Submitted by letsgetitdone on Tue, 01/15/2013 - 3:50pm
Submitted by letsgetitdone on Mon, 01/14/2013 - 9:58am
Yesterday, Ezra Klein reported in the Washington Post that:
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,”
The inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless.
This statement from Ezra Klein would have us believe that the Federal Reserve is an independent agent in this matter, and that it can refuse to credit the deposit of a newly minted high face value proof platinum coin, if the Treasury makes such a deposit. It also assumes that if the Treasury insisted on the deposit of the coin, that the Fed would be in a position to go Court to contest that; that it has a choice in the matter.
I don't believe that either of these things are true. I also think they are just a rationalization, so the President, who most probably decided this can pretend that this decision isn't on him; or at least can be partially blamed on the Fed. Let's review some critical aspects of the relationship between the Fed and the Treasury. Read below the fold...
Submitted by letsgetitdone on Fri, 01/11/2013 - 5:53pm
Here's a commentary on Ezra Klein's recent diatribe against Platinum Coin Seigniorage (PCS).
But there’s nothing benign about the platinum coin. It is a breakdown in the American system of governance, a symbol that we have become a banana republic. And perhaps we have. But the platinum coin is not the first cousin of cleanly raising the debt ceiling. It is the first cousin of defaulting on our debts. As with true default, it proves to the financial markets that we can no longer be trusted to manage our economic affairs predictably and rationally. It’s evidence that American politics has transitioned from dysfunctional to broken and that all manner of once-ludicrous outcomes have muscled their way into the realm of possibility. As with default, it will mean our borrowing costs rise and financial markets gradually lose trust in our system, though perhaps not with the disruptive panic that default would bring.
Name calling, labeling, and fear mongering aside, does Ezra understand the first thing about PCS? Does he know that if a $60 T coin were minted, and the Treasury General Account (TGA) filled with $60 T in electronic credits, the US would be able to just say goodbye to the international markets? If we were paying off the national debt as it fell due, we would not only not be defaulting, but would be paying all our creditors on time and in full, and without benefit of further debt instrument issuance. Nor would we care whether the markets trusted us or not; since we would not be borrowing money from them for the foreseeable future. So, how could our borrowing costs rise? Read below the fold...
Submitted by DCblogger on Sun, 12/30/2012 - 12:00pm
Submitted by letsgetitdone on Sun, 12/23/2012 - 12:49am
Richard Eskow of the Center for the American Future, posted a very good one a couple of days ago. He used the old union meme “which side are you on” to beat up the President and Congress about Social Security being placed on the negotiating table. I thought his writing on it was striking. Here's some of it: Read below the fold...
Submitted by letsgetitdone on Sun, 12/16/2012 - 11:49pm
The most frequent objections to proposals that we use Platinum Coin Seigniorage (PCS) to create reserves for debt repayment and deficit spending, frequently come back to inflation. Perhaps people can't get over the association they learned in high school Social Studies, or perhaps in American History, or Economics 101, that when Governments create money and then just spend it without any compensating deflationary action, inflation or hyperinflation happens. Maybe they can't forget those cartoons about people in Weimar Republic days pushing wheelbarrows full of money to the market to buy some bread. So, I've been promising for about a week now, to blog about the likely expected relationship between the different PCS options and inflation using the framework laid out by Scott Fullwiler! Read below the fold...
Submitted by letsgetitdone on Fri, 12/14/2012 - 5:26pm
The one thing that jumps out at you when reading the mainstream posts of the past week-and-a-half bringing Platinum Coin Seigniorage (PCS) into the forefront of attention again, for the first time since last year's debt ceiling crisis, is that every mainstream blogger or commentator is telling a story about minting a Trillion Dollar Coin (TDC), or a few trillion dollar coins as an option the President can either use or not to get around the debt ceil Read below the fold...
Submitted by letsgetitdone on Thu, 12/13/2012 - 9:20pm
In my last three posts, I've critiqued the new wave of mainstream posts and commentary on Platinum Coin Seigniorage (PCS) on my way to making the case that the MSM are missing "the big story" about PCS. Read below the fold...
Submitted by letsgetitdone on Thu, 12/13/2012 - 5:15pm
In my last two posts I've been reviewing the new wave of mainstream posts and commentary on Platinum Coin Seigniorage (PCS) by way of providing background for making the case that the MSM are missing “the big story” about PCS. Read below the fold...
Submitted by letsgetitdone on Wed, 12/12/2012 - 10:19pm
Did the MSM's new wave of commentaries on platinum coin seigniorage (PCS) miss the really big story about it? Of course, I think it did, and I'll continue my review of the MSM commentaries with the efforts of Chris Hayes at MSNBC, substituting as host on the Rachel Maddow show (12/05 at 9:20 PM); and John Carney at CNBC (12/06 at 11:54 AM). This is my second review post on this subject.
Chris Hayes Read below the fold...
Submitted by letsgetitdone on Wed, 12/12/2012 - 6:53pm
In this post I said I would blog about the likely expected relationship between the different Platinum Coin Seigniorage (PCS) options and inflation using the framework laid out by Scott Fullwiler! But, after reconsidering, I thought I'd hold off until later, and, instead, first provide a discussion of the "new wave" of MSM-based blog posts on the Trillion Dollar Coin (TDC) “solution” to the upcoming debt ceiling conflict. Read below the fold...
Submitted by letsgetitdone on Sun, 12/09/2012 - 3:47pm
The Trillion Dollar Coin (TDC) is, first, an oversimplified meme, because there's not one TDC solution, but lots of Platinum Coin Seigniorage (PCS) variations on that idea with differing implications for politics. Some just kick the can down the road, until the next debt ceiling crisis, or set up another trade between the Administration of something relatively valuable for something less valuable. Others would really change the political game. Read below the fold...
Submitted by letsgetitdone on Sun, 12/09/2012 - 2:01am
The Trillion Dollar Coin proposal for solving the debt ceiling problem is again experiencing a blogosphere explosion this past week. The precipitating factor may be that people are starting to believe that the Republicans will come to a “fiscal cliff” settlement with the Democrats including very little in entitlement spending; but will then come back, in 2013 with a very to Read below the fold...
Submitted by libbyliberal on Sat, 12/08/2012 - 1:45am
Submitted by stuartbramhall on Thu, 12/06/2012 - 4:40pm