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Treasury, Fed Kill Trollin' Dollar Coin

Tyler Durden's picture




 

And just like that the most surreal two weeks of sheer monetary idiocy is over, with the Treasury and the Fed both formally announcing the death of the trillion trollin' dollar platinum  coin idea, which was nothing but a cheap charlatan trick devised by page view-desperate media outlets to dumb down their already confused audience and distract from the fact that the US is, sadly, once again on the verge of bankruptcy.

As the WaPo reports:

The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

 

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. “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,” he said.

This is good news: at least the US monetary system will not devolve into an all out circus and parlor trick. For the time being at least. Because it is and always will be far easier to create empty, repoable "money" out of fungible electronic 1s and 0s, than an actual piece of metal.

It is even better news because one can now permanently filter out and ignore all destructive "opinions" originating from those vocal proponents of this monetary gimmick, some of whom even have awards not ironically named for the inventor of dynamite.

We won't even touch on what you need to know for the click-through and CPM loss this means for Series ZZ preferred round investors in slideshow-centric electronic media outlets located at the intersection of gossip and financial cluelessness.

Finally, and on a more serious note, this once again means that it will be once again up to the market to get the political left and right to come to a compromise, as was the case in the summer of 2011.

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Sat, 01/12/2013 - 17:34 | 3147542 THX 1178
THX 1178's picture

Its not like you can just create things out of thin air.

Sat, 01/12/2013 - 17:45 | 3147557 traderjoe
traderjoe's picture

Like from fractional reserve lending - which the Fed admitted is how most of our money is created?

Sat, 01/12/2013 - 19:34 | 3147714 Griffin
Griffin's picture

I think it would have been a great idea to mint this trillion dollar coin.

It would have been a shining example of a hopless policy.

Later, when all this crap has blown sky high, it would have been a good idea to place that coin in the White House and put it into law that all future presidents start each working day by polishing that platinum until it lights up the office.

In the old norse Sagas Odin had a gold ring called Draupnir, this was something Loki got from Black elves and gave to Odin. That ring had magical powers so that every 9th day eight identical rings fell of it.

It sound a bit like the back bone of modern banking, the fractional reserve system.

Thats really all it is, just a few thousand year old Black elves magic, its amazing until you see trough it, then its just crap, like that coin idea.

 

 

 

 

Sat, 01/12/2013 - 20:08 | 3147796 espirit
espirit's picture

Ah Shucks, I was kind of looking forward to owning a few of them trillion dollah platinum coins.  Would have paid for them with Zimbabwe Bux.

Sat, 01/12/2013 - 21:04 | 3147895 knukles
knukles's picture

Black elve magic it is. 

Sat, 01/12/2013 - 17:45 | 3147559 nmewn
nmewn's picture

And collect interest on it.

Sun, 01/13/2013 - 10:59 | 3148644 tip e. canoe
tip e. canoe's picture

compound interest

Sat, 01/12/2013 - 18:40 | 3147650 ISEEIT
ISEEIT's picture

Krugman.....The pied piper of morons. So many of these dolts were actually dead serious about the hairbrained bullshit. To make it that much more baffling, they claimed moral and intellectual highground from which to spout this idiocy (and a graet cover of MMT voodoo of course).

All they've got left now is 'stopping climate change'.........

Sat, 01/12/2013 - 20:03 | 3147783 knukles
knukles's picture

You can say that again.

Sun, 01/13/2013 - 00:35 | 3148248 Nikao7
Nikao7's picture

Krugman.....The pied piper of morons. So many of these dolts were actually dead serious about the hairbrained bullshit. To make it that much more baffling, they claimed moral and intellectual highground from which to spout this idiocy (and a graet cover of MMT voodoo of course).

All they've got left now is 'stopping climate change'.........

Sat, 01/12/2013 - 18:42 | 3147654 ISEEIT
ISEEIT's picture

Krugman.....The pied piper of morons. So many of these dolts were actually dead serious about the hairbrained bullshit. To make it that much more baffling, they claimed moral and intellectual highground from which to spout this idiocy (and a great cover of MMT voodoo of course).

All they've got left now is 'stopping climate change'.........

Sat, 01/12/2013 - 22:18 | 3147996 newdoobie
newdoobie's picture

+1 For sayin it again

Sat, 01/12/2013 - 22:01 | 3147968 A Nanny Moose
A Nanny Moose's picture

Perhaps they can back it with good intentions, and unicorn shit?

Sat, 01/12/2013 - 17:31 | 3147538 traderjoe
traderjoe's picture

I wonder why ZH has been so adamantly against this coin idea. Yes, it represents a default under our current monetary system. But our current monetary system is simply a scam against the people: privately created money (for free) loaned back to the sovereign at interest and with the collateral of your productive labor. Our current monetary system is one big parlor trick.

Default is and will be the only option. Austerity under the current system is a gift to the bankers.

Sat, 01/12/2013 - 17:41 | 3147551 Al Huxley
Al Huxley's picture

I suspect that if you read the fine print you'll find that when the Fed buys debt from the Treasury, it's secured by the underlying assets of the country.  So I wouldn't get too excited about that default option - more likely they'll just lay claim to the underlying collateral.

Sat, 01/12/2013 - 17:50 | 3147565 Republicae
Republicae's picture

I doubt that is in the fine print, but if a default did occur I think that Congress would immediately revoke the Federal Reserve Act and, as the Act provides, seize and liquidate all assets of the Federal Reserve. I think that is a far better idea when we reach the point of a functional rather than technical default, which this country has done in the past. The government defaulted on its obligations when FDR confiscated and stopped domestic gold exchange for the dollar, there was another default when silver was removed from circulation and then again when Nixon "closed the gold window" for the payment of foreign debts. All of those examples were defaults, all were handled with slight-of-hand tricks; I have no doubt that the next wave of defaults will be handled in a similar fashion unless the government decides that it is far less dangerous simply to inflate the debt away by repaying it in massively devalued currency. 

Sat, 01/12/2013 - 17:57 | 3147580 Raymond K Hessel
Raymond K Hessel's picture

That won't happen until gun confiscation happens first.

Not for any other reason but many people are hyper-sensitive to what the federal government is doing.  

 

Sat, 01/12/2013 - 18:05 | 3147595 TheSilverJournal
TheSilverJournal's picture

There won't be a technical default. The Fed can and will print any amount of money necessary until the printing press is rendered worthless. Then the problem becomes the government being unable to borrow and a massive restructuring of the economy is forced.

Sat, 01/12/2013 - 18:38 | 3147647 shovelhead
shovelhead's picture

Half right...

The printing press is still worth something.

What it prints will be worth paper scrap.

Sat, 01/12/2013 - 22:00 | 3147759 Acidtest Dummy
Acidtest Dummy's picture

Yes it's magic, take two things that have intrinsic value - paper and ink - combine them into something worthless: a FRN.

Sat, 01/12/2013 - 18:39 | 3147648 aminorex
aminorex's picture

The USG can always borrow, because the FRB can always lend.  That used to be a laughable contingency.  Today it is the dominant recurring fact.

Sat, 01/12/2013 - 22:40 | 3148034 Zero Debt
Zero Debt's picture

Unless used in slogans, USG and FRB should not be treated as two separate entities.

Sat, 01/12/2013 - 23:40 | 3148148 sun tzu
sun tzu's picture

That's what I told my finance professor in my MBA school about 5 years ago and he laughed. Now who's the fool?

Sat, 01/12/2013 - 18:00 | 3147589 Al Huxley
Al Huxley's picture

This is a nice idea, but it assumes that the govt would act against the Fed in the interest of the people.  Can you provide some other examples of where they've done this?

Sat, 01/12/2013 - 21:21 | 3147919 nmewn
nmewn's picture

Can't provide American examples...but world history is replete with them.

Sat, 01/12/2013 - 18:58 | 3147673 Lazlo Toth
Lazlo Toth's picture

Its in the fine print.

Its more tricky than that though.

Its like playing chess with four people.

Its not that they are trying to actually default to the end.

They just need the leverage up to take the next steps.

Corporate law dicatates specific things in relation to corporations and by-laws.

The plot is kinda large.

Wish I could explain more.

But I think you can do your own research if you wanna know.

Its never the hand you think is going to be dealt.

And never trust that all parties at the table aren't in on the game.

As some of them always are.

Sun, 01/13/2013 - 11:03 | 3148650 tip e. canoe
tip e. canoe's picture

They just need the leverage up to take the next steps.

yup.   very interesting comment, thanks.

Sun, 01/13/2013 - 02:10 | 3148361 cranky-old-geezer
cranky-old-geezer's picture

 

 

Borrowing to pay interest is another type of technical default.

Govt is worried about avoiding cash flow default now. 

Not much to worry about long as Fed keeps printing and buying govt debt, which they can do forever.

USD collapse is the growing danger now. 

Sat, 01/12/2013 - 17:53 | 3147570 traderjoe
traderjoe's picture

I'd rather see the Fed try to collect on the 'full faith and credit' of the government than have the banks collect on the real assets of the people.

Sat, 01/12/2013 - 17:54 | 3147571 traderjoe
traderjoe's picture

Dp.

Sat, 01/12/2013 - 20:29 | 3147840 prains
prains's picture

double penetration is a bitch

Sat, 01/12/2013 - 17:43 | 3147552 a growing concern
a growing concern's picture

I can see what you mean.  Any attempt at austerity or trying to reign in the deficits only serves to make this banana republic of ours last just a little bit longer.  It does seem that the sooner we reset it, the greater the chance of us coming out alive on the other side.

Sat, 01/12/2013 - 17:50 | 3147564 traderjoe
traderjoe's picture

Yes. And austerity will lead to defaults, which is when bankers collect their collateral.

While the Thomas Jefferson quote is not attributable to him, first by inflation then be deflation is how the bankers will end up with all of the real assets.

Sat, 01/12/2013 - 23:42 | 3148155 sun tzu
sun tzu's picture

They might own the pieces of paper, but let's see them try to repo 100 million cars and houses.

Sat, 01/12/2013 - 20:09 | 3147742 ISEEIT
ISEEIT's picture

Nothing personal and you do make a valid point in so far as the nature of our bankster/political slimeball enablers regarding the so called monetary system. My guess is that ZH enjoyed making such a mockery of the 'trillion dollar' coin farce because so many absent minded dolts actually latched onto it as being a viable new charade with which to continue playing political hot potato. The so called 'leader' preznit yo-momma and the other bankster puppets who rule strictly for the sake of power and similar narcissistic/sociopathic delights, will of course continue on by other more usual means. The fun in mocking this lunacy might be derived merely from astonishment at what utter morons Americans at large have become as well as perhaps some degree of twisted admiration for those in the leftist intelligentsia who shamelessly promote such obscenely perverse propaganda to the moronic masses of useful idiots content to cheer it on as so long as 'their' side appears to be winning the game.

I also suggest that true austerity would not at all be a gift to the banksters. True austerity would end both major political parties. True austerity would also end communism progressivism. For this reason it will not take place while Lincoln obama continues to serve as the joke in front of the curtain.

Sat, 01/12/2013 - 22:52 | 3148058 csmith
csmith's picture

Easy to see why TY is so vocal on the coin. It was shilled at 1000 decibels by the assclowns at Business Insider, which is nipping at the heels of ZH in the click department.

Sat, 01/12/2013 - 17:32 | 3147540 CrashisOptimistic
CrashisOptimistic's picture

 

If you add up all the GDP effects of the various fiscal events pending, and the probable effects of those about to execute (but not yet pending), the drag is 3+%.

Should all this happen, GDP will not remain positive this year.  

This is deflation.  Outright, pure, unquestioned deflation.  When you do not grow an economy, but population does, the share for each shrinks -- and that's deflation.

About all they can do is delay the upcoming cuts.  As was done in Aug 2011, they delayed them past the 2012 election year, but of course, that's not what they face now.  They dare not delay them in to 2014 because that's the congressional elections.  Odds politically are to do it now (though do not think of this in terms of "getting it over with", because these cuts are 10 yrs long.  These drag numbers are applied each year for 10 years.)

That is very long term deflation.

Sun, 01/13/2013 - 06:50 | 3148522 Woden
Woden's picture

CrashisOptimistic When you do not grow an economy, but population does, the share for each shrinks -- and that's deflation.

Sorry what? Increase the population -> shift out the demand curve. Goods become relatively scarcer...driving UP their nominal and real prices.

Deflation is a lowering of the general price level.

Something rather unlikely with a government addicted to money creation to fuel its spending.

Sat, 01/12/2013 - 17:34 | 3147541 faustian bargain
faustian bargain's picture

BTW the economics prize is not an official Nobel Prize; it's a prize (begun in 1968) given by a bank 'in memory of' Alfred Nobel.

Sat, 01/12/2013 - 17:36 | 3147545 knukles
knukles's picture

Betcha 100% of the Paltinum coin's melt value that Krugman never ever mentioned that to anybody, anytime, anyplace.

Sat, 01/12/2013 - 18:01 | 3147591 faustian bargain
faustian bargain's picture

It's right there on http://www.nobelprize.org/nobel_prizes/ for anyone to read, although (a) hardly anyone will read it nor take note of the difference, and (b) it appears the Nobel committee has no problem with downplaying the distinction. As to the family of Alfred Nobel, I've read they weren't too pleased at the addition of 'economic sciences' to the lineup.

Sat, 01/12/2013 - 17:47 | 3147560 ziggy59
ziggy59's picture

Seems lately the Prizes won by these bozos were more likely from Alfred E. Neuman than Alfred Nobel.

Sat, 01/12/2013 - 22:05 | 3147976 A Nanny Moose
A Nanny Moose's picture

...and economics prize named after an arms manufacturer, makes even less sense thann a "Peas" Prize

Sat, 01/12/2013 - 23:07 | 3148089 mkhs
mkhs's picture

You misspelt "piece."

Sat, 01/12/2013 - 17:34 | 3147543 knukles
knukles's picture

Indian giving killjoys
Now what's Paul Krugman gonna say? 
Will he shove a 4 lb cabbage up has rectum as an amends to mankind?
Will he simply apologize?
Has he enough Humility?
Will he write a scathing broadside about Timmah and Lew-lu's past relationship? 

Drama at the NYT
Earth shattering events in the Capitol.

Quick, everybody, into the carpool lanes!

Sat, 01/12/2013 - 17:44 | 3147556 ziggy59
ziggy59's picture

He's so clever, He should just jump out of his basement appartment...

Sat, 01/12/2013 - 17:52 | 3147567 knukles
knukles's picture

I thought he still lived with his mom?

Sat, 01/12/2013 - 19:46 | 3147743 Hohum
Hohum's picture

"Indian giving?"  Who invented that term?  Custer?

Sat, 01/12/2013 - 17:38 | 3147547 Benjamin Glutton
Benjamin Glutton's picture

so we won't be depositing plutonium at the Fed?

 

what a disappointment.

Sat, 01/12/2013 - 17:39 | 3147549 ShortTheUS
ShortTheUS's picture

I'm not sure this puts the issue to rest.

It's still a toss-up...

Badum-tshhh....

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