tag:blogger.com,1999:blog-2761684730989137546.post6578533222299018283..comments2024-03-28T04:13:36.779-04:00Comments on Mike Norman Economics: Tea Partiers want dollar coin and why it is a terrible ideamike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2761684730989137546.post-39531759997498289212011-09-29T19:53:12.472-04:002011-09-29T19:53:12.472-04:00I finally got change in a dollar coin the other da...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.Adam2https://www.blogger.com/profile/03710514839937913226noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72608938558828158062011-09-29T13:52:21.469-04:002011-09-29T13:52:21.469-04:00Gonna have to disagree Tom. This is the greatest i...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:<br /><br />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. <br />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.<br /><br /><i>"(d) Clarification With Respect to Seigniorage- The ninth proviso of section<br />5136 of title 31, United States Code, is amended, by inserting after<br />‘miscellaneous receipts’ the following: ‘and such amount shall be included<br />as an estimated receipt of the Government and a receipt of the Government<br />under paragraphs (6) and (7), respectively, of section 1105(a) in any<br />budget submitted under such section’."</i><br /><br />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)<br />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:<br />"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..."<br />http://www.ourfuture.org/report/2010062630/statement-commission-deficit-reductionbeowulfhttps://www.blogger.com/profile/14987548132065830204noreply@blogger.com