The petition is a joke. O doesn’t want to bypass the debt-limit “crisis” any more than he wants to sign EFCA. He wants to be “forced” to right-size SS and MC.

If 934 card-carrying Villagers signed a petition, then the WH might take notice.

Except that imports to America would collapse nearly instantly after we made that coin. The one minor flaw in your otherwise brilliant plan.

Bllomberg has this story on the coin as well. They suggest that the Pres (a) buy back the coin with new debt when authorized and (b) give up the right to mint coins in return for repeal of the debt limit law. Personally, I would not do either. Why give it up? Makes no sense. But you know how the Pres thinks about these things.

That said. I doubt he will do any of it. But who knows?

Explain please.

Maybe that would be good. Bring jobs back to the US?

Why not issue a coin for, you know, like $100 Trillion, and then be done with this silliness forever.

The plan, at least from my perspective, is to neutralize the Republican’s crazy faction. Though it seems more like a joke the financial press just can’t stop itself from promoting.

The plan would probably be a disaster if actually carried out, then again so is defaulting on the debt.

Not to worry. Congress will shortly take the right away. Can’t have a crazy Pres, you know, monetizing the debt. Besides, in the background TV is saying this is just a “joke”. I guess defaulting on the debt is also a joke?

I like Duncan’s suggestion: “Put Reagan on it, just for giggles.”

…in the background TV is saying this is just a “joke”.

“First they ignore you, then they laugh at you….”

Winning.

This is nothing more than a plan to devalue the currency by 1 trillion dollars, in an instant. This would signal the advent of a currency war with the first shot being taken by the US against the entire rest of the world.

Considering that America currently imports about 2/3 of it’s energy… well, you can kiss fuel for your vehicle goodbye as one example of things that will go away when the rest of the world stops generously donating stuff to us in exchange for our fancy printed money.

Keep dreaming.

I certainly can’t say what others may think of it. But all this does is put money in the treasury’s account at the fed, like a bank account. The treasury is not authorized to spend it until congress passes a spending bill. .

Also @bluedot12

Wouldn’t the inflation / ensuing currency war be averted by an equivalent bond sale by the Fed? That would even out the currency in circulation, in effect using treasuries to pay the debt.

I suppose the assumption there is that the Fed could sell a couple trillion in bonds…

Yeah, I don’t think I’d count on Obama “to use an obscure provision of the law” to avoid cutting Social Security and Medicare if I were one of the folks signing this petition. People are just grasping at straws now, and it’s sad.

The coin is somewhat similar to the bond. Both of them result in a credit to the treasury’s account at the fed and in both cases that money cannot be spent unless approved by congress. No reason to expect inflation from either action and certainly not a currency war.

I believe you are correct. In any event, the coin does NOT dump $1 trillion into circulation — which seems to be, near as I can tell, jgordon’s premise.

http://www.businessinsider.com/3-huge-myths-about-the-plan-to-save-the-economy-with-a-trillion-dollar-platinum-coin-2013-1

The trade deficit is a $500B to $600B demand leakage, year in year out. If using the Trillion Dollar Coin would collapse imports (thereby eliminating the trade deficit) that would be a huge selling point. Alas, it will do no such thing.
China will keep stepping into the Forex market, in any event, to prop up the dollar to protect its exporters.

The treasury is not authorized to spend it until congress passes a spending bill. .

Exactly!

But the issue is that the bills for expenditures authenticated by previous sessions of Congress are now coming due, and this session wants to repudiate (renege on) those debts. And that’s why we need to mint these coins, i.e., to pay for already-appropriated expenditures.

How do you feel about the idea of the President giving up the idea of minting a platinum coin in exchange for repeal of the debt limit law?

No it won’t:

MYTH #1: This will cause massive hyperinflation.

This is an understandable fear, because the idea of creating new money out of thin air to pay our debts brings to mind situations like Weimar and Zimbabwe, and trillion dollar bills being tossed about it in the streets.

But this is not about using the coin to pay back our debts, it’s staying within the law, while avoiding the technically nonsensical debt ceiling.

Think about the mechanics, the trillion dollar coin goes to the Fed, but in terms of the real economy, government spending takes place exactly as normal. Now it is true that the Treasury might not be doing bond purchases at this time, and that this could leave more money in the system, that could heat up and cause inflation, but this is easily remedied, because the Fed has a gigantic pile of Treasuries it’s sitting on that it could sell back into the open market to “sterilize” the government spending.

The bottom line is: Because this trillion dollar coin isn’t being used as “helicopter money” (money dropped directly into the economy) you don’t get the inflationary effects you’re used to seeing when you hear about governments creating money in large denominations.

This is purely a technical fix for a bad situation.

MYTH #2: The trillion dollar coin will destroy the dollar!

This is pretty much the same as the first argument. What would destroy the dollar is if the government just started printing $1 trillion bills, declared them legal tender, and then dropped them from a helicopter onto cities. Soon, the buying power of a single dollar bill would be zilch. But alas, because the coin isn’t a direct injection into the economy, but rather a stopgap that lets the government continue to spend on various services, you don’t have that destructive effect.

The treasury is not authorized to spend it until congress passes a spending bill. .

I’ve found some precedents where nations ran their economies on freshly printed money rather than borrowing:
* The U.S. during the Civil War (greenbacks)
* The Nazis from 1933 to 1945.
* Most European nations during WWI.
There didn’t seem to be any problems, but they all went back to the gold standard after the war.

Now we no longer have a gold standard and the value of the dollar is based on the fact that U.S. taxes have to be paid in dollars. So we don’t need to worry about diluting the value of the dollar by issuing fresh money. If the value of the dollar starts to sink, we can simply increase taxes.

As Saul Alinsky teaches us, always use the tools the powers that be offer us. Even though the petition process may be a joke, if we take it seriously the powers that be will be forced to respond.

Using platinum coin debt seigniorage to raise significant revenue is one of the worst public policy ideas I’ve heard lately. And that’s saying a lot, given that lately in the world of public policy ideas we’ve had Teahadists and other assorted wingnuts constantly redefining “worst” for us. You’ve got to be pretty bad, dive pretty deep, to reach lower than those guys and gals.

While reasonable people would applaud the use of a workaround for maliciously stupid Congressional inaction on raising the debt ceiling, there’s no way this presidential workaround could be restricted in the future to actions that reasonable people would applaud. What you’re doing when you give the president the power to raise significant revenue on his own, without having to go to Congress, is making the president the government. Even George III couldn’t do that, raise money without going to Parliament for it. Do you really want to give some future Dubya the power to raise armies and make war on his own, without going to Congress?

Not that this debt seigniorage gambit would work. It amazes me what simple faith people have that the law is nothing more than a bizarre battlefield in which victory goes to whichever side can locate and trip some obscure landmine legal provision under the feet of their hapless foe. In reality, the debt ceiling law was quite clearly never intended to allow the House, or the Senate, or the president, acting alone, to counteract the legislative will of all three together that obligated spending, and the platinum coin law was not designed to let the executive raise significant revenue on its own. Just saying “Gotcha!” really loud as you spring either interpretation does not make either of them actually work.

This is not to say that either one of these two juvenile power plays could not be made to succeed. There are no adults in the room in this scenario to adjudicate, to disallow juvenile nonsense and make both sides follow the rules. The courts are not the controlling legal authority in disputes among the two chambers and the president. Again, not that SCOTUS might not get away with asserting such control. But that would tip us over into making SCOTUS, rather than the president, the effective government.

Just stop it. House failure to raise the debt ceiling needs to be met with this simple response — nothing. The day the ceiling is exceeded, Treasury carries on as before, obeying all the laws that oblige it to borrow as much as is needed to meet all legal spending obligations that can’t be covered by other revenue. The executive should not assert some off-the-wall theory that it is allowed to raise trillions in revenue without Congress, it should simply assert that breach of the ceiling creates an apparent contradiction in what Treasury is obliged to do, and that contradicton can only be resolved by assuming that there was in fact no Congressional intent in passing the current debt ceiling to make it a means by which one chamber alone can set aside laws obligating spending agreed to by all three elements of the legislative authority.

Actually that was letsgetitdone’s original suggestion.

You may have overlooked the simple fact that LOTS of business I frequent, Jack inthe BOx, Burger King, 99 Cent Store, Walmart, won’t take bills over $50. You’re really gonna have problem getting change for a $1 trillion bill.

The 1T coin redefines “Heavy Metal”!

Heavy Meddle but not Heavy Mettle.

Oh my precious as someone said. Can’t remember who?

Reportedly, Warren Mosler says congress has to determine the specs for the coin. So next idea?

Obama is the worst negotiator in the world (even if he really wants to lose, he could at least try a little harder before throwing the fight).
Any negotiation would begin Obama adopting Josh Barro’s idea of exchanging of platinum coins for eliminating the debt ceiling and would end with Obama agreeing to exchange platinum for a T-shirt and a case of Snapple.

Its like what Winston Churchill said, don’t climb into the water to fight a shark. Obama can stay high and dry on his platinum battleship, no reason to climb into the water to negotiate.

The whole point is that the $1T coin never enters into commerce, so fears of inflation are pointless.

Just stop it. House failure to raise the debt ceiling needs to be met with this simple response — nothing. The day the ceiling is exceeded, Treasury carries on as before, obeying all the laws that oblige it to borrow as much as is needed to meet all legal spending obligations that can’t be covered by other revenue. The executive should not assert some off-the-wall theory that it is allowed to raise trillions in revenue without Congress, it should simply assert that breach of the ceiling creates an apparent contradiction in what Treasury is obliged to do, and that contradicton can only be resolved by assuming that there was in fact no Congressional intent in passing the current debt ceiling to make it a means by which one chamber alone can set aside laws obligating spending agreed to by all three elements of the legislative authority.

So you’re saying that minting a $1T coin is worse than acting as if laws passed by the United States Congress have no legal force at all?

You talk about not wanting to give the dread and awful majestic power of currency creation to the Executive Branch as it would weaken the Legislative Branch, yet your alternative is to pretend that the debt-limit law passed by the Legislative doesn’t exist — and that therefore the Executive Branch has the right to ignore the Legislative Branch?

Really?

Yeah. That’s the one real obstacle to the $1T coin that I’ve seen so far. However, I wonder if there’s a way around it — perhaps by taking the design of a defunct (yet obviously already approved) piece of currency and just adding a few zeros?

Warren is wrong (assuming he’s said that).

The United States Mint shows a great deal more restraint in creating and offering special numismatic products when compared to other world mints. Sometimes, this is attributed to the central role of Congress in authorizing denominations, compositions, coin designs, and specific coin programs. In many respects, the US Mint must simply carry out the requirements set out by Congress. However, there are many areas where the Mint or the Treasury Department does have some discretion or authority with regards to coins…
The authority to produce the American Platinum Eagles comes from 31 U.S.C. § 5112(k). However, rather than authorizing only this specific program, the law provides incredibly broad authority that could be used to create virtually any type of platinum coin… This seems to allow the creation of infinite new series of platinum coins with any denomination, specifications, designs, or themes that the Secretary chooses.

http://mintnewsblog.com/2012/03/us-mint-and-treasury-department-authority-for-coins/

(FDL comes up in the comments, and I decloak long enough to assert my RINO bona fides, I did indeed vote for Ron Paul in the primaries, and, after this, Romney in the general).

Its not an obstacle, hell even the Director of the Mint who helped draft the law and then carried it out agrees its legal.

“We brought that coin to market faster than any coin the U.S. Mint had ever brought to market, and within about six months of launching it, we owned about 80 percent of the worldwide market for platinum bullion coins,” he said. “The Canadians had dominated the Japanese and U.S. market up to that time, and we basically took them out of his both markets.”…

Diehl said he thought it could be used “as a backstop,” and that it appeared to be on more firm legal ground than the 14th Amendment.
“From everything I know about this, it is possible,” he said. “Now, is it likely? I think it’s highly unlikely to happen. It just looks so ridiculous for the major economic power in the world to produce a trillion-dollar coin in order to balance its books. But is that any more ridiculous than the country being held hostage over default? I think not.”
http://www.capitalnewyork.com/article/politics/2013/01/7071045/trillion-dollar-coin-idea-takes-and-former-head-us-mint-doesnt-see-

This is not really a debatable issue. American Eagle Platinum Eagles have been issued since the late 1990s (with a new design for each new annual series). Has the Mint ever gone back to Congress to seek approval for the specifications of each new design? In point of fact, it has not, the Secretary’s approval is all that’s legally required. Were it otherwise, Director Philip Diehl would have been required to go back to the Hill before he could issue that first series in 1997 (and for every series thereafter) If Warren Mosler or Kevin Drum are right the Mint must go back to Congress to get design specifications approved then the Mint has been breaking the law continuously since 1997. Or the Mint Director at that time, Mr. Diehl, actually has a better understanding of the law HE HELPED DRAFT than Mosler and Drum do. Like I said, its not really a debatable issue.

Really? That’s good news, because the US Mint Public Affairs Specialist ABC interviewed said otherwise:

The more difficult part comes sometime after the decision is made to coin the platinum and before the Mint gets to work in sculpting the pieces.
At that point, the American people must decide whose face will adorn the trillion dollar trinket. The process to determine the “specs” of the coin, U.S. Mint Public Affairs Specialist Genevieve Billia warns, must be “determined by legislation,” creating the potential for another congressional impasse.

Yes really. This isn’t something the federal govt is manifestly incapable of doing, like landing a man on the moon and returning him safely (seeing as Nazi war criminals are now thin on the ground). This is just paperwork.

Coin designs go before two advisory panels, the Commission of Fine Arts and the Citizens Coinage Advisory Committee. Their recommendations go to the Secretary of the Treasury and he is free to accept or reject them (the word that comes to mind is “discretion”). The simplest process would be to take one of the recommended designs for the 2013 American Eagle Platinum series (the design changes annually) and just mark up the denomination. Hell, Geithner could make the executive decision that the Roman numeral for trillion is T and then stamp the back of the coin thusly—
$ T

:o)