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View Diary: There will be no default on the national debt (113 comments)

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  •  If Obama has the GUTS (8+ / 0-)

    The treasury can mint trillion dollar coins and deposit them in the federal reserve.
    We fought a war to become a sovereign nation and the hallmark of a sovereign nation is that it mints (creates) its own money.
    Right now the banks create money through fractional reserve lending, that is they can legally lend up to 25 times their capitol.
     http://en.wikipedia.org/...

    However money does NOT have to be borrowed into existence. It can be created debt free without inflation (minted) when there is a lot of idle capacity in the economy.

    Look up Modern Monetary Theory

    So the choice is to respond with  traditional means to the new Republican economic terrorism and adopt counter productive austerity,  simi-starve 60 million people directly and depress the incomes of another 70 million, or to do what Lincoln did and directly increase money supply and risk the administration being sued, and accused of being radical, irresponsible and socialist.

    Does this administration have the courage?

    Stay tuned.

    To Goldman Sachs in according to their desires, From us in accordance with the IRS.

    by Bluehawk on Thu Dec 27, 2012 at 04:11:25 AM PST

    •  Helicopters (5+ / 0-)

      Helicopters can drop the money all over the place. Why did no one ever think of this before ... Prosperity for all at zero cost. Yeah, right.

      There's room at the top they're telling you still But first you must learn how to smile as you kill If you want to be like the folks on the hill

      by taonow on Thu Dec 27, 2012 at 04:13:33 AM PST

      [ Parent ]

      •  It all depends on circumstance (2+ / 0-)
        Recommended by:
        Odysseus, AoT

        and arguably today's circumstances make this a viable option.

        Whether it's a good idea to fix the notion in the nation's collective heads, possibly leading to future applications of the same scheme in inappropriate circumstances, is a separate question.

        “What’s the use of having developed a science well enough to make predictions if, in the end, all we’re willing to do is stand around and wait for them to come true?” - Sherwood Rowland

        by jrooth on Thu Dec 27, 2012 at 06:01:15 AM PST

        [ Parent ]

        •  It's lunacy (0+ / 0-)

          I cannot believe that people are considering such ridiculous ideas. There are so many things wrong with the concept that I can't even begin to explain.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Dec 27, 2012 at 11:18:29 AM PST

          [ Parent ]

          •  Some pretty serious economists (0+ / 0-)

            have offered various variations of this proposal.  And they happen to be among the economists who have gotten things right throughout this current economic crisis.

            “What’s the use of having developed a science well enough to make predictions if, in the end, all we’re willing to do is stand around and wait for them to come true?” - Sherwood Rowland

            by jrooth on Thu Dec 27, 2012 at 12:06:32 PM PST

            [ Parent ]

    •  "Risk the administration being sued" (1+ / 0-)
      Recommended by:
      northsylvania

      What on earth??  The administration cannot be sued.  Two words for you: sovereign immunity.  

    •  You don't even need MMT - (4+ / 0-)
      Recommended by:
      geebeebee, ferg, AoT, Odysseus

      The Congress has authorized the executive to mint platinum coins of whatever denomination.
        The President can simply mint, say, twenty coins with a face value of $1 trillion each and deposit them in the Treasury's Fderal Reserve Bank account. Then the President can simply pay federal expenses with checks drawn against the government's account.
         Presto! No deficit.
         Since that would mean putting roughly $900 billion into the economy, the immediate effect would be a powerful economic stimulus.
         Once the economy reached full employment, inflation would ensue.
         We would have to have higher taxes or return to the tax-borrow system in order to avoid continuous inflation.
          Of course, if they don't solve the fiscal cliff and taxes rise, we would only be talking about a $600 billion stimulus if we go the platinum coin route.

    •  There are lots of things the President could do (1+ / 0-)
      Recommended by:
      salamanderempress

      The question is which action will produce the least bad results. The idea of minting a trillion dollar coin will meet our debt obligation, but it will also create inflationary pressures.

      •  more inflation would be good now (1+ / 0-)
        Recommended by:
        jeopardydd

        If we had a little more inflation, the Fed could be more effective.

      •  we WANT (0+ / 0-)

        inflation right now.

        it gives the Fed more power to help the economy while also helping people get out from under their debt by reducing the real value of that debt.

        •  And wrecking the housing market... (1+ / 0-)
          Recommended by:
          salamanderempress

          ...with skyrocketing interest rates.

          And screwing low-income workers who sure as hell aren't going to get raises.

          And a dozen or so other negative impacts that people haven't considered.

          (-5.50,-6.67): Left Libertarian
          Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

          by Sparhawk on Thu Dec 27, 2012 at 11:21:35 AM PST

          [ Parent ]

          •  nah (0+ / 0-)

            interest rates won't skyrocket until the economy is at or near full employment.  it's simply not a worry for a long time.

            meanwhile, you can't have an inflationary cycle unless wages largely keep up with inflation - otherwise, companies cannot keep charging more and more if people's wages are not going up so that they can buy the products.

            meanwhile, far too many people are buried in debt (housing, student loans, credit card debt, etc).  inflation erodes the real value of that debt (which is why the rich in particular hate inflation, because they are often lenders/investors).

      •  Have you shopped for groceries lately? (0+ / 0-)

        ...or automobiles?

        ...or gasoline?

        I have to break the news to you, but we have been under the strain of inflationary realities for quite some time.

        The money printing is already taking place. I can live with inflation so long as it is not compounded by a heap of debt. Right now, we are cutting both our hands off.

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