Joe provides the latest on the coin made from a metal NOT from column 11 of the Periodic Table and Yves/Lambert some context.
And as Lambert says, “Now the coin is in Brookings, the Inner Citadel!” Well, even if, as Joe Firestone points out, they can’t bring themselves to give it an intellectually honest treatment: “What’s their response? Marginalize it, of course!” But the fact that Brookings feels it has to address it at all is a form of progress.
And MMT has reached the scrambled eggs inside the craniums at the AEI we found out this week too. At least a couple of positive revelations this week.
Joe Firestone: The Platinum Coin Returns #NakedCapitalism https://t.co/Ihj40wxKd8
— peterc (@heteconomist) October 23, 2015
The Obama "breakdown of government" argument against TPC is after-the-feast. Shooting a dead corpse is unpleasant and illegal, but it isn't murder. When the government has failed to pay its debts and failed to fund its operations as matter of choice, the government already has already failed in its duty to govern, minting a two-bit coin worth trillions is hardly causing it to fail anymore than it already has.
ReplyDeleteIf it came down to impeachment, the governors would step into the fray and begin proceedings to remove the two-party government from Washington. But that is all about 100 steps out from where we are today, where the mere threat of TPC should be enough to settle the phony debt debacle.
Why does the Treasury need to issue trillion dollar coins when the Fed can just forgive a portion of the current national debt?
ReplyDeleteAs far as I can tell, the Fed is not prohibited from forgiving Treasury debt. If it were to do so, the Treasury debt limit would then be below the current debt limit set by congress. The Treasury could then auction off new debt, which would be deposited into the Treasury's general account at the Fed. The Fed of course can buy that debt from the debt holders. This cycle can be repeated indefinitely.
The following links support this idea:
A Modest Proposal: Why Doesn’t the Fed Forgive the Debt?
The Fed Could Simply CANCEL $2 Trillion of Government Debt
The debt limit legislation is empowered in the Federal Reserve Act which limits the Fed's purchase of debt to the 'open market' rather than directly from the Treasury. The debt limit itself is a proscription on the US Treasury, not the Fed:
31 U.S. Code § 3101 - Public debt limit
Direct Purchases of U.S. Treasury Securities
by Federal Reserve Banks
Richard that may not effect gross issuance amounts in the Ceiling....
ReplyDeleteiow just because the Fed would "forgive" it, doesnt mean the Congress would subtract that amount from "Debt Issued"....
That is the standard Old Testament approach "borrow >>> default >>>> forgive >>> borrow >>> default >>>> forgive>>>>> borrow >>>>> ....."
It has many advocates.... you can see it manifest over in Europe with the northern Calvinists currently....
Matt,
ReplyDeleteAre the 'gross issuance amounts' the same thing as the 'face amounts' referenced in 31 U.S. Code § 3101:
"(a) In this section, the current redemption value of an obligation issued on a discount basis and redeemable before maturity at the option of its holder is deemed to be the face amount of the obligation.
(b) The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than $14,294,000,000,000, outstanding at one time, subject to changes periodically made in that amount as provided by law through the congressional budget process described in Rule XLIX [1] of the Rules of the House of Representatives or as provided by section 3101A or otherwise.
(c) For purposes of this section, the face amount, for any month, of any obligation issued on a discount basis that is not redeemable before maturity at the option of the holder of the obligation is an amount equal to the sum of—
(1) the original issue price of the obligation, plus
(2) the portion of the discount on the obligation attributable to periods before the beginning of such month (as determined under the principles of section 1272(a) of the Internal Revenue Code of 1986 without regard to any exceptions contained in paragraph (2) of such section)."
It seems that 'face amounts' are tied to obligations which would go away when the debt obligation was forgiven.
Regardless in this case Congress does not have the power to subtract that amount from "Debt Issued". This would ultimately have to be settled in court - which is OK - unless congress blinks. We need to get down to the nitty gritty here and get this issue out from under the purview of congressional staffs and lobbyists.
Let me take a look....
ReplyDelete