Paul Goes Platinum!

By Joe Firestone

Another platinum coin surge in the Second Wave rippled through the mainstream media yesterday and this time hit the Congressional Progressive Caucus. Domenico Mantanaro of MSNBC kicked things off on one of the morning shows by mentioning the Trillion Dollar Coin (TDC) as a possible solution to the debt ceiling problem. Then, in the afternoon, on MSNBC’s the cycle, Krystal Ball, and Steve Kornacke, in discussing the coming debt ceiling conflict talked rather matter-of-factly, I thought, about minting some TDCs to get around the debt ceiling.

Then Paul Krugman blogged about platinum coins. In the context of answering a question about whether we can “print money,” to get around the debt ceiling, he answers no, and then says:

The peculiar exception is that clause allowing the Treasury to mint platinum coins in any denomination it chooses. Of course this was intended as a way to issue commemorative coins and stuff, not as a fiscal measure; but at least as I understand it, the letter of the law would allow Treasury to stamp out a platinum coin, say it’s worth a trillion dollars, and deposit it at the Fed — thereby avoiding the need to issue debt.

An admirably brief statement of the basic idea, but followed then by this puzzler:

In reality, to pursue the thought further, the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back. So this is all a gimmick — but since the debt ceiling itself is crazy, allowing Congress to tell the president to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.

So, it’s gimmicks for gimmicks to get around the debt ceiling, and no notion on Paul Krugman’s part that Platinum Coin Seigniorage (PCS) might have a much broader use than simply countering a gimmick the Republicans are using to try to trash the social safety net and drown the Government in a bathtub.

Apart from that, however, this “. . . the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back” is a bit strange. A very high value platinum coin deposited by the Mint in its account at the Fed would have its value credited to the Mint’s account in the form of electronic credits. The Fed would then keep the coin in a vault forever, as an asset on its balance sheet, and the seigniorage profits from the deposit of the coin would be swept into the Treasury General Account (TGA) where it would be used for repaying debt or other spending appropriated by Congress. So why would the Treasury ever want or need to buy that coin back from the Fed? And why would the coin be a Federal debt that the Treasury must repay?

It’s true that base money issued by the Federal Government is a Federal debt in the sense that the Government has an obligation to accept it in payment of taxes. But in this case, the Fed holds the coin and it has no taxes to pay. Also, the coin never goes into circulation, but sits in a Fed vault, so where does a debt that the Treasury must repay come into this picture and why?

Paul Krugman goes on to make a number of comments about the Fed printing money and the need for the Fed to pull that money back by selling its Treasury debt at some future time when the economy is growing rapidly to prevent inflation. But these comments aren’t directly relevant to using PCS, since using it is no more, and perhaps less, inflationary than using debt financing.

The appearance of PCS in Paul Krugman’s blog apparently had an immediate impact. Congressman Jerrold Nadler (D-NY), in an interview reported in Capital New York said:

 “There is specific statutory authority that says that the Federal Reserve can mint any non-gold or -silver coin in any denomination, so all you do is you tell the Federal Reserve to make a platinum coin for one trillion dollars, and then you deposit it in the Treasury account, and you pay your bills,”

Well, that’s a little garbled, since it’s the Treasury that orders the Mint to create the coin which is then deposited in the Mint’s account, which is then credited by the Fed with electronic credits because the coin is legal tender, and is then swept by the Treasury for the seigniorage profits which end up in the Treasury Account, and then you pay your bills. But, regardless, Congressman Nadler has the right idea. It is legal for Treasury to make platinum coins with arbitrary face values and to use the seigniorage to pay bills.

In the same interview, the Congressman also refers to invoking the 14th amendment as a way in which the President could justify not complying with the debt ceiling. But, I think, this is not as good a solution as using PCS. The reason why, is that the debt ceiling isn’t unconstitutional as long as Congress has provided alternative ways for Treasury to meet its obligations. PCS is such an alternative, so, as long as it is legal, I think the President is obligated to use it and not the 14th amendment to defeat the debt ceiling constraint.

Mike Sankowski at Monetary Realism, also reviews Krugman’s views and Nadler’s interview and points out that:

I don’t think the coin will be used, but the idea of the coin has now hit critical mass. He’s a congressperson, so he only knows what his aides are telling him. If his aides are talking about it, you can be sure all of the democratic aides are talking about it over drinks. It’s just part of the everyday conversation in the support staff of congress.

Nadler is right – it’s not normally proper to consider such an extreme tactic. It is terrible it had to come to this, but here we are. It would be good if we just didn’t have a debt ceiling at all. Then, it would be so much nicer if the government had a well established, and commonsensical method to allow for the Treasury to print money directly – along with rules on how much and when this could be done.

I think Mike is right about the coin reaching critical mass and now being a topic of conversation among Congressional Staff. Even more, since the coin reference comes from Jerry Nadler, we can suppose that PCS is making the rounds within the Congressional Progressive Caucus (CPC) specifically, and may become a key element in stiffening their spines during the debt ceiling fight. The CPC is much less likely to accept a lousy deal from the Republicans and the President if they know very well that the President can rise above the whole debt ceiling crisis by minting a very high value platinum coin.

Mike Sankowski voices misgivings about the coin. Above he calls it an “extreme tactic” and later on in his post he talks about the problem of giving politicians the power to print money. On the last point, I think the Constitution has already given the politicians the power to “print money.” And it’s a wonder that instead of grasping that power more firmly, they’ve constructed all kinds of constraints preventing them just issuing it.

Until 1971, they constrained themselves with the gold standard. And from then until the present, they’ve constrained themselves by insisting that deficit spending be preceded by debt issuance even though there’s no reason to believe, except the discredited Quantity Theory of Money (QTM), that issuing fiat money in the act of spending is any less or more inflationary if it’s preceded by issuing debt than if it’s not.

Commenter Robert Rice answered Mike’s misgivings about the power to print money, by pointing out that every power of Government is subject to abuse and that this is no reason not to have government and to use its powers for public purpose. And I agree, Mike Sankowki’s misgivings about the “printing money” power are no more than the usual conservative disposition to always mistrust government.

It’s wise to do that, since one must never cease to look gift horses in the mouth. But it’s not wise to let one’s mistrust cripple one’s government and, as a result, arrive at the kinds of conditions we are finding ourselves in right now. After all, what is the debt ceiling legislation itself, but an expression of the same conservative impulse that Mike is voicing? Listening to it is what has caused the mess we’re in. To get out of it, we have go onto a new track. That track is using Platinum Coin Seigniorage as our primary tool when deficit spending.

As for PCS being an “extreme tactic.” I’m afraid, I think that’s just labeling. Wigwam, a blogger at FDL and DailyKos, had this answer for people who label PCS as “weird,” a very similar label to “extreme.” He said:

Such coins are “legal tender” and can therefore be deposited into the Treasury’s General Account at the Fed, from which the Nation’s bills are ultimately paid. Therefore, there is no need for the Treasury to borrow money to meet the obligations of the United States. But, and this is critical, none of that money can be withdrawn except for congressionally appropriated expenditures; e.g., the Treasury cannot monetize the national debt except insofar as such expenditures are appropriated by Congress.

For the past 220 years, the Treasury has been paying a portion of each year’s expenditures via the markup (seigniorage) on the minting of coins — last year coin seigniorage covered about 1% of the tax deficit — Abraham Lincoln went even further and paid for the Civil War with printed fiat money (“Greenbacks”), as did the European powers to finance WW I, and as did Germany to finance its part in WW II.

All of the above is background to keep in mind the next time you read a financial/economic pundit declare that it would be “weird” for the Secretary of the Treasury to exercise his powers under 31USC5112(k) and recommend that he instead foment a constitutional crises by directly violating 31USC3101(b), which I think would be “weird” at best.

And further, how much “weirder” or “more extreme” is it for a government with a sovereign fiat currency system to deficit spend only after it borrows back its own currency, than it would be for that same government just to forget about borrowing and paying interest to rich investors and foreign nations on what it can create in unlimited quantities itself. In short, what we’re doing now is a lot more “weird” and “extreme” than just using existing legal authority fill the public purse to spend what Congress has already appropriated.

70 responses to “Paul Goes Platinum!

  1. Joe
    Interesting developments.
    Also Stan Collander had a discussion about the Coinage issue on Bill Press this AM.
    This errant matter of repatriation of the coin also came up – so probably from the PK discussoion.

  2. Legalisms aside, perhaps the emergence of this idea into the minds of Congressmen will prompt some of them to think “If Treasury can mint a TDC and then spend without borrowing first, why can’t they print a TDB (Trillion Dollar Bill) and spend that without borrowing first? In fact, doesn’t the Fed do that every month now, $85B dollars worth, buying stuff without first borrowing? What if they bought aircraft carriers and cruise missiles and fighter planes instead of mortgages?”

    • At $85B per month, that would soon make the Federal Reserve the world’s super power, greater than the US or China. Hm, what is Ben Bernanke’s position on Iran?

  3. Even if Treasury ever wanted to buy back the TPC, it would be a net zero transaction (aside form interest) because it would end up with the coin, which would admittedly be a little hard to spend. Perhaps it could be dropped into a Salvation Army red kettle some Christmas, then the SA could get it changed at the FR.

    • Sunflowerbio

      Actually, this scenario is a good example to illustrate the difference between MMT and our current financial system. If the Treasury were to take the proceeds from sweeping the Mint’s account and fund a program for the impoverished (the very same clients that the Salvation Army serves), the end result would be: Scenario A
      FR holding TDC
      Treasury spending $1T on poverty programs
      SA fewer clients

      If the Treasury bought back the TDC and gave it to the SA, the end result would be: Scenario B
      FR holding TDC
      Treasury owing $1T notes plus interest
      SA spending $1T on poverty programs and ending up with fewer clients

      To me, Scenario A looks better from a taxpayer’s perspective. The Treasury could even give the money to the SA to administer in Scenario A, support faith based organizations rather than faith based economics.

  4. A Magic Coin still assumes a Haircut. Someone is gonna get sheared.

    “buying stuff without first borrowing?”

    Kinda like Naked Shorting.

    • Naked shorting is selling stuff you don’t have. In a way, it does create more shares out of thin air, kinda similar to creating dollars out of thin air. So naked short sellers are like stock certificate sovereigns. Or co-sovereigns. Or counterfeiters. Maybe that is sufficient cause for outlawing the practice.

    • Someone is gonna get sheared. BobbyG

      Not necessarily. Since bank “loans create deposits” then the repayment of bank loans destroys deposits so a ban on new credit creation would create massive deflation that the monetary sovereign could fill with new fiat for no net change in the size of the money supply.

      Needless to say, such a ploy could only be pulled once but nevertheless it is a genuine option.

  5. Joe, what do you think about the President giving up the right to mint these coins in exchange for repeal of the debt limit law?
    As an aside, I would expect that those opposing this move would take Krugman’s thought: This is just debt by another name and will have to be paid back.

    • “This is just debt by another name and will have to be paid back.”

      But that is so obviously WRONG!! It’s been 175 years since we paid back all the debt. In about 165 of those years we added to it, and only rarely paid any of it back, and never very much. It is smaller now , in relation to GDP, than it has been at times in the past. Why now do we all of a sudden HAVE TO pay it back?

      • We do pay off, or roll over, Tsy securities. So I think what Krugman, et al are saying these should be paid off with other treasuries. Not my idea but some think so.

        • Roll over, yes, pay off, no. Big difference. I don’t see where Krugman said even that. He said that eventually Treasury would “want” to buy back the coin, but offered no opinion about why they would want to do such a thing. It makes no sense to me that they should ever want to buy it back.

          • Sunflowerbio

            Maybe they would want to buy it back for the same reasons that the banks want to buy back their QE3 MBS’s from the Fed.

            • And can you enlighten us on what that reason is, and how it would apply to the Treasury in the same way it applies to a profit-oriented business like a bank wanting an asset that pays interest?

            • The short reason: They don’t. The long reason: They don’t want them back. Banks know they are worthless. The TPC would not be worthless, just pretty useless except for its original purpose.

          • There is a suggestion out there that they could pay off the coin in exchange for repeal of the law on debt. Then there is this from above:
            “In reality, to pursue the thought further, the coin really would be as much a Federal debt as the T-bills the Fed owns, since eventually Treasury would want to buy it back. So this is all a gimmick ..”

            • jonf, i think the way it operationally works, is that once the trsy deposits say a 10TDC with the fed and the fed credits the trsy acct, the coin would then be destroyed just like cash is, once its entered electronically….so nothing to buy back. just 10T in trsy acct to spend….so wheres the debt to buy back?
              i’m thinking as long as no debt issued in its creation, it is a pure credit to spend. trsy could use the credit to fund deficit or buy debt back.

              • I think the coin becomes an asset of the fed – – via debit to asset and credit to Tsy account. Krugman suggests it is still a debt of the tsy, similiar to bonds issued by the tsy, and therefore should be paid back. Others have suggested the tsy may want to buy it back in exchange for repealing the debt limit law. Personally, I don’t think either one has to happen but I will defer to the experts in this matter. If the tsy does buy it back, it can be destroyed.

                • Technically it might be a debt of Tsy, but it has no time limit like a Tsy note. It could sit in the Fed vault for as long as Treasury chooses.

                  • Yes, I think that is right.

                  • Thinking it through a bit…. There was no off setting debt created when the coin is minted. So the coin would be a pure credit . Once the value of the coin is credited to the trsys acct at fed, operationally the coin should be destroyed as the value of the coin is now represented in electronic form. Keeping the coin ( which is a pure credit) and the electronic credit value of the coin in the trsy acct,, would have the equivalence of having a double credit floating, no?

                    The coin represents a pure credit to the treaury not a debt of the treasury, no?
                    This is monetary nirvana,, yes?

                    I could be wrong, but I think we are so used to our money representing a debt, we’re having a hard time understanding how it works when it is used as a credit. What’s your thoughts?

                  • sunflowerbio

                    Jack, is an IOU a “debt” of the issuer; that is the question. Following Randall Wray’s analysis in his MMT primer, I would say a Treasury coin is an IOU of the Treasury even if it is stamped out of sugar. If the Fed holds the coin, it holds the Treasury’s IOU and can theoretically present it to the Treasury for “payment”, presumably in Federal Reserve Notes which it issued to the Treasury for the coin in the first place. To avoid having to issue new debt to obtain FR notes to redeem the coin, since the original FR notes would have been spent, the Treasury could repay the Fed with quarters or other coins it has minted including new TPC, so we’re back to the beginning. Since Treasury would have no need or desire to repossess the first coin, and the FR would have no need make the Treasury redeem the TPC (it would only get back FR notes which it created itself to “buy” Treasury notes so Treasury would be able to pay its IOU), there seem to be no need or incentive for the TPC to go any further than a FR vault. I hope this helps and is not just more confusing.

                  • WOW !
                    Now that that nail has been driven home, simply by the recognition that the Treasury both creates and ISSUES coins into circulation, without debt, perhaps we could move on to the benefits and costs of issuing all the nation’s money in the same way as we did with Greenbacks.
                    For the Money System Common.

                  • Jack et al: This is making things more complicated than they really are. The distinctive intellectual failing – seen everywhere – of the late 20th century – which I say we are still mired in, is undersimplification. Credit = debt. There can be no credit without a debt. They are two words for the same thing, seen from different perspectives. It is as if there were two words, one for arrows pointed at you, one for ones that you are pointing at other people, and people had to be convinced there was just one thing, one concept “arrow”. And credit=debt=(financial) asset=liability=IOU the same way; money is just a particular type of, particular way of viewing, all these equal things.

                    So the Platinum Coin is a (symbol of) a Treasury debt, whether it goes out into circulation or goes to the Fed. It works just like any coin. If it goes to the Fed, it represents a debt to the Fed, and the Fed gives the Treasury a debt of the Fed – the money in the Treasury’s Fed account. But this is all just a lot of BS. The Fed & the Treasury are two pockets of the same person, Uncle Sam. Who is in dire need of psychotherapy from a clinic in Kansas City.

                    If the coin were circulated, the true redemption of the debt the coin represents is when the holder uses it to pay taxes, or for a trillion dollar coin – for a lot of aircraft carriers and planes and subs. To buy something at a price = cancelling a debt going the other way, a debt of the holder to the government. Not monetary operations, like buying bonds, FR notes etc, which are primarily BS to confuse you.

                • Sunflower, good points and I agree under usual circumstances, thats how it would work. But just to have some fun with this,

                  The TDC is not a debt or iou, but rather it is a coin of credit, much like the greenbacks (or more appropriately, u.s. notes) are a bill of credit to the treasury. So, unlike a federal reserve notes (frn), there is no off setting debt to the coin.

                  The real question is how does the fed handle deposits of u.s. treasury notes. For ex:
                  I have an old $2 u.s. treasury note. if i deposit it at my bank, i get a $2 frn credit to my account. when that note makes it’s way back to the fed operations center, does the fed destroy it since it’s been converted to electronic form, like it does with frn’s? Or does it keep all these u.s. note bills in storage waiting for the trsy to buy them back?

                  • So, is there anyone who works at the FR who can tell us just what does happen to old treasury notes? Seems it could go either way.

  6. TPC has been getting a lot of PR.
    Also look up:
    Looking to the next debt-ceiling fight, Nadler proposes a trillion-dollar coin …

    Why We Must Go Off the Platinum Coin Cliff

    Rep. Jarrold Nadler, others still pushing for trillion-dollar coin to duck …

    Could two platinum coins solve the debt-ceiling crisis?

    The Platinum Coin Option

    The Trillion Dollar Coin Is Back

    Four Theories That Would Allow President Obama to Ignore the Debt Ceiling

    But of course, now justa foolish question. Can we find something better?

    The Platinum Coin is a way to bypass the “debt ceiling” but it is not a way to end “deficit spending”. Debt ceiling is only a self imposed restriction Congress has issued in order to hold down deficit spending. This “cure” would in time just help mature the disease.
    There is some benefit since the coin is not interest bearing and save “the people”, let’s see, isn’t $16 trillion of todays debt “unpaid interest”?
    The unintended consequence would be of a help in that at least it will not have that “secret weapon of the 1% ” attached to it-that is making the 99% pay back double its own money simply for the right to use it.
    How about something better?
    What if the Feds have a method of spending money which is NOT deficit spending.
    Bernanke (“Justaluckyfool, Prediction: 2013 Noble Prize in Economic Sciences-Bernanke”)
    has proven there is such a “silver bullet”. A magic way and means to “spend” trillions without any increase in “debt”. He is doing it every month, like it or not, with or without any approval.
    IT IS CALLED Quantitative Easing (QE).
    But QE is being used to make profits for the “Private For Profit Banks” (PFPB) as allowed by law, while “we the people” sit and nod our approval.
    Why not “QE 4 The People ” , Purchase assets for the benefit of the people, instead of PFPB?
    Google “Justaluckyfool”.
    Why would you not want prosperity for yourselves and your children?

  7. Umm Mike Norman says Warren says that congress has to determine the specs for the coin. So any other ideas? It was fun while it lasted.

    • Not sure if Warren said that but the Bill says:
      “such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion,”
      I believe there is an internal Citizen’s Coinage Advisory Committee at Treasury that would still weigh in.
      But that don’t seem like a game-stopper.

      • It would be very fun to be on the Citizen’s Coinage Advisory Committee under this scenario. You would suddenly be thrust onto an acronym vital for national security: the CCAC (see-kak)! Your every move would be followed by CNN, FOX, MSMBC and Al Jazeera. You would be briefed by big name economists from Fed and Tsy who would explain why the fate of the world economic system rested upon your decision. The task before you: should you approve the design for this coin? I imagine that after years of experiance on this committee some of the nusmatists might think the design was a little haphazzard and rushed. I can just hear them, “hmm, all those zeroes are so small and hard to read” and “it doesn’t have the ridges along the sides like the quarter”. I dont know, sounds like a game-stopper to me.

        • LOL
          Lacking a quorum, the CCAC has postponed their meeting til next month.
          More importantly, a $Trillion coin has exactly the same monetary-economic system effect as issuing $1Trillion in Greenbacks.
          If we embrace the principle that it is perfectly OK for the government to restore its money-creation powers, then either platinum or Green works for me.
          And that IS what the Kucinich Bill does.
          If the legality against the $Platinum preponderates, then the same result could be had by advancing another form of public money administration.
          For the Money System Common.

  8. Article just up on AlterNet by Josh Holland

    Sorry that don’t look right but it worked for me.

    Holding the Debt Limit Hostage is Unconstitutional, So Why Not Get Around it by Minting a Trillion-Dollar Platinum Coin?

  9. Maybe start looking for alternatives.
    That AlterNet article includes the following – providinf some legislative intent that I had been unable to locate:

    From the article:

    At Mother Jones, Kevin Drum acknowledges that the law permits the treasury to issue such a coin and then scoffs at the notion:

    I would just like to point out, once again, that this is ridiculous. During the very short floor debate on this amendment it was repeatedly referred to as a “technical correction,” and that’s obviously what was intended. Oklahoma Rep. Frank Lucas described it this way:
    Also contained in the bill is a clarifying section inserting the word ‘‘platinum’’ inadvertently dropped when Congress authorized production of platinum and platinum bullion coins a few years ago….This is a small bill, but important to the mint and important to coin collectors. It has no cost implications whatsoever.

    No particular restrictions were placed on the design or issuance of platinum coins, but this paragraph was plainly intended to apply to bullion and commemorative issues for coin collectors. That’s all.

    There is, apparently, a widespread belief that courts will uphold a literal, hypertechnical reading of legislative language regardless of its obvious intent, but I’m quite certain this isn’t true. Courts are expected to rule based on the most sensible interpretation of a law, not its most tortured possible construction. I don’t think there’s even a remote chance that any court in the country would uphold a Treasury reading of this law that used it as a pretense for minting a $1 trillion coin. [Emphasis: mine]

    Back to Greenbacks.

  10. “inserting the word ‘‘platinum’’ inadvertently dropped…”

    So the language about the Treasury secretary determining the value of the coin was there before, not new in 1996? So that without the word “platinum”, he could have issued a $1T coin made of (insert favorite substance here) prior to this law?

    Or perhaps Lucas was referring to one of several amendments to that section, and this one only changed one word, but there were other amendments that inserted the unique language that is not in the sections on gold and silver commemorative coins.

  11. This was supposed to be a doomsday option to restore the monetary system. It wasn’t meant to be noticed or picked up on (didn’t plan on the internet when it was put on the books in 1996). After seeing all minutia details for all the other coins, does anyone believe they accidentally forgot such specifications for a platinum coin?

  12. [redoing b/c of html errors]

    Dylan Matthews in “Michael Castle: Unsuspecting godfather of the $1 trillion coin solution” (, after presenting arguments against PCS from Castle:

    > But there’s another option. The , proposed by then-Rep. Denny Rehberg (R-MT) and signed into law by President Obama on Dec. 14, 2010, authorizes the Treasury secretary to mint $25 palladium coins “in such quantities as the Secretary may determine to be appropriate to meet demand.” So theoretically, Geithner could issue 80 billion $25 palladium coins, collectively worth $2 trillion, and deposit them in a similar manner.

    H.R. text at

    • “appropriate to meet demand”

      Key phrase. Who comprises “demand”? Yeah, I’ll take all 80 billion, if they’ll give ’em to me. I’ll just keep a few mil and give the rest away. Or, is China gonna buy them all?

      • Based on the gold and silver sections of the law, it would be demand from coin collectors, to BUY them, for approximately the bullion value. Like $1 silver eagles, which would sell for about $30 or so based on the silver content. There is a platinum coin, face value $100. Don’t know how much Treasury sells it for.

    • ” So theoretically, Geithner could issue 80 billion $25 palladium coins, collectively worth $2 trillion, and deposit them in a similar manner.”

      Nothing theoretical about it. The palladium coin would contain 1 oz of palladium, worth about $683 at the moment. So the $25 face value coins, if produced today, would sell for at least $683 plus the cost of minting. Platinum is $1559 an ounce now, and the mint sells the one ounce $100 platinum coin for $1892. If the palladium coin were to be sold for, say $1000, it would take only 2 billion of them to raise $2 trillion. But why deposit them at the Fed for $25 each when they sell for $1000?

      • Why indeed? If my calculator is right 80b palladium coins would cost over $50T to mint and would only fetch $2T at face value from the Fed. I expect a little more efficiency even from this government.

        • How’s this for efficiency?
          One hundred Trillion $0.25 cent pieces.

          Or, as already proposed by Dennis Kucinich in HR 2990:
          (a) In General- Pursuant to the exercise by the Congress of the authority contained in the 5th clause of section 8 of Article I of the Constitution of the United States of America–
          (1) the authority to create money within the United States shall hereafter reside exclusively with the Federal Government; and
          (2) the money so created shall be known as United States Money and denominated and expressed as provided in section 5101 of title 31, United States Code.


  13. Gary Anderson

    I would never deposit the coin with the Fed. Can’t the treasury have its own bank? I don’t trust the Fed to watch over the money. The Fed allowed toxic loans and Greenspan was in on the Ponzi housing scheme. He said in Feb, 2004, that you could get a “better deal” with an adjustable mortgage, and this right at the start of the spreading of toxic CDO’s by Henry Paulson.

    • Gee, I got an adjustable rate mortgage in 2004, and 3 years later it adjusted from 4% down to 3%. I thought it was a good deal. My bank didn’t sell it, though.

      • Gary Anderson

        You were fortunate. Most people were messed up by toxic mortgages. I think you know that GolferJohn.

        • There is a difference between an adjustable rate mortgage and a toxic mortgage. I think you know that, Gary. I think Greenspan knew it, too, and was not advocating that unsophisticated investors should take out a toxic mortgage.

          • Sorry, you are completely wrong. Toxic mortgages were variable rate mortgages once reserved for the wealthy that were then pushed on the masses in the biggest housing scam in the history of the world.

            • Toxic mortgages were a particular type of variable rate mortgage. Not all variable rate mortgages are toxic. All cows are animals, but not all animals are cows. Do you get it now?

    • They could probably mint it in smaller amounts and use it to buy things like bombs and aircraft carriers.

  14. Josh Barro is proposing ( that Obama renounce Presidential ability to coin trillions in exchange for the Republican’s agreement to end the power of Congress to block the payment of debts. A bad bargain but Obama seems apt to fall for it.

    • A bad deal since Congress still controls the purse strings. If it doesn’t appropriate the money there is no expansion.

  15. Gary Goodman

    You guys want to ELIMINATE the Debt?

    Bill Mitchell told a story about how High Street Banks in Australia met with Govt for an emergency session because they wanted the Govt to issue MORE debt, despite the fact that they were then and now running a budget surplus, taxing more than spending (offset by high exports).

    Mosler explained in a bit of a roundabout way that the Treasury issues Debt simply because Congress pretty much MANDATES that the Treasury must auction Securities.

    The following article is a bit out of paradigm vs MMT, but it says that the BIS published a paper saying that the financial sector wants and needs MORE “safe assets” meaning national debt.

    Fortunately, or unfortunately, the US Treasury *CAN* issue Debt without running or increasing any budget deficits, OR … with a few minor tweaks of Congress’ law or rules … COULD do deficit spending without issuing any Debt (Securities).

    People could DEMAND that Congress stop issuing NEW Securities, if the Debt is such a crisis. Bet they won’t. The bond market would be very angry.

    • These days short term bonds don’t pay much interest. But longer term bonds pay a little. I think pension funds and long term investors (China, Japan and rich) would want them since this is a risk free asset. (Or at least it was until congress started messing with the debt ceiling. )

    • Keeping in mind that the net effect of platinum coin issuance is exactly the same as issuing Greenbacks of an electronic media, the Kucinich Bill provides that the government issue new money in funding its so-called eficits, and at the same time stops the government from issuing any debt when it deficit spends.
      One single, clear solution.
      Why not?

      • Sorry, ‘deficits’.

      • I agree this is the ultimate solution. Joe Firestone had an earlier post showing how the 60T PC could lead to this result (though not necessarily this specific legislation). The rub is how to get John Boehner, the tea party Republicans and the Democratic deficit hawks to agree this is the way to go.

        • Thanks.
          I’m a firm believer that only if the people lead will the leaders follow.
          That’s why I’m here.
          Among the people.

          • sunflowerbio

            Glad you’re here. I assume that, like most of us, it’s not by choice, but if it is, congratulations.

      • joe, the downside to HR2990 is significant elimination of things to argue with each other over. I think HR2990 addressed the monetary structure pretty well as it eliminates the debt boogy-man. Then we have to tackle the tax issue.

        Check this out:
        Let me know what ya think. The gist seems to be: eliminate income tax, and replace it with tax on money transactions….not just trading, but every single financial transaction. keeping the amount to some number under 1/2 of 1pct in the light of no income tax seems pretty efficient. and if hr2990 were implemented, this method of taxing could be adjusted almost instantaneously to affect inflation management.

    • yeah, tough concept to grasp…no us debt oh my, where to safely stash all the cash the 1% hoard and collect interest. in exchange for changing the structure, we can either create govt safety accounts where they sit safely but no interest or govt debt for like .25 interest. either way the days of the govt paying trillions in interest to use it’s own money need to stop.

      if the govt stops giving away the store on interest, they might actually have to spend all that cash.

  16. here’s an alternate idea: take 1000 ($1T) coins, just deposit them in the fed vaults and not credited to the trsy acct. whentrsy needs to deficit spend, it tells the fed to take 1tdc out of storage and credit it to the trsy acct. so the fed does and once it credits trsy acct, it destroys the coin just like it would cash. it wold be like a nuclear monetary core providing creadit for the next several hundred years…..

    Acutually the could have just implement HR2990 and avoided all the stuff.

  17. The government issued a 16 trillion dollar credit as an electronic ledger entry to bail out the banks. There was no corresponding debt issued at that time, as this would have been apparent by inspection of the national debt at the time this credit was added to the ledger.

    There is no question that this is what happened. The question is whether the government thinks we, the people, are as important to it as the banks are.

    Money is a concept that is valid as long as we believe in it. Its physical instantiations are merely symbols representative of the concept, whether the symbols be paper, electronic ledgers, coins, or any other symbol the people of a society are mutually willing to suspend their disbelief about.

    • This is such a clear, resounding statement, it should be broadly posted.

      In terms of messaging, this sentence this particularly compelling:
      > The question is whether the government thinks we, the people, are as important to it as the banks are.

    • “The question is whether the government thinks we, the people, are as important to it as the banks are.”
      From the government’s actions to date, I would say the answer is a resounding NO.

    • Posted to Reddit with title:
      Gov’t comes up with $16T for Banksters — but for “We, the People”, the Gov’t is broke ??
      under category “Economics”

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