Matthew Yglesiasis promoting the idea and Atriosis pointing to it.
Apparently, neither Letsgetitdone [Joe Firestone] nor Corrente is to have any credit, but at least the idea is getting out there.Not to mention beowulf (aka Carlos Mucha), whose idea it originally was. As is recognized in the comments there.
Scott Fullwiler was the first economist to promote it publicly afterwards, and to my knowledge is still the only one to do so.
Read it at Corrente
Platinum coin enters the main stream
by coin seigniorage
(h/t Kevin Fathi via email)
One other recent mention of the platinum coin - Hernando Today (an edition of the Tampa Tribune) - Government debt – an illusion
ReplyDeleteAlso There are some good recent comments at the Angry Bureaucrat - on his July 2011 article on the Platinum coin - all comments are in the last few weeks - The Coolest Way to Solve the Debt Ceiling Crisis - Mint $1 Trillion Platnium Coins
I would prefer the coin to be minted out of plastic. Like a cheep poker chip. One, it will snub the metalists and two it might enlighten the public on how a monetary sovereign operates.
ReplyDeleteMiller B.
ReplyDeleteThe only reason that this is feasible is because the law that allows for the minting of platinum coins allows the denomination of the minted coin to be determined at the discretion of the Secretary of the Treasury.
See 31 USC § 5112 - Denominations, specifications, and design of coins
Quote:
(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
There is no such law for plastic coins. Hence plastic coins, no matter how good a teaching tool, cannot be the instrument of resolving the Government Debt issue.
In fact, the way I read it, the platinum coin does not even have to be 100% platinum. If I read the above extract correctly, the coin could be plastic with some platinum in it!
ReplyDelete"the coin could be plastic with some platinum in it!"
ReplyDeleteNo reason to monkey with a foolproof plan (the law says platinum, let's stick to platinum) however there's another way Tsy could mint its way around the debt ceiling. I've read in a coin collector publication that the Mint has long had wide open coinage power ("general numismatic authority") under 31 USC 5111(a)(3)
(signed into law October 1973; good 'ol Dick Nixon, Johnny on the spot once again):
"The Secretary of the Treasury— may prepare and distribute numismatic items..."
Section 5134 defines numismatic item as:
"any medal, proof coin, uncirculated coin, bullion coin, or other coin specifically designated by statute as a numismatic item..."
That definition is from 1992, but it seems clear that "may prepare and distribute numismatic items" includes the authority to mint coins, which is as they say, the ball game because the legal tender act (section 5103, on the books since at least 1965) says "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender..."
The links to the Sections pointed out by Carlos (Beowulf) above
ReplyDelete31 USC § 5103 - Legal tender
Quote:
United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.
31 USC § 5111 - Minting and issuing coins, medals, and numismatic items
Quote:
(1) shall mint and issue coins described in section 5112 of this title in amounts the Secretary decides are necessary to meet the needs of the United States;
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.
.
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(b) The Department of the Treasury has a coinage metal fund and a coinage profit fund. The Secretary may use the coinage metal fund to buy metal to mint coins. The Secretary shall credit the coinage profit fund with the amount by which the nominal value of the coins minted from the metal exceeds the cost of the metal. The Secretary shall charge the coinage profit fund with waste incurred in minting coins and the cost of distributing the coins, including the cost of coin bags and pallets. The Secretary shall deposit in the Treasury as miscellaneous receipts excess amounts in the coinage profit fund.
Section 5112 I have linked to in my previous post - That is where the Secretary of Treasury has the discretion about the nominal value of the platinum coins. It should also be noted that coins are not covered by the debt ceiling law only paper money is.
31 USC § 5134 - Numismatic Public Enterprise Fund
Here, the Fed becomes a "coin collector" not much different than collecting stuff that the TBTF banks want to dispose off!
Thanks Tom for a little credit here, and for calling attention to the conspicuous absence of any mention of my blogging in Matty's post.
ReplyDeleteCould it be because of the title of this Post:
"Why Matt Yglesias and Felix Salmon are Wrong About A Legal Way to Circumvent the Debt Ceiling Impasse" at NC: http://www.nakedcapitalism.com/2011/07/why-matt-yglesias-and-felix-salmon-are-wrong-about-a-legal-way-to-circumvent-the-debt-ceiling-impasse.html ?
Btw, Carlos has a new one at MMR today, where I've commented, though my comment hasn't appeared yet: http://monetaryrealism.com/coin-of-destiny/#comments
ReplyDeleteMike Norman may want to comment on this too.
It should also be noted, that there is a statutory limitation on US Notes that can be issued by the Treasury see Legal Tender Status
ReplyDeleteQuote:
United States Notes (characterized by a red seal and serial number) were the first national currency, authorized by the Legal Tender Act of 1862 and began circulating during the Civil War. The Treasury Department issued these notes directly into circulation, and they are obligations of the United States Government. The issuance of United States Notes is subject to limitations established by Congress. It established a statutory limitation of $300 million on the amount of United States Notes authorized to be outstanding and in circulation. While this was a significant figure in Civil War days, it is now a very small fraction of the total currency in circulation in the United States.
Both United States Notes and Federal Reserve Notes are parts of our national currency and both are legal tender. They circulate as money in the same way. However, the issuing authority for them comes from different statutes. United States Notes were redeemable in gold until 1933, when the United States abandoned the gold standard. Since then, both currencies have served essentially the same purpose, and have had the same value. Because United States Notes serve no function that is not already adequately served by Federal Reserve Notes, their issuance was discontinued, and none have been placed in to circulation since January 21, 1971.
The Third Legal Tender Act passed in 1863 put a limit of $450,000,000 on the amount of US Notes that could be issued. But there was no such limitation on the amount of coinage that can be issued.
Since the Treasury can issue only US Notes and coins, and there is a limit on the US Notes, That leaves only coins to be used to pay off the debt. Standard coins are expensive, and a totally inappropriate use of that metal. Therefore the only CURRENT solution is the platinum coin.
Hey Joe,
ReplyDeleteI think your comment hit a size buffer, I updated the original post to acknowledge that your corrected math probably kicks the event horizon past Election Day, erased all traces of my innumeracy, and then manually approved the rest of your comment.
:o)
This subject was covered in Yglesias and also at Atrios. And in neither place was Beo (Carlos)credited. So it wasn't just Correntewire and I.
ReplyDeleteThanks, Carlos for doing that, But I think you missed an important part of my comment. So, I'll record that here:
ReplyDeleteI checked the Daily Treasury Statement (DTS) on June 21st, because I was curious about where Federal spending was relative to last year and also to see where the debt ceiling vs the debt subject to the limit was.
This is what I found on the closing balance 20th:
Statutory Debt Limit: 16,394,000 in millions
Total Public Debt
Subject to the Limit: 15,737,388 in millions
The difference or space between current debt and the ceiling is: $656.612 Billion with a little more than 4 months left until the election.
So, the President can probably increase deficit spending to $150B per month and still have about $50 B to spare. So, 1) I think Obama has been holding back deficit spending somewhat probably thinking that if he can spend the money in July, August, and September, then he can see the UE numbers go below 8% and talk about a trend toward a stronger recovery and 2) I don’t think we’ll hit the debt ceiling until the middle of November or later.
And to add something to that now, Mike Norman did a piece back in April: http://mikenormaneconomics.blogspot.com/2012/04/govt-spending-collapsing.html on Government spending collapsing. He pointed that spending in the preceding 12 months was down $433B. He did another piece on the same day here: http://mikenormaneconomics.blogspot.com/2012/04/we-need-tax-cut-fedl-tax-deposits.html pointing out that tax collections had increased by $45B. The two together amounted to almost $500B more fiscal drag than in the previous year. As of June 20 spending over the previous 12 months was still down by $412B, while tax collections were up $66B, still about $475 B in total fiscal drag compared to the previous 13 months.
Joe,
ReplyDeleteThe Obama's technical capacity to spend more is not to be doubted, the trouble is Congress hasn't appropriated the funds.
This comment has been removed by the author.
ReplyDelete