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Trillion Dollar Platinum Coin Is "Not The Solution" - PIMCO's Gross

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From GoldCore

Trillion Dollar Platinum Coin Is "Not The Solution" - PIMCO's Gross

Today’s AM fix was USD 1,669.50, EUR 1,258.29 and GBP 1,036.25 per ounce.
Yesterday’s AM fix was USD 1,663.00, EUR 1,269.37 and GBP 1,036.65 per ounce.

Silver is trading at $30.68/oz, €23.24/oz and £19.12/oz. Platinum is trading at $1,629.00/oz, palladium at $694.00/oz and rhodium at $1,150/oz.


Cross Currency Table – (Bloomberg)

Gold climbed $15.50 or 0.94% in New York yesterday and closed at $1,672.90/oz. Silver surged to a high of $30.926 and finished with a gain of 1.45%. The yellow metal was on track for a 1% weekly rise, after falling for five of the past six weeks.

Gold edged off in euros on Friday, following the European Central Bank’s decision to keep its rates unchanged.

Japan's gold market (TOCOM ) made news as benchmark Tokyo gold futures hit a record high of 4,820 yen a gram ($1,699.62 an ounce) after the yen dropped to a 2-1/2-year low vs. the dollar on expectations of more QE by the BoJ.

Japanese Prime Minister Shinzo Abe made has pushed increased jobs growth as part of the Bank of Japan’s directive as his government approved $117 billion of spending to revitalize the economy in the biggest stimulus since the financial crisis.

Abe is leaning hard on the BOJ to adopt a 2% inflation target at its January 21-22 rate review, which is double its current goal, and consider easing monetary policy again, most likely by increasing government debt and asset purchases, sources told Reuters.

Spain's first debt auction of the year was positive, as appetite for high-yielding assets improved.

PIMCO founder and co chief investment officer Bill Gross gives no credence to the trillion dollar platinum coin scheme.

Concerns over the debt ceiling have prompted Washington politicians and political and economic activists to argue that the U.S. treasury should simply use its authority to mint a platinum coin worth $1 trillion.


Platinum in USD, 2 Years – (Bloomberg)

Proponents argue the coin could be deposited at the Federal Reserve Bank of New York to cover the Federal government’s debts until and unless Congress raises the debt limit.

Gross acknowledges that they can do this and says it is not a novel idea as it has been advanced in the last several years.

However, whether Bernanke and Treasury in combination would jeopardise their standing with Congress by this type of "end run" ... no we "don't give it much credence."

We feel that such an action would not only jeopardise the U.S. Fed and Treasury standing with Congress but with creditor nations internationally - particularly the Russians and Chinese.

It appears to be a bit of a stunt by and may be a convenient distraction away from the substantive issue of how the U.S. manages to address its massive budget deficits, national debt and unfunded liabilities of between $50 trillion and $100 trillion. It may also be designed to create the false impression that there are easy solutions to the intractable US debt crisis - thereby lulling investors and savers into a false sense of security ... again.

Gross said that subject to the debt ceiling, the Fed is buying everything that Treasury can issue. He warns that we have this "conglomeration of monetary and fiscal policy" as not just the US is doing this but Japan and the Eurozone is doing this also.

Gross has recently criticised the Fed's 'government financing scheme.'  He has in recent months been warning of the medium term risk of inflation due to money creation and recently warned of 'inflationary dragons.'

Gross in his monthly Investment Outlook note to clients of the world's biggest bond fund, argues that the quantitative easing and near zero  interest rate strategies employed by central banks in the US, UK, Europe and Japan, China and Switzerland have the potential to permanently distort financial markets and create significant long-term inflation risks.

 

Gold in USD, 2 Years – (Bloomberg)

Incredibly, the world's most important central banks have issued more than $6 trillion dollars' worth of "essentially free" money into the global economy since the financial crisis in a misguided recovery effort that could erode stocks, bonds and currencies for generations to come.

"While they are not likely to breathe fire in 2013, the inflationary dragons lurk ... a case of quantitative easing," Gross wrote. The tactics, he says, "destroy financial business models and stunt investment decisions which offer increasingly lower (equity and investment returns). Purchases of 'paper' shares as opposed to investments in tangible productive investment assets become the likely preferred corporate choice."

Thus, PIMCO remain favorably disposed towards gold as an allocation in a portfolio.

On December 30, PIMCO tweeted @PIMCO:Gross: 2013 Fearless Forecasts: 1) Stocks & bonds return less than 5%. 2) Unemployment stays at 7.5% or higher 3) Gold goes up……

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS

Video: Silver To Rise Over 500% In Next 3 Years? - BBC

Gold takes breather; Tokyo gold strikes record high - Reuters

Gold Set to Snap Run of Six Weekly Losses on Demand From China - Bloomberg

COMMENTARY

Gross: Trillion Dollar Coin Not the Solution - Bloomberg

$1 trillion platinum coin hogwash – if it should happen, buy gold and silver - Mineweb

What will happen to the UK property market in 2013? – About Property

Growing risk of property defaults across the eurozone periphery – The Telegraph

 

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Fri, 01/11/2013 - 09:01 | 3143773 GetZeeGold
GetZeeGold's picture

 

 

Word up.....taking that much PT out of the market all at once would kill the economy.

Fri, 01/11/2013 - 09:05 | 3143779 bigdumbnugly
bigdumbnugly's picture

and if something as ridiculously easy as this was the answer to our probs then why did it take these guys 17 trillion (at least) to think of it?

are they that slow?

... no need to answer.

Fri, 01/11/2013 - 09:13 | 3143799 mrgneiss
mrgneiss's picture

Maybe this would be the answer:

PETITION TO AUDIT THE GOLD IN FORT KNOX:

https://petitions.whitehouse.gov/petition/perform-assayed-public-audit-all-treasurys-claimed-8100-tons-gold-and-net-swaps-loans-sales/rGyFTLwD

Get some popcorn........

Fri, 01/11/2013 - 09:15 | 3143802 trav777
trav777's picture

Gross is just pissed because he can't find the yield he thinks he's entitled to.

He probably very loosely understands that growth produces yield but he hasn't figure out why growth isn't happening.

So, like a lot of people here who are unwilling to confront mental third rails, he constructs scapegoats to blame to avoid having to face a really uncomfortable truth's ramifications.

Blame tax policy, blame sunspots, blame a miasma...it's all the same. 

Fri, 01/11/2013 - 09:19 | 3143811 fonzannoon
fonzannoon's picture

Trav I think you have it all wrong with Gross. He has been saying forever that bonds are toast. He also thinks stocks are toast. He confronts those third rails very logically. He expects lower returns going forward. However since he is competing against zirp he can provide you with the cleanest smelly asshole or whatever his stupid slogan is.

Fri, 01/11/2013 - 09:59 | 3143908 francis_sawyer
francis_sawyer's picture

Your comment bolstered Trav's argument

~~~

"Gross is just pissed because he can't find the yield he thinks he's entitled to" [smelly assholes notwithstanding]...

Fri, 01/11/2013 - 10:03 | 3143920 fonzannoon
fonzannoon's picture

I don't think he is pissed at all is my point. He is the biggest beneficiary of this environment. He is loving this.

Fri, 01/11/2013 - 10:07 | 3143932 francis_sawyer
francis_sawyer's picture

I don't know... The image in my mind is some wealthy dude in Las Vegas who can get all the hot babes he wants, then is forced to move to Bulgaria... He's not as happy, even though he's still getting the best tail in the room...

Fri, 01/11/2013 - 10:31 | 3144009 fonzannoon
fonzannoon's picture

Maybe. Who the hell knows anymore. if i were him all i would care about is aum. 

Fri, 01/11/2013 - 12:29 | 3144393 alangreedspank
alangreedspank's picture

If the state forces interest rates in one way or another to its advantages and forces you to use the currency they are fiddling with, expecting good returns is not asking too much.

Fri, 01/11/2013 - 11:50 | 3144256 Snakeeyes
Snakeeyes's picture

Why not a billion, million, gazillion dollars?

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

The scariest thing is the bypassing of the Constitution and  Krugman thinks this is cool!

Fri, 01/11/2013 - 12:07 | 3144309 Matt
Matt's picture

The obvious risk to minting a platinum coin (that is not 40,000 tons) is the risk that they will do it again and again in the future.

The only way this program can work is if there is some way to ensure that it cannot be repeated as desired. 

If the coin was said to be made of a rare element such as adamantium, vibranium or unobtainium, using the only ounce on Earth, and thus setting a precendent that any other such coin must be a fraud, then maybe you could CONvince at least the general public and prevent a mass run out of USD. Actually, all that matters is what the algorithms believe, right?

Fri, 01/11/2013 - 15:23 | 3145056 AE911Truth
AE911Truth's picture

The face value has nothing to do with the intrinsic value. The asserted value of our fiat dollar IS a fraud. The Trillion Dollar Coin is a truthful open admission of the fraud.

 

Fri, 01/11/2013 - 11:53 | 3144269 TruthHunter
TruthHunter's picture

Just be patient eventually a little copper coin with Lincoln,s picture

 

on it will be worth a "Trillian" dollars.

Fri, 01/11/2013 - 09:14 | 3143800 Acet
Acet's picture

Keep in mind that the suggestion was not to make a coin with enough PT to be worth a Trillion, it was to make a coin made out of PT (any size) with a face value of $1 Trillion - in other words an FRN only printed in PT rather than paper or copper.

The reason for this complicated construct is legal: the Mint is already legally authorized to make celebratory coins with whatever face-value they want as long as they're made of platinum.

 

Fri, 01/11/2013 - 09:27 | 3143834 Mad Mohel
Mad Mohel's picture

They should mint the trillion coin(s) out of petrified Bernanke turds, because we all know that sonofabitch is full of an endless amount of shit.

Fri, 01/11/2013 - 10:12 | 3143947 Acet
Acet's picture

I suspect that there is no law that would make a coin made out of petrified Bernanke turds to be legal tender, even if made by the US Mint.

I might, however, make for an interesting collectible, in which case we could truthfully state that something good came out of the whole Bernanke thing.

Fri, 01/11/2013 - 10:17 | 3143966 ricky2
ricky2's picture

Stamp "Federal Reserve" on anything and they'll say it's worth something

Fri, 01/11/2013 - 10:55 | 3144074 logically possible
logically possible's picture

Bernanke turds and hostess twinkies as currency, Hmmm.

Fri, 01/11/2013 - 09:45 | 3143878 BullsNBeers
BullsNBeers's picture

Roumor has it that Obama will be forging it in the fires of Mt. Doom.

Fri, 01/11/2013 - 15:25 | 3145069 AE911Truth
AE911Truth's picture

It is a small (e.g. one Troy Ounce) coin with a face value of $1T.

 

Fri, 01/11/2013 - 09:03 | 3143774 Acet
Acet's picture

Trillion Dollar Platinum Coin Is "Not The Solution" - PIMCO's Gross

Duh!?

Fri, 01/11/2013 - 09:07 | 3143786 tuttisaluti
tuttisaluti's picture

We could also take a stone or a sea shell and print a trilli on it.

Fri, 01/11/2013 - 09:45 | 3143877 GetZeeGold
GetZeeGold's picture

 

 

Throw some glass beads and whiskey (aka firewater) in there and you might have something.

Fri, 01/11/2013 - 10:01 | 3143914 francis_sawyer
francis_sawyer's picture

mmmmmmmmmmmmmmmmmmmmm!..... Firewater

Fri, 01/11/2013 - 09:29 | 3143842 asteroids
asteroids's picture

Of course it's "an end run around congress". How about Obozo stops screwing around and actually gets a budget. Something as president he has never done!

 

Fri, 01/11/2013 - 11:19 | 3144148 Beam Me Up Scotty
Beam Me Up Scotty's picture

He won't produce a budget, because it would actually show how much bigger the budget deficit would really be if he had his way.  These Keynsians have insatiable spending desires.  In fact, I would say infinite spending desires.  They are like the person who buys a lottery ticket and dreams about all the homes and cars and vacations that they would buy if they won the lottery.  They will never answer the question "how much spending is enough", because no matter how much was spent, it's never enough.

Thats why, IMO, if the debt ceiling is eliminated, inflation will finally come.  Whether he does it by executive order, or by minting a trillion dollar coin (because one coin will just be the start of many which will be minted on ever shorter half lives), once the spending cap comes off, spending will go parabolic and so will inflation.......and gold.

Fri, 01/11/2013 - 09:04 | 3143776 ricky2
ricky2's picture

HANG THE BERNANKER!!!! (go ahead and string up Geithner while you're at it too...)

Fri, 01/11/2013 - 09:07 | 3143784 laomei
laomei's picture

Meh, it's quite literally the same exact thing, it's a loophole and nothing more.  If the GOP wasn't full of shitstains it wouldn't even be an issue for discussion.

Fri, 01/11/2013 - 09:08 | 3143788 ricky2
ricky2's picture

so...we're going on a platinum standard?.......i'm lost

Fri, 01/11/2013 - 09:10 | 3143794 GetZeeGold
GetZeeGold's picture

 

 

No you're not.....they are.....as in totally freakin lost.

Fri, 01/11/2013 - 09:18 | 3143790 Bob
Bob's picture

What's funny is that this internet meme of a platimum coin has legs even in the finance community.  Whether for good or evil, Obama going radical--as in doing something that has never been done before, entirely on his own--is preposterous.  It's not how he rolls.

Fri, 01/11/2013 - 09:12 | 3143792 slackrabbit
slackrabbit's picture

 

I say in for a penny in for all unfunded liabilities’.

If your going to print one coin, then why not 16 to cover the debt?

In which case why not cover the unfunded liabilities’ as well so that the kids don't have to pay (notice my moral argument to justify my own personal fortune?).

True I own gold so I profit at around $56,000 per ounce (ref: Jim Richards), but I’m only saying this cos I rrrreeaaaaaalllllyyy care!

This is a win - win situation.

The government gets to lie and we get rich!

 

;-)

 

 

Fri, 01/11/2013 - 09:46 | 3143880 a growing concern
a growing concern's picture

Yeah, seriously... just do it.  Why the fuck not?  But if you're gonna do it, might as well just do it up right and pay off all those unfunded liabilities for SS and Medicare while you're at it.  Maybe $200 trillion ought to hold us over for a couple of years.

Fri, 01/11/2013 - 10:29 | 3144000 laomei
laomei's picture

Because it's a stopgap solution and it would make no sense to go that extreme in the creation of money.

 

How it normally works:

Government needs money, the Fed conducts a sale of T-securities issued by the treasury, revenue is deposited at the treasury.

 

How this works:

Government needs money, makes a coin which has a full legal value of $1T, that is placed on deposit at the fed and the fed places cash in the treasury.

 

It's non-interest bearing, but there's nothing that says it can't be placed in there as hock for a standard interest rate while cancelling out an equal amount of securities that the fed has onhand as assets and having it being interest-bearing until reclaimed.  Same exact thing.  There's nothing mysterious or magical about it.  It's like an out of work athlete signing a jersey and getting a loan on it.  It's worth something, they created it, if they run around making a ton of them, it will deflate the value to basically nothing.  The government could, if it wanted to, just create money to pay the bils, as long as it was kept under control as to how much money is floating around in the system, it would be just fine.

 

FRN is worth something because the law says it is.  This coin would be worth $1T because the law says it is.  Simple as that really.  This isn't a "platinum standard", this has no influence on the value of platinum, just like zinc or cupro-nickel or brass or whatever.  It's called seigniorage and it's nothing new.

 

In theory, yes, they could just make a single coin, slap on a face value of a few hundred trillion and suck out the money from it as needed.  Which would be no different from removing the credit limit entirely, or jacking it way up.  It's a loophole, it's constitutional, and there's nothing crazy about it.  What's crazy is that it has come to this because congress is so vile and broken.  So fuck it, a solution that fits a problem.

Fri, 01/11/2013 - 11:23 | 3144173 Beam Me Up Scotty
Beam Me Up Scotty's picture

"Which would be no different from removing the credit limit entirely, or jacking it way up"

Ding, Ding, Ding, Dingdong!!  Like I said in my above post, there is infinite spending desires.  Remove the cap on spending and it will go parabolic.  What you are basically saying in your post is, Obama would like another trillion in spending over and above what was already spent.  It won't stop at one coin.  You think these people are suddenly going to be all responsible?  As if this would be a one time event?  Give me a break....

Fri, 01/11/2013 - 11:57 | 3144276 Bay of Pigs
Bay of Pigs's picture

"It's a loophole, it's constitutional, and there's nothing crazy about it."

First two points I get, the last one I don't. Anyone with a functioning brain should be considered batshit crazy for suggesting this absolutely terrible idea,

 

 

Fri, 01/11/2013 - 12:11 | 3144327 laomei
laomei's picture

Not really.  If you want to see what a US default looks like, no more subsidies, no more contracts, no more SS payments, no more anything else... well, you'll be begging for that damn coin, and then you'll be begging for the heads of the idiots who forced that stupid situation.

Fri, 01/11/2013 - 13:36 | 3144643 Beam Me Up Scotty
Beam Me Up Scotty's picture

You don't get it do you?  The coin will do nothing to fix any problems.  Mint it, print it, its all the same.  You will get your SS check, and food and gas will go up faster than the COLA that they will adjust your SS check.  You will not win the inflation battle by minting or printing, period.  The only reason inflation isn't raging right now is, most of the money the Fed has printed to date is sitting in the banks on reserve.  They aren't lending it out.  But if the government gets the money directly, they won't just sit on it to make their balance sheet look good, they will spend it.  THAT money will hit the street, and you can darn well bet it will be inflationary.

Fri, 01/11/2013 - 14:06 | 3144792 laomei
laomei's picture

Yea, the fed can sell some of the securities it's sitting on, and remove the cash from circulation.  No big deal at all.

Fri, 01/11/2013 - 16:15 | 3145297 AE911Truth
AE911Truth's picture

Use precious metals as a store of value. Use this created out of thin air fiat to pay off the debt. It is the only way. Its OK, the debt is fraudulent anyway. Usry without forgiveness on a planet with finite resources is not doable.

Fri, 01/11/2013 - 10:18 | 3143968 Acet
Acet's picture

Just print a platinum coin with a face value of $1 Quadrillion - that would solve the public debt problem for the next 20 years.

It also has the additional benefit that it would be a tax on stupidty and gullability since the resulting inflation would essentially devaluate the savings of anybody stupid or gullible enough to still have savings in USD.

 

Fri, 01/11/2013 - 12:15 | 3144341 Matt
Matt's picture

And through this inflation, it would in fact fail to solve anything, since the annual budget would grow astronomically from the inflation, so the debt would grow anyways.

Even if you had a $1 quadrillion coin deposited at the Fed, and this did not cause a mass loss of faith in the USD, the problem then would be that Congress would (assuming they got around to producing a budget) feel free to continue increasing the budget to try to "fix" the economy.

Fri, 01/11/2013 - 16:19 | 3145309 AE911Truth
AE911Truth's picture

So, pay off ALL the debt. All $600 Trillion of it. Do not issue any more debt, ever. So there is no more debt, and no more interest owed, ever.

Usry on a finite planet is immoral.

Fri, 01/11/2013 - 10:23 | 3143986 Shell Game
Shell Game's picture

Our local news brought up the story of this $T coin idiocy last night.  At the close of the brief story they were stumbling around the idea, shrugging and giggling at each other like school kids upon hearing Rumpelstiltskin's daughter could spin straw into gold. 

Funny how they keep a straight face for Fed printing, but wink-wink-nudge-nudge over this as if there's a difference. 

So, no, Bummers won't make this coin and open himself up to ridicule over minting funny-money, when he can be taken seriously over printing it.

Fri, 01/11/2013 - 09:15 | 3143795 overmedicatedun...
overmedicatedundersexed's picture

the only thing I take from this is what is the diff vs 100 frn note...mint the damn coin it makes as much sense as our current fiat system just a matter of taking the fiat to it's logical conclusion..if you support the debt system we have this is perfectly logical and in fact needed

buying platinun the new gold.

Fri, 01/11/2013 - 17:55 | 3145603 cynicalskeptic
cynicalskeptic's picture

Have four series of Zimbabwe banknotes framed - the oriignal series, when Rhdesia became independent had $Zim 1 = $US 1.48.   Beiong resource rich, the newly independent Zimbabwe had a dollar worht MORE than the US dollar.   After continued mismanagement and inflation, three currency series later (and losing 3 zeroes along the way) You finally had $zim 100 TRILLION revalued to equal $Zim(new) 1 - which quickly became worhtless.

This 'artwork' serves as a remindewr of where we're headed.   I'm also reminded every time I go to the grocery store.

When governments resort to 'gimmickier and gimmickier' 'solutions' to deal with their gorwing debt, you know you're screwed.

Fri, 01/11/2013 - 09:15 | 3143798 Quinvarius
Quinvarius's picture

The coin is such a bad idea that we will probably do it.  It is basicly printing the money.  And we are going to do it anyway.  I don't care what they print the zeros on.  Might as well be a platinum disk.

Fri, 01/11/2013 - 09:19 | 3143806 slackrabbit
slackrabbit's picture

Actually they may use it as an excuse to knock off some zero's sometime in the future...the 1T will become $1

Fri, 01/11/2013 - 09:53 | 3143898 a growing concern
a growing concern's picture

For a shot-in-the-dark sort of financial insurance play that really has no downside, get a few thousand dollars in nickels.  In the event of a hyperinflation scenario, zeros are probably lopped off of paper currency, but coinage will stay in circulation at an increased value (by a factor of 10, 100, 1000, etc.).  The other side of the play is that nickels are currently worth more than face value and will be changed to steel soon, giving a metal arbitrage opportunity with zero downside.  (the only downside being you make no interest on the money you put into nickels, but you're not making any money in the bank anyways)  Get 'em while you can!

Fri, 01/11/2013 - 10:04 | 3143917 francis_sawyer
francis_sawyer's picture

already checked off the list... [it doubles as a home gym system as well]...

Fri, 01/11/2013 - 10:50 | 3144061 a growing concern
a growing concern's picture

Oh yeah, make sure your floor can support it. They're some heavy sons of bitches, so I hear.

Fri, 01/11/2013 - 11:43 | 3144219 francis_sawyer
francis_sawyer's picture

definitely ~ go directly to basement... As a footnote ~ I've been collecting nickles for years... It started just paying cash for everything & asking for the "coin" change in nickles... Then, progressed to buying a $2 nickle roll at places who were sure to have them (like supermarkets & liqour stores)... Soon thereafter, I'd go once a week to the local bank & ask to buy 10 rolls at a time... Can you believe that Bank of America practically needed a note from your doctor to do this?... I used to make up the excuse that I was a volunteer "bingo caller" for a "casino night" at a local retirement home... That got them off my jock... Finally later ~ I moved to the boonies & for sme reason have ZERO problems buying a $100 box of them any time I want from a local bank...

~~~

Greatest thing aout nickles also (some are not going to like to hear this)... They're NOT joobux...

Fri, 01/11/2013 - 09:25 | 3143827 fonzannoon
fonzannoon's picture

If Obama can go with the coin then he can go the red money route. I would take a guess that he goes red money during his presidency. Nice way to get the GDP up to 4% for a year or so.

Fri, 01/11/2013 - 09:21 | 3143815 Smuckers
Smuckers's picture

I remember doing something like this when I was a kid
except it was for giving hugs, kisses and backrubs.

I should have thought bigger.

Fri, 01/11/2013 - 09:29 | 3143817 unununium
unununium's picture

"...a stunt ... a convenient distraction away from the substantive issue..." --Bill Gross

No, it does NOT distract from the substantive issue. It brings the substantive issue into VERY CLEAR FOCUS.

Without sound money, all discussions about deficits, budgets, debt ceilings, spending, and taxes are MEANINGLESS. Everything you save and work for and store in dollars, yen, or euros is subject to IRREVERSIBLE THEFT by arbitrary inflation at any time.

Fri, 01/11/2013 - 09:43 | 3143873 oldschool
oldschool's picture

Exactly right.  But no one will face this reality because we live in an idiocracy and the halls of power are populated by predators and parasites.  So the bleat goes on.

Fri, 01/11/2013 - 09:23 | 3143821 Mad Mohel
Mad Mohel's picture

No Shit. You don't say.

Fri, 01/11/2013 - 10:37 | 3143828 Mercury
Mercury's picture

In one of the Hitchhiker’s Guide ToThe Galaxy’ books our heroes get stranded on pre-historic Earth and they have to make due by civilizing the inhabitants and leveraging their tech knowledge.  Someone declares that all the leaves that grow on trees are money which makes everybody “rich” but hyperinflation results which is then countered by a massive, planet-wide chemical de-foliation campaign to "fix" the problem.

It’s only funny because it’s so ridiculous and fictitious. The trillion dollar coin idea?...not so much.

This isn't a stunt Bill. Many influential people clearly have a hard-on for this tactic and massive debasement is almost certainly the endgame here anyway. Exactly how we get there is just details.

 

Fri, 01/11/2013 - 09:25 | 3143831 MSForecast
MSForecast's picture

I would love to see someone try and cash it in at Citi or BAC.  Most rediculous thing I heard in a long time.  The best part, is there are members of congress that actually think we should have "discussions" on this issue.  Moron's.

Fri, 01/11/2013 - 09:33 | 3143851 overmedicatedun...
overmedicatedundersexed's picture

ms my poor sod, they will give all debt holders a paper saying they own x percent of the trillion dollar dabloon, silly to think they give them the whole sheebag now don't you feel better

Fri, 01/11/2013 - 09:42 | 3143872 Mercury
Mercury's picture

It is cash which means your cash would be worth a whole lot less.

 

So, it’s more scary than ridiculous.

Fri, 01/11/2013 - 09:28 | 3143839 JustObserving
JustObserving's picture

national debt and unfunded liabilities of between $50 trillion and $100 trillion.

National debt is $16.4 trillion and unfunded liabilities are $122.2 trillion per USdebtclock.org

Kotlikoff has US unfunded liabilities of $222 trillion and rising $11 trillion a year.

Richard Fisher of the Dallas Fed had US unfunded liabilities at $99.2 trillion in August 2008.

So it is ridiculous to say US debt and unfunded liabilities are between $50 and $100 trillion.  They are at least $135 trillion and rising at $8 trillion a year.


 

Fri, 01/11/2013 - 12:42 | 3144421 Marco
Marco's picture

The US government is not obligated to pay out medicare/SS at current levels in the future ... unfunded liabilities are not, they are simply future government outlays subject to budgeting.

Fri, 01/11/2013 - 09:29 | 3143843 Buzz Hacksaw
Buzz Hacksaw's picture

Seroisly, what is the difference between a gazillion dollar coin and what the fed is doing right now? It would be a continuation "imaginary"value.

One positive of this would be that currency would be able to be created around it free from usury, if it were created apart from the central bankers. We must first eliminate usury and fractional leverage, then we can work on placing value where it belongs, productivity. 

This idea of a coin would not end the stupidity but if implemented correctly could end the bankers hold on us producers.

 

 

Fri, 01/11/2013 - 09:34 | 3143853 PhD
PhD's picture

How about a trillion dollar cyanide pill?

Wouldnt that help?

Fri, 01/11/2013 - 10:34 | 3144016 Chump
Chump's picture

Only if they made 535 of them.

Fri, 01/11/2013 - 09:34 | 3143854 Raymond Reason
Raymond Reason's picture

It appears to be a bit of a stunt by and may be a convenient distraction away from the substantive issue of how the U.S. manages to address its massive budget deficits

haha!  So the FRN is not a convenient distraction, or a lesser convenient distraction?

 

Fri, 01/11/2013 - 09:40 | 3143859 sbenard
sbenard's picture

"lulling investors and savers into a false sense of security"

Interesting analogy and choice of words by Bill Gross. Here's why it strikes me as amazingly reminiscent. I remember a strikingly similar phrase in a description of one of the Devil's strategies for deceiving people:

"And others will /the devil/ pacify, and lull them away into carnal security, that they will say: All is well in Zion; yea, Zion prospereth, all is well--and thus the devil cheateth their souls, and leadeth them away carefully down to hell." The Book of Mormon

I'm quite certain that Gross isn't a Mormon, but I'm struck by the similarity in analogies.

Fri, 01/11/2013 - 09:40 | 3143866 overmedicatedun...
overmedicatedundersexed's picture

sbenard heaven or hell which would be more interesting..a thought brought to you by the DEVIL.

Fri, 01/11/2013 - 10:02 | 3143915 Raymond Reason
Raymond Reason's picture

All is well in Zion, yea, RC Willie prospereth. 

Fri, 01/11/2013 - 09:39 | 3143865 sudzee
sudzee's picture

GOV is not going to cut spending so I think it will be a choice between a trillion dollar coin scheme or a VAT.

Fri, 01/11/2013 - 09:49 | 3143882 luckylongshot
luckylongshot's picture

If you stand back far enough, the current mess we are in is a direct result of allowing private bankers to take over the right to create money. The current situation where americans are waking up penniless on the land their ancestors conquered  was predicted by Thomas Jefferson 200 years ago when he warned against allowing private banks to get control of the right to create money. The brilliance of this idea is that it returns the right to create money to the people. It actually is the first step on the path to rid America of the parasite that is causing the problems and as such is a move that Abraham Lincoln and Thomas Jefferson would applaud.

Fri, 01/11/2013 - 10:10 | 3143946 Raymond Reason
Raymond Reason's picture

I like the line of thinking, but is the Treasury we the people?  Eric DeCarbonell says the Treasury controlls the Fed through the Exchange Stabilization fund.  But in the end, does it matter if we don't have hard money? 

If you stand back far enough, you could say loaning at interest opened Pandora's box. 

Fri, 01/11/2013 - 11:18 | 3144119 ParkAveFlasher
ParkAveFlasher's picture

+1 RR. 

Interest is the engine of the parabola.  It's just math.  A prime rate of 2% yoy for a 100 years is a 724% increase.   If the assumption is that money/credit only exists as issued by banks, and the last I checked, it is, and if population doesn't increase at the same clip, you have an explosion in the units of currency not matched by a like explosion in the supply/demand for goods and services, guess what you have?  Starts with "in" and ends with "flation".

Good luck to Krugman though, he's the Pope of MOPE, he'll need luck in his quest to denigrate hard money and its supporters.

Just another reminder that all modern economic theory does is map the ever-spreading linguistic jungle of liability in the face of debt.  Really, you either have the money or you don't.

Fri, 01/11/2013 - 12:32 | 3144401 Matt
Matt's picture

The interesting thing I find with bitCoin is how, as an electronic currency on the internet, it seems to amplify and accelerate movements. It went through a whole cycle from stable to speculation to massive bubble to collapse and back to stable in less than a year.

bitCoin shows us that if you have a currency designed to have deflation rather than inflation, people will hoard it. Whether this is a problem or not, I do not know, but I can certainly see why bankers would prefer inflation. If your money will be worth 10 percent more next year just by sitting on it, why would you bother to invest it?

Fri, 01/11/2013 - 12:47 | 3144433 TraderTimm
TraderTimm's picture

The fact bitcoin is still standing after all the earlier volatility is saying something. As for the often-mentioned "hoarding problem" whenever the deflation-by-design argument is brought up - we have "hoarding" in US Dollars, except we call it "savings".

Also, the divisibility of the system to units so numerous they'd outnumber the total sum of red blood cells in your body isn't exactly a limit we'll hit any time soon. (21 x 10^14 collectively)

The bankers prefer inflation because it allows them to change the rules any time they please, with attendant aftereffects. (Which they're insulated against, so it becomes even easier to make such detrimental decisions.)

Sat, 01/12/2013 - 13:35 | 3147124 Matt
Matt's picture

The dollars that are "saved" are for the most part in banks, which lend out most of their savings deposits, so while one person is "hoarding" their cash, the money itself is being put to work.

Compare with bitcoins, where >75% of the money supply is sitting in offline coldstorage. That money is not being reinvested, it just sits there.

Now, with gold, whether the gold gets deposited in fractional reserve bank accounts and lent out with interest, or whether the gold coins sit in people's safes is the question.

Fri, 01/11/2013 - 12:51 | 3144447 ParkAveFlasher
ParkAveFlasher's picture

The interesting thing I find about bitCoin trollers, is how they covertly inject themselves into hard money conversations in an assumptive manner.

Firstly, sound money isn't a designation, sound money is a mechanism that evolved along the continuum of human trade.  It defines that to ensure the value of a trade, the medium of trade itself must show value.  A valueless medium lacks this base insurance, and it is this lack that the world seeks to repair now in ever-elaborate scaffolding.

bitcoin shows us that hubris increases exponentially along the same curve as computational power.

Fri, 01/11/2013 - 17:49 | 3145585 TraderTimm
TraderTimm's picture

Where to begin. You started strong, attacking from the gate - then it devolved into a broad definition of money and trade. Perhaps that is the best that can be expected when you're working with less than optimal reference material.

To help you in your time of need, I recommend the following:

Bitcoin Protocol Whitepaper - http://bitcoin.org/bitcoin.pdf

Bitcoin Wiki - You'll want to re-read this section a few times - https://en.bitcoin.it/wiki/Myths

Afterward, I'd love to have a productive conversation about it.

Fri, 01/11/2013 - 09:51 | 3143895 sbenard
sbenard's picture

One thing that Gross mentioned a few weeks ago but that wasn't included in this article. This was something that jumped out at me, but perhaps other people didn't take note of.

Gross seemed to imply a timetable for when we are likely to see the higher inflation that he expects. He implied that it would occur in the same timeframe as the US treasuries that the Fed is buying. If the Fed is buying treasuries starting at around 5 years, then shouldn't we begin seeing inflation in about 5 years from the initiation of the Fed's "unprecedented" monetary policy that began with QE?

I don't recall precisely when the Fed started its monetary mayhem, but we must be appraoching that milestone fairly soon. In other words, Bill Gross must be expecting high inflation to begin manifesting itself within the next year or two. It will crush the US economy, especially the price of energy and food will rise, and middle class consumers will feel the pinch. SOON!

Fri, 01/11/2013 - 10:01 | 3143910 ItchyBeard
ItchyBeard's picture

Print a FRN Mobius Strip with a string of '1' s. Problem solved.

Fri, 01/11/2013 - 10:20 | 3143979 judejin
judejin's picture

trillion dollar coins or not.

every major continent is print trillions of dollars every year, US, China,Euroland, Japan+UK+Australia, the rest of the world.

every year, world's liquidity increases double digits.  in china, M2 double every FOUR years!

the finale of every villain is stupidity!

keep stacking.

Fri, 01/11/2013 - 10:47 | 3144052 dcj98gst
dcj98gst's picture

If we do the coin option, the flow of treasuries stops. Therefore the banks would not have access to this risk free money. We all know the Obama is in the pocket of the banks, therefore this would never happen.

But lets assume it does happen.  Would the FED still do QE?  We would have a decreasing supply of Treasuries, one would think the demand would go up with more cash in the system and supply would be more limited so the rates would drop.

 

On the other had the value of the treasuries would drop due to the underlying currency would lose value.  So what would happen?  This would wreck havoc on the system.  I am trying to wrap my little brain around it.


Also the coin money could never be removed from the system because it could never be sold like the bonds.  The FED would be stuck with the coin and we would be stuck with the FIAT.  

Fri, 01/11/2013 - 12:17 | 3144352 helping_friendl...
helping_friendly_book's picture

Blankfien, Corzine, Dimon, Hank Paulson, Giethner.....etc....would be lined up at the treasury to convert all they have looted into a few coins for easy transport to some luxurious destination. Monaco? Greek island? 

Since they have stolen 16.5 trillion they would have to make about 20 coins which would immediately disappear and become 20 trillion in deposits in offshore accounts.

I say we ask the Chinese to come and rule here and start executing these motherfucking joohs!

Fri, 01/11/2013 - 10:53 | 3144068 mendigo
mendigo's picture

I am baffled why Gross would even make reference to the Trillion dollar coin thing since it is obviously not meant as as constructive or rational solution but at best is a means to circumvent the law but really seems more of a threat to shit ones pants if terms are not met.

Still, his characterization of the situation seems pretty much on the (platinum) mark.

I think one of the techniques used for crowd controls is to leak or announce concepts that are so obviously rediculous that even the truely mentally challenged will be engaged and distracted in the debate and feel like somehow voicing thier displeasure accomplishes something and then wear themselves out and then can return to thier miserable lives.

"What am I crazy!"

Fri, 01/11/2013 - 11:28 | 3144192 caShOnlY
caShOnlY's picture

Spending cuts is austerity, austerity brings collapse - politicians get blamed and flamed. 

Money printing brings inflation, hyperinflaton brings a crisis that brings austerity.  Never let a crisis go to waste.  (a little wealth transfer goes unnoticed)

Doesn't matter whether it's a coin, a bond, a wink, a smile and a "go to work, Mr. Charman (-i), money printing will continue.     

Fri, 01/11/2013 - 11:40 | 3144228 Benjamin Glutton
Benjamin Glutton's picture

What does a Trillion Dollar coin sound like when you drop it into the night deposit?

 

It sounds like Andrew Jackson stomping a den of vipers,imo.

 

What happened to all the ZH'ers that believe the Federal Reserve and its 'banks' must die?

 

Make up your minds Mitchez!!!!

Fri, 01/11/2013 - 16:44 | 3145394 AE911Truth
AE911Truth's picture

I agree. Pay off ALL debt. End Usury.  Replace debt money and usury with debt free fiat as medium of exchange, and use precious metal as store of value. Finance via equity sharing not usury.

Compound interest debt on a planet with finite resources is not sustainable.

 

Fri, 01/11/2013 - 12:05 | 3144300 IridiumRebel
IridiumRebel's picture

They do this and I will be seriously considering becoming a prepper. 

Fri, 01/11/2013 - 12:42 | 3144422 Matt
Matt's picture

They do this, it may be too late to start prepping. 

Fri, 01/11/2013 - 12:09 | 3144318 helping_friendl...
helping_friendly_book's picture

Just another scam so the bankers can smuggle their loot to offshore accounts. I wonder if TSA would even notice a trillion dollar coin in the tray at airport check point?

This is just a device so Jon Corzine, Timmy, Hank Paulson, Llyod Blankfein, Jamie Dimon etc. can smuggle their wealth out of the United States. 

Just check that trillion dollar coin in your luggage, put on your slippers and kick back w/ some champagne in your first class flight to Monaco.

This is an obvious scam.

Fri, 01/11/2013 - 16:52 | 3145417 AE911Truth
AE911Truth's picture

No, not a scam. Actually, it is a means to transition to a world without usury. Where funding is provided via equity sharing, not debt.

Yes, the criminals did steal a lot.

Fri, 01/11/2013 - 12:14 | 3144337 dragoneyes74
dragoneyes74's picture

Hey ZH: here's the perfect bit for Friday humor: 

http://www.businessinsider.com/jon-stewart-trillion-dollar-platinum-coin...

 

Fri, 01/11/2013 - 12:24 | 3144373 AE911Truth
AE911Truth's picture

The average person in the US consumes 60 barrels of oil (2520 gallons) per year. The average salary is around $40k per year. There is an extreme disparity between how we value our labor vs. how we value real world physical stuff. This includes land, gold, oil, wood, everything.

These $1T coins will bring the perceived value of our labor paid in dollars more in line with its real world value and revalue all real world physical stuff upward in relation to the value of our labor. After all one barrel of oil is (in the real physical world) equal to well more than 1,000 hours of manual human labor in terms of energy content. Brainiac labor is worth only as much as the manual labor it actually saves. If your brain power does not save any actual real world work, it ain't worth nil.

Fri, 01/11/2013 - 12:45 | 3144430 Matt
Matt's picture

This is all fine and dandy, but the robots are doing most of, and soon nearly all, of the work.

Fri, 01/11/2013 - 13:38 | 3144657 AE911Truth
AE911Truth's picture

Yes, and the energy to power the robots is vastly under valued.

As is the embeded energy to create them.

By a factor of well more than 2,000 to 1.

A huge adjustment is comming.

Fri, 01/11/2013 - 12:22 | 3144375 Money By Trading
Money By Trading's picture

My latest look at gold:

http://wp.me/p2CT0a-81

 

Fri, 01/11/2013 - 12:34 | 3144397 AE911Truth
AE911Truth's picture

The Trillion Dollar Coin(s) also enable us to assert that we are sovereign and pay off all the debt from the bankers that currently enslave us.

The solution to the problem of too much debt is to pay off all the debt.

Fri, 01/11/2013 - 12:51 | 3144448 jvetter713
jvetter713's picture

I have not quite stayed up on this idea of the trillion dollar coin.  Since the total amount of platinum ever mined does not add up to anywhere near a trillion dollars, is the idea that it would just be a one ounce round and they would say it's worth a trillion dollars?

Fri, 01/11/2013 - 13:34 | 3144632 Thisson
Thisson's picture

Yes.  Although it doesn't have to be one ounce.  It could be any size.  I mean, if they're going to put a trillion face value on it, you'd expect them to at least make it look impressive, right?  So maybe it would be a 5 or 10 ounce disk?  Or maybe it would be a disk made of steel and then plated with platinum, knowing our government haha

Fri, 01/11/2013 - 13:09 | 3144516 alangreedspank
alangreedspank's picture

That this idea even got one leg to stand on is a sterling examplification of the failures of public education. 

Fri, 01/11/2013 - 13:48 | 3144700 AE911Truth
AE911Truth's picture

What is the difference between issuing vast quantities of dollar based un-repayable promises repay at near zero interest,... and issuing an interest free dollar coin?

They are both an accurate reflection of the intrinsic value of the dollar.

The coin actually does pay off the debt. And it makes the value of the dollar crystal clear to the world.

Fri, 01/11/2013 - 14:08 | 3144800 AE911Truth
AE911Truth's picture

A useful, easy-to-remember aphorism is: ONE BARREL of oil is equivalent to ONE YEAR of very hard labor by a human. The 20 gallons of gasoline made from one barrel of oil contains about 180 useful kilowatt-hours. If we divide that by say, 1/8 of a kilowatt -- a generous continuous output for a fit person -- we get 1440 hours of hard human work. Let's assume that a person can put out this 1/8 of a kilowatt for 6 hours per day. This means that you would need 240 days to get 180 kilowatt-hours (or more, if you are a dimmer bulb), which is minimally equivalent to one year of 5-days-a-week very hard labor by a fit human. This boils down conveniently to: ONE BARREL of oil = ONE YEAR of hard human labor. Source: http://www.theoildrum.com/story/2005/11/30/233433/82 Adjust your oil and material resource consumption accordingly.

Fri, 01/11/2013 - 14:08 | 3144802 Clesthenes
Clesthenes's picture

Bill Gross wrote, The trillion dollar platinum coin scheme “may also be designed to create the false impression that there are easy solutions to the intractable US debt crisis - thereby lulling investors and savers into a false sense of security ... again.”

Also,

“The financial crisis in a misguided recovery effort that could erode stocks, bonds and currencies for generations to come.”

He is so modest in his projections.  In other words, I agree completely, and then some.  Perhaps he is so modest because he doesn’t want to get too far ahead of his readers… so they won’t think he has gone over the edge.  That’s probably what I should do – but I can’t.

The US debt crisis is beyond remedy.  Practically and constitutionally, it is uncollectable and unconstitutional.  And, when you consider that governmental debt is the process by which one generation of people financially cannibalizes their children and generations to come, you eventually come to the conclusion that this society does not deserve to survive.

So, what’s the solution?  We have to learn procedures of the only activity that has ever restricted tyranny: the petitioning process.  This is the process that organized human societies from the beginning.

The petitioning process is the activity by which bodies of private men collect power to make their rights and property secure; this has been done only three times in human history.  Or, the process can be used by the bandit class to protect their booty and destroy their victims and witnesses to their crimes.

Thus, petitioning is like any other fact of nature or invention of man: it may be used to advance man’s cause; or destroy it.

The problem is that this knowledge is almost (99.999%, I may be too optimistic here) monopolized by criminal and useful-idiot classes.  Productive and thrifty classes, on the other hand, have virtually no knowledge of such procedures (same percentage and qualification).

Fri, 01/11/2013 - 15:03 | 3144984 Acidtest Dummy
Acidtest Dummy's picture

TDC = Throwing good money after bad.

Fri, 01/11/2013 - 16:14 | 3145290 Silvertrader
Silvertrader's picture

I will probably never own a coin like that. But I can do the next best thing: trade platinum using cfd's.

Fri, 01/11/2013 - 20:07 | 3145917 SmittyinLA
SmittyinLA's picture

federal unfunded liablities were over 100Trillion over a year ago, that doesn't include all the states, or the last 4 wars or war liabilities.

Or the Obama amnesty every immigrant dropout is a $750K per head toll on the treasury, 1 million Obama amnestees alone is an instant 750Billion in unfunded liabilities.  

Sat, 01/12/2013 - 00:38 | 3146508 helping_friendl...
helping_friendly_book's picture

Don't you morons undrstand this trillion dollar coin is just the latest scam for the Wall Street banking, MIT, Joohs to steal with much less effort.

What happens when a banker can go to a country without an extradition treaty, let's pick one.....um....let's say Israel, and smuggle the coin up their ass and transport the trillions looted by Timmy's team during the last 5 years?

NO COIN.

Let's have a polgrom instead.

Sat, 01/12/2013 - 03:27 | 3146694 polo007
polo007's picture

http://www.bloomberg.com/news/2013-01-04/narula-s-no-1-hedge-fund-gains-38-betting-on-mortgages.html

The Feds Mission Is to Drive Down the 30 Year Mortgage Rate - Bloomberg Markets Magazine

“To revive the housing market, the Fed has thrown a lot of firepower at agency mortgage-backed securities,” Narula says. “Policy makers have worked hard to let homeowners refinance. They’ve been clear that that’s their mission -- and you want to be careful going against that mission.”

In addition to his intuition on Washington policy moves, Narula uses mathematical models to calculate how long homeowners will make payments at their current interest rates before either refinancing or defaulting. The models predict behavior based on a homeowner’s credit score, address, loan size, loan age and other factors. The algorithms also allow sophisticated investors to hedge against wrong-way bets.

“You want to come up with wagers where if you’re right, you’ll do really well and if you are wrong, you don’t get hurt too badly,” Narula says.

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