L. Randall Wray — Update on Trillion Dollar Coin: Not Inflationary–it is a Duration Trade

The Platinum coin has been all over the blogosphere as well as the media. Some have been arguing it will cause hyperinflation. How can issuing a coin to be held at the Fed to allow the Treasury to spend up to budgeted amount lead to hyperinflation? It has no first round effect that is different from selling a bond into private banks and then having the Fed buy the bond to replenish bank reserves (the current operating procedure); the second round effect–if there is any–is deflationary because it can remove interest income. Some “challenged” politicians are advocating that we remove the Treasury’s ability to coin platinum.

Economonitor | Great Leap Forward
Update on Trillion Dollar Coin: Not Inflationary–it is a Duration Trade
L. Randall Wray