[Greg] Ip's solution [in The Economist] is to have the coin sold to the public rather than deposited to the Fed....
This goes a long way to avoiding the legal problem I was discussing above. Here, the minting authority of the Treasury Secretary would be used in a way much closer to what was imagined by the authors of the law: selling coins to the public. The spending power generated by minting the coin would come from actual coin purchases, which is also what was anticipated by the law's authors. The only difference is that the revenues would be much higher than anyone expected.
I think this also gets rid of some of the weirdness problem that has always plagued the mint the coin idea. People just aren't comfortable with the idea that the Treasury can create spending power out of thin air by depositing a newly minted coin at the Fed. Here the Treasury's spending power would arise from actual revenue from the sale of a coin, just like it does when the Treasury sells a bond.CNBC NetNet
How To Fix The Trillion Dollar Platinum Coin Idea
John Carney
A compromise worth considering. The Treasury can fund itself with coin issuance instead of paying interest on Treasury securities, which subsidizes a special interest — savers. If used past the immediate situation, it would be route to "no bonds," and only short terms T-bills.
At least people are coming to realize that this is possible and are discussing it openly.
9 comments:
If the Government chooses to pay people by coin, that is people purchasing the coin by means of supplying labor, services or goods to the government in return for the coin. So what is the difference?
As I said at Daily Kos
Quote:
The US Government could pay its obligations in $1 coins, and not breach the Debt Ceiling - Seigniorage profits count as revenue to the Treasury - therefore government spending does not have to be funded by taxes alone. It can be funded by seigniorage profits.
There is 82 cents of seigniorage profit in every one dollar coin. So theoretically, budgets 5 times tax revenues are feasible (not that I suggest going anywhere near that)
With recycling of dollar coins, the costs drop much more. The Treasury could ask the Fed to return tax money in the form of dollar coins.
The only drawback is the tediousness of it all. Which is why the platinum coin makes sense. But the trillion dollar coin is really no different than a trillion dollar coins!
Hey, I know, why don't we have a bake sale! We can ask people to buy cupcakes for a million dollars a pop!
These guys just don't get it. Their minds are fragmenting into little crazy pieces, so flustered are they by their glimpses at the nature of our monetary system.
Hey even I have to admit that at least John looks like he is going with what he is getting as it is becoming more clear to him...
He may be the first one in and the last one with a credible reputation over there... everyone else is still off their rockers...
CNBC is 100% invested in "debt doomsday"... their entire credibility is at stake as is many others...
The smart play is to go with "the coin" early at this point, as soon as you realize you have had it all wrong all along..... salvage your reputation...
rsp,
John as to negotiate his way through the shoals at CNBC. His first position is an opening bid, so to speak. It isn't necessarily where he ends up.
Meanwhile Santelli rants that politicians should just ignore the signals of disapproval the market may be sending "for the good of the country."
Santelli exhibits the mentality Tom that is literally terrifying to me ... this is a real threat out there... it's not over yet... no word on this from the Admin... scary...
there are no voices of reason left on the GOP side currently to temper this suicidal psychopathy ...
as there has been at crisis points in the recent past... and they have the House... they could do us in... scary!!
rsp,
They want to do us in, that is, bring down "the welfare state." No conception of $NFA and sectoral balances. The saving > investment > income >saving loop they envision is closed. Where does the money come from in their view? Daft.
And there is a new piece in Der Spiegel reporting that Germany is going to do austerity after the election. These guys have so much invested in their anti-Keynesian theologies, and their aim of consolidating corporate takeover of democratic governments, that they will create a path of destruction if that's what it takes.
Couldn't Treasury just pay the interest on Treasuries in coins?
Tell the owners of Treasuries that they now have to turn up at the Treasury with their receipts to collect their interest in coins.
That would quickly get the debt ceiling raised.
What's the point of having a fiat money system with stupid rules that force the government to "collect back" its own fiat in order to pay its bills? Insane!
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