WHITE HOUSE WON’T RULE THEM OUT
We love a good conspiracy theory around here, but when we were first alerted to the “trillion dollar coin” scandal we assumed it was nothing but fringe chatter. And that’s saying something considering this website is also “fringe chatter” (for the most part).
Within the last few days, though, this issue has moved squarely into the mainstream of political discourse – and with good reason. “Trillion dollar coins” – a.k.a. currency minted and deposited in the Federal Reserve for the sole purpose of artificially raising the nation’s borrowing limit – are no joke. In fact if U.S. President Barack Obama doesn’t pipe up soon and rule out them out as an option in the upcoming debt ceiling debate, our nation could be facing a major constitutional and monetary crisis.
Our friend Ralph Benko – a sound money proponent who has published several pieces here on FITS – was among the first to sound the alarm on this issue. We spoke with him earlier this week in an effort to figure out what was going on.
“Some left wing nuts discovered a loophole in the law that let’s Treasury mint platinum coins with an arbitrary face value,” Benko explained to us. “(These) lefties decided that if they minted two of them and deposited them with the Fed they could end run the debt limit. Paul Krugman has endorsed. Jay Carney refused to rule it out.”
Benko is right. In fact Carney, the White House spokesman, not only refused to rule it out – he refused to rule it out five times.
Evidently Obama is leaving this option on the table in the hopes of improving his negotiating position in the latest debt debate – believing this nuclear option will prevent so-called “Republicans” from insisting on concessions in exchange for an increase in the borrowing limit (which officially expired on December 31).
All of this is patently ridiculous.
First of all, the Federal Reserve has been on a money-printing rampage over the last four years. If it wants to pull $2 trillion out of its ass for this purpose – or any other purpose – there is nothing anyone can do about it (hence S.C. Senator Tom Davis’ recent statement that Fed chairman Ben Bernanke was a “dictator“).
More importantly, let’s contemplate the “concessions” won by “Republicans” during the last debt ceiling debate.
In exchange for $2.1 trillion in new borrowing capacity (which the federal government exhausted in just seventeen months), the GOP claimed to have secured $1.2 trillion in cuts over a ten-year period – and $900 billion in cuts during a three year window from 2019-21.
What did Obama and his Republican allies do, though? As part of the massive $630 billion “fiscal cliff tax hike” approved earlier this month, they delayed the implementation of these previously agreed upon spending cuts.
So to translate … $2.1 trillion in new debt has disappeared down the government sinkhole in the last seventeen months, and absolutely nothing has been cut.
Which means this wouldn’t be the first time Washington pulled a pair of “trillion dollar coins” out of its ass …
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33 comments
Heard FITS and Sanford’s likeness would be on the other side…
There is not that much difference between you…You lead to the same ends…
Gold and silver – real money.
The fiat paper federal reserve note is becoming worthless.
The Trillion dollar coin makes as much sense as the debt limit. Congress(including the House Republicans) should not be allowed to authorize the government to acquire goods and services and then refuse to pay for them.
This is not a simple goverment shut down. If Congress wants to shut the government down, they can do that tomorrow. It simply requires a vote. This is about paying for goods and services the Congress, including the Republican House, has already ordered and consumed.
If congress wants to cut spending, then cut spending. But don’t refuse to cut spending then refuse to pay for what you bought. They have already run up the credit card. This is not a credit issue. The credit was granted, now we have to pay it back. If we don’t have the cash we have to borrow more money or default on the debt.
Obama did not do this, Congress (including Republicans) did this. Obama has no ability to spend money which was not approved by Congress. A big chunk of this is from borrowing trillions of dollars to fight two disastrous wars that netted this country nothing. One of which the country was promised Iraq would pay for. Well they are not, so we have to.
Thank you, Jan. Excellent summary.
Great comments!
I bet the City of Colunbia with the help of the Richland County Legislative Delegation could spend one of these in oh, 30 days. Lillian McBride could be the executive director of spending for about a million.
If you go back to 7 July 2011 in your post about then-Rep. Tim Scott threatening to impeach Obama if he dared use the 14th Amendment to raise the debt ceiling, you will see that I beat Steve Benko to the punch on using the seigniorage of large-denomination platinum coins to pay the bills already authorized by Congress.
https://www.fitsnews.com/2011/07/07/scott-impeach-obama-if-he-raises-debt-ceiling-unilaterally/
BTW, if you do not understand exactly what this end-run around the Republican hostage-taking is all about, please do some research and refrain from parroting all the right-wing myths about the “platinum coin.”
Anyone who is a numismatist (don’t confuse them with those philatelists who like to lick things) knows that no US coin may bear the likeness of a living person.
My preference is Ronald Reagan, since he started this country down the road of spending without revenue. Like the Elvis stamp, maybe we can vote on the young Reagan or the senile Reagan.
Obama should have already instructed Geithner to have the US Mint at West Point strike the $1 Trillion coin, so that the next time he has to sit across the table from Boehner and McConnell, he can pull it out of his pocket, spin it on the table, then after it has finished oscillating, ask those two “How about doing away with this Debt Ceiling crap?”
This notion was discussed back as early as 09′:
economicpolicyjournal.com/2013/01/how-trillion-dollar-platinum-coin-idea.html
The basic notion of minting a trillion dollar coin is so silly despite it being “legal” that the Keynesians are doing everyone a favor by even suggesting they’d do it.
It highlights:
#1: The ongoing debasement of our currency(and 1 trill in one shot is sure to have some market ramifications almost immediately)
#2: It begs for question- why platinum? That’s a bad path for the Keynesians to lead people down…
#3: It shows the “common man” that the monetary system is no different than three card monte he might be watching on a street corner.
This thing doesn’t have to be pretty. Just has to be deposited.
This idea is of a purely symbolic coin, representative of $1T worth of U.S. debt. It would be booked, bonds sold against it, and returned to be melted down (converted to debt) at some point in the future. It would obviously never circulate, it wouldn’t need to be designed, and it wouldn’t need to impact the price of platinum, simply because the law requires such a coin be made of platinum. It’s a coin because there’s a limit on the amount of paper currency the U.S. can issue.
“simply because the law requires such a coin be made of platinum.”
Yes, but you are “simply” missing the ? as to why the law said it must be platinum….
That’s where the fun starts and you are missing it.
:)
“Something is worth what a buyer will pay for it.”
I wonder how much a foreign country would give us for our platinum $1T coin.
I’m no monetary expert, but the audacity of the stunt can’t be too healthy for keeping the dollar as the world’s currency. At some point, something gotta give.
The world’s primary “reserve” currency that is.
Obama would not have to do it at all if Congress would not insist that he spend more money than the government takes in.
By law, the President cannot refuse to spend money authorized by Congress, yet Congress can refuse to raise the debt ceiling to pay for it.
The $1 Trillion coin preserves the good faith and credit of the United States until such time as Congress either comes to its senses or the crazies are replaced.
You’re right, it wouldn’t be great but fucking saner then playing chicken with defaulting like last time.
“The $1 Trillion coin preserves the good faith and credit of the United States”
That is the biggest knee slapper for today fellas.
Good work Tom.
Depends on whether they think their investment in U.S. debt will pay off. Based on the strength of this country, its ingenuity and it’s creative energy, that has historically proven to be a good bet. My guess is that the next $1T in debt would be as eagerly bought as the first $16T.
“My guess is that the next $1T in debt would be as eagerly bought as the first $16T.”
You realize that the largest buyer of US bonds the last go round(aprx. 70%) was us, right?
http://www.youtube.com/watch?feature=player_embedded&v=QJwmMu15Exc
Good grief, what a bunch of nonsense by those with no mathnastic ability.
“playing chicken with default”??
LMAO
No debt instrument of the U.S. will be defaulted upon no matter what the politicians and their media whores try to communicate to their cross-eyed mouth-breating followers.
Speaking of mouth-breathers, how’s that 47% increase in the payroll tax withholding working out for the Mo Fo Lo Info voters?
How do you figure?
Congress has already spent the money, now it wants to refuse to pay the credit card bill, or rather have Obama do it so they can bark like seals about impeaching him.
The trillion-dollar coin would not “artificially raise the debt ceiling.” It would postpone the arrival of the debt ceiling the same way the minting of four trillion quarters would (seignorage).
And it’s a great idea. It may well be President Obama’s only legal option in dealing with the debt ceiling and an intransigent Congress. He can’t legally spend less than Congress appropriates, due to the Congressional Budget and Impoundment Act of 1974. He can’t raise taxes with the wave of his hand, despite the bleating to the contrary from the Tea Party, and by the 14th Amendment, he cannot allow the United States to default on its debt.
The Republicans are trying to back Obama into impeachment by leaving him no legal options in dealing with their ridiculous debt ceiling hostage taking. This is a perfectly legal way to tell Congress to go piss up a pole, get its shit together and do the work the American people pay them to do.
It might be absurd, but it’s less absurd than defaulting for the first time in history over an arbitrary unconstitutional law.
I think the best part of this whole deal is that a Mitt Romney supporter came up with the idea.
So Beowulf voted for Romney.
Imagine what Fox News would say about this proposal if Romney had won the election and Democrats were holding the Debt Ceiling hostage?
I don’t disagree with you. 95% of GOPers are Keynesians as well.
That is why I made my comment.
Allow me ro be the first to suggest….a $100 trillion coin.
Didn’t the Wehrmacht Nazi government print multi-million dollar banknotes? I thought Obama was a Muslim not a Nazi!
Obama threw away a perfectly good bargaining chip by taking the $1 Trillion coin off the table.
Grannies, be prepared to starve!
If anything, he bought Granny more time Tom. Also, there’s the possibility that when everything goes down finally that sons and daughters take Granny in like days of old.
That being said, just like I predicted before in your link above, they will once again raise the debt limit….so don’t go worrying yourself too much Tom.
It’s all just posturing and in the end the GOP is as much for deficit spending as the Dems. It’s just a matter of who is getting the stolen loot.
I suspect if they actually used such a coin it would have just speed up the ultimate reckoning. I don’t think even the common man is that obtuse. But then again, I know of more people that went broke betting against the capacity for human stupidity than for it…so there’s that.
Obama Furious He Wasted Week Posing for Coin
WASHINGTON (The Borowitz Report) — President Barack Obama was “totally furious” he spent a week of his time posing for a trillion-dollar platinum coin that would never be minted, a White House source confirmed today.
“The President is a super-busy man, so it’s understandable that he’d be mad,” the source said. “It’s not like he has time to sit still for hours on end for a coin that’s not going to happen.”
Mr. Obama devoted much of last week to posing for the trillion-dollar coin on the assurances of outgoing Treasury Secretary Timothy Geithner, who told Mr. Obama that the coin had “a way better than fifty percent chance” of being minted.
Based on Mr. Geithner’s advice, Mr. Obama carved hours out of his schedule to pose for the ill-fated coin, even cutting short meetings with world leaders such as Afghan President Hamid Karzai.
But even as he posed for it, Mr. Obama seemed “fidgety and skeptical” that the platinum coin would ever see the light of day.
“He was like, ‘Look, I’ve got things to do. Is this coin really going to happen, because if not, this whole thing is really messed up,’” the source said.
When Mr. Geithner delivered the news to the President that the coin idea had been scrapped, according to the source, “to say that things got ugly would be a massive understatement.”
The coin fiasco behind him, Mr. Obama has now apparently learned his lesson, the source said: “If this coin idea ever comes up again, he’s going to make Biden pose for it.”
There are three types of people who think the debt limit should be abolished: 1) Those who work for the government an want to keep the gravy train rolling at the expense of everyone else, 2) Those who receive government assistance and ” “, 3) People who are too stupid to understand why the debt ceiling should not be raised ad infinitim.
If you got one of such trillion dollar coins and spent $1 million per day, it would take about 2,700 years before the money would finish!!