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Disconnect: High Value Platinum Coin Vs. Austerity!

letsgetitdone's picture

A little disconnect: what President Obama, through Treasury and the Federal Reserve, really said last Saturday:

"We're running out of money because the Republican House may not allow us to float any more debt; so I took the Platinum Coin off the table just to ensure that we would!

Next month, I'll give you the gift of austerity, because, naturally, we're now really gonna run out of money!"

Despite Saturday's announcements by the Treasury and the Fed the Platinum Coin Seigniorage (PCS) legislation is still on the books. For the President not to use it to fill the public purse with enough funds to banish the fiscal conditions that underlie austerity politics -- the national debt, and the ability to cover the deficit for a long time to come -- is inexcusably corrupt, fiscally and economically irresponsible, and completely opposed to the public purpose that the President is supposed to serve.

So, I want to tell the President that for as long as PCS is on the books, and he and others are claiming that we need austerity because we are “running out of money,” he has the duty and the obligation to mint a game-changing High Value Platinum Coin, for example, a $60 T platinum coin. After this legal tender coin is credited by the Fed, the presence of $60 T in the Treasury General Account (TGA), and its immediate use to begin paying off the national debt, will make it very plain that there is no need for austerity; no need to cut SS, Medicare, and Medicaid; no need to cut Head Start, no need to cut anything that's working.

Yesterday, the White House line was that temporary fixes to the debt ceiling problem like the platinum coin would not solve the budgetary and political problems faced by the Government. Our mainstream media people did their thing by failing to call out the President on that – probably because they, themselves, have never dared think about any other PC option apart from the Trillion Dollar Coin. It's easy to see, however, that a $60 T coin wouldn't be a “temporary fix,” spawning crises every few months, even if it wouldn't last forever. The fact that a $1 Trillion Dollar Coin would not solve our debt ceiling problem for very long, isn't an argument for taking High Value PCS (HVPCS) off the table at all.

So, I call on the President to mint that $60 T coin now! I call on him to abandon austerity and to create financial plenty in Federal fiscal policy by using game-changing HVPCS. Austerity and “grand bargains” are “the great betrayal!” We don't need such “greed bargains.” We need a full public purse, and then we need to get Congress to open the purse for programs that fulfill public purpose.

I call on others to join me in beginning again to blog, comment, facebook, and tweet about PCS; but this time to forget about the TDC, which was always the wrong coin, and focus on #minttheHVPC instead.

Up the ante! Make this about ending austerity, and using the right platinum coin to create the political space needed for doing it! Forget about them taking PCS off the table! As long as it's legal it's still on the Table! Mint that HVPC! End Austerity!

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Comments

Submitted by lambert on

That is, if enough people believe that the government can run out of money (and hence must borrow) then the operational reality of money creation could change, could it not?

And since a nation that has no control over its fiscal policy is no longer sovereign, we have the transfer of our sovereignty to the people who control our money: A cartel of international bankers. Apparently, in MMT, one shouldn't "go there," but the conclusion seems inescapable to me. Thoughts?

letsgetitdone's picture
Submitted by letsgetitdone on

you're right! But why is MMT prohibited from going there?. It seems to me that MMT economists would just conclude that the nation involved was no longer sovereign in its own currency.

letsgetitdone's picture
Submitted by letsgetitdone on

It's a good analysis; but doesn't take into account different PCS options, and is faulty in that respect. Furthermore, I don't think PCS is very risky as a last minute avoidance move, because it can happen very fast. So, perhaps the TDC version isn't off the table at all.

letsgetitdone's picture
Submitted by letsgetitdone on

Carney thinks wrong as he almost always does. His problem is that he always views the world through his conservative druthers. he wants the coin to be illegal or impractical so he goes around inventing objections that make it so. He prefers such a denouement because he wants the debt issuance regime to continue so that progressives can always be beaten down with cries of "teh debt, teh debt."

Enough of motives. First, the seigniorage profits of the mint go into miscellaneous receipts. It's not clear that they can be used for operating expenses, however, there's no debt that they can be used to repay debt, which is all that is needed, since if that's the case, operating expenses can be made by floating short term debt, say one month in duration followed by using seigniorage to pay them off, older debt can always be paid off as it comes due from the $60 T coin.

Second, the Treasury wouldn't spend the mint's coin. The Fed would be forced by Treasury order to credit the coin by using its power to create reserves out of thin air. Then the excess reserves over mint costs would be swept into the TGA, and that is what would be spent by Treasury, not the mint's coin. The mint's coin stays at the Fed as a Fed asset.

Third, the same Federal Reserve Act cited by Carney has this:

". . . wherever any power vested by this chapter in the Board of Governors of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, such powers shall be exercised subject to the supervision and control of the Secretary." 12 USC 246

If the Fed won't credit the legal tender coin, all the Treasury has to is to compel it with an order, since this language is clear. Can it be challenged in Court. I don't think so for reasons I've explained in my last post.

Beo has treated this in some detail, and also explains why the Fed would not contest the Treasury if it came down to it here.