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View Diary: 'Grown-ups don't mint trillion dollar coins' and other childhood fantasies (224 comments)

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  •  Except when it does. (11+ / 0-)

    Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

    by TomP on Wed Jan 09, 2013 at 07:21:29 AM PST

    [ Parent ]

    •  Prime example of legalism trumping Constitution. (1+ / 0-)
      Recommended by:
      George Hier

      Obscure statute used to circumvent the foundation of separation of powers is a legal construct as weak as the bloviation obliterating common sense.

      "If the past sits in judgment on the present, the future will be lost." Winston Churchill

      by Kvetchnrelease on Wed Jan 09, 2013 at 07:31:18 AM PST

      [ Parent ]

      •  Yes, let's let the (13+ / 0-)

        Republicans subvert democracy through economic terrorism instead.  

        Prime example of formalism in interpreting the consitiution as a suicide pact.

        Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

        by TomP on Wed Jan 09, 2013 at 07:46:38 AM PST

        [ Parent ]

      •  Congress authorized the Treasury to mint (8+ / 0-)

        legal coinage.

        They left it up to the Treasury to decide how much to mint.

        There's not separation of powers issue here.

        "Furthermore, if you think this would be the very very last cut ever if we let it happen, you are a very confused little rabbit." cai

        by JesseCW on Wed Jan 09, 2013 at 08:52:13 AM PST

        [ Parent ]

      •  Congress shall issue the currency.... I'm not so (0+ / 0-)

        sure we haven't ignored the Constitution for a long time considering how the Fed Reserve considers itself above Congress.

      •  No separation of powers issue (6+ / 0-)

        The argument that this does anything to separation of powers is the stupid argument.  A sovereign government has the power to create currency in any denomination and any form.  Congress has explicitly delegated this power for coins to the Treasury and to the Fed for computerized bookkeeping.

        Minting a $60 trillion coin and depositing it with the Fed does not grant the Executive any additional spending authority beyond current statute.  It does not grant the Executive any additional taxing authority beyond current statute.

        We have the following legal situation. Congress has passed certain spending and taxes, Congress has set a limit to the amount of bonds, and Congress has passed the means for the Treasury to create reserves.  The only possible legal conclusion is that Congress has determined that the public should not hold any more bonds and instead that it is preferable that the public have more reserves and therefore deficit spending should be handled by the creation of reserves instead of bonds.

        This is exactly what the law says.  The Executive must follow Congressional statute.  Congress has set certain spending, if the Executive were to unilaterally not do that spending that would violate Congressional statute. If the Executive were to issue bonds beyond the debt limit that would violate Congressional statute.  If the Executive were to not pay interest or redeem bonds that would violate the 14th amendment.  Minting a $60 trillion coin is legal.  Depositing that coin in the Fed to credit the Treasury's account at the Fed is legal.  Continuing to spend and collect taxes according to Congressional statute is legal.

        Felix Salmon has is backwards.  Doing anything other than minting a several trillion dollar coin would be violating Congressional statute and hence separation of powers.  Of course this presumes Congress cannot pass a debt limit increase.

        And, even keeping a large amount on the Treasury's books does nothing to Congressional authority going forward.  Congress could simply put into law that bonds should be issued in an amount equal or slightly greater than the difference between revenue and spending within a certain statutory period up to a certain limit.  It would not matter that the Treasury has the number $60 trillion in some Fed computer, it would still have to issue bonds in a an amount equivalent to the deficit until the limit is reached and then it would have to use its credit until Congress raised the limit.

        It is important to note that $60 trillion on the Treasury's Fed account does not really exist economically until it is spent.  And, can only be spent by Congressional appropriation.

        •  Very clear explaination of the issues involved (0+ / 0-)

          Thanks for that, and I totally agree with your analysis.

          The only murky part of this discussion, that I see, is how the minting of a $60T coin will affect the domestic, and worldwide, perception of the value of the dollar. I understand that the money would "not really exist economically until it is spent", but that doesn't mean that it wouldn't be perceived to exist, and would therefore cause havoc in the financial markets.

          And I'm not even saying that havoc in the financial markets would necessarily be a bad thing (that's a whole other discussion), just that I haven't seen it addressed by the supporters of the TDC, or MMT in general.

        •  Congress would simply pass law negating coin. (0+ / 0-)

          If congress created enabling statute, what prevents them from revoking said statute or limiting it from this reducto absurdum?

          "If the past sits in judgment on the present, the future will be lost." Winston Churchill

          by Kvetchnrelease on Wed Jan 09, 2013 at 10:34:41 AM PST

          [ Parent ]

          •  Congress…pass a law? (2+ / 0-)
            Recommended by:
            Kvetchnrelease, llywrch

            1. Have you been asleep for the past two years? Expecting Congress to agree to anything is nuts. Sure the Jouse would pass something like that, then the bill would go die in the Senate.
            2. Even if said bill were to pass, the President would veto it.
            3. Congress could only repeal the Treasury's ability to mint coins in unspecified denominations. It cannot negate currency that has already been lawfully issued.

            Teh stoopidTM, it hurts. Buy smart, union-printed, USA-made, signs, stickers, swag for everyone: DemSign.com. Get your We are the 99% Yard Sign.

            by DemSign on Wed Jan 09, 2013 at 10:55:57 AM PST

            [ Parent ]

            •  Executive Branch supremacy is not good for (1+ / 0-)
              Recommended by:
              George Hier

              Our nation regardless of party in control, so no I have not given up hope on congress doing the right thing without this coin leverage bs.

              "If the past sits in judgment on the present, the future will be lost." Winston Churchill

              by Kvetchnrelease on Wed Jan 09, 2013 at 11:05:13 AM PST

              [ Parent ]

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