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View Diary: China Cuts US Credit Rating. Obama Cuts Hawaii Vacation Short. (171 comments)

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  •  Platinum Coin Seigniorage (31+ / 0-)

    Obama could mint $60 - $100T in platinum proof coins - fill the public purse, repay all outstanding obligations, and tell the bondholders to pound sand, just like we told international dollar holders to pound sand when Nixon abandoned the gold standard. The law allowing Obama to do this is already in place and has been on the books since the 90's. if the fucking Chinese want to declare QE a form of default (the same as calling it default if you pay off your credit card or your mortgage earlier than expected) let them hold their US dollars in cash then, and forgo the interest. They are not doing us any favors. buy our bonds, we are doing them a favor selling them bonds. That bit of unnecessary chicanery costs the treasury $360 Billion in FY 2012. That might have provided a lot of economic stimulus, but it was all sequestered in the bondholders accounts earning compound interest. Imagine a world where you couldn't invest in usury, where all investment was in equity and productive capital. Our economy would be producing $8-10Billion per DAY more than at present. What we really have is the polar opposite. Nearly all investment is being diverted to non productive financial assets. The movement is tantamount to a malignant cancer's usurpation of the body's resources to its own ends. The financial industry spells the end of industrial capitalism in exchange for a system of parasitism that leads ultimately to society's self destruction.    

    •  How Much Platinum is Available to Use? (3+ / 0-)
      Recommended by:
      Smoh, Nulwee, Shockwave

      Last time I checked, this idea has a serious decimal place issue.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Wed Dec 26, 2012 at 06:17:29 AM PST

      [ Parent ]

    •  Recced from the highest mountain top, OS, (3+ / 0-)
      Recommended by:
      CharlieHipHop, Shockwave, blueoasis

      especially the last two sentences.

      Building a better America with activism, cooperation, ingenuity and snacks.

      by judyms9 on Wed Dec 26, 2012 at 07:05:56 AM PST

      [ Parent ]

    •  Bondholders? (3+ / 0-)
      Recommended by:
      redding888, 4Freedom, ozsea1

      You realize only 32% of US debt is owned by foreigners.  The other 68% is owned by Social Security Trust fund and other US government agencies and the general public.  Telling all of them to pound sand isn't really an option.

      [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

      by rabel on Wed Dec 26, 2012 at 08:16:54 AM PST

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      •  sure it is. there is no necessity for (7+ / 0-)

        these inter-agency accounts and trust funds. They are all accounting gimmicks. All social security, medicare and Lockheed Martin payments come out of the same Treasury General Account at the Fed. Moving money from one pocket to another changes nothing in the aggregate. it just give politicians something to bullshit the public about.

        •  Gimmick? (1+ / 0-)
          Recommended by:
          ozsea1

          I don't agree that investing surplus money (such as the surplus that the social security trust fund accumulated up until this decade) in the US Government is a gimmick.  Exactly what would you have them do with the surplus?  US Government treasury notes and bonds are the safest investments in the world and is where people, governments and businesses invest their money when they want it to be in a safe investment vehicle.  I don't understand why you feel like that is some sort of gimmick.

          [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

          by rabel on Wed Dec 26, 2012 at 10:23:24 AM PST

          [ Parent ]

          •  I repeat (2+ / 0-)
            Recommended by:
            chuck utzman, Wolf10
            All social security, medicare and Lockheed Martin payments come out of the same Treasury General Account at the Fed.
            Despite what you believe, the government does not store up dollars for future use any more than the scorekeeper at Fenway Park stores up points for future games. I'm afraid you fundamentally misunderstand the nature of fiat money.

            And this:

            US Government treasury notes and bonds are the safest investments in the world and is where people, governments and businesses invest their money when they want it to be in a safe investment vehicle.  I don't understand why you feel like that is some sort of gimmick.
            Isn't it nice of us to provide the wealthy with not just a safe place to store their money, but one that guarantees payment of interest in addition to the elimination of risk. Where is it, exactly, that you find this accord in the social contract or the constitution?
            •  Yep, you're off the deep end (0+ / 0-)

              Sorry, bub, but you're not nearly as smart as you think you are.  I do in fact understand that the government takes the bond income and uses it in the general fund. You cannot, and will not, provide any explanation as to why that's a bad thing, and you cannot argue against why a US government backed bond is not the safest investment in the world.

              As I stated, government bonds are not just a tool for the wealthy. You really don't have any credibility or room to stand on with your little conspiracy theories gleaned from the worst of Glenn Beck and Libertarian scare-mongering.  

              It's perfectly acceptable for the US Government to raise funds by selling savings bonds and treasury notes and to then provide a guaranteed return on that investment.  Banks do it, other governments to it, States and Local governments do it.  You're really out there, Old Surgeon.  

              Go on back to your little gold-standard CT web sites and argue with your equally-ignorant little peers about "fiat" money and other ridiculous bullshit that has absolutely no basis is reality. Hey, I know, why don't you go buy yourself some of those Ron Paul dollars - I hear they're a great investment.

              [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

              by rabel on Wed Dec 26, 2012 at 03:58:14 PM PST

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              •  Are you a completly out to lunch or what? (0+ / 0-)

                The one thing you seem obsessed with is gold and paulism, both of which I find ridiculous positions. One would have to be illiterate to read some latent desire for a return to the gold standard from any of my writings on this site or any other site. I have stated repeatedly that abandonment of the gold standard was the re-institution of monetary sovereignty, and was one of the most important and positive economic developments of the 20th century, but we haven't quite figured that out yet. That's why we modernized the monetary system and nothing changed but the actors. You clearly have no understanding the arguments I have made or of the US monetary system and its interplay with fiscal policy. Go study some MMT and get you head out of Ron Paul and his idiocy.

                •  Yep (0+ / 0-)

                  You cannot, and will not, provide any explanation as to why that's a bad thing, and you cannot argue against why a US government backed bond is not the safest investment in the world.

                  [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

                  by rabel on Wed Dec 26, 2012 at 08:10:33 PM PST

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                  •  I never said what you claim - you did! (0+ / 0-)
                    You cannot, and will not, provide any explanation as to why that's a bad thing, and you cannot argue against why a US government backed bond is not the safest investment in the world.
                    Since I never made such a statement I have no reason to defend it. That was all your inability to comprehend plain language. But no matter, I respect your intellectual limitations. If that's how you choose to perceive the world, have at it. I hope it serves you well.
                    •  Yep (0+ / 0-)
                      Isn't it nice of us to provide the wealthy with not just a safe place to store their money, but one that guarantees payment of interest in addition to the elimination of risk. Where is it, exactly, that you find this accord in the social contract or the constitution?
                      You cannot, and will not, provide any explanation as to why that's a bad thing, and you cannot argue against why a US government backed bond is not the safest investment in the world.

                      You sir, are a joke.

                      [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

                      by rabel on Thu Dec 27, 2012 at 09:03:43 AM PST

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                      •  I asked a very specific question which you quote (0+ / 0-)

                        but don't bother addressing. Obviously, you believe that it is a good thing for the people to pay financial elites to store their money risk free for them. I think it is a foolish thing for us to do for reasons I have already stated and that are self evident from my statement. As for your personal insults, I consider the source and laugh at the clown acting the fool. But now I have gown weary of your sad attentions so I bid you farewell.

      •  And as for the private sector ownership of (6+ / 0-)

        treasuries, why should we be concerned about them. The treasuries provide RiSK-FREE INCOME to rich people. Why. How do the rest of us benefit from this? Removing the treasuries from the bond market would save us $360B per year at the current cost of debt service. With or without the bond market, the Fed will continue to control interest rates through the reserves and the overnight market. But they could cut that from $360B to $40B by just not renewing bonds as they mature so the money will be trapped in reserves. That might actually force some money back into industrial capitalism. That would be a step in the right direction.

        •  Industrial capitalism (9+ / 0-)

          that's the key.  The great post-war economic boom was created by government extracting money from the FIRE sector by "debt" and turning it over to the industrial sector to pay workers to make things.  Even when we deliberately blew those things up or threw them away into outer space, they did better for the economy than leaving the money rotting in bank vaults, sitting idle.

          Quigley again:

          "In addition to their power over government based on government financing and personal influence, bankers could steer governments in ways they wished them to go by other pressures. Since most government officials felt ignorant of finance, they sought advice from bankers whom they considered to be experts in the field. The history of the last century shows, as we shall see later, that the advice given to governments by bankers, like the advice they gave to industrialists, was consistently good for bankers, but was often disastrous for governments, businessmen, and the people generally."

        •  Not just rich people (2+ / 0-)
          Recommended by:
          limpidglass, ozsea1

          Any financial counselor in the country will advise you to invest your money is a well-rounded portfolio with more and more of your money invested in government securities as you get older because they are safe.  It's not just for rich people but the middle class and state and local governments, pension funds, businesses, anyone.  Most people have probably received a US Savings Bond from their grandmother.  

          I'm all for a shake up in our top-heavy economy but you're completely and utterly uninformed and really venturing into conspiricy-theory territory when you're going on about government securities like this.

          If a prudent move is for the government to buy back outstanding securities I'd be all for it, but right now we need government spending on infrastructure and other stimulus, not debt buy-back.  Once we're back on stable economic ground (by reigning in the tea party and Libertarian know-nothings in the House, and with a global economic recovery) we can then start working on buying down our debt load but until then there's really nothing dangerous or irresponsible about having US government debt.

          Can we decrease our imports and bring jobs back to the United States?  Absolutely, and that should be part of a bigger rebuilding plan that we would use debt spending to achieve.  Part of that would be that we need to provide incentives for creating jobs in this country and disincentives for shipping jobs overseas.  A "buy american made" promotion would also help by educating some of these low-information Libertarians and Republicans and making it patriotic to pay a little more for American-made goods while shunning cheap, low-quality imports.

          [Terrorists] are a dime a dozen, they are all over the world and for every one we lock up there will be three to take his place. --Digby

          by rabel on Wed Dec 26, 2012 at 10:33:01 AM PST

          [ Parent ]

          •  Your comment presupposes a monetary (0+ / 0-)

            constraint that does not exist in actuality. The system that actually required us to use the bond market as we do disappeared in 1971 with the gold standard. The debt stood at less than half a $trillion. So virtually all of the current debt has accrued since leaving the gold standard. You want to claim conspiracy theory territory, it is your claim. Mine is the collaboration of greed, ignorance and willful misdirection causing us to engage in costly and nonproductive business. If you believe $360B is a fair price to pay for what we could otherwise get for $40B, I suggest you organize a campaign committee and run on it.

            Why don't you check out a few MMT sites and get another perspective before calling for tin foil hats. Most of the MMT community endorses a full employment economy as fundamental with various proposals for a job guarantee.

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