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Brother, can you spare a coin — a $1 trillion one?

10 Comments
By CALVIN WOODWARD

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That is an incorrect statement. 

Thanks for your strawman argument. A guy who headed the Fed for many years is on my side.

Alan Greenspan:

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default"

https://www.cnbc.com/id/44051683

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Why one Trillion? They could mint a few thousand million dollar coins which could at least be put in circulation and be snapped up by millionaire's and billionaire's who could carry a few around in their pockets for spare change and bragging rights.

Nobody can use a trillion dollar coin as the world has no trillionaire's yet and few trillion dollar companies.

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So that nice photo has nothing to do with the story? The caption changes halfway through. "It would be the token of all tokens..." What would be? A little confused here.

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Peter14's million dollar coin iedea might work, but I would certainly buy a $1,000 coin if it was offered, and I am sure millions of others would. And they'd all go into a drawer somewhere for safe keeping.

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Edit, iedea = idea!

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It may be a gimmick, but it does underscore the fact that the US govt and its fiscal agent, the Fed, can pay any debt in dollars, because they are the sole issuers of dollars. Therefore, they are free to spend as much as they want until inflation becomes a problem.

A much bigger gimmick the debt ceiling: "instituted in the World War I era to make it easier for the U.S. to issue war bonds."

This is insanity. The world's biggest economy being hostage in 2021 by an anachronism.

 

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The idea of minting a $1 million platinum coin was first proposed by Populist Party candidate Bo Gritz in 1992 and was a routine feature of his stump speeches. It died a rightful death until it was popularized again in 2010 on the blog of economist Brad DeLong. It was never seriously considered by anyone in the US Government but was popularized during the 2011 "Debt Cliff" by the financial press as a work around to a recalcitrant Senate. The idea was again pushed by Paul Krugman during a repeat of the Debt Cliff in 2012. Now it seems to be a feature of every such debt limit debate, but no President, Treasury Secretary or Fed Chief has ever endorsed the idea.

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The idea of minting a $1 million platinum coin....... 

Sigh, I meant to write "$! Trillion platinum coin" Apologies for the gaff.

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John Tamny is spot on over this:

In Biden’s case, he has no spending power. No government does. Governments just have economic growth to extract from. Biden’s $1 trillion coin is American production. Real economic growth is what makes government spending possible. Assuming there were a constitutional way for Biden to mint $1 trillion in spending, it would only be possible insofar as the 46th president extracted $1 trillion in private sector production. Once again, without work money is meaningless. Which is why currencies tend to shrink to nothing when errant governments presume that they can print wealth.

At the same time, members of the Right shouldn’t be so smug. Lest they forget, the cost of government has hardly shrunk under their leadership in modern times. Indeed, while conservatives pat themselves on the back for shrinking Biden’s spending plans to the $1 or $2 trillion range, they leave out that the last budget President Clinton signed was $1.8 trillion. Federal spending during President Trump’s last year in office was something on the order of $9 trillion.

The lesson seems to be that politicians exist to spend, and regardless of ideology. It’s not about deficits, or surpluses, or the oft-stated bit of nonsense of what we as a nation can “afford;” rather it’s about production. Government can print dollars, but it can’t create demand. Only the private sector can. There’s no government spending, nor are there $1 trillion coins. There’s just government waste of precious, privately created wealth.

Forbes, Oct 10, 2021,10:00am EDT, Let’s Be Serious, There’s No Such Thing As A $1 Trillion Coin., https://www.forbes.com/sites/johntamny/2021/10/10/lets-be-serious-theres-no-such-thing-as-a-1-trillion-coin/?sh=7030eeeb3adf

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It may be a gimmick, but it does underscore the fact that the US govt and its fiscal agent, the Fed, can pay any debt in dollars, because they are the sole issuers of dollars.

That is an incorrect statement. Every time a bank lends money it creates new dollars out of thin air. The larger US banks only have to have 4 cents on deposit at their regional Federal Reserve Bank for every dollar lent. The remaining 96 cents of the loan is quite literally money created out of thin air. The amount of money lent by a bank is spendable money like any other, even though it exists only in a computer database or on your computer screen when you look at your balance on line. Banks print the majority of new money created in the US in this manner.

The Federal Reserve manages this process through the interest rate it charges banks for overnight loans. Huh? When banks lend more than they have reserves to cover, they borrow money from their regional Fed(s) to cover the shortfall. The Fed charges the banks an interest rate on these loans. Raising the rate makes such borrowing more expensive so banks are more judicious in their lending. Lowering the rate makes the loans less costly for the bank so they lend more. This is how central banks manage new money creation in most cases. A more crude, sledgehammer approach is to change the reserve requirement but most central banks like to avoid big shocks to the economy such as this. Central banks can also expand and contract the money supply through buying and selling bonds in what are called "open market operations".

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