Weimar Economics

Blog067


Paul Krugman:

Be Ready To Mint That Coin

Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.

For those new to this, here’s the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.

And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

So why not?


Why not?

How about because it’s completely insane? It’s the equivalent of saying “I’m not broke, I still have some checks left.” It’s also a violation of the principle of checks and balances. Remember when liberals had a conscience?

My respect for economists has dropped considerably the past few years and my respect for Paul Krugman has gone past zero and is in negative numbers now.

Just when you think Democrats can’t get any stupider they go and prove you wrong.


Blog070


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About The Klown

Rude, crude and socially unacceptable. But I'm like toe fungus - I'll grow on you. Just because I agree with you doesn't mean I like you.
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39 Responses to Weimar Economics

  1. myiq2xu (D) says:

    As always, ask yourself what the reaction would have been if George Bush did it.

  2. myiq2xu (D) says:

    The Chinese will be really happy when they receive it as a payment.

  3. myiq2xu (D) says:
  4. angienc (D) says:

    I’m just an ignorant rube without a Nobel Prize but even I can see there’s a 3rd option — i.e. negotiate and implement serious reductions in spending to decrees the $1 trillion + deficits we’ve been running every year for the last 4 years. That’s neither silly nor vile & destructive. Of course that would require compromise — especially from the vile progs — and they aren’t even willing to cut spending from Seasame Street.

    Funny how Krugman is so worried about what Obama is “legally required to do” in this situation but doesn’t give a fig that he’s also legally required to pass a budget — something that hasn’t happened his entire first term. I guess I’m not smart enough to understand it all & should just listen to my betters.

  5. DeniseVB says:

    Nixon, Carter and Bush are all looking good to me now.

  6. myiq2xu (D) says:
  7. cj says:

    Is Obama holding Krugman’s family hostage or something? What a pathetic sell-out he turned out to be & all it took was a ride on AF 1.

    • Gawk, the stupidest part is where Krugman says he’s a bad administrator. “And that matters.” But his articles all scream, “Take my advice on administrating!” It’s like he can’t even complete a full circle of logic in his own brain anymore. FFS.

  8. myiq2xu (D) says:
    • myiq2xu (D) says:

      Now, putting the sheer legal idiocy of the proposal aside, and CNBC’s John Carney has written a good article about why it is indeed, legal idiocy, the simple reality is that for this retarded idea to work, there has to be some justifiability, or even remote credibility of the “legal tender” backing the value. Sadly as the chart above shows, there can’t possibly be such justifiability.

      Or can there?

      Remember, as we said, the chart above is indicative of reality at today’s prices. So if the Treasury plans on literally coming up with ridiculous laws, what is there to prevent it from merely coining a one ounce, or half an ounce, or one gram Platinum coin and assigning it the value of $1 trillion.

      Sure it can. There is a problem with that, however: it is called currency devaluation and is also what FDR did with executive order 6102 when he confiscated America’s gold – he basically devalued the US Dollar by well over half overnight (which, for all those curious, is the endgame in the current depression also, but we’ll cross that bridge when we get to it).

      In other words, when one strips away with all the rhetoric, all the advocates of this insidiously stupid idea which gets a new life every time there is a debt ceiling crisis, are doing, is arguing for a massive devaluation of the dollar: because for the trillion dollar coin idea to be even remotely plausible, the price of Platinum, and by implication the entire precious metals complex, would have to go up by a factor of some 1,100.

      It also means the value of the paper US currency would have to go down by 1,100.

      Which, by the way, is precisely what all those who wish for the Fed to continue funding America’s unprecedented spending binge, which can never be satisfied by taxes alone, are hoping for.

      And of course, they will eventually get it.

  9. myiq2xu (D) says:
  10. honoracarroll says:

    Why stop at one trillion?

  11. myiq2xu (D) says:
  12. myiq2xu (D) says:
  13. yttik says:

    http://www.nationalreview.com/articles/337035/guns-me-not-thee-john-fund

    Journal news hires armed guards after backlash from publishing gun map.

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