This is just an indication of how stupid the leftists are in this
country and how far out of touch they are with reality.
It is right up there with Obama's ongoing plan to have the fed buy the
debt with money they print out of thin air. (80% of all new issue
bonds right now).
(AKA quantitative easing)
This version of the story doesn't even have it right.
As I understand it, the scheme is *not* to reduce the outstanding
debt by $1tril. It's to use the $1tril coin to make payments
on the debt and the other expenses of govt if the borrowing
limit is reached. Still, it would be very interesting to
understand how even that is legal on the govt books.
I doubt it's seriously being considered. But then a couple
weeks ago I saw the chaiman of the Senate Finance Committee
on a Sunday talk show. They were asking him about the
fact that the budget deal then being discussed included
fictional spending cuts, like pretending that the wars in Iraq
and Afghanistan were going on for another 10 years. He
said, "Well you can call it ficitional spending cuts, and there
is some truth to that, but at least it's fictional spending cuts
offset by fictional revenue increases."
With clowns like that in control, anything is possible. Pelosi
says for example that Obama should just go ahead and borrow
more, citing the 14th amendment, and give Congress the finger.
She had no such problem when Obama voted not to increase
the debt ceiling, calling Bush unpatriotic for wanting to do so.
The 14th only says that the credit of the USA shall not be
put into question. There is still enough money coming in that
the govt could easily make payments on the national debt.
They would just have to cut other things.
So, sady, I would not put a $1tril coin out of question. That
should really impress the holders of US debt.
On Thu, 10 Jan 2013 06:13:16 -0800 (PST), " email@example.com"
They are already doing it without the formality of a silly piece of
When the Fed buys unsold bonds with money they create out of thin air,
it is economically the same thing.
An actual coin that had a trillion in value in platinum would be the
size of a 747
On Jan 10, 11:04 am, firstname.lastname@example.org wrote:
It's not the same thing. The FED then has bonds which have a value
that is set in the open market. When they buy $1tril of bonds with
new money to stimulate the economy, the process is later reversed
when the economy has recovered, where they sell those
bonds and get the money back. That has been going on since the
creation of the FED. It's part of the business cycle. They
might get more or less for the bonds
than they initially paid for them, there is the interest involved,
so it's not going to be perfectly 1:1, but it's close enough and
clearly it's very different than the govt just issuing some bogus
coin and SPENDING all the money.
It doesn't need to have it's value in platinum any more so than
a dime or quarter needs to have metal value of 10c or 25c.
It could be the size of a silver dollar.
On Jan 10, 12:22 pm, email@example.com wrote:
Because when the FED buys a bond, the bond has a
real value. Two years from now, they can reverse the
process and get the money back. That's exactly what
the FED has been doing for decades to regulate the
economy. When the economy is weak, they create
money and buy bonds. When the economy recovers
they start to reverse the process. They sell the bonds
and recover the money.
If the govt issues some coin and then spends it,
it's spent and gone.
Apparently because under current law, they may be
able to do it via the coin route. The rubber check would
On Thu, 10 Jan 2013 09:34:33 -0800 (PST), " firstname.lastname@example.org"
Both are just accounting gimmicks. The bond can be sold later and the
money destroyed or money (and the coin) can be destroyed. Same thing.
The difference is that Obama doesn't think a coin is "borrowing", so
gets around the debt limit.
On Jan 10, 3:12 pm, email@example.com wrote:
I guess it depends on what they do with the coin after they
create it. Nobody has explained the exact process. I guess if
they then take it and deposit it at Chase and just use it as
part of federal spending, then it would be similar to the FED
money creation process.
Have you seen what law allegedly gives them the authority and what
the law actually says?
Quantitative easing does not add to the debt. Spending money adds
to the debt. It's like me selling a car. I'm swapping one asset for
another. My balance sheet has not changed. I don't owe and
more or less than I did before. A month later I can buy my car
back and we're back to where we started, assuming the price is
the same. The current federal debt of $16tril, the debt limit, etc
has nothing to do with QE.
On Thu, 10 Jan 2013 12:34:57 -0800 (PST), " firstname.lastname@example.org"
The idea was that the Fed would put the coin in the vault and "pay"
the government its face value; an accounting gimmick.
I've only read reports that the law doesn't allow the government to
coin copper, silver, or gold without Congress' approval. The idea was
that the mint could make commemorative coins using other metals
without Congressional approval. It's a case of what the definition of
Only because the debt is in the form of an IOU to the Fed, and the
balancing money is gone. It's a debt. OTOH, if a coin is minted,
it's not borrowing. It's "creating" money.
It certainly does! No one else is buying the government debt so the
Fed is buying it. The government is spending the money the Fed is
On Jan 10, 5:00 pm, email@example.com wrote:
QE is exactly that, creating money. The FED uses money
that never existed before to buy bonds.
That is nonsense. US treasuries are widely held and there is
a huge and deep market. They trade about $1tril a DAY.
About half of the total 16 tril is owned privately or by
foreign govts/institutions. Those securities trade every day with a
variety of buyers and sellers in the marketplace, not just the FED.
Yeah, the FED has a big influence there, but it's nonsense that
no one else but the FED is buying them. Around the world, US
debt is still viewed as one of the safest investments.
On Jan 10, 11:50 pm, firstname.lastname@example.org wrote:
That assumes there are no other players in the bond market.
That no one else buys any US debt. That is untrue. They
are two seperate processes. Yes, it's true that some of the
debt the US issues is ultimately bought by the FED. OF the
$16til outstanding, the FED doesn't own the majority.
Let's move forward a bit. Let's say a year or two from now the
economy is growing at 4% GDP. Do you not agree that the
FED will then start selling the bonds it has bought to
decrease the money supplyy, reversing the process that
put new money into the system? That this is not exactly what
has been done in other business cycles to regulate the
economy, prevent inflation, etc?
Also, where did $1.6T come from? The budget deficit for
the year just ended was $1.1tril. That is about the estimate
for 2013 as well.
I've been paying attention. Obviously you haven't, because the link
you just posted refutes your whole argument above. It clearly says
that the FED owns just $1.6tril in US bonds. That's of a total
debt outstanding of $16 tril. Exactly consistent
with what I've been saying. You claimed that no one else was
buying US bonds. $6tril has been added in new US debt since
Obama was elected. Even if the FED bought the entire $1.6tril
that they own during that period, it still leaves $4.4 tril that was
purchased by other buyers. You make it sound like there is
no market for US bonds other than the FED.
Actually there is a huge market, trading $1tril a day with
Your argument is like saying because hedge fund XYZ owns
10% of say Apple, making it the largest single holder, that no
one else is buying Apple stock.
On Jan 11, 11:42 am, email@example.com wrote:
And your source for that would be? krw provided a link
that shows the fed owns $1.6tril, or only 10% of the outstanding
debt. The FED owns $1.6tril, yet the deficit last year alone
was $1.1 tril, $6tril has been added in the last 4 years,
so how can they be buying 80%, yet hold only $1.6tril?
Complete avoidance of the questions noted. The questions
pertain to routine FED measures to regulate the economy through
the money supply that are part of
it's most basic function. That have been going on since it's
creation, without regard to whether there was a federal deficit
or surplus. They are in response to what the economy is
And there is a direct corelation between govt revenue and
economic growth. If you had that 4% economic growth, the
deficit would shrink dramatically for two reasons. One
is that with economic growth the govt takes in more tax
revenue from everything from personal income tax, to
capital gains and corporate tax. At the same time, some
expenses drop, eg unemployment claims, food stamps.
You sound like a conservative. This has been a
core conservative principle forever. That a vibrant,
growing economy greatly increases revenue without raising
taxes and will have a significant impact on the deficit as
long as new spending is not initiated. Will it close the
deficit? No, but getting back to growth of 4% or 5%
can cut it in half.
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