Mike Sandler — The Debt Ceiling And #MintTheCoin: Another Teachable Moment For A Sustainable Money System

It's baaack!

Bit wacky in spots though.

In addition, it erroneously attributes the idea to MMT economists when it was originated by Ellen Brown and proliferated by Beowulf. MMT'ers subsequently picked it up.

HuffPost
The Debt Ceiling And #MintTheCoin: Another Teachable Moment For A Sustainable Money System

Mike Sandler

US Treasury Dept — There is Only One Solution to the Debt Limit

Some commentators have suggested that the President could invoke the Fourteenth Amendment of the Constitution as a justification for issuing debt in excess of the debt limit. Others have suggested that Treasury could mint and issue a large-denomination platinum coin to obtain cash without exceeding the debt limit. But as we’ve said before, the Fourteenth Amendment does not give the President the power to ignore the debt ceiling. And neither the Treasury nor the Federal Reserve believes that the law can or should be used to produce platinum coins for the purpose of avoiding an increase in the debt limit.

As the Chair of the Council of the Inspectors General on Financial Oversight (CIGFO) explained in 2012, Treasury found no option that could reasonably protect the full faith and credit of the United States and the American people from very serious harm. Additionally, CIGFO noted that Treasury viewed the option of delaying payments as the least harmful among these options. But this option would still be default. Fortunately, because Congress ultimately took action, no final decision was needed.

With some in Congress again suggesting that we prioritize principal and interest while missing payments on other obligations, it’s worth considering again why this is such an unacceptable outcome. It is simply default by another name.…

For 226 years, we have been a country that pays all our bills. We can’t break that trust with our creditors and investors and put the full faith and credit of the United States in question. And we can’t break that trust with our citizens.

To remove the unnecessary and avoidable threats to our economy and the wellbeing of our citizens, we have continued to urge Congress to take action as soon as possible and raise the debt limit before Treasury exhausts its extraordinary measures.

The president decides to play hardball with Congress.

U. S. Department of the Treasury
There is Only One Solution to the Debt Limit
Daniel Watson
ht Bill McBride at Calculated Risk

Philip Diehl — Fmr. Mint Director Philip Diehl explains the Coin to Ezra Klein

Philip Diehl: Here’s the text of an email I just sent to Ezra Klein commenting on an interview with former Treasury chief of staff Mark Patterson that was published on his blog yesterday afternoon.

Monetary Realism
Fmr. Mint Director Philip Diehl explains the Coin to Ezra Klein
Posted by beowulf

Diehl: As co-author of the law, I happen to believe minting the coin is fully consistent with the law, and I take comfort that Laurence Tribe agrees.

Two Former Mint Directors are disagreed over TPC

Monetary Realism
Former Head of U.S. Mint: beowulf and JKH are 100% correct
Michael Sankowski

CNBC NetNet
Former U.S. Mint Director: The $1 Trillion Platinum Coin Ain't Worth a Plugged Nickel
Edmund Moy | 38th director of the United States Mint

Now WaPo: Could two platinum coins solve the debt-ceiling crisis?

MSM wakes up long enough to notice that the MMT blogosphere has long ago and at present come up with a way to legally get us out of this moron-manufactured needless "debt ceiling" crisis.

Post at WaPo WonkBlog here delegated to Plumer as perhaps Klein thinks this "novelty" idea is beneath his direct attention and could potentially taint his tremendous Very Serious Person credentials.  Excerpt:

Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

OK so far, BUT now here may be the line that gets the "MMT Irony of the Year Award":

“I like it,” says Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

Aaahhhhhhhhhggghhhh!!!!!!  (Inner monologue: "Save the hammer for the man.... save the hammer for the man....")

Either they are all bigger morons than even I thought, or looks like Gagnon is going to be fired when he goes in to work at this Peterson place Monday morning.

Gagnon continues:

In theory, this is much like having the central bank print money. But, says Gagnon, the U.S. government would simply be using the money to keep spending at existing levels, so it wouldn’t create any extra inflation. And if it did cause problems, the Fed could always counteract the effects by winding down some of its other programs to inject money into the economy.

I just can't believe the stupidity that these monetarist morons continue to exhibit.

Here Gagnon in his first sentence correctly relates price stability to the government spending rate, which is FISCAL policy.

[TIP:  STOP RIGHT THERE JOSEPH GAGNON, you got it!]

BUT THEN he makes the assertion that in the face of this hypothetical fiscal process becoming too stimulative and leading to unstable prices, the solution would NOT be to modify this same FISCAL policy, but rather, have the Fed cease to make re-distributional arrangements effecting the duration of the financial assets on its central bank balance sheet.

How do their brains work?