Grasping Reality with Both Invisible Hands
The Obama Tax Cuts: Now It Is Time To Think About Funding Them…
Brad DeLong
The New York Times | The Conscience of a Liberal
Debt in a Time of Zero
Paul Krugman
Economonitor | Great Leap Forward
Why Does Brad DeLong Worry About Paying For Tax Cuts?
L. Randall Wray
New Economic Perspectives
Brad DeLong Has Me Worried
Stephanie Kelton
It's great that Kugman is aware of 'the trillion dollar platinum coin'
ReplyDelete(By the way, what's to stop the Treasury creating a whole shitload of ordinary-denomination coins?)
However, he's still hung up on the reserves thing.
Someone needs to send him Fullwiler's 'Interest on Reserves' paper and his "interest rates and fiscal sustainability" paper.
It would be very interesting to see what he makes of them.
(By the way, what's to stop the Treasury creating a whole shitload of ordinary-denomination coins?)
ReplyDeleteThere's a loophole in the law for platinum coins only.
but what stops the Treasury from 'financing' it's spending with newly-minted (normal) coins?
ReplyDelete*its
ReplyDeleteUS Code:
ReplyDeleteThe Secretary of the Treasury may mint and issue only the following coins:
(1) a dollar coin that is 1.043 inches in diameter.
http://www.law.cornell.edu/uscode/text/31/5112
No mention of weight or metal to be used.
"The Secretary of the Treasury—
(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."
"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."
http://www.law.cornell.edu/uscode/text/31/5111
"the Secretary of the Treasury may borrow such funds from the General Fund as may be necessary to meet existing liabilities and obligations incurred prior to the receipt of revenues into the Fund: Provided further, That the General Fund shall be reimbursed for such funds by the Fund within one year of the date of the loan"
ReplyDeletehttp://www.law.cornell.edu/uscode/text/31/5111
Apparently the Treasury can borrow money from itself to buy metal, then mint coins and use them to pay itself and to meet any other obligations.
Coin Seigniorage and the Irrelevance of the Debt Limit By: beowulf
ReplyDeleteBad link on the Randy Wray article
ReplyDeletey,
ReplyDeleteThen they could use nanotechnology to make .1 micron $1 coins out of nanomaterials and fit $1T in a dump truck or two and take it over to the Fed and deposit them... rsp,
There is nothing that prevents the Treasury from issuing regularly denominated coins, other than the cost, and the impact on the metals market - There is relatively little profit in them. The deficit spending has to be funded by seigniorage profits. There is almost a 100% profit in *very* large denomination platinum coin siegniorage.
ReplyDeleteMatt,
ReplyDeleteThe law is very specific on the composition and size of regularly denominated coins. No 0.1 micron $1 coins are allowed by law - hence only a platinum coin will do.
It's so disappointing that after all the back and forth earlier this year Krugman is still wearing the same flashing neon sign.
ReplyDeleteThe whole debate with him over endogenous money may as well never have happened, he learned nothing.
Bad link on the Randy Wray article
ReplyDeleteThanks, Clonal. Fixed now.
"No 0.1 micron $1 coins are allowed by law"
ReplyDeleteAs far as I can tell the law specifies the diameter of $1 coins but neither the material, weight or thickness.
So a 0.1 micron thick coin might be possible!
y from
ReplyDeleteQuote:
The Secretary of the Treasury may mint and issue only the following coins:
(1) a dollar coin that is 1.043 inches in diameter.
.
.
.
.
(b) The half dollar, quarter dollar, and dime coins are clad coins with 3 layers of metal. The 2 identical outer layers are an alloy of 75 percent copper and 25 percent nickel. The inner layer is copper. The outer layers are metallurgically bonded to the inner layer and weigh at least 30 percent of the weight of the coin. The dollar coin shall be golden in color, have a distinctive edge, have tactile and visual features that make the denomination of the coin readily discernible, be minted and fabricated in the United States, and have similar metallic, anti-counterfeiting properties as United States coinage in circulation on the date of enactment of the United States $1 Coin Act of 1997.
It appears that you are not right on that.
Y,
ReplyDeleteBut you are right in that neither the thickness or weight appears to be specified. So you could have a dollar coin made of three metallic foils, with micro-embossing on either side.
These coins need not ever be circulated, but be stored in the Fed Vault. So that indeed may be doable. But of course, a lot more effort is needed than required by the platinum coin!
Couple of interesting comments on the platinum coin on Mike Sankowski's take on Krugman and Nadler
ReplyDeleteCouple of interesting comments on the platinum coin on Mike Sankowski's take on Krugman and Nadler
ReplyDeleteLike whether the PC is "easing" like QE or fiscal. Looks to me like it adds $NFA by paying bills, interest, making transfers, etc. which is fiscal. The point is that it can do this without increasing the deficit and breaking debt ceiling because coins are not added to the debt. They are form of direct issuance rather than indirect.
In QE the Treasury's rb don't increase due to Fed action. Under the PC, Treasury's rb do increase, but without corresponding issuance of tsys.