Looking to the next debt-ceiling fight, Nadler proposes a trillion-dollar coin trick
Jerrold Nadler.
5:34 pm Jan. 2, 201315
Rep. Jerrold Nadler has an admittedly "out of the ordinary" solution to the coming fight over the debt ceiling.
"There is specific statutory authority that says that the Federal Reserve can mint any non-gold or -silver coin in any denomination, so all you do is you tell the Federal Reserve to make a platinum coin for one trillion dollars, and then you deposit it in the Treasury account, and you pay your bills," Nadler said in a telephone interview this afternoon.
I asked whether he was serious.
"I'm being absolutely serious," he said. "It sounds silly but it's absolutely legal. And it would normally not be proper to consider such a thing, except when you're faced with blackmail to destroy the country's economy, you have to consider things."
Liberals like Nadler got a lot of what they wanted from the president's deal to avert the fiscal cliff—an extension of unemployment insurance, a final resolution to the Alternative Minimum Tax, the elimination of the Bush tax cuts for the wealthiest Americans, and no reduction in entitlement benefits—with the glaring exception of an automatic increase in the debt ceiling, and a permanent solution to the deep sequestration cuts, which were put off for another two months as part of the deal.
Republicans have made the debt ceiling a rallying cry, exacting deep spending cuts from President Obama last year, after threatening not to pay the country's debts if he failed to agree.
Obama has since pledged not to negotiate over the debt limit, which pays existing debts, and Nadler said last night's deal will be viewed through the prism of that promise.
If President Obama can somehow stick to his guns on the debt ceiling and the sequester, Nadler said the deal "will be viewed as a major step forward economically, and in terms of social justice. If we do cave in two months from now, this won't look so good. I hope we won't cave in."
But Nadler conceded that's going to be "very difficult" to prevent, especially with Republicans already preparing for such a fight.
Republican senator Lindsey Graham, in advocating for a "yes" vote on the fiscal cliff deal, told fellow Republicans to "save their powder" for another debt-ceiling fight, where the party was more likely to win concessions from the White House.
Nadler sees it as an old-school racket.
"It's like in the old gangster movies: 'That's a nice economy you got over there, pity if it should happen to blow up—if you don't do what I want.' That's exactly what they're saying. That's exactly what Lindsey Graham is saying."
Nadler said the trillion-dollar coin was one of two options to avoid the debt ceiling fight; another would be for the president to use his power under the Fourteenth Amendment, which says the validity of the public debt "shall not be questioned." (Nadler tried to press the president toward that option last time, but to no avail.)
"It gets around this artificial debt-ceiling thing which has no economic justification," he said. "And, by the way, by the way, none of this has to be done. All the president would have to say is, 'I would do it if necessary.'"
it would have to be one really BEEEG coin. and who is going to pay for all the precious metal? the FED? ha ha ha.
How about just repenting of the fraud and deceptions of fiat specie against Article One section 8 and 10?
I want my copper penny back ( in 1968 One genuine copper penny was worth 3.6 Yen. It aint japans fault the reprobate debased penny is worth less than a yen today). I want my silver dollar back. i want my gold coinage back and i want the Wallstreet banking industry to by regulated only by mathematical reality of precious metal legal tender. Their books either balance or they go to jail for fraud when they collapse.
Every trainwreck has a fundamental root cause..the only thing wrong with US economy is the financial equivilant of Blood Cancer..fiat specie, monopoly money of the banks, by the banks, and for the banks and against the Constitutions legal tender mandate.
We The People of USA need monetary reform 1st and foremost.
To return to the Constitutions fundamental check and balance of two precious metal legal tenders (under elected State Government where all real economy is local) that the debt industry despises. They wont allow Americans to vote for the regional federal reserve guvnors because it is an unlawful commercial monopoly! Whoever the politician that doesnt understand that is talking out his banker friends rear end.
Much easier than the giant platinum Coin scheme would be for Uncle Sam to monopolize the Marijuana industry for badly needed revenues and monetize that monopoly commodity to pay off the fractional reserve banking industrys debt and retire their continental $ and confederate paper money once and for all.
Stop waging the bankers war against the People and the Constitutions Gold and Silver MANDATE.
the only money system more perfect for liberty and justice than that mandated by US Constitution article One section 8 and 10 would be to make the dollar a metric system weight of precious metal.
It would become the standard of the entire honest financial world.
Honest economists will endorse this proposal and diagnosis of why under Gold and Silver legal tender USA never had great depressions and great recessions. Under that system all boats do rise and fall equitably with the same tides of nature. Under monopoly money the gap between rich and poor inevitably gets wider and the middle class gets wipred out. Need any evidence yet?
Take that to the bankers and put some jesus whup ass on em.
Money changers are the only ones he ever got even symbolicly violent with. For good reason too.
The world doesnt need their many fiat species robbing the planets wealth in substance and labor
and making it impossibe for the working poor to lift themselves up and overthrow military dictatorships that fiat specie encourages and perpetuates.
Repent or suffer the Great Tribulation when mathematical reality catchs political reality by the britches.
It aint science or prophecy. Just mathematics of reality.
Jerry has his facts a little off. Here's a summary of the situation.
How many times have you heard that the Government can only spend money after it raises revenue by either taxing or borrowing? Nearly every time someone talks or writes about the US's public deficit/debt problem? How come nobody asks why, since Congress has the unlimited authority to create coins and currency, it doesn't just create money when it deficit spends? The short answer is that Congress in 1913, constrained both itself and the Executive Branch from creating currency or bank reserves, delegated its power to do that to the Federal Reserve System, and never looked back when we went off the gold standard in 1971.
But coins, it turns out are different. They're the province of the Executive. And Congress provided the authority, in legislation passed in 1996, for the US Mint to create one oz. platinum bullion or proof platinum coins with arbitrary fiat face value, having no relationship to the market value of the platinum used in the coins. These coins are legal tender. When the Mint deposits them in its Public Enterprise Fund account, the Fed must credit it with the face value of these coins. The difference between the Mint's costs in producing the coins, and the reserves provided by the Fed is the US Mint's “coin seigniorage” or profit from the transaction.
The US code also provides for the Treasury to periodically “sweep” the Mint's account at the Fed for profits. These then go into the Treasury General Account (TGA), narrowing or eliminating the revenue gap between spending and tax revenues.
Platinum coins with huge face values such as $60 Trillion, can produce profits closing the revenue gap and technically end deficit spending, while still retaining the gap between tax revenues and spending that can add to aggregate demand and produce full employment. Platinum Coin Seigniorage (PCS) is also a way for the Executive to end debt ceiling crises, since the profits could be used to repay debt instruments when they fall due, without the need to issue any more debt.
If all debt instruments are re-paid by using PCS, eventually the US would have no debt subject to the limit, or presence in the bond market, and would pay no interest to bond holders. No one would worry about the public debt, or use its size to justify blocking legislation.
So, PCS-based elimination of debt can end the whole austerity mind set that provides our current budgetary process with its constraining conservative cast focused on narrow monetary costs considerations, rather than a broader progressive framework that weighs the real costs and benefits of proposed fiscal activities of the Federal Government. Congress and the Executive would evaluate the substance of legislative proposals based on their likely direct impacts and side effects on the lives of Americans, rather than their impact on Federal deficits and surpluses. Then the issues will be about what people need, and what improvements we can make by working together through our Federal Government. That would be the fulcrum of a new politics, not debt, deficits, and debt-to-GDP ratios.
How about inflation? There won't be any due to using PCS. See: http://neweconomicperspectives.org/2012/12/platinum-coin-seigniorage-iss... which covers it comprehensively.
Jerry has his facts a little off. Here's a summary of the situation.
How many times have you heard that the Government can only spend money after it raises revenue by either taxing or borrowing? Nearly every time someone talks or writes about the US's public deficit/debt problem? How come nobody asks why, since Congress has the unlimited authority to create coins and currency, it doesn't just create money when it deficit spends? The short answer is that Congress in 1913, constrained both itself and the Executive Branch from creating currency or bank reserves, delegated its power to do that to the Federal Reserve System, and never looked back when we went off the gold standard in 1971.
But coins, it turns out are different. They're the province of the Executive. And Congress provided the authority, in legislation passed in 1996, for the US Mint to create one oz. platinum bullion or proof platinum coins with arbitrary fiat face value, having no relationship to the market value of the platinum used in the coins. These coins are legal tender. When the Mint deposits them in its Public Enterprise Fund account, the Fed must credit it with the face value of these coins. The difference between the Mint's costs in producing the coins, and the reserves provided by the Fed is the US Mint's “coin seigniorage” or profit from the transaction.
The US code also provides for the Treasury to periodically “sweep” the Mint's account at the Fed for profits. These then go into the Treasury General Account (TGA), narrowing or eliminating the revenue gap between spending and tax revenues.
Platinum coins with huge face values such as $60 Trillion, can produce profits closing the revenue gap and technically end deficit spending, while still retaining the gap between tax revenues and spending that can add to aggregate demand and produce full employment. Platinum Coin Seigniorage (PCS) is also a way for the Executive to end debt ceiling crises, since the profits could be used to repay debt instruments when they fall due, without the need to issue any more debt.
If all debt instruments are re-paid by using PCS, eventually the US would have no debt subject to the limit, or presence in the bond market, and would pay no interest to bond holders. No one would worry about the public debt, or use its size to justify blocking legislation.
So, PCS-based elimination of debt can end the whole austerity mind set that provides our current budgetary process with its constraining conservative cast focused on narrow monetary costs considerations, rather than a broader progressive framework that weighs the real costs and benefits of proposed fiscal activities of the Federal Government. Congress and the Executive would evaluate the substance of legislative proposals based on their likely direct impacts and side effects on the lives of Americans, rather than their impact on Federal deficits and surpluses. Then the issues will be about what people need, and what improvements we can make by working together through our Federal Government. That would be the fulcrum of a new politics, not debt, deficits, and debt-to-GDP ratios.
How about inflation? There won't be any due to using PCS. See: http://neweconomicperspectives.org/2012/12/platinum-coin-seigniorage-iss... which covers it comprehensively.
So why not mint 17 of these wonderful trillion dollar coins and pay off the debt.....idiot....
I would not want to appear greedy making 17.
I'd make 2 trillion dollar coins.
^^^^^^^^^^^ In all seriousness we actually should just mint a 100 trillion dollar coin to the whining and crying from both parties. It's unbelievable to me to see that people are unable to connect the dots though when they acknowledge that such a coin can be made. If you can make such a coin then that means you can create equal amount of dollars. If you can make the equivelant amount of dollars to equal the coin then that means you can create however much money you need to make an economy work. If you can do this then that means defaulting is not an issue. If default is not an issue then the only constraint on spending is inflation. Inflation is not a problem in an economy where we have under-employment, un-employment, money be hoarded in mass quantities by corporations and banks, and a productive capacity that has never been realized.
There's a simple answer to the "why not mint 16 or even 25 of these coins?" Question. BECAUSE it would devalue the US dollar worldwide to the point where our dollar would be worthless. Our foreign commerce would be virtually decimated. A short answer to a rather long winded question.
Agreed. This solution would COMPLETELY devalue the dollar in the world market. What would a barrel of oil cost then in US dollars? Printing money with enormous denominations has destroyed the economies of many countries. With the dollar as the foundation of many currencies, such a nice could decimate many countries.
Money without being legal tender is already worthless, mint those coins, there's no difference in minting 20x $1trillion dollar coins and having printed the 17 Trillions in $100 bills.
The solution to the problem of too much debt is to pay off all the debt.
The US Dollar is grossly overvalued in relation to our real productive
capacity. Outstanding obligations to pay far exceed our real capacity to
pay. A devaluation is indicated.
Trillion Dollar Coins enable us to assert that we are sovereign and pay
off all debt owed to the bankers that currently enslave humanity.
Mint the Trillion Dollar Coins. Pay off ALL debt. All $600+ Trillion.
Stop issuing any more debt. Live debt free forever. Use equity sharing
for funding.
Usury is a crime against humanity, hence immoral, hence unenforceable.
Exponentially increasing debt on a finite planet is a really dumb idea,
since it is not sustainable due to lack of infinite resources.
United States Dollar is a unit of account and medium of exchange, but
not a stable store of value. Precious Metals are a store of value.
Study FOFOA and FreeGold
Doing this "coin-trick" would be the fastest path to massive (and instant) inflation for the US. It would devalue the US dollar in a heartbeat - the day the coin was minted. Causing the price of all items (think OIL) to rise overnight.
Let's leave such stupid coin-tricks to the magicians in Las Vegas, shall we? Unbelievable that we have serious people thinking this would work!
And while they are at it (minting the trillion $ coin), they can can mint one for every US citizen so we will all be trillionaires! Yes, that will work!
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