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This is not about cryptocurrency for once. It's about a way to work around Congress to raise the debt ceiling.

Interestingly, the workaround involves minting an official, physical coin worth $1T:

> "The swiftness of creating a $1 trillion coin could serve as an extreme last-minute option if Congress failed to raise the debt ceiling before the Treasury runs out of money on October 18."

The value obviously has nothing to do with the material choice, so why don't they just print it out of PLA?
Because the law says that platinum coins may be minted with an arbitrary value and says nothing about coins made of PLA.

Sorry, was your question rhetorical?

Probably not rhetorical, I don’t think most people know about what obscure laws that make these kinds of loopholes work. I’m actually surprised you thought it was common enough knowledge that you suspected the question was rhetorical.
It's mentioned in the article.
It is the subject of the article.

My best faith reading of the original comment was that it decries the arbitrary nature of platinum - if we are calling it a $trillion, why not make it out of anything?

But the debt ceiling is itself a legal construction. People call it a "loophole" because of episodes of The Simpsons or whatever but the Treasury is explicitly given permission to issue coins of arbitrary value. The debt ceiling is itself a legal construction.

Legal technicalities about what values can be put on what type of coin.

The sovereign citizens and anti- Federal Reserve folks had fun with the idea in the 90s too.

And we were told these ideas were rediculous, look now what we are seeing though.
31 U.S.C. 5112(k) as originally enacted by Public Law 104-208 in 1996:

The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time.

This is a bit a bike-shedding discussion/topic, no? The amount of national (fiscal?) debt is a matter of accounting, and not physical paraphernalia.
It's a legal loophole. The Treasury can't issue bonds to pay for government expenses until Congresss approves a budget. But president can mint coins without Congress's authorization. A trillion dollar coin would easily cover government expenses for the next several months.
The issue isn't approving or not approving a budget. The issue is that Congress has simultaneously passed budgets saying to spend enough money to rack up X dollars in debt, and passed laws saying the government may issue no more than Y dollars in debt, and X > Y.
Why is this even an issue? Is it harder to pass a "raise debt limit" motion than it is to pass the budget? Did people who pass the budget a few months ago get buyer's remorse?
>> Is it harder to pass a "raise debt limit" motion than it is to pass the budget?

Ordinarily, NO, as this is passed in the normal course of business - this merely authorizes the issuance of debt instruments to finance the spending that was previously authorized.

But, now the answer is YES, when one party has decided to exploit this legal quirk separating the spending from the issuance of debt to execute a DOS attack on the other party currently in power.

>>Did people who pass the budget a few months ago get buyer's remorse?

Yes, since they are no longer in the driver's seat, they want to execute a DOS on the other party now in the driver's seat, and they don't care if it crashes the country or global economy, as they think they won't be blamed and the other party will.

It really is as simple as that, putting party over country.

>But, now the answer is YES, when one party has decided to exploit this legal quirk separating the spending from the issuance of debt to execute a DOS attack on the other party currently in power.

But the party in power has 50 + tie-breaking VP vote? What gives?

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It takes 60 votes to break a filibuster (which the GOP has promised to do on a debt ceiling vote).

It only takes 51 votes to change the filibuster rules, but at least 2 Democratic Senators oppose that, so we're kind of stuck.

See: Filibuster [1]

60 votes are required to break the filibuster in the Senate, and whatever their private ideas (e.g., I've seen reports from credible sources that no less than 44 R Senators personally support raising the debt ceiling), there are apparently zero R votes to go against their leader and end the filibuster.

Interesting times.

[1] https://en.wikipedia.org/wiki/Filibuster

It would also destroy the confidence in US Dollar worldwide, provide further proof that Biden is indeed an idiot, and basically pushed the US to the slippery slope, that ends with the US economy being in the same condition as Venezuelan.
I'm honestly surprised the above hasn't happened with Yellen coming out and telling everyone that the US will default on its debt if it can't borrow more money to pay back the people it already borrowed from.

Peter Schiff has touched on this, but who in the world is willing to lend to the US at the moment when the US just came out on record as running the biggest ponzi scheme ever?

Peter Schiff is a broken clock that was right once in the last 20 years. Even broken clocks are right twice a day.
He has been arguing mostly the same points for the past decade, but at least he's been consistent. The old saying comes to mind, "Markets can remain irrational longer than you can stay solvent."

I wanted to believe in MMT; it sounded at first like it could be something completely counterintuitive that just works, and some time later a rational quantity of math would explain it.

At the present, I think that was too wishful. The US seems to be able to print unlimitedly because of its unique status as the reserve currency. Once other countries opt out, and some are making concrete steps towards doing so, our dollar will quickly collapse, and it'll take the rest of our lives to experience a quality of living akin to today's.

> It would also destroy the confidence in US Dollar worldwide,

No it wouldn't

> provide further proof that Biden is indeed an idiot,

Idiot or not, the coin is actually a solid move.

> and basically pushed the US to the slippery slope,

Nope.

> that ends with the US economy being in the same condition as Venezuelan.

TF?! Not at all. You do not belong in this conversation. You have no clue what you are talking about.

You didn't refute any of his points, political jabs aside. I'm not sure how arbitrarily minting a Trillion dollar coin wouldn't harm confidence in the USD worldwide, it's one of the most blatant examples of debasing a currency I can imagine. I sure as hell don't want to sit on too much cash with ideas like this being seriously considered, or do you think expanding the money supply without expanding the value it represents has no impact on its spending power (or confidence in its spending power)?

Look at any charts of the M1/M2 money supply (that haven't been discontinued) and they seem to strongly indicate we're on a slippery slope towards hyperinflation, that's been the trend for several decades and seems to be rapidly accelerating- At least that's what it looks like to a dumb layman like myself

> You didn't refute any of his points

"What can be asserted without evidence can also be dismissed without evidence" OP provided no evidence, so I dismissed without evidence.

> it's one of the most blatant examples of debasing a currency I can imagine

No. QE is. look it up. Actually minting a coin is smart.

> It would also destroy the confidence in US Dollar worldwide

If it was used to redeem debt held by outside parties, that would be an issue. Redeeming Fed holdings has no effect on circulating holdings or public debt holdings, and is basically a nonevent. The money creation that matters regarding those already happened when the Fed created real circulating money to buy the Treasuries in the first place. (Which, btw, did not have catastrophic effects on confidence in the US dollar.)

Insofar as there would be legitimate worry, it would be of new money creation made procedurally more available by the move. And also worry about other people's worries, legitimate and otherwise.
On reflection, this is too narrow. Previous lending put more money in circulation, but to the degree people expected that money to be removed from circulation later as the loans were repaid they should (on deposit of the coin) expect there to be more money (ceteris paribus) in circulation at that future time than there would have been sans coin.
Why stop at one coin? Print a wheelbarrow full of them. Surly nothing could go wrong with that.
The difference between is smart argument and a straw man is nuance. You have none.
> Why stop at one coin?

Because the coin can be any arbitrary amount, and its only use will be to redeem federal debt held by the Federal Reserve. Using multiple coins serves no purpose.

It’s printing money. Same scenario that leads to ultra inflation. The sort where a wheelbarrow is more valuable then the money it holds.

Sure this time it may used as an accounting trick. But it also frees government to spend recklessly until current money is worthless.

> It’s printing money

Substantively, its not when its used to redeem Fed-held government debt.

The money creation involved happened when the Fed created money to buy the debt (and, lo and behold, did not produce ultrainflation); interaction between two hands of the money-issuing government isn't substantively “money creation”, its accounting gimnicks with a platinum token.

> Sure this time it may used as an accounting trick. But it also frees government to spend recklessly until current money is worthless.

No, the law authorizing it already frees government to do that (and, more generally, the Constitutional power of creating money.)

There are procedural constraints, like the budget and the Constitutional assignment of power over it, which prevent the executive willy-nilly spending such money having minted it (unlike, say, the Fed’s money creating powers, where it can spend all the money it creates fairly freely, which is how it bought the debt it now holds.)

This is really a non-issue; its one of the clearly-legal routes around the stupid, contradictory (with mandated spending in the budget), counterproductive, and probably constitutionally null at least insofar as it purports to constrain later-mandated spending, and possibly more generally, debt ceiling without openly defying it.

A less legally clear method is just to treat it as the complete legal nullity it may be and ignore it completely. In many ways, I think that's the best option, but effectively “mint the coin” is no different in substance.

> The Treasury can't issue bonds to pay for government expenses until Congresss approves a budget.

Congress has approved a budget not merely authorizing but legally mandating spending and necessary borrowing to finance it.

It has also imposed a debt ceiling, purportedly prohibiting borrowing beyond a certain amount.

Minting the coin is one way of using an unquestionably legal power to resolve the conflict of mandates.

Another option is to simply ignore the debt limit because it conflicts with the budget mandate (and, given existing obligations, the 14th Amendment’s debt clause.)

> But president can mint coins without Congress's authorization

Only platinum coins. For...reasons that are mostly irrelevant.

Yes, but the accounting has to be done according to the law. The purpose of the coin is not to be a physical object per se, but to enable an end-run around the procedural hurdles that allow a minority in the Senate to prevent the debt limit from being raised. The whole thing is silly political theatre, but with very high stakes.
Yes. So that's like me saying I can set up a new export for customer XYZ in 15 hours. Numbers seem big and impressive, but they're just talking about doing routine stuff in their office and doing it "omg so fast". It just so happens my exports don't sound as impressive.
They could release a fxxing NFT in 10 seconds.

It'd be worthless either way.

The US government and Federal Reserve are running a legal Ponzi scheme.

What if we stopped spending $3.8 trillion on ineffective healthcare, or $1.2 trillion on welfare instead? Or just reduced our spending on those proportionally to save the $1 trillion?
Ignoring the ghoulish suggestion entirely, this misses the point of the debt ceiling crisis. The debt ceiling has zero effect on spending, it's servicing the debt for spending that already happened.

You don't fix what you spend on your credit card by not paying the bill.

Spend less now so we can use the saved money for paying off old spending?
That is in fact how household budgets work.

That is not how government budgets work, at all.

For starters, payment within a household budget are not typically to other members of the same household. The house's mortgage debt isn't to another person resident there, the groceries aren't bought from an household member.

Payments within a country are. It's circulation of money within the entity, not income and outgo.

And a household does not own their own bank to manage the circulation.

https://theconversation.com/why-the-federal-budget-is-not-li...

https://positivemoney.org/2018/10/a-government-is-not-a-hous...

https://www.forbes.com/sites/francescoppola/2018/04/30/gover...

Did you learn this in your AP econ class?

Logic doesn't go out the window once you get to government scale.

I'm sure there is a way to spend a trillion less on healthcare and get better results. At least other countries seem to manage that. But just cutting spending is not the way to achieve that, you need far reaching reforms that will be heavily resisted by parts of the healthcare industry.
If you want to reduce spending, please start with cutting the budget for the organization whose main purpose is killing people around the world.

Your government will have more money to spend usefully, and the world would be a better and safer place.

The US could utterly abolish its military and we'd still be running a significant deficit- Ignoring the fact that our military hegemony is the only thing holding up the USD as the reserve currency
It would also abolish one of the most effective jobs programs to ever exist.
Military entire budget is less than 1 trillion though, it is these entitlement spending that consume most dollars at the federal level.
The money has already been approved and spent. This whole stupid debate is about whether or not we should pay back what we already borrowed.
if we are prepared to not pay it back, we might want to double or triple the military.
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What if we stopped subsidizing rich people, polluting extractive industries, companies that ship jobs overseas, and NIMBY homeowners instead?
Clearly someone who is either trolling or has made the conscious decision to have no idea what they are talking about
Taxes could also be raised.

Government expenditure in the USA isn't unreasonable in itself, being lower than most other liberal democracies and even the levels in the USA in prior decades.

Either jacking up taxes or cutting government spending by like 20% total in the middle of such an economically precarious time seems far too risky, anyway. Times like these are what deficits are for! It's a shame the country was in a bull economy and yet still entered the pandemic already fiscally stretched to breaking point.

The trillion dollar platinum coin has been proposed on other occasions, but never minted.

Last I checked, platinum was trading at around 30-31 dollars a gram, roughly half that of gold. The presumption is that the coin will be 1 troy ounce or about 31g.

Hyperinflation from reckless debt monetization isn't unprecedented. When it does occur, it tends to quickly spiral out of control. Let us assume for the sake of discussion that there are some responsible people within these institutions who would like for these platinum coins to act as an actual asset, a backstop against a total devaluation of the dollar.

What would a reasonable weight of a trillion dollar platinum coin be?

Reasonable weight? Something that won't blow away in the wind.
Our money hasn't been backed by physical metals for a very long time. The coin would be purely symbolic, being made of platinum only because the law allows platinum coins to be minted in any denomination.
Yes, that much is obvious. Please understand that I was posing a hypothetical.
The seigniorage is the entire point of the exercise.
The idea is to mint a worthless coin that has face value of $1 trillion. That way, the coin has one trillion dollars of seigniorage, i.e. profit for government, and the coin could be deposited to Federal Reserve treasury instead of issuing debt.

In other words, they would be issuing new money by debasing the dollar, without generating debt in their balance sheet. It's like issuing one trillion worth of cash, which is backed with just one worthless platinum coin. It's not really different from just issuing debt that isn't paid back, but this way they don't have to raise the debt limit.

Shenanigans like this will completely erode the trust in the value of dollar.

Yes, this is the obvious part of the charade. I do disagree with one key part of your analysis.

>...backed with just one worthless platinum coin.

Platinum is a precious metal and far from worthless.

Let us pretend there are people involved in this charade who would allow that initial wealth to be extracted via Cantillon effects, but still desired the coin to act as a backstop at a later date.

Given the current rate of spending and outstanding obligations, what would be a reasonable weight for a trillion dollar coin?

>Given the current rate of spending and outstanding obligations, what would be a reasonable weight for a trillion dollar coin?

Not sure why you need to factor in "current rate of spending and outstanding ", but 1 trillion divided by current platinum prices gets you 31,610 metric tons. Apparently that exceeds all platinum ever mined:

>Mining experts also estimate that just over 10,000 tonnes of platinum have ever been mined by man.

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Clearly it wouldn't be practical to mint platinum coins at the current price. Instead, they would profit from the difference as they debase the dollar. Therefore the total obligations become important in the calculation. The weight of the coins would become the new USD valuation in this scenario. A 'backstop' as I mentioned above.
I'm not really sure that you are suggesting, but if they were 'reasonable', then the coin should actually be valued at the platinum's current price. That's how money is supposed to work.
As you said, the coin will be deposited in the treasury. It's not being circulated, so it doesn't debase the dollar.
Issuing debt: - The treasury prints bonds with promises to pay $ on them - Banks, insurance companies and people buy the pieces of paper and give the gov't $ - Gov't has money to spend - Banks periodically sell the bonds to the Fed who can create $ out of thin air - Note by law the treasury can't sell directly to the Fed

$1 Trillion Coin: - Treasury mints coin - Treasury sells it to the Fed who can create $

Both can be inflationary, but the optics on the coin are terrible. And with currency appearances matter.

When the platinum coin is deposited, it will increase government's account balance by one trillion dollars, which can then spent in the economy like any other dollar. The newly issued money will increase the total circulating supply of US dollar, diluting its unit value.
That's not at all how this works.

Treasury mints the coin.

Treasury trades the coin to the Federal Reserve for existing bonds the Fed already owns.

Treasury retires the bonds which keeps the US under the statutory debt limit.

The coin isn't "spent in the economy".

It's just an exchange of assets among government departments.

Zero new money circulates in the economy.

How are they going to keep spending then? That's why they need to raise the debt limit in the first place. If they retire their old debt, they would have to issue new debt. In both cases the end result is the same; new money in circulation, and the Fed has platinum coins instead of government bonds.
Capitalism, communism, democracy, authoritarianism, if the money is fake, the votes are rigged, and the leaders are little more than front men, is there any difference?
There is no difference. There is no difference whether you are alive or dead. If you are dead you wouldn't know it. See, fatalism and moral ambiguity works in all different ways. Fun!
Parker: A trillion dollar coin isn't cool. You know what's cool? A quadrillion dollar coin.
Why do they need that coin to raise their dept limit?

Who gets the coin?

Not sure why your being downvoted. Nothing about this makes any sense, I don’t think your questions have obvious answers unless you already knew how it works.
They don't need the coin to raise the debt limit. They need the coin to get around the failure to raise the debt limit.

The coin goes to the Federal Reserve, the government's bank. Then the government has money on deposit at the bank, and can write checks for the things that the Congress has already budgeted.

Ordinarily they would just sell bonds to the Federal Reserve, which is exactly the same thing. There's a law preventing them from doing that above the authorized debt limit. But there's another law allowing them to mint coins -- which are the same thing, except made out of metal.

It would be much easier if Congress would just allow them to borrow the money to spend on the things Congress already ordered them to do. But as a matter of political grandstanding, parts of Congress are standing on the rules... so the President will stand on different rules.

What happens if someone steals this coin?
Not much. Since it's unique, how would you profit from that theft without being provably in receipt of stolen goods?
Obviously this is absurd, but the Treasury doing absurd things with loopholes is not new. Example: the $100 United States Notes.

Before all paper money became Federal Reserve Notes, some was legally required to be "United States Notes", which were direct obligations of the US Treasury (as opposed to coming from the Federal Reserve system). Before the 1970s $2s and $5s were issued as USNs, with a red seal instead of the green seal of FRNs (or the blue seal of Silver Certificates, which had a slightly different legal authorization and obligation). When the concept of redeeming paper money for silver ended in the 1960s, USNs became irrelevant, and the $2 and $5 USNs were pulled from circulation and eventually reissued as FRNs. But the treasury still had the legal requirement to circulate a certain dollar amount in USNs. So they printed up a bunch of $100 USNs, stuck them in boxes, and occasionally carted them around between different bank vaults, which technically met the definition of "circulate". This went on until 1994, when Congress finally repealed the law requiring the USN circulation.

https://en.wikipedia.org/wiki/United_States_Note

> Obviously this is absurd

Default seems a bit more absurd. Gotta keep the machine running one way or another.

> Obviously this is absurd

What's even more absurd is that Congress can approve trillions in tax cuts and new spending over the last four years, and then just refuse to pay for what they already approved.

Well, and in the same vein, that Congress has essentially become a zero-sum game, where one party attempts to cut taxes, slash regulation, and prevent the government from paying for anything except for a larger military. The idea that the government doing anything except for defending the country is socialism is patently absurd, and the fact that so-called respectable people, in large numbers, keep parroting the idea is toxic for democracy.

Marco Rubio, for instance, has called Biden's policy agenda Marxist -- this coming from a man who has spent his political career agitating against normalizing diplomatic relations with Cuba. Conflating the two makes Cuba's government look more benign than it is, and makes the American government look more extreme than it is.

The other funny thing about this whole thing, is... who gets that coin after it's printed?

We're literally giving it to China. I mean you don't create a coin without having someone to give it to.

A trillion-dollar coin is 'magical thinking'. It doesn't get past the problems of having exploding debt and no way to fix it. Otherwise known as 'Kicking the can down the road."

All of these smart-ass solutions are leading inexorably to a lack of confidence by the world in the US Dollar. When that happens, you can produce billions of these 'Trillion-Dollar Coins' and it won't make the slightest bit of difference in the 'New Zimbabwe' currency.

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