Sorry if this is a repost or if another thread exist on it (I’m just getting used to posting on SDMB as opposed to lurking for the past 5 years)…but I’ve been following this story about solving the debt ceiling via a “1 Trillion Dollar Coin” which would be minted (without needing congressional approval) deposited into the treasury DIRECTLY (hence it doesn’t enter public circulation, thus avoiding hyper inflation) and used to pay off a few of the National Debts (a few as in less than 10%) thus keeping the government running without raising the debt ceiling or defaulting…
Now when I first read about it, it sounded like the plot of an upcoming Albert Brooks/Mel Brooks movie…but apparently it’s an actual idea being tossed around…
So, Dopers…legit solution or Disney magic? And what would be a situation where the idea COULD actually work (or if it is feasible, why wouldn’t we do it?)
Also a separate question. Why only One 1 Trillion Dollar coin? Why not mint 18 of them at once and pay off the ENTIRE National Debt, plus have a little left over for surplus?
Eh no one within the administration per se (such as Pres.Obama, Vice Pres Biden,ect) but a few representatives and economist seem to think it’s a good idea, or at least one as equally absurd as our debt is
I’m vague on the exact rules, but it has to do with minting the coin in platinum which has no regulations against it unlike Paper Money and other minted coins (gold, copper, silver) also the money would not go into general circulation, but straight to the federal reserve vault after being deposited in the treasury
This is actually starting to freak me out a bit…I’m not the sharpest tool in the shed when it comes to economics, but apparently if both of those measures are legal, how is it that our money has ANY value at all? It makes sense on paper (especially our debts to other nations, which I’m not sure how they were even incurred for example, the one to China) but what excuses us…or any nation for that matter…for forgiving/canceling ALL internal debts?
I’m not clear how invoking an amendment that says, “the validity of the public debt shall not be questioned,” is equivalent to “just saying the debt doesn’t exist.” Seems kind of the opposite to me.
Like everything else in the world, our money has value because we agree it has value. Value is not an objective quality. If no one on Earth wants gold, then gold is worthless. If no one on Earth wants a dollar, than a dollar is worthless.
Fear of economic reprisals. If we just say, “Hey, China, you know all that money we owe you? We’re just going to keep it. Neener neener!” Then China will say, “Okay, fine. You know all those cheap goods you’ve been buying from us for the last thirty years? They’re not for sale anymore.”
Eh…to see it almost sounded like saying the same thing (but in an opposite way?)
Debt doesn’t exist = Don’t question if it exist or not (or question it period)
Sad/strange though that the value of something is arbitrary. That’s a whole different question, but wonder I Gold is SOOOO valuable only because it’s “shiny” and thus people want it for…whatever…(that’s the argument Stephen Corbet says anyway lol)
And international debts I get (like ours to China) but not internal ones…defense budget is 2 billion dollars short? Okay, I (as President) mint a 2 Billion Dollar coin…here ya go Armed Forces, blast away!
The point is not to issue the trillion dollar coin (or any number of them) to pay off the debt. Rather it is to deposit $1 trillion on account so then the Treasury can write checks against their balance and not need to incur new debt which Congress might not allow them to do.
Paying off the debt or a trillion dollars of it would quite likely cause inflation as a trillion dollars would enter the private sector and “go searching” for things to buy. Just using it as a government bank balance would not be doing anything different spending-wise than what had already been planned. Yes this would be more inflationary than raising taxes to make the payments because that would remove money from the private sector, but not nearly so as simply paying off the debt and making the expenditures as well.
The other thing to do, of course, is cut expenditures. That has to be worked out in the budget which is entirely separate from the debt ceiling.
I don’t see anybody claiming that it would make our financial problems go away, but it might keep the Republicans from turning our financial problems into a complete, worldwide disaster.
It hasn’t. Or rather, it only has as much as people collectively agree it has. That’s what the “fiat” part of “fiat money” means (although of course, gold-backed money was fiat money too, when you think about it).
Yes, it makes one’s head spin. I personally would advise not thinking about it too hard. You’ll only go nuts and/or become an economist, neither of which is advisable or much respected.
