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Debt Ceiling Debacle 2013: It's the End of the World As We Know It and the GOP Feels Fine

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Posts

  • tbloxhamtbloxham Registered User regular
    Were going over the ceiling by ~1 trillion, and the plan is to cover for ~1 trillion, so essentially just this budget. So 1 year. right?

    And we can technicly keep doing it as long there is bonds to exchange it for, right? I dont get how we figure out our quantity/quality of bonds though.

    Obama decrees that a billion dollar coin now exists.
    He places the coin in the bank.
    The bank borrows against the value of the coin, which is backed by the value of the US economy
    The bank releases the borrowed money to Obama to spend.

    The coin has no real effect on anything. It's not inflationary and has no effect on the US economy, beyond what just borrowing the money based DIRECTLY on the value of the US economy would. It just gets around the debt ceiling.

    "That is cool" - Abraham Lincoln
  • FeralFeral MEMETICHARIZARD along with you if I get drunk well I know I'm gonna be gonna be the man whoRegistered User regular
    Henroid wrote: »
    The second sanest is that, using a trick of the law that lets the treasury mint platinum coins of any denomination, we just bring out a trillion dollar coin, stick it in an account, and pretend that this all makes sense.

    ... man what. Isn't this the "print more money" solution which fucks the value of the currency?

    In short, no.

    Because it never enters circulation, it only creates as much inflation as taking out the loans would create anyway. Ronya has a post that I'm too lazy to dig for in the other thread.

    Okay, every time I think I have a handle on this, I end up reading something that gives me a moment of doubt. This is how I understand it, and somebody can tell me if I'm wrong:

    First option: increase the debt ceiling and take out loans to pay for budgetary commitments. Eventually, we have to pay those loans back, which means either increasing revenue (which reduces the nominal amount of currency in the public sphere by collecting it as taxes) or decreasing expenditures (which reduces the nominal amount of currency entering the public sphere from the government).

    Second option: $1T coin. While this does not immediately impact the value of currency because it doesn't circulate, it eliminates the need to either tax $1T+interest of currency or eliminate $1T+interest of spending.

    Over the long term, the second option results in currency of lower real value than the first option.

    Am I wrong? And if so, how am I wrong?

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch man" fallacy.
  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    Feral wrote: »
    Henroid wrote: »
    The second sanest is that, using a trick of the law that lets the treasury mint platinum coins of any denomination, we just bring out a trillion dollar coin, stick it in an account, and pretend that this all makes sense.

    ... man what. Isn't this the "print more money" solution which fucks the value of the currency?

    In short, no.

    Because it never enters circulation, it only creates as much inflation as taking out the loans would create anyway. Ronya has a post that I'm too lazy to dig for in the other thread.

    Okay, every time I think I have a handle on this, I end up reading something that gives me a moment of doubt. This is how I understand it, and somebody can tell me if I'm wrong:

    First option: increase the debt ceiling and take out loans to pay for budgetary commitments. Eventually, we have to pay those loans back, which means either increasing revenue (which reduces the nominal amount of currency in the public sphere by collecting it as taxes) or decreasing expenditures (which reduces the nominal amount of currency entering the public sphere from the government).

    Second option: $1T coin. While this does not immediately impact the value of currency because it doesn't circulate, it eliminates the need to either tax $1T+interest of currency or eliminate $1T+interest of spending.

    Over the long term, the second option results in currency of lower real value than the first option.

    Am I wrong? And if so, how am I wrong?
    Krugster wrote:
    In case you’re wondering, no, this wouldn’t be an inflationary exercise in printing money. Aside from the fact that printing money isn’t inflationary under current conditions, the Fed could and would offset the Treasury’s cash withdrawals by selling other assets or borrowing more from banks, so that in reality the U.S. government as a whole (which includes the Fed) would continue to engage in normal borrowing. Basically, this would just be an accounting trick, but that’s a good thing. The debt ceiling is a case of accounting nonsense gone malignant; using an accounting trick to negate it is entirely appropriate.

    Lh96QHG.png
  • ronyaronya Arrrrrf. the ivory tower's basementRegistered User regular
    because the Fed only has so many substitute Treasuries to issue on the Treasury's behalf, so the accounting dodge only extends that far

    here's another (fundamentally identical) perspective: the Fed holds a lot of Treasuries just to gain traction, and we're telling it: okay, hold these identically-valued substitutes instead while we use the Treasuries you're holding to meet this other purpose instead.

    but the Fed can't hold negative Treasuries - so eventually you run out. In any case, the Fed wants to hold valuable assets to gain this traction, and if you were issuing this many, it might not even want hold any Treasuries or substitute Treasury liabilities.

    aRkpc.gif
    spacekungfuman
  • nexuscrawlernexuscrawler Registered User regular
    So the short version would be it's different because as opposed to the Treasury dept directly issuing Treasuries the coin fucks with the Feds balance sheet?

  • TejsTejs Registered User regular
    Ok, I'm not an economist, so I come here seeking knowledge:

    1) How is the US debt structured? When someone says most of america's debt is held by america, that doesn't make sense. Why can't we just forgive our own debt to ourselves and greatly reduce the debt? The only thing that has ever made sense is when someone explained it as:

    - America (Government) has issued bonds to America (citizens) with an offer to repay the bond with money plus some interest in exchange for your money now. So the debt is mostly this obligation to repay these bonds in the future? So "forgiving" the debt just screws the people holding the bonds?

    2) The process of "borrowing" more debt is just issuing more bonds, yes? Or do we print money as a "loan" to ourselves, with the idea that we reduce circulation at some point in the future to "payback" that loan?

    3) So defaulting on the loan is basically like "forgiving" those bonds?

  • FeralFeral MEMETICHARIZARD along with you if I get drunk well I know I'm gonna be gonna be the man whoRegistered User regular
    Feral wrote: »
    Henroid wrote: »
    The second sanest is that, using a trick of the law that lets the treasury mint platinum coins of any denomination, we just bring out a trillion dollar coin, stick it in an account, and pretend that this all makes sense.

    ... man what. Isn't this the "print more money" solution which fucks the value of the currency?

    In short, no.

    Because it never enters circulation, it only creates as much inflation as taking out the loans would create anyway. Ronya has a post that I'm too lazy to dig for in the other thread.

    Okay, every time I think I have a handle on this, I end up reading something that gives me a moment of doubt. This is how I understand it, and somebody can tell me if I'm wrong:

    First option: increase the debt ceiling and take out loans to pay for budgetary commitments. Eventually, we have to pay those loans back, which means either increasing revenue (which reduces the nominal amount of currency in the public sphere by collecting it as taxes) or decreasing expenditures (which reduces the nominal amount of currency entering the public sphere from the government).

    Second option: $1T coin. While this does not immediately impact the value of currency because it doesn't circulate, it eliminates the need to either tax $1T+interest of currency or eliminate $1T+interest of spending.

    Over the long term, the second option results in currency of lower real value than the first option.

    Am I wrong? And if so, how am I wrong?
    Krugster wrote:
    In case you’re wondering, no, this wouldn’t be an inflationary exercise in printing money. Aside from the fact that printing money isn’t inflationary under current conditions, the Fed could and would offset the Treasury’s cash withdrawals by selling other assets or borrowing more from banks, so that in reality the U.S. government as a whole (which includes the Fed) would continue to engage in normal borrowing. Basically, this would just be an accounting trick, but that’s a good thing. The debt ceiling is a case of accounting nonsense gone malignant; using an accounting trick to negate it is entirely appropriate.

    Assume that I don't take what Krugman says on face value.

    Why wouldn't selling assets or borrowing more from banks (the bolded text) result in less currency circulating over the long term than the $1T coin option?

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch man" fallacy.
  • ronyaronya Arrrrrf. the ivory tower's basementRegistered User regular
    edited January 2013
    Feral wrote: »
    Henroid wrote: »
    The second sanest is that, using a trick of the law that lets the treasury mint platinum coins of any denomination, we just bring out a trillion dollar coin, stick it in an account, and pretend that this all makes sense.

    ... man what. Isn't this the "print more money" solution which fucks the value of the currency?

    In short, no.

    Because it never enters circulation, it only creates as much inflation as taking out the loans would create anyway. Ronya has a post that I'm too lazy to dig for in the other thread.

    Okay, every time I think I have a handle on this, I end up reading something that gives me a moment of doubt. This is how I understand it, and somebody can tell me if I'm wrong:

    First option: increase the debt ceiling and take out loans to pay for budgetary commitments. Eventually, we have to pay those loans back, which means either increasing revenue (which reduces the nominal amount of currency in the public sphere by collecting it as taxes) or decreasing expenditures (which reduces the nominal amount of currency entering the public sphere from the government).

    Second option: $1T coin. While this does not immediately impact the value of currency because it doesn't circulate, it eliminates the need to either tax $1T+interest of currency or eliminate $1T+interest of spending.

    Over the long term, the second option results in currency of lower real value than the first option.

    Am I wrong? And if so, how am I wrong?

    no; if the $1T coin is not circulated, it cannot be used to claim anything worth $1T, so Bernanke will still be tapping his foot waiting for Sec. Geithner to cough up something that can. Technically the $1T would be legal tender, but instead it'll be treated as a debt the Treasury owes to the Fed. It eliminates the need to issue Treasuries above the amount that can be legally issued, because instead you issue Treasuries to the limit, plus coin, and then the Fed takes the coin and releases its own Treasuries that it already holds, and sits on the substitute liability (the coin). But you would still have any deficit problems you started with.

    It's identical as if the Treasury said: okay, well, the debt ceiling says we can't sell any more Treasuries. But we'll sell these Geithneries stamped with Geithner's face, combined with a promise to buy them back with the stated amount of USD later. But wait, these would legally be recognized as debts! So let's issue coins instead, since a promise to swap legal tender for an equal value of legal tender isn't "debt", since any "debt" would've been extinguished by the legal tender. That's what legal tender does.

    Now if the coin circulated, and the Fed ran out of assets to sell to sterilize it, then you would have inflationary pressure.

    ronya on
    aRkpc.gif
  • override367override367 ALL minions Registered User regular
    Honestly how bad would a trillion in circulation even hurt?

    I don't see that it would have any serious impact on inflation in this environment, not that they'd ever do that

  • enlightenedbumenlightenedbum Registered User regular
    Tejs wrote: »
    Ok, I'm not an economist, so I come here seeking knowledge:

    1) How is the US debt structured? When someone says most of america's debt is held by america, that doesn't make sense. Why can't we just forgive our own debt to ourselves and greatly reduce the debt? The only thing that has ever made sense is when someone explained it as:

    - America (Government) has issued bonds to America (citizens) with an offer to repay the bond with money plus some interest in exchange for your money now. So the debt is mostly this obligation to repay these bonds in the future? So "forgiving" the debt just screws the people holding the bonds?

    2) The process of "borrowing" more debt is just issuing more bonds, yes? Or do we print money as a "loan" to ourselves, with the idea that we reduce circulation at some point in the future to "payback" that loan?

    3) So defaulting on the loan is basically like "forgiving" those bonds?

    Much of the money the US government owes itself is more accurately owed to Social Security. If you forgive it, you have a lot of poor old people suddenly starving. Good times.

    Herbert Hoover got 40% of the vote in 1932. Friendly reminder.
    Warren 2020
  • FeralFeral MEMETICHARIZARD along with you if I get drunk well I know I'm gonna be gonna be the man whoRegistered User regular
    edited January 2013
    ronya wrote: »
    if the $1T coin is not circulated, it cannot be used to claim anything worth $1T, so Bernanke will still be tapping his foot waiting for Sec. Geithner to cough up something that can. Technically the $1T would be legal tender, but instead it'll be treated as a debt the Treasury owes to the Fed. It eliminates the need to issue Treasuries above the amount that can be legally issued, because instead you issue Treasuries to the limit, plus coin, and then the Fed takes the coin and releases its own Treasuries that it already holds, and sits on the substitute liability (the coin). But you would still have any deficit problems you started with.

    Now if the coin circulated, and the Fed ran out of assets to sell to sterilize it, then you would have inflationary pressure.

    Ding! Light bulb! I am illuminated. Thanks, ronya!

    Feral on
    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch man" fallacy.
    Tiger BurningCommunistCowTheBlackWind
  • FeralFeral MEMETICHARIZARD along with you if I get drunk well I know I'm gonna be gonna be the man whoRegistered User regular
    So, I was just a little bit off, but I wasn't crazy, right?

    every person who doesn't like an acquired taste always seems to think everyone who likes it is faking it. it should be an official fallacy.
    the "no true scotch man" fallacy.
  • CantelopeCantelope Registered User regular
    Tejs wrote: »
    Ok, I'm not an economist, so I come here seeking knowledge:

    1) How is the US debt structured? When someone says most of america's debt is held by america, that doesn't make sense. Why can't we just forgive our own debt to ourselves and greatly reduce the debt? The only thing that has ever made sense is when someone explained it as:

    - America (Government) has issued bonds to America (citizens) with an offer to repay the bond with money plus some interest in exchange for your money now. So the debt is mostly this obligation to repay these bonds in the future? So "forgiving" the debt just screws the people holding the bonds?

    2) The process of "borrowing" more debt is just issuing more bonds, yes? Or do we print money as a "loan" to ourselves, with the idea that we reduce circulation at some point in the future to "payback" that loan?

    3) So defaulting on the loan is basically like "forgiving" those bonds?

    The important point is that because it's owed to Americans it's denominated in US currency, of which more can be printed. Most of the big problems with debt that wreck your economy are due to having large amounts of debt denominated in a foreign currency. Basically, if you owe most of the money in a foreign denomination their currency becomes worth far more (or yours becomes far less) it changes what debt is worth. In some cases this makes it literally impossible to pay back your debt, which is generally what people are really afraid of.


    If your debt is in a foreign denominated currency and shenanigans happens to your economy, you may be unable to pay it. That will never happen with your own currency. It's not that the government would just print crazy amounts of extra currency, it's that it has the power to pay it back.

  • nexuscrawlernexuscrawler Registered User regular
    Cantelope wrote: »
    Tejs wrote: »
    Ok, I'm not an economist, so I come here seeking knowledge:

    1) How is the US debt structured? When someone says most of america's debt is held by america, that doesn't make sense. Why can't we just forgive our own debt to ourselves and greatly reduce the debt? The only thing that has ever made sense is when someone explained it as:

    - America (Government) has issued bonds to America (citizens) with an offer to repay the bond with money plus some interest in exchange for your money now. So the debt is mostly this obligation to repay these bonds in the future? So "forgiving" the debt just screws the people holding the bonds?

    2) The process of "borrowing" more debt is just issuing more bonds, yes? Or do we print money as a "loan" to ourselves, with the idea that we reduce circulation at some point in the future to "payback" that loan?

    3) So defaulting on the loan is basically like "forgiving" those bonds?

    The important point is that because it's owed to Americans it's denominated in US currency, of which more can be printed. Most of the big problems with debt that wreck your economy are due to having large amounts of debt denominated in a foreign currency. Basically, if you owe most of the money in a foreign denomination their currency becomes worth far more (or yours becomes far less) it changes what debt is worth. In some cases this makes it literally impossible to pay back your debt, which is generally what people are really afraid of.


    If your debt is in a foreign denominated currency and shenanigans happens to your economy, you may be unable to pay it. That will never happen with your own currency. It's not that the government would just print crazy amounts of extra currency, it's that it has the power to pay it back.

    One of the reasons I gather Weimar Germany's had hyper inflation. One of the stipulations of their war reparations was the debt had to be paid in foreign currency.

  • ronyaronya Arrrrrf. the ivory tower's basementRegistered User regular
    edited January 2013
    conflating three issues there

    one is that you don't want to wind up with "too much" foreign-denominated liabilities because it exposes you to temporary panics. Denominating in your own currency gives you the ability to suppress temporary panics. If the panic isn't temporary, this doesn't save you - you would have to engage in hyperinflationary accelerating purchase of forex to clear out those liabilities. This is not a situation really relevant to the US.

    two is that owing a lot of foreigners, even in domestically-denominated liabilities, exposes you to some peculiar political constraints. This is what American commentators are generally concerned with. Devaluation here wold be identical, in economic effect, to the outcomes of devaluing upon domestic holders - but now many of the holders might get mad enough to affect your geopolitical interests.

    three is dealing with accounting fictions where some part of your government "owes" another part of the government stuff; this is most famous with regards to the Social Security Trust Fund. The extent to which one agency sits at surplus would be the extent to which the other sits at deficit, but what we care about is their combined solvency, so the "deficit" may be illusory.

    ronya on
    aRkpc.gif
  • V1mV1m Registered User regular
    V1m wrote: »
    No I mean by minting 100 such coins, the possibility of using the debt ceiling as a wedge is utterly removed for the forseeable future instead of for a year or two. It will no longer be an issue.

    Well you can't literally do a 100 of them, and really if you start doing it too much you WILL cause inflation we don't want.

    It's one and done.

    How will 100 cause inflation if 1 wont?

    The thing is, it's quite easy to conceive of the US govt spending an extra trillion and then being right back in this mess a couple of years down the line. Make 100 - or a 1000, and that's it, the issue has been negated for the indefinite future, and we have to have a sensible conversation about it rather than dealing with hostage-takers.

  • V1mV1m Registered User regular
    V1m wrote: »
    No I mean by minting 100 such coins, the possibility of using the debt ceiling as a wedge is utterly removed for the forseeable future instead of for a year or two. It will no longer be an issue.

    Well you can't literally do a 100 of them, and really if you start doing it too much you WILL cause inflation we don't want.

    It's one and done.

    Why would it cause inflation if none of those coins enter circulation?

    Because the coins *do* cause inflation, but it's about equal to increasing the debt ceiling. If it's just once, that's not so bad. If it is 100 trillion or a reasonable number, things start getting tricky.

    And the more we lean on it, the more the world is going to start looking for a different reserve currency.

    Which would be pretty bad for the dollar.

    Only insofar as they're actually used.

    Moridin889
  • override367override367 ALL minions Registered User regular
    V1m wrote: »
    V1m wrote: »
    No I mean by minting 100 such coins, the possibility of using the debt ceiling as a wedge is utterly removed for the forseeable future instead of for a year or two. It will no longer be an issue.

    Well you can't literally do a 100 of them, and really if you start doing it too much you WILL cause inflation we don't want.

    It's one and done.

    How will 100 cause inflation if 1 wont?

    The thing is, it's quite easy to conceive of the US govt spending an extra trillion and then being right back in this mess a couple of years down the line. Make 100 - or a 1000, and that's it, the issue has been negated for the indefinite future, and we have to have a sensible conversation about it rather than dealing with hostage-takers.

    there are lots of reasons but the fed wouldn't stand for it being one

  • JuliusJulius Registered User regular
    Tejs wrote: »
    Ok, I'm not an economist, so I come here seeking knowledge:

    1) How is the US debt structured? When someone says most of america's debt is held by america, that doesn't make sense. Why can't we just forgive our own debt to ourselves and greatly reduce the debt? The only thing that has ever made sense is when someone explained it as:

    - America (Government) has issued bonds to America (citizens) with an offer to repay the bond with money plus some interest in exchange for your money now. So the debt is mostly this obligation to repay these bonds in the future? So "forgiving" the debt just screws the people holding the bonds?

    Well not just citizens, but mostly you're correct. They can't really be forgiven though, they're legal obligations to pay back within a time-frame. At the moment paying back is absolutely no problem for the government and some economists even argue that trying to reduce debt is a bad thing at the moment.

    2) The process of "borrowing" more debt is just issuing more bonds, yes? Or do we print money as a "loan" to ourselves, with the idea that we reduce circulation at some point in the future to "payback" that loan?
    It's the Fed that prints the money. The treasury issues bonds and that is what the debt is.

  • V1mV1m Registered User regular
    Tejs wrote: »
    Ok, I'm not an economist, so I come here seeking knowledge:

    1) How is the US debt structured? When someone says most of america's debt is held by america, that doesn't make sense. Why can't we just forgive our own debt to ourselves and greatly reduce the debt? The only thing that has ever made sense is when someone explained it as:

    - America (Government) has issued bonds to America (citizens) with an offer to repay the bond with money plus some interest in exchange for your money now. So the debt is mostly this obligation to repay these bonds in the future? So "forgiving" the debt just screws the people holding the bonds?

    2) The process of "borrowing" more debt is just issuing more bonds, yes? Or do we print money as a "loan" to ourselves, with the idea that we reduce circulation at some point in the future to "payback" that loan?

    3) So defaulting on the loan is basically like "forgiving" those bonds?

    Much of the money the US government owes itself is more accurately owed to Social Security. If you forgive it, you have a lot of poor old people suddenly starving. Good times.

    And then once they've all died off, good times? Debts wiped out, deficits reduced, house prices fall, assets released, savings spent and many fewer racist, sexist conservatives (demographically).

    Gentlemen, the solution is obvious and we have @enlightenedbum to thank for it.

  • override367override367 ALL minions Registered User regular
    I was under the impression pretty much every economist thought that austerity was bad when in a slump, not just some of them

  • enlightenedbumenlightenedbum Registered User regular
    I was under the impression pretty much every economist thought that austerity was bad when in a slump, not just some of them

    The ones not captured by elites who pay them a lot of money to have different opinions, basically. Or the ones at the IMF before like Monday.

    Herbert Hoover got 40% of the vote in 1932. Friendly reminder.
    Warren 2020
  • ronyaronya Arrrrrf. the ivory tower's basementRegistered User regular
    I was under the impression pretty much every economist thought that austerity was bad when in a slump, not just some of them

    this is indeed the consensus

    technically the US is no longer in recession, of course, so 1937 instincts are in full sway

    aRkpc.gif
  • JuliusJulius Registered User regular
    V1m wrote: »
    V1m wrote: »
    No I mean by minting 100 such coins, the possibility of using the debt ceiling as a wedge is utterly removed for the forseeable future instead of for a year or two. It will no longer be an issue.

    Well you can't literally do a 100 of them, and really if you start doing it too much you WILL cause inflation we don't want.

    It's one and done.

    How will 100 cause inflation if 1 wont?

    The thing is, it's quite easy to conceive of the US govt spending an extra trillion and then being right back in this mess a couple of years down the line. Make 100 - or a 1000, and that's it, the issue has been negated for the indefinite future, and we have to have a sensible conversation about it rather than dealing with hostage-takers.

    there are lots of reasons but the fed wouldn't stand for it being one

    Yes. The important point here is that the Fed has to accept the coin as valid. They're not obligated to do so.

    And the coin is a trick. The Fed will accept it because it understands it will eventually be bought back, but they can't use it. So they can't take more coins than the public debt held by the government (otherwise they'd have to put them in circulation, causing inflation). And they won't want even that many coins.

  • DarkewolfeDarkewolfe Registered User regular
    edited January 2013
    The reason this can't be a sustained solution is simply that it's indicative that we are no longer capable of governing ourselves through our legislative branch. If we have completely lost the ability to make any meaningful budget decisions in Congress, it'll be an absolutely clear indicator that the U.S. economy is not a long-term bet. That's also a big part of why the coin is something we should fucking avoid. If it is literally impossible to get even the most fundamental thing passed in Congress with an absolute deadline, to the point where we have to completely circumvent the UNWRITTEN parts of the system of law we've set for ourselves, we can see the end from where we stand.

    Which isn't to say one use of the coin will be the end. Sure as fuck will be embarrassing, though, and I say this knowing how badly we've been embarrassing ourselves lately on all fronts.

    Darkewolfe on
    What is this I don't even.
  • ronyaronya Arrrrrf. the ivory tower's basementRegistered User regular
    Feral wrote: »
    So, I was just a little bit off, but I wasn't crazy, right?

    Close; I would emphasize that it's an accounting dodge to simulate lifting the debt ceiling. There is no long-run inflationary pressure as long the Fed can keep selling Treasuries.

    aRkpc.gif
  • Knight_Knight_ Dead Dead Dead Registered User regular
    Darkewolfe wrote: »
    The reason this can't be a sustained solution is simply that it's indicative that we are no longer capable of governing ourselves through our legislative branch. If we have completely lost the ability to make any meaningful budget decisions in Congress, it'll be an absolutely clear indicator that the U.S. economy is not a long-term bet. That's also a big part of why the coin is something we should fucking avoid. If it is literally impossible to get even the most fundamental thing passed in Congress with an absolute deadline, to the point where we have to completely circumvent the UNWRITTEN parts of the system of law we've set for ourselves, we can see the end from where we stand.

    Which isn't to say one use of the coin will be the end. Sure as fuck will be embarrassing, though, and I say this knowing how badly we've been embarrassing ourselves lately on all fronts.

    Honestly, if the Treasury mints the coin, congress will probably fall all over itself to fix the coin problem and the debt ceiling problem, as leaving it as is would increase the power of the executive.

    But then, the Tea Party really really wants to watch the world burn at this point. I dunno, I almost feel sorry for the republicans in congress that are just regular crazy. Some shit should not be fucked with, and the full faith and credit of the United States of America is basically 1 A on that list.

    aeNqQM9.jpg
    fugacity
  • zagdrobzagdrob Registered User regular
    As much as I would love to see Obama mint the coin and watch the GOP blow the fuck up, if it happens we lose.

    The coin is rhetoric. It's Obama telling the GOP 'if you don't behave, I'm cancelling Christmas for EVERYONE'.

    He doesn't want to do it. But do you really want to be the ones who put him on the spot and ruined Christmas?

    No, so do your fucking jobs and raise the debt ceiling.

  • ronyaronya Arrrrrf. the ivory tower's basementRegistered User regular
    Darkewolfe wrote: »
    The reason this can't be a sustained solution is simply that it's indicative that we are no longer capable of governing ourselves through our legislative branch. If we have completely lost the ability to make any meaningful budget decisions in Congress, it'll be an absolutely clear indicator that the U.S. economy is not a long-term bet. That's also a big part of why the coin is something we should fucking avoid. If it is literally impossible to get even the most fundamental thing passed in Congress with an absolute deadline, to the point where we have to completely circumvent the UNWRITTEN parts of the system of law we've set for ourselves, we can see the end from where we stand.

    Which isn't to say one use of the coin will be the end. Sure as fuck will be embarrassing, though, and I say this knowing how badly we've been embarrassing ourselves lately on all fronts.

    ...

    The US already has a tremendous history of foisting staggeringly important decisions onto accounting trickery and technical maneuvers. It is well known, for instance, the the Federal Reserve cannot meet its dual mandate, which gives the FRB discretion over what to pursue. Every other developed Western state has their monetary policy objective explicitly specified by legislation; the US is the sole exception because nobody trusts Congress to be reasonable about it.

    Or the "doc fix", which solely exists to make revenue projections look better.

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  • AtomikaAtomika A joke hole just for fartsRegistered User regular
    Knight_ wrote: »
    Honestly, if the Treasury mints the coin, congress will probably fall all over itself to fix the coin problem and the debt ceiling problem, as leaving it as is would increase the power of the executive.

    But then, the Tea Party really really wants to watch the world burn at this point. I dunno, I almost feel sorry for the republicans in congress that are just regular crazy. Some shit should not be fucked with, and the full faith and credit of the United States of America is basically 1 A on that list.

    I'm pretty sure the GOP's only strategy at this point is forcing Obama's hand into proposing or enacting extreme legislation just so they can point out how extreme he's become.

  • Knight_Knight_ Dead Dead Dead Registered User regular
    Knight_ wrote: »
    Honestly, if the Treasury mints the coin, congress will probably fall all over itself to fix the coin problem and the debt ceiling problem, as leaving it as is would increase the power of the executive.

    But then, the Tea Party really really wants to watch the world burn at this point. I dunno, I almost feel sorry for the republicans in congress that are just regular crazy. Some shit should not be fucked with, and the full faith and credit of the United States of America is basically 1 A on that list.

    I'm pretty sure the GOP's only strategy at this point is forcing Obama's hand into proposing or enacting extreme legislation just so they can point out how extreme he's become.

    Nod, they're probably hoping for some sort of perceived power grab like a unilateral raise of the debt ceiling or equivalent measures such that they can point and shout "SEE!"

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  • CommunistCowCommunistCow Registered User regular
    You can wait as long as you like, a limited nuclear exchange does not necessitate a world war.

    A default of American debt means the collapse of the dollar, a global depression at least as deep as the 1930s, and a rush to find a replacement world currency which does not currently exist.

    Not to mention the likely military conflicts that would arise from this crisis.

    I know it is a favorite passtime of yours to try to undercut the idea of American hegemony, but the facts aren't with you here.

    Or you're being far too caught up in the logistics of nuclear war.

    Ignorant question time. Is there some reason the Euro wouldn't be the next logical currency to move to? Would the Greek and Spain shenanigans be enough to make it not a viable option?

    No, I am not really communist. Yes, it is weird that I use this name.
  • DiannaoChongDiannaoChong Registered User regular
    edited January 2013
    Julius wrote: »
    V1m wrote: »
    V1m wrote: »
    No I mean by minting 100 such coins, the possibility of using the debt ceiling as a wedge is utterly removed for the forseeable future instead of for a year or two. It will no longer be an issue.

    Well you can't literally do a 100 of them, and really if you start doing it too much you WILL cause inflation we don't want.

    It's one and done.

    How will 100 cause inflation if 1 wont?

    The thing is, it's quite easy to conceive of the US govt spending an extra trillion and then being right back in this mess a couple of years down the line. Make 100 - or a 1000, and that's it, the issue has been negated for the indefinite future, and we have to have a sensible conversation about it rather than dealing with hostage-takers.

    there are lots of reasons but the fed wouldn't stand for it being one

    Yes. The important point here is that the Fed has to accept the coin as valid. They're not obligated to do so.

    And the coin is a trick. The Fed will accept it because it understands it will eventually be bought back, but they can't use it. So they can't take more coins than the public debt held by the government (otherwise they'd have to put them in circulation, causing inflation). And they won't want even that many coins.

    Ok so back to what I was saying, the public debt is the limit that we could do this for theorectically, or am I still off base on the why we can trade the coin for creating a gap in debt to pay back up to 1 trillion towards the debt ceiling again. and eventually we have to work it back, as if it were debt/bonds itself/themself(hense the clean trade), right?

    Sorry if I am dense, I get the premise of how it works, just not where the worth is coming from that is getting traded for the coin, and the limitations. I understand the coins aren't inflating the economy and arent in circulation and its just a workaround. I am just curious about the mechanics.

    DiannaoChong on
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  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    You can wait as long as you like, a limited nuclear exchange does not necessitate a world war.

    A default of American debt means the collapse of the dollar, a global depression at least as deep as the 1930s, and a rush to find a replacement world currency which does not currently exist.

    Not to mention the likely military conflicts that would arise from this crisis.

    I know it is a favorite passtime of yours to try to undercut the idea of American hegemony, but the facts aren't with you here.

    Or you're being far too caught up in the logistics of nuclear war.

    Ignorant question time. Is there some reason the Euro wouldn't be the next logical currency to move to? Would the Greek and Spain shenanigans be enough to make it not a viable option?

    Short answer: yes.

    Long answer that's full of some conjecture which I'm sure Ronya will yell at me for: I have my doubts as to whether the Eurozone is even going to exist in ten years.

    It certainly won't in its current form.

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  • MagicPrimeMagicPrime FiresideWizard Registered User regular
    edited January 2013
    So let me get this straight.

    The Trillion Platinum Coin is like some kind of Financial Spirit Bomb. Where it gives the fed the catalyst to combine smaller numerous assets into something that can destroy evil?

    goku_coin.png

    MagicPrime on
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  • override367override367 ALL minions Registered User regular
    edited January 2013
    You can wait as long as you like, a limited nuclear exchange does not necessitate a world war.

    A default of American debt means the collapse of the dollar, a global depression at least as deep as the 1930s, and a rush to find a replacement world currency which does not currently exist.

    Not to mention the likely military conflicts that would arise from this crisis.

    I know it is a favorite passtime of yours to try to undercut the idea of American hegemony, but the facts aren't with you here.

    Or you're being far too caught up in the logistics of nuclear war.

    Ignorant question time. Is there some reason the Euro wouldn't be the next logical currency to move to? Would the Greek and Spain shenanigans be enough to make it not a viable option?

    The Euro is currently in the midst of its own little crisis, it's sitting kind of close to the ledge

    If the dollar drunkenly goes off the ledge, it's going to take the euro (and yuan and god knows what else) over the ledge with it.

    it's hard to overstate exactly how damaging this would be to the global economy and global trade

    override367 on
  • TheCanManTheCanMan Registered User regular
    You can wait as long as you like, a limited nuclear exchange does not necessitate a world war.

    A default of American debt means the collapse of the dollar, a global depression at least as deep as the 1930s, and a rush to find a replacement world currency which does not currently exist.

    Not to mention the likely military conflicts that would arise from this crisis.

    I know it is a favorite passtime of yours to try to undercut the idea of American hegemony, but the facts aren't with you here.

    Or you're being far too caught up in the logistics of nuclear war.

    Ignorant question time. Is there some reason the Euro wouldn't be the next logical currency to move to? Would the Greek and Spain shenanigans be enough to make it not a viable option?

    The Euro is currently in the midst of its own little crisis, it's sitting kind of close to the ledge

    If the dollar drunkenly goes off the ledge, it's going to take the euro (and yuan and god knows what else) over the ledge with it.

    Yeah, that's the real key. In order to find a replacement for the USD as the world's currency, you need to find someone else's currency that wasn't obliterated when the dollar shit the bed. Good luck with that.

  • TheBlackWindTheBlackWind Registered User regular
    I actually have a question regarding the "opportuni-Tea Party" link. Some GOP legislators have talked about initiating a partial government shutdown over the debt ceiling fight, but like, I don't really see how. Default is default, right?

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  • AManFromEarthAManFromEarth Let's get to twerk! The King in the SwampRegistered User regular
    I actually have a question regarding the "opportuni-Tea Party" link. Some GOP legislators have talked about initiating a partial government shutdown over the debt ceiling fight, but like, I don't really see how. Default is default, right?

    Sort of. We will have enough tax revenue to keep a limited number of programs running OR pay our debt down.

    But basically anyone saying that is a damn fool and need to be voted out of office ASAP.

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  • zagdrobzagdrob Registered User regular
    So I just had a terrifying thought.

    If we hit the ceiling and the dollar crashes, bringing along all the other currencies...does this mean the gold bugs were right all along?

    I don't know if I can accept that. For some reason, that terrifies me as much as the crash itself.

    AManFromEarthKnight_tuxkamen
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