Over at TPM, Ryan Reilly has an intriguing post about the interest of some tea partiers for a new circulating dollar coin because it supposedly will save the federal government money. This follows a story in the Huffington Post from a week ago about how Rep. David Schweikert (R-AZ) introduced a bill that would eliminate the dollar bill and substitute dollar coins.Here's some very personal and U.S. history about the dollar coin and why this is a terrible idea that is really nothing more than a corporate subsidy....
Read the whole post at CapitalGainsAndGames, Tea Partiers Want A New Dollar Coin And Refuse To Listen To The Free Market In The Process by Stan Collender
2 comments:
Gonna have to disagree Tom. This is the greatest innovation since the New Deal-era invention of chocolate chip cookies. As I just commented at Stan Collander's original post:
This bill is actually a good thing. If it were enacted, it would blow up any future balanced budget amendment on the launch pad. Now if you'll recall way back in the summer of 2011, the suggestion was made to sidestep the debt ceiling by the Secretary of the Treasury using his statutory authority to mint platinum coins in any denomination to strike a couple of $1 trillion coins to buy back the $2 trillion in Fed-held Treasuries.
If this dollar coin bill passed, Secretary Geithner would have even more powers to do good (and perhaps close his own karmic deficit before he's knocked out cold by falling satellite debris). He could immediately balance the federal budget this year and every year thereafter, Tsy would never have to borrow again.
"(d) Clarification With Respect to Seigniorage- The ninth proviso of section
5136 of title 31, United States Code, is amended, by inserting after
‘miscellaneous receipts’ the following: ‘and such amount shall be included
as an estimated receipt of the Government and a receipt of the Government
under paragraphs (6) and (7), respectively, of section 1105(a) in any
budget submitted under such section’."
Today, Tsy takes the position that coin seignorage revenue is off-budget. However, were this bill already law and there were a $1 trillion budget deficit today, depositing a $1 trillion coin tomorrow would eliminate the deficit. Now that's a grand bargain! :o)
I'll leave it to Jamie Galbraith to explain why Tsy doesn't actually have to borrow and how the Fed can, instead, peg a Fed Funds target rate simply by adjusting the Interest On Reserves rate it offers banks:
"The U.S. government spends (and the Federal Reserve lends) in a very simple way. It does so by writing checks --in fact simply by marking up numbers in a computer. Those numbers then appear in the bank accounts of the payees... The effect of government check-writing is to create a deposit in the banking system. This is a “free reserve.” Banks of course prefer to earn interest on their reserves... Thus they demand a US Treasury bond, which pays more interest without incurring any form of credit or default risk... So long as U.S. banks are required to accept U.S. government checks – which is to say so long as the Republic exists – then the government can and does spend without borrowing, if it chooses to do so..."
http://www.ourfuture.org/report/2010062630/statement-commission-deficit-reduction
I finally got change in a dollar coin the other day. I used it promptly the same night at the grocery store. It was worth exactly the same as the dollar bill.
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