United States Debt Default

They're not supposed to but I've shown that the law says that they can, via this specific mechanism of platinum coins.

Maybe... I'm not sure it'd be legal tender.

Who else would have the authority to create money in the United States, CS, if not the United States Treasury?

I just don't think they can slap "legal tender" on something and then it is.

Sure! The United States Treasury determines what is and isn't money in the United States, according to the laws created by Congress. If the Treasury was authorized by Congress to mint and issue little pieces of concrete as money, then those little pieces of concrete would be money, the same way little pieces of paper and nickel are, now.

And you're saying that congress has already authorized them to do it with platinum coins?

By law, they cannot. When the Treasury issues money, it is by definition legal tender for all debts public and private. If you have a debt with someone, they're legally obligated to accept United States notes as payment of that debt.

Not totally, gas station are legally allowed to refuse bills larger than, say, a twenty.

From wiki:

quote:

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the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled "Legal tender," which states: "United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues." There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

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I'm not sure it'd be legal tender.

What else could it be, CS? It can't be counterfeit. How could it be? The Treasury printed it!

I just don't think they can slap "legal tender" on something and then it is.

And you're just wrong about that.

And you're saying that congress has already authorized them to do it with platinum coins?

Well, I quoted 31.5112(k), didn't I? Who do you think passed the United States Code if not the United States Congress?

Not totally, gas station are legally allowed to refuse bills larger than, say, a twenty.

Hrm, well, I guess I was wrong about that. Regardless, why would a bank refuse $1 trillion dollars?

Also doesn't your cite prove AZPaul completely wrong that Treasury coins aren't legal tender? By definition a coin struck and issued by the US Treasury would be a "United States coin." Didn't you find the exact legal statute that proves that a $1 trillion coin issued by the US Treasury would be legal tender?

Edited by crashfrog, : No reason given.

You can still spend a $2 U.S. Note like it's worth $2 because it is $2, by fiat. The fact that the Federal Reserve never issued it is irrelevant

And you haven't yet shown that this isn't simply a case of grandfathering.

Jon writes: You haven't yet shown us the laws that require the Fed to purchase the coins from the Treasury, nor have you shown us the laws that permit the Treasury to enter coin into circulation. This is nonsense, and it bears no relationship to the legalities of monetary policy in the United States. The proof of it is the $2 bill.

Why is the proof of it the $2 bill? When was the last time the $2 bill was issued as a U.S. Note?

I prompted you to cite a law; not a bill.

Federal Reserve Notes are considered legal tender because they're accepted by the United States Treasury.

Odd; when the Treasury sends bills to the Reserve, who must first agree to buy them, of course, it sure doesn't seem like the Treasury is on the receiving end.

the fact that he thinks a private company has the authority to make up money is another.

Some private companies are endowed with more legal authority than others.

AZPaul gives many indications that he has no idea what he's talking about, if you look closely enough to see.

And so the pot betrays itself.

Jon

Edited by Jon, : typ0

And you haven't yet shown that this isn't simply a case of grandfathering.

Er, no, I've directly done that by noting that the US Treasury continued to issue Treasury notes after the passage of the Federal Reserve Act.

Odd; when the Treasury sends bills to the Reserve, who must first agree to buy them, of course, it sure doesn't seem like the Treasury is on the receiving end.

You've got it completely backwards, though. The Reserve buys debt and the Treasury issues the bills. That's why they have the seal of the Treasury on them.

Only the government can make something legal tender. When someone besides the Treasury prints a dollar, its not a real dollar - it's counterfeit.

I prompted you to cite a law

I've cited 31.5112(k), and now CS has cited 31.5103. The first is the law that grants the Treasury the power to coin fiat platinum coinage in any arbitrary denomination, and the second is the law that affirms it as legal tender. You've asked for a "law" that affirms that the Federal Reserve has to "buy" the dollars that the Treasury produces but there's no such law because the Fed doesn't buy dollars, it buys debt. And, again, the Federal Reserve is not the only means by which dollars are created. They're the only means by which Federal Reserve Notes are created, but I'm not talking about the Treasury creating a Federal Reserve Note.

And so the pot betrays itself.

As... black? Sorry, you've completely lost me.

Edited by crashfrog, : No reason given.

Edited by crashfrog, : No reason given.

I checked my stash... All of my $2 bills are from 1976 and say "Ferderal Reserve Note". But, I have a $1 bill from 1935 that says "Silver Certificate" and a $5 bill from 1963 that says "United States Note". So there you go.

What else could it be, CS? It can't be counterfeit. How could it be? The Treasury printed it!

Something that's neither legal tendor nor conterfeit. What do you call money that ain't money no more?

If United States Notes are deemed to no longer be legal tendor, then they wouldn't suddenly become counterfeit.

Isn't money today supposed to come from the Federal Reserve?

I just don't think they can slap "legal tender" on something and then it is. And you're just wrong about that.

Oh, well, I don't believe you.

And you're saying that congress has already authorized them to do it with platinum coins? Well, I quoted 31.5112(k), didn't I?

Assuming that "issue" means "make legal tendor" along with simply writing "legal tendor" on it makes something legal tender.

I'm not sure about those two.

Hrm, well, I guess I was wrong about that. Regardless, why would a bank refuse $1 trillion dollars?

I dunno, its a 'what if'... Prolly some silly banking reasons. Or simply because its just a coin. Or because its too big of a denomination. Or because they don't think the next guy will let them schlub it off on him.

It'd still fuck up your plan though, wouldn't it?

Also doesn't your cite prove AZPaul completely wrong that Treasury coins aren't legal tender?

It proves that Treasury coins have been legal tendor. I thought money today is supposed to come from the Federal Reserve.

By definition a coin struck and issued by the US Treasury would be a "United States coin." Didn't you find the exact legal statute that proves that a $1 trillion coin issued by the US Treasury would be legal tender?

Unless it has to go through the Federal Reserve now, or something, to become legal tendor.

But yeah, its looking like United States coins are legal tender.

And now from what I'm reading, it doesn't really look like being legal tendor is all that important. What with "trade dollars" n'all, I'm sticking with it being worth a dollar when you can get a dollars worth of shit for it.

It proves that Treasury coins have been legal tendor.

Obviously not, since the law is still in effect, United States Notes are still legal tender, the Treasury is still empowered to produce them (since they produced them for years after the Federal Reserve Act), and still does produce them.

I mean, I don't know what more you want, I guess. Can you elaborate on what additional information you would find convincing? I'll try to find it.

I thought money today is supposed to come from the Federal Reserve.

Money today comes from the Federal Reserve loaning money to the government, and then that debt is issued as paper money. It's sort of broken up and put into dollars. The interest rate on that loan is a way of generating inflation, and we've previously talked about how inflation is important to an economy by making sure that a growing population and a growing GDP doesn't cause people to hoard currency. It's a way of generating new dollars.

But there's another way for the Treasury to generate new dollars and it's to simply generate new dollars.

And now from what I'm reading, it doesn't really look like being legal tendor is all that important.

Well, it's a function of the utility of money. I mean, anything can be money. Like that society on the island of Yapp that bought and sold things with giant stone wheels. Ultimately, they stopped even moving the wheels when they changed ownership; everybody just remembered who the owner of each new wheel was.

You could take chocolate coins or chickens as payment for things, if you wanted. But do you want to? I doubt it, since you very intelligently realize that it would be quite difficult for you to convince someone you wanted to buy from to take chocolate coins or chickens for it. A fiat currency system works because everyone agrees to treat a worthless object as a medium of exchange, to denote prices in numbers of it, and to accept those objects as payment for goods and services. Dollars are dollars because everybody agrees to treat them as dollars, and because dollars are purposefully made scarce - you can't print your own, you have to get them from somebody else in exchange for something. But they ultimately have to come from somewhere, and they come from the Constitutional monetary authority of the United States Treasury. They say so, right on them.

Saying that a coin is "legal tender" is a way of making everybody think "oh, this is money" the first time they see a new design on the dollar or something. It's a way of transferring the psychological heft of old dollars - from a time when a dollar really was a certain amount of gold or silver - onto new ones. And it's worked on you, right? You still take your paycheck in fiat currency backed by absolutely nothing, right? And people still take it from you in exchange for real goods and services, right?

Obviously not, since the law is still in effect, United States Notes are still legal tender, the Treasury is still empowered to produce them (since they produced them for years after the Federal Reserve Act), and still does produce them. I mean, I don't know what more you want, I guess. Can you elaborate on what additional information you would find convincing? I'll try to find it.

I can look it up myself sometime, but I'd be interested in seeing more about the production process and how its decided what new coins today are to become legal tendor.

But there's another way for the Treasury to generate new dollars and it's to simply generate new dollars.

How often is that happening today?

Well, it's a function of the utility of money. I mean, anything can be money. Saying that a coin is "legal tender" is a way of making everybody think "oh, this is money" the first time they see a new design on the dollar or something. It's a way of transferring the psychological heft of old dollars - from a time when a dollar really was a certain amount of gold or silver - onto new ones.

Assuming they'll go along with it. What if the bank doesn't want it and/or won't give them a trillion dollars for it?

And it's worked on you, right? You still take your paycheck in fiat currency backed by absolutely nothing, right? And people still take it from you in exchange for real goods and services, right?

I'm on direct deposit and I swipe my debit card at the grocery store.

I'm not to familiar with these "notes" y'all are referring to... I had to dig mine out of the closet upstairs!

What if the bank doesn't want it and/or won't give them a trillion dollars for it?

Then they go to a different bank. Why would banks turn away money?

I'm on direct deposit and I swipe my debit card at the grocery store.

Oh, so you don't even need the fiat currency - you and your creditors are satisfied just by the simulation of currency being "deposited" and "withdrawn" from your accounts.

Why would banks turn away money?

It wouldn't be bank money; it would be in the Treasury account.

The Fed buys the 'money' that the Treasury prints.

Jon

It wouldn't be bank money; it would be in the Treasury account.

Who said anything about "bank money"? What is "bank money" supposed to be?

Yes, it would be in the Treasury account and then they could write checks against it to the various claimants that Congress has already appropriated funds to.

The Fed buys the 'money' that the Treasury prints.

quote:

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Federal Reserve Notes are printed by the Bureau of Engraving and Printing (BEP), a bureau of the Department of the Treasury.[8] The Federal Reserve Banks pay the BEP not only the cost of printing the notes (about 4¢ a note), but to circulate the note as new currency rather than merely replacing worn notes, they must pledge collateral for the face value, primarily in Federal securities.

In contrast, the Federal Reserve pays the United States Mint—another Treasury bureau—face value for coins, as coins are direct obligations of the Treasury.

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http://en.wikipedia.org/wiki/Federal_reserve_note

The Fed buys the notes but that elides the other half of the exchange - they're printed and issued by the Treasury and backed by debt purchased by the Federal Reserve Bank. But, coinage is issued and backed directly by the Treasury. That's why I've been very clear to specify that we're talking about a platinum coin and not a $1 trillion bill. The practices and laws of the Federal Reserve Bank are irrelevant - they're not involved in coinage except as a means of getting it into circulation. But the point of trillion dollar coins isn't to circulate them, it's to use them to pay debts that the Executive Branch is lawfully and constitutionally required to pay.

Edited by crashfrog, : No reason given.

Who said anything about "bank money"? What is "bank money" supposed to be?

A bank is an organization; like all organizations it can have its own money (for a bank that might be profits from investing its clients' money, etc.).

Money in the Treasury account wouldn't be bank money, so the Treasury wouldn't be giving the bank money that the banks would be foolish to turn away. First, the Treasury would be asking that the bank perform a transaction service for the Treasury. Second, and even worse for your nonsense theory, the transaction would take place the way it has always taken place: The Bank would have to agree to pay the Treasury for the coins which would then become bank money and be deposited into the Treasury account.

But the point of trillion dollar coins isn't to circulate them, it's to use them to pay debts that the Executive Branch is lawfully and constitutionally required to pay.

Is there a difference?

But, coinage is issued and backed directly by the Treasury.

= Debt.

Jon

If United States Notes are deemed to no longer be legal tendor, then they wouldn't suddenly become counterfeit.

When we switched from tolar to Euro at first all prices had to have the price in euro and tolar but locals couldent spend euros in shops then we could spend euros in shops but got tolars back, after that we could spend euros and tolars in shops but got euros back and after that you could not spend tolars in shops even though the price tags still had to have the price in both euro and tolar but you could and still can exchange tolars to euros at banks.

So if the dollar where to be switched for a noter typ of currency the same thing would probably happen.

Though you Americans do have a funny law that allows shops to take any kind of currency if they so desire. That might provide some problems

Then they go to a different bank.

A different Federal Reserve?

Why would banks turn away money?

Because they won't be able to get anything for it.

When coins are sold to the Federal Reserve, they are a "direct obligation of the Treasury". Its the Treasury's debt. Paper money is bought buy the Federal Reserve for cost, and then it becomes the Federal Reserve's debt as they pass it out to banks.

But if the Treasury doesn't have the money, then them making a coin that says that they do have the money, doesn't magically make the money appear. If the Federal Reserve wanted that money back for the coin, then the Treasury wouldn't have it if they paid their bills with it. So why would the Federal Reserve give them the money for it in the first place?

A different Federal Reserve?

Well, there are about a dozen individual banks in the Federal Reserve system. But why does it have to be a Federal Reserve Bank? Again - the coin is already money. AZPaul is absolutely wrong, as you and I have individually demonstrated. The role of the bank in this whole thing is just to make change.

Because they won't be able to get anything for it.

They get $1 trillion per coin. Why do you think they're not getting anything for it?

When coins are sold to the Federal Reserve, they are a "direct obligation of the Treasury". Its the Treasury's debt.

No, they're not debt. They're money. If you have a quarter, which means that at your request the Treasury must pay you twenty-five cents, but the way they're going to pay that "debt" is by giving you a quarter, then you don't hold debt in any sense of the term, you hold money. Debts in the United States are denominated in dollars and cents. The Treasury is the source of dollars and cents. The "obligation" of a Treasury coin is to pay you the face value of the coin at your request. But the way they pay that value is in coins.

But if the Treasury doesn't have the money, then them making a coin that says that they do have the money, doesn't magically make the money appear.

It does in a system of fiat currency. That's the point of having fiat currency, that's what the "fiat" means.

quote:

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Fi-at

1) a command or act of will that creates something without or as if without further effort.

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The reason that we're off the gold standard is precisely so that the Treasury can create money from nothing by "magic." The act of printing a Treasury note creates money. That's where money comes from. It's fiat currency. Has been for years. It's backed by absolutely nothing but the value of goods and services for sale in the United States.

If the Federal Reserve wanted that money back for the coin, then the Treasury wouldn't have it if they paid their bills with it.

If the Federal Reserve wants to break a 1 trillion dollar coin, they just have to find someone with $1 trillion in smaller bills. Same as if you want to break a 20. The $1 trillion is money, and therefore it can be exchanged for money.

So why would the Federal Reserve give them the money for it in the first place?

Because it's money. Why wouldn't a bank make change?

A bank is an organization; like all organizations it can have its own money (for a bank that might be profits from investing its clients' money, etc.).

Oh, you're talking about banknotes. Why didn't you just say "banknotes"?

Money in the Treasury account wouldn't be bank money

Money in the Treasury account is money in the bank, so checks can be drawn against it. That's the point of banking.

First, the Treasury would be asking that the bank perform a transaction service for the Treasury.

Well, yes. Good thing banks are in that business.

The Bank would have to agree to pay the Treasury for the coins which would then become bank money and be deposited into the Treasury account.

No, completely wrong. It works the same way when you make a cash deposit in your bank account. Does the bank "buy" the currency from you? No, of course not. They just take it and note that your account is now larger by the same amount of money you have them.

And that's all that's going on, here. The Treasury is creating a trillion dollars by fiat, depositing it in a Treasury checking account at some bank, and then writing checks against it. Perfectly simple and requires the issuance of no further government debt.

Is there a difference?

Well, yes. It's the difference between paying cash and writing a check.

= Debt.

No, money.