Debt Ceiling - The Platinum Coin Solution

HAHA!

I wish Obama had the balls to do it ...

I'm glad to see Representative Jerrold Nadler lending his support to the idea that President Barack Obama should avert a debt-limit crisis by issuing large-denomination platinum coins, as permitted by 31 USC § 5112.

In case you're not familiar with this idea: In general, the Treasury Department is not allowed to just print money if it feels like it. It must defer to the Federal Reserve's control of the money supply. But there is an exception: Platinum coins may be struck with whatever specifications the Treasury secretary sees fit, including denomination.

This law was intended to allow the production of commemorative coins for collectors. But it can also be used to create large-denomination coins that Treasury can deposit with the Fed to finance payment of the government's bills, in lieu of issuing debt.

What the law should say is that the executive branch may borrow to pay whatever obligations the federal government has, but may not print. Unfortunately, when we hit the debt ceiling, the situation will be backwards: The administration will not be allowed to borrow, but it can print in unlimited quantities.

This points toward an interesting solution.

If Republicans start issuing a list of demands that must be met before they will raise the debt ceiling, Obama should simply say that he will issue platinum coins as necessary to pay government bills if he cannot borrow. But, to avoid causing long-term inflation expectations to skyrocket, he should pledge that he will have the Treasury issue enough bonds to buy back all the newly issued currency as soon as it is allowed to do so.

And then he should offer to sign a bill revoking his authority to issue platinum coins -- so long as that bill also abolishes the debt ceiling. The executive branch will give up its unwarranted power to print if the legislative branch will give up its unwarranted restriction on borrowing to cover already appropriated obligations.

Joe Weisenthal got this right this morning: Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.

Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.

http://www.bloomberg.com/news/2013-01-03/why-we-must-go-off-the-platinum-coin-cliff.html

Why are you people so against having a budget?

Why must you insist on a absolute power to raise Americas debt as obama see's fit?

I know why, you hate the country.

Where does the platinum come from?

Sal wrote:HAHA!

I wish Obama had the balls to do it ...

I'm glad to see Representative Jerrold Nadler lending his support to the idea that President Barack Obama should avert a debt-limit crisis by issuing large-denomination platinum coins, as permitted by 31 USC § 5112.

In case you're not familiar with this idea: In general, the Treasury Department is not allowed to just print money if it feels like it. It must defer to the Federal Reserve's control of the money supply. But there is an exception: Platinum coins may be struck with whatever specifications the Treasury secretary sees fit, including denomination.

This law was intended to allow the production of commemorative coins for collectors. But it can also be used to create large-denomination coins that Treasury can deposit with the Fed to finance payment of the government's bills, in lieu of issuing debt.

What the law should say is that the executive branch may borrow to pay whatever obligations the federal government has, but may not print. Unfortunately, when we hit the debt ceiling, the situation will be backwards: The administration will not be allowed to borrow, but it can print in unlimited quantities.

This points toward an interesting solution.

If Republicans start issuing a list of demands that must be met before they will raise the debt ceiling, Obama should simply say that he will issue platinum coins as necessary to pay government bills if he cannot borrow. But, to avoid causing long-term inflation expectations to skyrocket, he should pledge that he will have the Treasury issue enough bonds to buy back all the newly issued currency as soon as it is allowed to do so.

And then he should offer to sign a bill revoking his authority to issue platinum coins -- so long as that bill also abolishes the debt ceiling. The executive branch will give up its unwarranted power to print if the legislative branch will give up its unwarranted restriction on borrowing to cover already appropriated obligations.

Joe Weisenthal got this right this morning: Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.

Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.

[url=http://www.bloomberg.com/news/2013-01-03/why-we-must-go-off-the-platinum-coin-cliff.html

http://www.bloomberg.com/news/2013-01-03/why-we-must-go-off-the-platinum-coin-cliff.html[/quote[/url]]



Economic tyranny....

PkrBum wrote:Where does the platinum come from?

"Of the 245 tonnes of platinum sold in 2010, 113 tonnes were used for vehicle emissions control devices (46%), 76 tonnes for jewelry (31%). The remaining 35.5 tonnes went to various other minor applications, such as investment, electrodes, anticancer drugs, oxygen sensors, spark plugs and turbine engines."
Wikipedia

How much will the price of goods using the platinum rise if the United States and other countries start using it for coinage?

*****SMILE*****

https://www.youtube.com/watch?v=wQzUCO7rG0M



Notice also which industry will take the biggest hit if the price of platinum goes up.

What makes you think that having the price of platinum skyrocket doesn't play into Wall Street's hands?

*****SMILE*****

https://www.youtube.com/watch?v=qOFRR1PY0XE

D-E-F-A-U-L-T!!!!!

Why not deposit an iPad at the Fed and say it's worth $16Trillion? Now everyone is rich, right?

Margin Call wrote:

Why not deposit an iPad at the Fed and say it's worth $16Trillion? Now everyone is rich, right?

That would be against the law.

The platinum coin?

Not so much.

https://petitions.whitehouse.gov/petition/direct-united-states-mint-make-single-platinum-trillion-dollar-coin/8hvJbLl6

Sal wrote:

Margin Call wrote:

Why not deposit an iPad at the Fed and say it's worth $16Trillion? Now everyone is rich, right?

That would be against the law.

The platinum coin?

Not so much.

So, the Fed hasn't provided a bid for Treasuries? You could deposit a bucket of puke at the Fed...and some banks likely have.

In other words, you don't need a platinum coin. Simply, ask Ben to add a few zeros to the Treasury's account.

Any consequences that you can think of?

I'm trying to understand this thing the only way I can which is to relate it to my own household budget.
Let's say with my household budget I'm borrowing 40% of everything I spend (which is what the federal government will be doing this year).
And rather than trying to get the spending under control, instead I buy one of those commemorative coins they hawk on late night tv infomercials.
Will all I have to do is say "abracadabra this coin is now worth the amount of money I need to pay my bills" and, shazaam, my problems are solved?
Is that how this works?

Sometimes I wonder how we allowed ourselves to get into this mess... then I realize the majority now think like Sal.

http://www.goldstockbull.com/articles/government-funded-shell-game-fed-buys-80-debt/

"My Fellow Americans,

Until now the Treasury has been borrowing the money the Government created back from the private sector, in order to cover our deficit spending, so the national debt has been steadily growing.

This is absurd! According to the Constitution, this Government, of the people, by the people, and for the people, is the ultimate source of all US money. So why should we ever borrow US money back and pay interest on it, since we can create it any time by the authority of the Constitution and Congress?

Congress has also imposed a debt ceiling, so, if and when we reach it, we can’t borrow back our own money without Congressional approval, anyway, and lately Congress has been using the need to raise the debt ceiling as an excuse to extort cuts in safety net and discretionary programs that the majority of Americans support.

So, on my order, and in accordance with legislation passed by Congress in 1996, and with the US Code, the US Mint has issued $60 Trillion using a single 1 oz. platinum coin, and deposited it at the NY Fed. It’s legal tender, so the Fed credited the Mint’s Public Enterprise Fund (PEF) account with $60 Trillion in US Dollar credits using its unlimited authority from Congress to create them.

This is not inflationary because the Fed will put our coin into its vault, and keep it there permanently out of circulation, and the Treasury will use the $60 T in USD credits only to pay back the national debt and to spend what Congress has already approved, which is only a small fraction of these credits and far from the amount needed to cause inflation.

My action ends any possibility of a debt ceiling crisis in February or March, because we have no further need to borrow our own money back in the markets, and that’s why we don’t need the tea party or other Republicans, or even my fellow Democrats to agree to raise the debt ceiling any more.

Now the Treasury, has plenty of money, much more than we need, in fact, to pay for all appropriations Congress has already approved for 2013, and may approve in March, including all deficit spending and, again, we won’t have to borrow our own money back, either to repay debts or to implement future deficit spending.

So, we will pay all Government debts which will come due in 2013 and 2014. Treasury securities and all other debts included. We will also pay back all debts held by other agencies of Government and the Federal Reserve. When we do this we will lower the national debt by about $12 T, reducing the “debt burden” by about 75% by the end of 2014, and creating an actual Social Security trust fund with 2.7 T in cash reserves in it; and again, to do this we don’t have to borrow any of our own money back, and we will also reduce our interest costs on the outstanding national debt all through the remainder of 2013, 2014, and beyond until it is all paid off.

None of the $60 T in new credits created by our actions is “money” in the private sector economy until the Treasury spends it. For now it is just capability to spend awaiting the appropriations of Congress to mandate deficit spending, should it need to compensate for the reduction in demand, probably close to 10% of GDP right now, caused by your own desire to save (which we want to do our best to facilitate), and your desire to import goods from foreign nations.

We have created $60 Trillion in new credits even though we probably needed less than that to cover anticipated deficit spending and debt repayment until at least 2028. The reason for this, is that I wanted to have enough capability created in the Treasury account, so that the national debt could be completely paid off (except for a small amount in very long-term Treasury debt still not mature by 2028), and all projected Federal deficits covered over the next 15 years, even extraordinary deficit spending needed to be performed without further borrowing over this period.

Of course, we can always make new coins if our projections about future deficits turn out to be wrong; but I thought it would be best to ensure that all $16.4 T plus of the “debt burden” can be completely eliminated from our political concerns; and also to provide enough funds in our spending account at the Fed, so that it would be very clear to Congress and all newly elected Representatives and Senators, that even though they, as required by the Constitution, continue to control the purse strings, the national purse is very, very full, and that we would be able to cover from the Treasury General Account whatever deficit spending for the public purpose, including for full employment, Medicare for All, infrastructure, education, and other things, that Congress, in its wisdom, chooses to appropriate now, before the next election, and for some elections to come.

Good night, my fellow Americans! Rest well knowing that our beloved country won’t be defaulting on any of its debts when the debt ceiling is reached, and that I’ve prevented this without going over the legal debt ceiling, or borrowing any more, by providing money for spending mandated appropriations, in compliance with the laws authorizing Platinum Coin Seigniorage, while supporting the Constitution’s prohibition against our Government ever defaulting on its debts. I hope that, in the future, everyone in Congress will obey the 14th Amendment’s prohibition against questioning the validity of Federal Government debts, and think twice before they indulge themselves in loose talk about the possibility of the Federal Government defaulting on its obligations.

America will always pay its debts in US Dollars according to the terms of the contracts it has concluded, and in line with the pension payments and other obligations that it owes. Neither you, nor the rest of the world need ever doubt that again! Nor need you ever think that our Government is running out of money for the things we must do. We can never run short of money unless Congress refuses voluntarily, to use its unlimited constitutional authority to make more of it. But as long as it delegates to me the authority to create high value platinum coins to cover our needs, you can be sure that running out of US money will never happen!"

Sure sounds like Madoffian economics to me.

Time to hock the wedding band for a few billion dollars!

It is mostly tongue and cheek, but it does focus on the comparative and relative nature of currency. Bob, attempts to understand this in terms of his household budget. The largest debt a homeowner has is usually his mortgage. Today we have the absurd arguments that the long term debt must be considered current and that our mortgage debt must be considered like the bell south monthly phone bill........everything due in the short term.

That household analogy just does not work because we have the ability to create our own payments out of thin air, and the simple fact is if our payments are not worth as much.....the Bell South monthly bill will increase.....because our money will have less value, but that does not change a thing in regard to the wealth of our household or our nation.

All these tragedies which tell the horror of a fiat monetary system assume that wealth is tied to the indicator....it is not. The classic example of Germany and the wheel barrows of money because of the inflationary cycle, or Brazil and Argentina where 100% inflation in a year was not unheard of do not see how quickly this is corrected and how real wealth of those nations was far more important that the gap in the fiat.......America has tangible wealth which allows for continuing gdp growth beyond the perception of the gap between tangible and fantasy. Hell, Germany had the classic example corrected in less than a decade, and throughout Latin America it took less than 20 years.....the corrections are not the end of the world.

Quite simply America, or your household could declare bankruptcy Saturday morning.....and the fiat currency has little to do with the structural wealth of that household or nation. Far more important is the comparative advantage and productivity of that household or nation.......this focus on debt is only relevant to the degree it hinders our productivity....structural corrections have always existed in history....and they have never.....and I repeat never.....been the final word. A young couple with advanced degrees and up to their noodles with debt in that household have a far better future even after a bankruptcy than another couple with a lower debt but nowhere near as efficient or productive.

2seaoat wrote: The largest debt a homeowner has is usually his mortgage. Today we have the absurd arguments that the long term debt must be considered current and that our mortgage debt must be considered like the bell south monthly phone bill........everything due in the short term.

That household analogy just does not work

That analogy may not have been as valid before the real estate bubble collapsed. But once that happened I assure you the analogy is sound. lol

That analogy may not have been as valid before the real estate bubble collapsed. But once that happened I assure you the analogy is sound. lol



Not really. The wealth is tangible. It is millions of houses with copper, wood, steel, and concrete. It is also not going to go away......the currency may be inflated and that house may be worth 200k, or deflated and only worth a 100k, but this nation has 10 fold the wealth of any other nation in this world, and on top of the tangible wealth in our housing stock alone, makes the real estate bubble irrelevant.....the house exists and there will be winners and losers, but the actual wealth represented by that house has not been extinguished in the least. We do not have a crisis because of some threat of inflation in the future......it will be years before inflation will be a reality, and this idea that debt cannot be structured and the platinum solution cannot be found.....well only the traitors who are trying to destroy this union can ultimately harm this nation....not the collective nation working for our strong survival. hang the traitors.

2seaoat wrote:That analogy may not have been as valid before the real estate bubble collapsed. But once that happened I assure you the analogy is sound. lol



Not really. The wealth is tangible. It is millions of houses with copper, wood, steel, and concrete. It is also not going to go away......the currency may be inflated and that house may be worth 200k, or deflated and only worth a 100k, but this nation has 10 fold the wealth of any other nation in this world, and on top of the tangible wealth in our housing stock alone, makes the real estate bubble irrelevant.....the house exists and there will be winners and losers, but the actual wealth represented by that house has not been extinguished in the least. We do not have a crisis because of some threat of inflation in the future......it will be years before inflation will be a reality, and this idea that debt cannot be structured and the platinum solution cannot be found.....well only the traitors who are trying to destroy this union can ultimately harm this nation....not the collective nation working for our strong survival. hang the traitors.

Now why would you want to hang Obama's party? democrats and commies mean well...well they mean to get rich like ALGORE.

Sal wrote:

Damaged Eagle wrote:

How much will the price of goods using the platinum rise if the United States and other countries start using it for coinage?

Notice also which industry will take the biggest hit if the price of platinum goes up.

What the hell are you talking about, imbecile?

Can you not read?

He can strike a single coin, say it's worth a gazillion dollars, and problem solved.

Well then I'm smelting down the fifty or so pounds of copper I have stored in my garage and making some one ounce tokens that I'm going to sell at a million dollars each.

Minimum order is ten.

How many can I put you down for?

*****CHUCKLE*****

https://www.youtube.com/watch?v=lAD6Obi7Cag