LTC8K6
Penultimate Amazing
Yeah, the numbers did seem odd given the relative prices.
Trillion Dollar Coin
- Thread starter ravdin
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Yeah, the numbers did seem odd given the relative prices.
LTC8K6
Penultimate Amazing
I commented at ZH's source, asking them to correct their article on platinum.
I'd bet it would do nothing since they could simply replace it with a backup duplicate coin and never report the loss. Anyone trying to sell the stolen coin would then just be laughed at.
Puppycow
Penultimate Amazing
It would not increase the debt. In fact, it would decrease the debt by $1 trillion.
Right now, every week the Treasury Department auctions off new treasury bonds and t-bills. Each time the Treasury Department does this, the government's debt increases. The money raised from these auctions is used to pay for government spending. If they used the trillion-dollar coin gambit then they could stop having these auctions (indeed, if the debt ceiling is not raised, they cannot have any more of these auctions) which increase the national debt, and instead pay for government spending with money created out of thin air (essentially; the cost of the platinum for the coin is small enough to be ignored).
There is an argument to be made against this idea, but the argument that it would "balloon" the debt is not the right one, because it does the opposite.
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Brian-M
Daydreamer
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Minting a single 1 trillion dollar coin is a bit silly. After all, sooner or later they may need another, and another. I say they should mint a couple of thousand 1 trillion dollar coins while they're at it, that way they can be sure that they always have enough. [/devil's advocate]
Plus, what coin could be more appropriate for the president to flip when making the tough decisions?
Plus, what coin could be more appropriate for the president to flip when making the tough decisions?
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Puppycow
Penultimate Amazing
Minting a single 1 trillion dollar coin is a bit silly. After all, sooner or later they may need another, and another. I say they should mint a couple of thousand 1 trillion dollar coins while they're at it, that way they can be sure that they always have enough. [/devil's advocate]
Plus, what coin could be more appropriate for the president to flip when making the tough decisions?
They could keep the mold and mint another one when needed. They have to be very careful because once this precedent is set, it could lead to big inflation problems later. A thousand trillion dollars of new money would almost certainly cause hyperinflation. That's just crazy talk.
The government would no longer have to make any hard choices: Do you raise taxes and/or cut spending? Well, if you 'poof' all this new money into existence, you no longer have to face that decision. In fact, you can cut taxes and raise spending! Everybody's happy! But understand that this will lead to very severe inflation.
No! lol , just wondering IF it was stolen, AND melted down (in other words out of circulation permanently) AND reported as stolen, what affect, if any, would it have on the economy?
Would it be like $1 trillion in cash was removed from circulation at once?
What would the consequences be? if any
Puppycow
Penultimate Amazing
The government would just make another one.
If the coin was melted down, then it would only be worth the price of the platinum in it. The coin would weigh maybe one ounce, which is about $1,500 worth of platinum.
Well, cutting taxes and increasing spending would lead to inflation if done indefinitely, yes, but depending on precisely how you spend the money, it can be used to pump up the economy back to full employment, and right a lot of other economic issues such as unsustainable debt, before you have to jump taxes back up to curtail inflation.
All depends on the current state of the economy (if in a downturn, lots of room for spending before inflation hits), and how the money is spent (some ways of spending are less inflationary than others)
All depends on the current state of the economy (if in a downturn, lots of room for spending before inflation hits), and how the money is spent
(some ways of spending are less inflationary than others)Yeah yeah I get that, but , for the sake of argument (and I should have clarified further) they couldn't make another one. They broke the mold, congress and the Prez all passed and signed a resolution that said "never again!"
what would the consequences be?
BenBurch
Gatekeeper of The Left
The Fed would collapse. Theoretically. In practical terms they would just find some obscure mint policy that allowed replacement of something once and apply it to this with a shoehorn.
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psionl0
Skeptical about skeptics
And the point I was shooting for is that the claim in the CNN item that ". . . since the money from the coin would never go into circulation it would not cause any inflation" was laughable.
I don't know what that has to do with the popularity of the president (unless you think that Obama is stupid enough to be sucked in by such an argument).
BenBurch
Gatekeeper of The Left
No, of course it is inflationary, and some inflation is also a good thing under some circumstances. Inflation cheapens debt.
rjh01
Gentleman of leisure
I think the idea of just producing the coin and storing it is just plain stupid. The government spends more money than is being raised in taxes. In order to pay for the deficit it must do one or more of the following
1. print more money (then use it)
2. borrow money from the domestic market
3. borrow money from overseas
4. sell assets
5. produce and then sell assets
The first option is OK if the economy is growing fast enough. Otherwise it will produce inflation. This would be especially true when the people who get the money start spending it.
The second option will raise interest rates. There is a limit to how much money can be raised by this method. It could cause the economy to be in trouble from the high interest rates.
The third option could raise the value of the dollar. If the economy does not grow fast enough then the government will have problems repaying the money or raising more money. America got out of trouble after WW2 because the economy grow a lot.
The forth option is great, but there only a certain amount you can sell.
The fifth option is great but again very limited in what you can do.
1. print more money (then use it)
2. borrow money from the domestic market
3. borrow money from overseas
4. sell assets
5. produce and then sell assets
The first option is OK if the economy is growing fast enough. Otherwise it will produce inflation. This would be especially true when the people who get the money start spending it.
The second option will raise interest rates. There is a limit to how much money can be raised by this method. It could cause the economy to be in trouble from the high interest rates.
The third option could raise the value of the dollar. If the economy does not grow fast enough then the government will have problems repaying the money or raising more money. America got out of trouble after WW2 because the economy grow a lot.
The forth option is great, but there only a certain amount you can sell.
The fifth option is great but again very limited in what you can do.
Puppycow
Penultimate Amazing
Oh, the money would be used alright. The coin itself would be stored at the Federal Reserve Bank, but the money it represents would be credited to the Treasury Department and would definitely be used. IOW, this is option 1 in your list.
psionl0
Skeptical about skeptics
In theory, there would be no consequence. The coin itself is just a token and, as Puppycow has pointed out, the money it represents has already been spent into circulation.
Of course, if news of the theft of the coin got out then in a worst case scenario, it could seriously undermine confidence in the USD causing its value to collapse.
Brian-M
Daydreamer
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Only if they spend or borrow against the coins, or use their value to determine the level of government spending.
If they just put them in a piggy-bank to be kept on the mantlepiece as if they didn't exist, no inflation results. At least, not until a burglar steals the piggy-bank along with the VCR and spends the coins down at the racetrack.
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rjh01
Gentleman of leisure
Then the coin itself is irrelevant. It need not be produced. Just asking as everything else happens that you mentioned.
Puppycow
Penultimate Amazing
And Congress passed a law authorizing the Secretary of the Treasury to carry out the coinage of money, and the law contains the following provision:
So there you have it, all perfectly legal and constitutional.
I think it does need to be produced as a formality. Else, where does the money come from?