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Member (Idle past 91 days) Posts: 10333 From: London England Joined: |
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Author | Topic: United States Debt Default | |||||||||||||||||||||||
crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
They are giving the Treasury something of real value in exchange for I.O.U. trinkets. No, they're giving the Treasury money in exchange for money. In other words, they're making change. When the Treasury strikes and issues a trillion-dollar platinum coin, it's money. Simply by the will of the Treasury money is created - that's what the fiat in "fiat currency" means.
Nope; you sure didn't. No, I sure did - twice. Once to CS and once to you. It's all up there, if you'd ever learn to read.
Of course there is. Read the link you posted. Use your brain, Jon. I know it's up there somewhere. If the Treasury's "obligation" is to give you exactly what you already have - a quarter - then it what possible sense is there an obligation?
That's not how it works. Says you? But we've already established - you have no idea what you're talking about. The way you conflate Treasury notes with Treasury coins is the proof.
Oh well. Why don't I ever learn? Because you don't listen.
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crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
Frog's little scheme is precisely what the Fed is there to prevent: government diluting the supply and the value of money by churning out cheap money for political purposes. You're right. It just so happens, however, that on the specific matter of large platinum coinage, which has never been issued by the Treasury, Congress erred - they failed to cede total authority over money to the Federal Reserve. By essentially nothing more than legislative short-sightedness, the Treasury retains the power to strike and issue platinum coinage in arbitrary face value, which becomes currency the same as any coin. Coins may enter circulation via the Federal Reserve System but that isn't how they become money; coins become money by Treasury fiat, not by the decision of the Federal Reserve Bank.
Treasury could strike all the $billion Platinum Geithners it wants but without a purchase order from the Fed they sit in the vault. Completely wrong. 1) As it is well-known, private individuals can order coinage direct from the US Mint at
http://www.usmint.gov/mint_programs/$1coin/ It's not necessary to get your coins via the Federal Reserve System for them to be money. The reason this is well-known is because, until last June, you could order 1 dollar coins on your credit card with free shiping, collect rewards points or travel miles, and then deposit the coins in your bank and use them to pay off the credit card - essentially collecting travel miles or rewards points or even direct cashback for free. (The Mint has since stopped taking credit card orders but you can continue to order arbitrary amounts of Treasury coinage with free shipping, because you're completely wrong - coins don't have to pass through the Fed, they're direct obligations of the Treasury.) 2) When the Fed "buys" coins, they have to buy them at face value. This is because they're already money and therefore the Fed has no power except to make change. They have to get their quarters the exact same way you do - they have to exchange other denominations of money for them. Because they're already money. The Fed has nothing to do with it.
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New Cat's Eye Inactive Member |
They get $1 trillion per coin. Why do you think they're not getting anything for it? Because they won't have one trillion dollars that they can do all sorts of things with, they'd just have one coin.
quote: So they might prefer to not have to deal with the coin and just keep their actual one trillion dollars, i.e. they don't want to make change and have this coin that they're gonna have to schlub off on the next guy (who also might not want it)
quote: What if it doesn't work on them, and they don't want to exchange one trillion dollars for one coin? Anyways, Why don't they just print up a bunch of coins of varying denominations and then just pay their bills directly with them? Why the one coin for a trillion dollars?
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crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
Because they won't have one trillion dollars that they can do all sorts of things with, they'd just have one coin. One coin worth $1 trillion. Or $2 trillion. Or 33 and 1/3 dollars. Whatever value Geithner decides it has, it has. So why do you say that they can't do anything for it, or get anything for it? It's worth a trillion dollars. It is a trillion dollars.
So they might prefer to not have to deal with the coin and just keep their actual one trillion dollars, i.e. they don't want to make change and have this coin that they're gonna have to schlub off on the next guy (who also might not want it) Who would say no to a trillion dollars? You're not making any sense, CS. Hell, most banks would find it an incredible convenience. Do you know how hard it is to ship a trillion dollars in cash? You'd need every airplane in the United States and Europe stuffed with hundreds to do it. Passing around a coin, or a box of billion dollar coins, would be an enormous convenience.
What if it doesn't work on them, and they don't want to exchange one trillion dollars for one coin? If the Treasury literally can't find even a single bank who will take Treasury money then we have much larger problems. What is the realistic scenario, CS, under which all American banks decide to boycott the Federal government?
Why don't they just print up a bunch of coins of varying denominations and then just pay their bills directly with them? Why the one coin for a trillion dollars? No particular reason; mostly, it's that it's cheaper to mint a single coin and its cheaper and safer to ship checks instead of coins. (Remember when your mother told you to never mail cash?)
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New Cat's Eye Inactive Member |
So then why is the debt ceiling issue even happening, if all they have to do is stike up some coins and go pay their bills? Hell, why would there even be a debt? They wouldn't have to borrow the money from anybody and could just keep making more and more money as they spent it.
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hooah212002 Member (Idle past 827 days) Posts: 3193 Joined: |
if all they have to do is stike up some coins and go pay their bills? Woulldn't that cause inflation?"Why don't you call upon your God to strike me? Oh, I forgot it's because he's fake like Thor, so bite me" -Greydon Square
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crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
So then why is the debt ceiling issue even happening, if all they have to do is stike up some coins and go pay their bills? It's happening because Republicans decided to start a hostage crisis, and because - as Buz is the example of - not everybody believes that fiat currency can actually work. Not even every politician, despite the fact that it's been that way for decades. As we've seen, even relatively neutral people like CS can't quite bring themselves to believe that dollars are dollars just because the Treasury says they are. It's been decades since money was backed by anything but the goods and services available to be purchased with dollars, but the psychological notion that a dollar is a real resource is persistent.
Hell, why would there even be a debt? Well, the scarcity of dollars is a real resource, and it's worth preserving instead of wasting needlessly. But when the need is great - to avoid a disastrous default, for instance - then it's worth exchanging a little of that scarcity for a real solution to the problem.
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crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
Further evidence that this isn't just something goofy I've made up:
quote: That's Jack Balkin, a professor of Constitutional Law at Yale.
http://www.cnn.com/.../07/28/balkin.obama.options/index.html
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frako Member (Idle past 331 days) Posts: 2932 From: slovenija Joined: |
America worry not your problems are going to be solved by the prayer meeting organized by the Texsas govenor
http://www.examiner.com/...yer-will-solve-america-s-problems
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AZPaul3 Member Posts: 8551 From: Phoenix Joined: Member Rating: 4.9 |
Further evidence that this isn't just something goofy I've made up: From the same article:
quote: And I'm telling you, Frog, the Fed will never go along for the simple reason that it usurps the Federal Reserve Act letting the administration fiddle with monetary policy, weaken the dollar and dangerously over-inflate the money supply. This plus the fact that the Fed is not required, in its sole discretion, to accept coinage it did not order.
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crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
First, there may be other legal obstacles to using these options that we don't know about ... Yes, or there may not be. And even if there is, who would have legal standing to bring the suit?
This plus the fact that the Fed is not required, in its sole discretion, to accept coinage it did not order. The Federal Reserve isn't being asked to accept anything and their cooperation is not required. They're irrelevant to the "Jumbo Coin" stratagem. Coinage is money as soon as it is issued by the Treasury, because it's an obligation of the Treasury, not the Fed. The Fed, as I've explained, has absolutely nothing to do with this. If the Federal Reserve Bank won't accept cash, another bank will. But CS couldn't explain the circumstances under which American banks would boycott the Federal government, and you haven't been able to explain anything at all.
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AZPaul3 Member Posts: 8551 From: Phoenix Joined: Member Rating: 4.9 |
who would have legal standing to bring the suit? The Board of Governors of the Federal Reserve System.
If the Federal Reserve Bank won't accept cash, another bank will. Yeah, right. No one would touch it with a 10' pole. They'd be number 2 on the Defendants list. This whole idiotic scheme would cause more damage than the problem your tiny little mind thinks it solves.
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crashfrog Member (Idle past 1493 days) Posts: 19762 From: Silver Spring, MD Joined: |
The Board of Governors of the Federal Reserve System. On what basis? How will they demonstrate harm or that the Treasury's actions are illegal, given the authority granted to the Treasury by 31.5112(k) and 31.5103? You'll have to do better than just assert that the Board of Governors has any standing in this matter. Why would they? It's Treasury business that doesn't involve them.
This whole idiotic scheme would cause more damage than the problem your tiny little mind thinks it solves. You must have arrived at this conclusion based on your years teaching constitutional law at Yale. Oh, no, wait! That's not you, that's Jack Balkin, who thinks there's no known legal impediment to the "Jumbo Coins" strategem. You, on the other hand, seem to know absolutely nothing. You couldn't even tell the difference between coins and bills.
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AZPaul3 Member Posts: 8551 From: Phoenix Joined: Member Rating: 4.9 |
based on your years teaching constitutional law at Yale. No, just a simple MS Economics. I wouldn't expect you or your Constitutional Law friend to understand macroeconomics, monetary policy, how bad money drives out good money, how monetary policy (specifically given solely to the Fed) includes controlling the expansion and contraction of the money supply (which your idiotic scheme seeks to abrogate) and how the resultant inflation from such st*pid schemes ruins nations. Those who hatch such boneheaded schemes seem not to recognize the power that monetary policy possesses and why it is placed at arms length from the political whims of government. You can see how your crazy scheme would cause a major expansion in the money supply beyond the present needs of the economy leading to an unacceptable level of monetary and economic inflation, yes? I didn't think so. But the Fed does and your st*pid little scheme violently usurps their authority and prerogative in violation of the Federal Reserve Act and (more importantly) in the intent of Congress in placing these rights exclusively with the Federal Reserve Board of Governors. Begin to get the picture here, Frog? I didn't think so. I have no more stomach for this level of st*pidity. Say what you will. I give you the last word. Edited by AZPaul3, : Better thought. Edited by AZPaul3, : No reason given.
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New Cat's Eye Inactive Member |
Well, the scarcity of dollars is a real resource, and it's worth preserving instead of wasting needlessly. But when the need is great - to avoid a disastrous default, for instance - then it's worth exchanging a little of that scarcity for a real solution to the problem. Why do you think that it hasn't been done? Is trillions of dollars really a little of that scarcity? I still don't think a bank would take the coin because its defeating the purpose of the Federal Reserve.
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