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Author Topic:   United States Debt Default
crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 166 of 211 (626316)
07-28-2011 12:23 PM
Reply to: Message 161 by Jon
07-28-2011 12:59 AM


Re: Straight Up
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.


This message is a reply to:
 Message 161 by Jon, posted 07-28-2011 12:59 AM Jon has not yet responded

  
crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 167 of 211 (626318)
07-28-2011 12:33 PM
Reply to: Message 165 by AZPaul3
07-28-2011 7:45 AM


Re: Notes? We don't need no stinking notes
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.


This message is a reply to:
 Message 165 by AZPaul3, posted 07-28-2011 7:45 AM AZPaul3 has acknowledged this reply

  
New Cat's Eye
Inactive Member


Message 168 of 211 (626323)
07-28-2011 1:05 PM
Reply to: Message 149 by crashfrog
07-27-2011 4:09 PM


why one coin?
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:
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.

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:
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?

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?


This message is a reply to:
 Message 149 by crashfrog, posted 07-27-2011 4:09 PM crashfrog has responded

Replies to this message:
 Message 169 by crashfrog, posted 07-28-2011 1:18 PM New Cat's Eye has responded

  
crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 169 of 211 (626328)
07-28-2011 1:18 PM
Reply to: Message 168 by New Cat's Eye
07-28-2011 1:05 PM


Re: why one coin?
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?)


This message is a reply to:
 Message 168 by New Cat's Eye, posted 07-28-2011 1:05 PM New Cat's Eye has responded

Replies to this message:
 Message 170 by New Cat's Eye, posted 07-28-2011 1:23 PM crashfrog has responded

  
New Cat's Eye
Inactive Member


Message 170 of 211 (626329)
07-28-2011 1:23 PM
Reply to: Message 169 by crashfrog
07-28-2011 1:18 PM


Re: why one coin?
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.

This message is a reply to:
 Message 169 by crashfrog, posted 07-28-2011 1:18 PM crashfrog has responded

Replies to this message:
 Message 171 by hooah212002, posted 07-28-2011 2:03 PM New Cat's Eye has not yet responded
 Message 172 by crashfrog, posted 07-28-2011 2:29 PM New Cat's Eye has responded

  
hooah212002
Member
Posts: 3188
Joined: 08-12-2009


Message 171 of 211 (626333)
07-28-2011 2:03 PM
Reply to: Message 170 by New Cat's Eye
07-28-2011 1:23 PM


Re: why one coin?
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

This message is a reply to:
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crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 172 of 211 (626339)
07-28-2011 2:29 PM
Reply to: Message 170 by New Cat's Eye
07-28-2011 1:23 PM


Re: why one coin?
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.


This message is a reply to:
 Message 170 by New Cat's Eye, posted 07-28-2011 1:23 PM New Cat's Eye has responded

Replies to this message:
 Message 180 by New Cat's Eye, posted 07-29-2011 10:38 AM crashfrog has responded

  
crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 173 of 211 (626340)
07-28-2011 2:30 PM


Jumbo Coins - On a Roll
Further evidence that this isn't just something goofy I've made up:

quote:
Are there other ways for the president to raise money besides borrowing?

Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.

Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.


That's Jack Balkin, a professor of Constitutional Law at Yale.

http://www.cnn.com/.../07/28/balkin.obama.options/index.html


Replies to this message:
 Message 175 by AZPaul3, posted 07-28-2011 7:31 PM crashfrog has responded

  
frako
Member
Posts: 2923
From: slovenija
Joined: 09-04-2010


Message 174 of 211 (626362)
07-28-2011 6:56 PM


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


  
AZPaul3
Member
Posts: 5244
From: Phoenix
Joined: 11-06-2006
Member Rating: 2.4


Message 175 of 211 (626368)
07-28-2011 7:31 PM
Reply to: Message 173 by crashfrog
07-28-2011 2:30 PM


Re: Jumbo Coins - On a Roll
Further evidence that this isn't just something goofy I've made up:

From the same article:

quote:
The "jumbo coin" and "exploding option" strategies work because modern central banks don't have to print bills or float debt to create new money; they just add money to their customers' checking accounts.

The government has not discussed either option publicly. There are three reasons for this. First, there may be other legal obstacles to using these options that we don't know about ...


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.


This message is a reply to:
 Message 173 by crashfrog, posted 07-28-2011 2:30 PM crashfrog has responded

Replies to this message:
 Message 176 by crashfrog, posted 07-28-2011 7:43 PM AZPaul3 has responded

  
crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 176 of 211 (626370)
07-28-2011 7:43 PM
Reply to: Message 175 by AZPaul3
07-28-2011 7:31 PM


Re: Jumbo Coins - On a Roll
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.


This message is a reply to:
 Message 175 by AZPaul3, posted 07-28-2011 7:31 PM AZPaul3 has responded

Replies to this message:
 Message 177 by AZPaul3, posted 07-28-2011 11:03 PM crashfrog has responded

  
AZPaul3
Member
Posts: 5244
From: Phoenix
Joined: 11-06-2006
Member Rating: 2.4


Message 177 of 211 (626381)
07-28-2011 11:03 PM
Reply to: Message 176 by crashfrog
07-28-2011 7:43 PM


Re: Jumbo Coins - On a Roll
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.


This message is a reply to:
 Message 176 by crashfrog, posted 07-28-2011 7:43 PM crashfrog has responded

Replies to this message:
 Message 178 by crashfrog, posted 07-28-2011 11:10 PM AZPaul3 has responded

  
crashfrog
Member (Idle past 55 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 178 of 211 (626382)
07-28-2011 11:10 PM
Reply to: Message 177 by AZPaul3
07-28-2011 11:03 PM


Re: Jumbo Coins - On a Roll
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.


This message is a reply to:
 Message 177 by AZPaul3, posted 07-28-2011 11:03 PM AZPaul3 has responded

Replies to this message:
 Message 179 by AZPaul3, posted 07-29-2011 12:31 AM crashfrog has responded

  
AZPaul3
Member
Posts: 5244
From: Phoenix
Joined: 11-06-2006
Member Rating: 2.4


Message 179 of 211 (626389)
07-29-2011 12:31 AM
Reply to: Message 178 by crashfrog
07-28-2011 11:10 PM


Re: Jumbo Coins - On a Roll
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.


This message is a reply to:
 Message 178 by crashfrog, posted 07-28-2011 11:10 PM crashfrog has responded

Replies to this message:
 Message 181 by crashfrog, posted 07-29-2011 11:52 AM AZPaul3 has acknowledged this reply

  
New Cat's Eye
Inactive Member


Message 180 of 211 (626420)
07-29-2011 10:38 AM
Reply to: Message 172 by crashfrog
07-28-2011 2:29 PM


Re: why one coin?
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.


This message is a reply to:
 Message 172 by crashfrog, posted 07-28-2011 2:29 PM crashfrog has responded

Replies to this message:
 Message 182 by crashfrog, posted 07-29-2011 11:58 AM New Cat's Eye has responded

  
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