM's clearance to mint the TDC. Obama does not do anything without approval from the MSM. He is their sock puppet.

Wed, 01/09/2013 - 22:21 | 3139402 Buzzworthy
Buzzworthy's picture

"Obviously, the TDC idea is a political ploy with a targeted mission: to rid the US Treasury of its debt ceiling, which is an increasingly frequent and embarrassing public reminder of government ineptitude."

One correction, if I may.  The debt ceiling is not so much reminding us of ineptitude as it is reminding us that debt is the natural condition of fiat currency.  Every time we breach it that truth becomes evident.  For this reason I LOVE THE DEBT CEILING

Thu, 01/10/2013 - 02:14 | 3139922 traderjoe
traderjoe's picture

Not all fiat is debt-money like the FRN. See the United States Note.

Wed, 01/09/2013 - 22:26 | 3139410 km4
km4's picture

What a sham i.e. a bullshit attempt of  quasi gold standard to interleave with dollar fiat currency that is printing out of control 

Wed, 01/09/2013 - 22:26 | 3139411 gimli
gimli's picture

Does anyone know if the price for platinum blondes be affected?

Wed, 01/09/2013 - 22:27 | 3139414 otto skorzeny
otto skorzeny's picture

how bout Minnie the Moocher's diamond car with a platinum wheel?

Wed, 01/09/2013 - 22:31 | 3139420 nmewn
nmewn's picture

They would hold less value, in fiat terms, zero one trillionth of a chopstick ;-)

Thu, 01/10/2013 - 01:37 | 3139875 Yen Cross
Yen Cross's picture

Hey, My Friend. Don't you ever under-estimate yourself! a smart man you are, I'm in your debt.  I'm sure there is some JEW in my family.

    You have done a lot of good on Zero Hedge nmewn. I thank you for your understanding.  You are good at mind fucking people.

 You are a good person.

 

Thu, 01/10/2013 - 01:59 | 3139905 Curiously_Crazy
Curiously_Crazy's picture

You are good at mind fucking people.

You are a good person.

 

Now there's two sentences I never expected to see one after the other :)

Thu, 01/10/2013 - 03:02 | 3139964 Yen Cross
Yen Cross's picture

 I pitty you. Curiously_Crazy

  I'll bet you can't find a friend?   Ever heard of "Golf Cadettes"?

Thu, 01/10/2013 - 03:11 | 3139971 Yen Cross
Yen Cross's picture

 Solace/ nmewn ( I'm half Jewish) and damn proud.  I don't want world domination. My other Jewish friend and I exchange gifts during Christmas. He was Married to his beautiful wife in a Christian Wedding.

   I'm going to take all you morons out for a drink soon!

Wed, 01/09/2013 - 22:27 | 3139413 nmewn
nmewn's picture

ROTFL!!!...fucking awesome!

We suspect the Japanese Ministry of Finance would soon mint a ¥100 trillion pair of chopsticks and put them on deposit with the BoJ.

I've got two...count them TWO!...500 trillion dollar flip flops!

I'm rich ;-)

Thu, 01/10/2013 - 00:00 | 3139663 andrewp111
andrewp111's picture

No need. The government of Japan is already going to cancel Treasury Bonds owned by its BOJ outright. That is the same as the trillion dollar coin without the coin.

Wed, 01/09/2013 - 22:34 | 3139424 gimli
gimli's picture

If it looks like a duck and is endorsed by Paul Krugman --- it's a platypus.

http://www.youtube.com/watch?v=S3MtqBSd3w0

Wed, 01/09/2013 - 22:36 | 3139428 chump666
chump666's picture

Those idiotic Keynesian maniacs will unleash hyperinflation, as their opinion of the barbaric relic (gold) will be bought up on mass as everyone (not just gold bugs, the WHOLE world) will go physical - as PMs will be used as collateral for debt by all countries, while currencies/bonds/even stocks collapse.  Oil will go bid the USD will be destroyed.  It will start a precedence of complete lack of faith in paper assets, including USTs.  They (the TDC crowd) will essentially provide hyperinflation in one swoop if the coin is minted.

There Joe smoke that one.  It won't happen for those reasons.

http://www.businessinsider.com/the-two-most-stunning-things-about-the-mo...

Thu, 01/10/2013 - 08:45 | 3140161 andrewp111
andrewp111's picture

Hyperinflation won't happen until Congress goes hog wild with the spending, doubles it and then doubles and doubles it again, all paid for with Seigniorage. In the near term, the TDC will make Obama a conquering hero. Mortgage rates will drop below 1% and interest rates on savings will go to -2% or less. Banks will start lending again, and we will have a recovery. The GOP House will get obliterated in the 2014 midterms. With Pelosi back in the saddle again, that is when the inflation fun begins.

Wed, 01/09/2013 - 22:44 | 3139446 Cabreado
Cabreado's picture

"Hunter S. Thompson’s observation sprang to mind: 'in a world of thieves, the only final sin is stupidity.'"

But stupidity is not a sin.

Intent gets close -- in latter stages even closer, as Intent is exposed...

but actions fit the bill; inaction in context as well, and that's where the attention must lie.

It is an easy concoction of Principle, Law, and Common Sense, all enabled by Humility.

Don't dare miss one part.

Wed, 01/09/2013 - 22:51 | 3139477 nmewn
nmewn's picture

Perhaps he meant willfully stupid, not ignorance.

Great comment.

Wed, 01/09/2013 - 22:48 | 3139460 gimli
Wed, 01/09/2013 - 22:48 | 3139461 pdtrader
pdtrader's picture

What astounds me is that the geniuses in both the Treasury and the Fed, with all their daily exposure to markets, and their heralded educations, don't understand that nasty, little thing we call the "pricing mechanism". Much less how they're completely fucking it all up.

Who knew the catalytic converter on my car would one day be worth a cool mil?

Wed, 01/09/2013 - 22:54 | 3139479 A Lunatic
A Lunatic's picture

Your platinum is still market value. See there's market value, and then there's "we're above the fucking law so you little people can STFU and get back to paying more taxes for less services or we'll cart your ass off to Gitmo" value. See the difference??

Wed, 01/09/2013 - 22:59 | 3139495 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

It's generally accepted that gold and silver Eagles sell for a premium over spot.  However, the implied premium for a 1-ounce platinum coin valued at $1 trillion seems a tad rich given the current spot price of $1,602.90 / ounce.

Wed, 01/09/2013 - 23:14 | 3139548 chump666
chump666's picture

China will use a mega gold coin to back all their sh*t and there is most probably a lot piling up.  Russia uses their oil and gas, fixes the spot price and so on...

Not only will there be hyperinflation overnight, but war the next day.

It's an insane idea.  But hey, the top are losing their minds.

Thu, 01/10/2013 - 02:50 | 3139953 Matt
Matt's picture

They need to make the coin out of an exotic alloy that requires the Large Hadron Collider or some other impossibly complex machinery to make, and then call it an Unobtainium Coin and tell people they used all of the Unobtainium on Earth to make that one coin. If it has the percieved rarity of there being only one ounce in the world, then they have a better chance of convincing people of its $1 trillion value.

However, if you are going to do it as a one-time thing, to maintain faith in the system, you might as well give it a higher value, like $100 Trillion, so it offsets all of the United State's unfunded liabilities as well as the national debt.

Or just make it out of Platinum and tell everyone it is Unobtainium. 

They could even have a rigged auction with shill bidders, with the heads of central banks from all over the world bidding on the world's only ounce of Unobtainium.

Then, for stimulus, they could detect that there is an ounce of Unobtainium on Mars that requires a human mining team to extract.

Wed, 01/09/2013 - 23:08 | 3139527 Zgangsta
Zgangsta's picture

With all this talk of a trillion dollar platinum coin, I'm shocked that idiots haven't sent platinum futures soaring.

Wed, 01/09/2013 - 23:13 | 3139545 dragoneyes74
dragoneyes74's picture

Every once in awhile something happens that is so insane I get stuck staring at the screen in a prolonged, dazed confusion, until finally I shake it off, turn off all my electronics and take a walk in nature to forget that I'm a human for awhile.  The fact that this Trillion Dollar Coin idea is being endoresed by people not in a mental institution is one of those times.  

 

Thu, 01/10/2013 - 01:18 | 3139841 jldpc
jldpc's picture

What makes you come back and look again? Cus it really is that ridiculousssssssssssssssssssss. Now here is a helpful suggestion. forget the gold and silver bugs; they are too heavy in large quantities. Go forth and collect all of the coke, opium, and other low weight psychotropic drug you can find - ask any mexican on the street where to go and what to ask for and how much -and store the maway carefully. When the shit hits the fan, there will no longer be laws that matter; and you can trade them for water and food for you and your family. Almost everyone will need them to overcome the extreme disbelief that God's protected America has failed, er gone down the flew. In the end not a bad way to go, and saves ammunition to produce the same result. Die Happy!!

Thu, 01/10/2013 - 02:23 | 3139932 traderjoe
traderjoe's picture

I love the idea:
1. The idea of a sovereign country borrowing money from a private banking cartel - that creates the money for free - at interest and with the collateral of your productive labor is odious.

2. Therefore we must default.

3. This is a default under our current system.

Default! Throw off the mental bonds of debt-slavery.

Anyone that wants to pay back our national debt is still a slave to our current monetary paradigm (or a shill like the author).

Default. Abolish legal tender laws. Print United States Notes. Freegold and silver.

Wed, 01/09/2013 - 23:43 | 3139618 Yen Cross
Yen Cross's picture

 If I were a teacher---  Every one of you bitchez< DESERVES AN (+AAAa) 

 S&P Central; out.

Wed, 01/09/2013 - 23:45 | 3139626 Vincent Cate
Vincent Cate's picture

I think we are at a point in history where it is important to really understand hyperinflation.  To help with this I have written a Hyperinflation FAQ:

http://howfiatdies.blogspot.com/2012/10/faq-for-hyperinflation-skeptics....

Thu, 01/10/2013 - 00:09 | 3139689 Joe moneybags
Joe moneybags's picture

Very nice presentation in your blog, Vincent.  Your consideration for those skeptical of hyperinflation, like me, is appreciated.  And your 30 possible signs of hyper-inflation initiation are useful.  Thanks.

Thu, 01/10/2013 - 00:28 | 3139726 Big Slick
Big Slick's picture

Very nice treatment of hyperinflation Vincent.  I notice you deviate from question form for a few :) I think you are being a bit hard on yourself:  If you can't predict the exact timing then you are no help to investors!  Your article is a tremendous help!

Wed, 01/09/2013 - 23:53 | 3139645 Joe moneybags
Joe moneybags's picture

Every economic system, from barter to Keynesism to Communism, is man-made.  The rules are simply that to which the parties involved agree.  Right now, the entire world, from China to New Zealand, practices the unlimited sovereign debt model, as well as fractional reserve banking and fiat currency.  Despite the jokes and punditry, the U.S. will get away with whatever scheme it wishes to continue unfettered government debt creation.

Wed, 01/09/2013 - 23:57 | 3139657 andrewp111
andrewp111's picture

Damm straight. The USA's ability to print money is really derived from our military power.  The value of the dollar comes from our ability to say what is in the world. As long as we are supreme world dominator, we get to say what is.

Thu, 01/10/2013 - 00:02 | 3139668 Acidtest Dummy
Acidtest Dummy's picture

Will it be in English, "One Trillion Dollars," written out, "$1,000,000,000,000," or (my favorite) scientific notation, "$1018"

 

 

Thu, 01/10/2013 - 00:09 | 3139690 AU5K
AU5K's picture

Typical liberal idea.  "Solve" a problem, but utterly unable to see 1 step further and what the unintended consequences might be.

Thu, 01/10/2013 - 09:20 | 3140214 knukles
knukles's picture

Address the symptom, not solve the problem

Thu, 01/10/2013 - 00:12 | 3139698 AE911Truth
AE911Truth's picture

Look at a Gold vs Dollar chart for the last 100 years. It is obvious where the trend leads. The Dollar goes toward zero, and Gold goes toward infinity.

The Trillion Dollar Coin scheme exposes the forty year-old charade, otherwise known as the global monetary system, better than any mind-exercise we have been able to come up with.

The world needs to understand the scam and this puts the scam clearly in everyones face.

Then paper currency dies, and real money (Gold and Silver) comes back into use.

And the debt gets paid.

What's not to like.

Mint 600 of these $1T coins so the $600T derivitive complex can unwind.

Lastly, every obligation SS, MediCare, etc., gets paid.

This is the end result. We can make it happen now or watch it happen later.

Just like FOFOA said.

Thu, 01/10/2013 - 01:38 | 3139880 Yen Cross
Yen Cross's picture

 Yuk Yuk Joe Bob. Isn't this redundant?

Thu, 01/10/2013 - 03:00 | 3139963 Silvertrader
Silvertrader's picture

I don't know about the price for platinum blondes, but it could perhaps do some good to the price of platinum. I often trade platinum online using CFD

Thu, 01/10/2013 - 03:44 | 3139986 BlackVoid
BlackVoid's picture

"it seems awfully unlikely Americans and the rest of the world would let the US Treasury enjoy a very visible monopoly on fraudulent monetary accounting."

It is already fraudulent as of now and nobody cares!

Thu, 01/10/2013 - 06:29 | 3140075 WhiteNight123129
WhiteNight123129's picture

Delirium Tremens

Thu, 01/10/2013 - 10:06 | 3140080 WhiteNight123129
WhiteNight123129's picture

A new organization is born, called the Vancouver Market Chopstick Association, which ensures delivery of chopsticks under the Vancouver Good Delivery Standards. 

Hong-Kong would surely peg the HKD to the chopstick. I guess next is JPM amassing gazillions of naked chopstick shorts. People would use their credit card to buy chopstick in order to bankrupt JPM. People could demand to be paid in chopsticks around the globe, which would severly contrain the world[s forests. Burning chopstick would a federal crime, and governments in Asia would have to start training station to re-educate their people to eat with knives and forks or with their bare hands. The accumulation of chopsticks in the central banks would start to create some serious issues of logistics. The Lumber trading association would take over the role of the IMF and BIS, as well other world lender of last resort due to their large control over the supply of chopsticks.

IT THINK WE HAVE A WINNER PLAN HERE! 

Thu, 01/10/2013 - 09:12 | 3140195 lindaamick
lindaamick's picture

Personally I am happy to see the Platinum Coin Proposal.

It might serve to wake up a greater number of people/countries to the fact that the US really operates in virtually the same manner AS IF there were a Platinum coin but the complex smoke screen surrounding that fact keeps the majority in the dark about what is really happening. 

A coin brought into existence out of nothing give a tangible example of what has been going on for a long time.

Thu, 01/10/2013 - 09:20 | 3140211 Downtoolong
Downtoolong's picture

Which is also why the Central Banks and TBTF banks are starting to quietly oppose the idea too. It would blow their scam and remove their profit loop in the present system of money creation out of thin air.

Thu, 01/10/2013 - 09:42 | 3140259 awakening
awakening's picture

Tell me I'm not the odd one out: "Bring it on, mint the f---er already and get this shit started already. FFS!"

Thu, 01/10/2013 - 09:59 | 3140302 Afrispaans
Afrispaans's picture

Flash forward fifty years: After mounting public insurrection and under white-hot diplomatic pressure, the US Treasury is finally forced to allow US citizens and foreign officials with vested interests to inspect the the 36 TDCs sitting in a vault at a secret location, currently underpinning the entire economy. The coins have been horribly disfigured, as successive Treasury administrations have been "recycling" their currency: small slivers have been shaved off the edges and added to the melt for the following TDC. Over the years this process has been repeated. The last coin minted, number 36 (the one used for the photo ops) is in "mint" condition, but as one inspects coins from previous years one notices that the older the coin is, the more debased. There is hardly anything left of the first TDC by now. The Treasury explains that, using nano-cutters, this process can be continued infinitely, as Xeno's paradox states that there will always be more coin left.

Thu, 01/10/2013 - 10:01 | 3140307 AE911Truth
AE911Truth's picture

This would not be the first time the US Government conned the world into trading real stuff for worthless promises.

http://www.courthousenews.com/2011/12/05/41930.htm

Thu, 01/10/2013 - 11:44 | 3140653 RazvanM
RazvanM's picture

Why wouldn't the mighty US of A decide to pay off all the debt with that coin? 16 fucking T and this is it! The ultimate QE.

Thu, 01/10/2013 - 17:19 | 3142151 Nels
Nels's picture

Rewrite the sentence for paper:  After declaring the bit of paper to be worth  $100 there would be no market-based discipline.

There will eventually be market-based discipline, but we will be deep into Weimar territory by that time.

At least a wheelbarrow full of these coins will always be worth something.

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