This is Covid-19-related, but probably more suited to GQ than in the Quarantine Zone:
More or less on instant/short notice, the U.S. government just passed a $2.2 trillion stimulus bill and can send out money pronto. I’m sure there’s got to be some limiting factor, a ceiling, on how much the government could do this.
Suppose that tomorrow morning, both parties in Congress, and President Trump, all announced that they wanted a **$9 trillion **stimulus bill on top of everything that’s already been done (9 trillion being an arbitrarily selected huge number - we could also substitute twenty trillion, or forty trillion.) Ignoring the effects such as inflation, etc., would or could the federal government + Treasury even pull off such a thing? Where would they get the buyers to buy up the issued debt (or however it is that they're raising the ?)
If the Federal Reserve was willing to play ball, it could instantly buy up all the Treasury debt and credit the Treasury with $9 trillion. The Fed could then either hold on to the debt or sell it on the open market at a pace of its own choosing.
I am not commenting on how financially responsible this would be.
Back in 2013 when the Republicans were playing games with the debt limit, an unofficial proposal to bypass the debt ceiling was floated that involved minting trillion-dollar platinum coins. This was necessary at the time because of the debt ceiling. This artifice would not be required for your hypothetical because, hopefully, Congress would raise the debt ceiling at the same time it passed the proposed law and the Treasury could simply issue bonds in an equivalent amount. The Treasury Has Already Minted Two Trillion Dollar Coins
> What’s the biggest amount of money the U.S. government could raise on short notice?
(1) Congress can appropriate as much as it wants.
(2) Congress can borrow as much as any entity will lend.
(5) Congress can create and allocate however much they want.
USC Section 9 imposes some rules but not amount limits. So Congress, with a cooperative POTUS, could “raise” a gazillion bucks in a couple hours or so. Insert a big big number in a bill template, call a voice vote, fax the paper to POTUS for signature, and watch the fun.
Since we are in ‘how-long-is-a-piece-of-string’ territory - what’s the best estimate of the percentage of all these $trillions that would be diverted to recipients other than those intended?
Nitpick: IIUC the Treasury would have to sell the new debt at a public auction. (Of course the Fed Reserve could be buying up a comparable amount of old debt on the open market concurrently, so the net effect is similar to just selling the debt to the FRB.)
Completely false. Your link points to a Forbes article by a virulent right-winger, ignorant and idiotic even by Forbes standard. A good rule of thumb:If you read it at Forbes.com it can be treated as a lie.
Not a GQ question. Save it for a thread in an appropriate forum.
[Not moderating]
Are we talking about a limit on number of dollars, or on amount of money? Any action like this will have inflationary effects. Raise too many dollars, and the amount of money could even decrease, from the decrease in value of those dollars.
But the standard terminology is “real balances” or “real monetary balances”. Dollars are money. But if you create too much money, you might decrease total real balances.
I would hope that we can agree that Paul Krugman is not a right-winger and does have some credentials in economics even if you do not support his proposals.
Paul Krugman did not claim there’s actually been trillion dollar coins(TDC) minted, unlike the other article. You can google for images of the TDC, but all you get is obviously photoshopped pictures of various real coins, either commemoratives or the one dollar coin.
Yes, the headline says that the Treasury has minted two coins, but the article does not say that. The headline writer took it out of context.
The article says that by issuing $2 trillion dollars in Treasury debt, the Treasury has effectively minted two coins “out of thin air.” The author was figuratively speaking comparing selling debt to minting coins.
Why can’t we borrow money from ourselves? Better than only depositing a $1 trillion platinum coin we’ll pay the money back over time by reducing the money supply according to our payments with revenue derived from actual goods and services.
Did you even read the article before you posted? You and the “headline writer” made the same error — you copied the “headline” to be your synopsis of the article.
And are you sure the headline writer and the article writer were different people? The article begins by prattling on and on about the “platinum coin.” Placing the word “effectively” in the headline would have kept things more honest — though still wrong — but that’s not Forbes’ style.
The platinum coin was not proposed as magic money or as a solution to mounting debt. It was proposed to combat a Congress unwilling to raise the debt limit because it wanted to see a President fail. Were you aware of that?
You write that as if you think I didn’t know the background of the platinum coin. My comment wasn’t directed at the proposal, nor at Forbes’ laughable effort to “educate.” It was directed at YOU.
Those are your words, whether you copy-pasted from disinformation or not. YOU wrote “The Treasury Has Already Minted Two Trillion Dollar Coins” although in fact The Treasury Has NOT Minted Two Trillion Dollar Coins. Spreading disinformation is not appropriate in GQ, so I’ll ask again: Did you even read the Forbes’ article before you wrote “The Treasury Has Already Minted Two Trillion Dollar Coins”?
Yes. I copied the headline and created a link to the article. That is a standard style for providing links to articles.
If you had read my post, you would have seen that I wrote:
“This was necessary at the time because of the debt ceiling. This artifice would not be required for your hypothetical because, hopefully, Congress would raise the debt ceiling at the same time it passed the proposed law and the Treasury could simply issue bonds in an equivalent amount.”
I did not get the impression that you knew. OK, so that was intended as a personal slam, not a comment on the content of the post. Thanks for clarifying.
Ok, considering my previous instructions, this will get you a warning for political jabs. Since you can’t seem to restrain yourself or respond in a civil manner, I’m also instructing you to stop posting in this thread.
The United States government has the power to borrow money by issuing bonds. People buy the bonds and the government collects the money from the sales and spends it. So the only real limit of the government’s ability to raise money is how many bonds it can put on the market before people decide they’re an unsafe investment and don’t buy them.
Also to consider is that under the 14th Amendment the US government must pay the interest and redeem the mature bond and bills. What happens when everyone is taxed at the maximum of the Laffer Curve and all of the money is going to pay the debt?
Well the government could issue more bonds to pay that off I guess …
It’s unlikely we would ever get to the point of a 100% tax.
To apply some realistic figures, the GDP of the United States is around twenty-one trillion dollars. The government collects around three trillion in taxes each year. That means we have a lot of untapped money that could be taxed.
The national debt is currently around twenty-four trillion dollars. Let’s say we raised the total amount of taxes from three trillion a year to four trillion. A big jump but not impossible. And then we apply that extra trillion every year to reducing the debt. It’ll be gone within twenty-five years.
So we have the ability to pay off the debt. We’re just choosing not to.
Did you even read the article before you posted? You and the “headline writer” made the same error — you copied the “headline” to be your synopsis of the article.