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View Diary: Make 'Em Do It! I Still Choose Using High Value Platinum Coin Seigniorage To End Austerity! (117 comments)

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  •  Yep, you can do a lot in 15-25 years. (2+ / 0-)
    Recommended by:
    Nada Lemming, doc2
    I've been blogging about the right kind of coin for a long time now, and very frequently since the latest wave of PCS began in December. That kind of coin is a platinum coin with a face value of $60 T. Why $60 T? Because that's the face value needed to pay off the national debt, and to cover deficit spending for 15 – 25 years, enough time to educate people about the nature of fiat money and the desirability of changing the current financial system so that the Federal Reserve is reorganized as part of the Treasury Department, and the Treasury's authority to create reserves as it spends, without either debt financing or seigniorage, is recognized as the way things ought to be done.
    Au contraire, I think 15-25 years of that would be sufficient to reduce Earth's civilization to smoking ruins.  

    You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

    by Rich in PA on Mon Jan 14, 2013 at 08:34:38 AM PST

    •  The smoking ruins would be the (5+ / 0-)

      Banker's plan to suck our life-blood and keep us, yea! even unto our great-great-great-grandchilden, in debt.

      For the world, for the US, it would be a boon.


      Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

      by Jim P on Mon Jan 14, 2013 at 09:12:21 AM PST

      [ Parent ]

      •  If the supply of money is unlimited... (3+ / 0-)
        Recommended by:
        doc2, Theston, Aquarius40

        ...then how would goods and services be allocated in the economy?  

        You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

        by Rich in PA on Mon Jan 14, 2013 at 09:34:46 AM PST

        [ Parent ]

        •  A rhetorical question if there ever was one ... (0+ / 0-)
        •  Exactly like they are now (4+ / 0-)

          Money in circulation wouldn't be unlimited.  It would still result from Congressional appropriations.  Nothing would be spent unless authorized by Congress.

          "[W]e shall see the reign of witches pass over . . . and the people, recovering their true spirit, restore their government to its true principles." Jefferson

          by RenMin on Mon Jan 14, 2013 at 10:56:07 AM PST

          [ Parent ]

          •  No, it would of course be unlimited. (0+ / 0-)

            If the purpose of the bulk of the $60T is to pay off debts, it would be released via creditors into the economy.  

            You know, I sometimes think if I could see, I'd be kicking a lot of ass. -Stevie Wonder at the Glastonbury Festival, 2010

            by Rich in PA on Mon Jan 14, 2013 at 11:21:33 AM PST

            [ Parent ]

            •  Not the purpose of the $60 T (8+ / 0-)

              $16.4 T of it would be paid off. The rest is for covering deficit spending so no more debt would be issued. Inflation possibilities are covered here. Bottom line, no chance of inflation due to the use of seigniorage financing rather than bond finance.

              •  And Bond finance GUARANTEES inflation. n/t (3+ / 0-)
                Recommended by:
                katiec, cynndara, Calgacus


                Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

                by Jim P on Mon Jan 14, 2013 at 12:12:28 PM PST

                [ Parent ]

              •  We may not want to pay it off (2+ / 0-)
                Recommended by:
                wigwam, RenMin

                I think there are arguments for the federal government providing an ultra safe non-bank issued means of savings that pays interest.  I guess the FDIC insurance does that also, but maybe government bonds are a better choice.  I don't really know.

                It is an aspect of the overall idea of a coordinated monetary, fiscal, and economic policy.  Congress can authorize the Treasury to issue a certain minimum and maximum amount of debt as a tool of policy rather than a requirement.  In this scenario the debt limit is a meaningful part of fiscal, monetary, and economic policy as it sets how many bonds Congress wants the public to hold and anything beyond that the Treasury would spend via reserves.

                •  Remember (1+ / 0-)
                  Recommended by:
                  RenMin

                  that "the public" in this context means, "The Ultra-Rich".  That being the case, the entire scam is mainly a way of maintaining the wealth and privilege of a small number of extremely wealthy families AT THE PUBLIC EXPENSE.  You might as well grant them coats of arms and call them aristocrats.

                  •  That is the argument to have... (1+ / 0-)
                    Recommended by:
                    Calgacus

                    There are arguments for and against.

                    But, one small problem is that you are still buying the premise ie PUBLIC EXPENSE.  There is no public expense to creating money unless is creates inflation. So, public expense is not the argument.  Is it worthwhile to be deploying money to those who already have money via interest payments on treasury bonds?  You have made a cogent argument that it is not.  Would it be better just to insure savings more?  Could it be mitigated by a higher tax on interest income on government securities at higher tax brackets?  Perhaps an exemption on the first several thousand dollars in interest or so?

                    But, the idea is that we should be having a debate to decide the public purpose of Treasury securities rather than simply saying that all deficits will be financed by the issuance of Treasury securities.

                •  Exactly! it's about borrowing-to-coining ratios? (3+ / 0-)
                  Recommended by:
                  RenMin, Calgacus, Donner

                  Currently we cover roughly 1% of our tax deficits through coining money and 99% through borrowing money.  Platinum Coin Seigniorage removes the need to stick with that ratio, which we have no reason to believe is optimal.  But, even so there still be reasons to sell bonds:
                  * To give the Chinese a nondestructive way to recycle their dollars.
                  * The give pension funds a place to invest.
                  * To provide a place to invest the SS Trust Fund.
                  * To provide a buffer against inflation (according to folks like Krugman)
                  * To provide a mechanism for adjusting interest rates.

                  There are lots of plausibly good reasons to continue to sell Treasury bills and Treasury bonds.  The question is how much and how many.  I don't claim to know the optimum ratio of coining to borrowing (selling of bonds).  IMHO, that's a question that should be handles by the professional economists at the Treasury and the Fed.

                  •  Nah, we just need to think through the logic (0+ / 0-)

                    of a fiat currency.

                    How can an infinite unit of account be a good store of value?

                    Seems odd to even expect such a thing.

                    Seems to me that an infinite thing's strength is in velocity.

                    A store of value in the human body is known as a blood clot.

                    And the economists at the Fed have pretty much sucked, I think we need  to be our own best advocates.

                  •  Hi, wigwam (2+ / 0-)
                    Recommended by:
                    katiec, wigwam

                    I think the Fed can fulfill your purposes by paying interest-on-reserves. That's really all that's needed. Bonds need never be issued. They're a risk-free investment; so the interest on them is "welfare."

                    •  But, we don't have to win that argument (1+ / 0-)
                      Recommended by:
                      katiec

                      The argument over the efficacy of bond sales can wait and be addressed down the line.  The matter of near-term importance is to establish that there is a legitimate alternative to bond sales and to establish the precedent of using it to cover more than 1% of the deficit.  Once we win that argument, the quibble over the optimum amount of bonds to sell becomes something of an academic matter.

                      In fact, at the moment, we should probably sell all the bonds we possibly can --- after all, the effective interest rate is now negative.

          •  Wow, how many times do people (0+ / 0-)

            have to repeat this point?

            if necessary for years; if necessary, alone

            by SouthernLiberalinMD on Tue Jan 15, 2013 at 04:13:23 PM PST

            [ Parent ]

        •  The capability (7+ / 0-)

          to  create money is unlimited, but the supply of money in the private economy must be limited to prevent inflation. In particular, don't deficit spend past full employment! The credits the coin produces primarily sit there, after the debt is paid. The reason why you want them to sit there is so people can't be fooled into thinking the Government can run out of money. Minting the Biiiig coin is about revealing the truth, which can best be done by actually producing and showing people the money!

        •  The supply of money is already unlimited (5+ / 0-)

          See QE, QE1, QE2, QE3... and it sure as hell isn't being allocated to any part of the economy that isn't bankers.

          And anyway, the supply of money wouldn't be unlimited under US control, it would be limited by Congressional Appropriations.


          Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

          by Jim P on Mon Jan 14, 2013 at 12:11:38 PM PST

          [ Parent ]

          •  You noticed that too? (2+ / 0-)
            Recommended by:
            Calgacus, katiec

            The significant difference between the use of Platinum Coin Seigniorage and Quantitative Easing is the fact that Treasury bonds that the Fed owns still count toward the debt limit.

            That said, it looks to me as though nearly all of the money that was "pumped into the economy" via quantitative easing is sitting at the Fed in the reserves of the commercial banks and gathering interest for them.

            •  I agree that's the case (2+ / 0-)
              Recommended by:
              katiec, wigwam

              But the important things are the politics and the optics. As long as have to call the debt instruments "debt" progressive fiscal policy is crippled by the debt memes. That's why the biiig coin should be used to facilitate debt payoff and deficit spending.

              •  I agree that HVPCS would be optimal (0+ / 0-)

                That said, I'd be very happy with any use of PCS as a substitute for borrowing, if nothing else, simply to establish a precedent for such use, and to force people to realize that debt is not the only option.

    •  Only if you use (4+ / 0-)
      Recommended by:
      katiec, cynndara, psyched, Calgacus

      it use to feed unregulated businesses filled with fraudsters destroying the environment for the sake of private profits. On the other hand, if you spend it on programs devoted to the transition to sustainability you'll have a fighting chance to save the earth for future generations!

    •  We're already on track for (1+ / 0-)
      Recommended by:
      katiec

      civilization being in smoking ruins, or haven't you seen the climate news lately?

      I don't think HVPCS is likely to destroy civilization. The things which assuredly are going to destroy civilization are off the table of the national political discussion, apparently permanently, so I don't see why you're getting worked up over this.

      if necessary for years; if necessary, alone

      by SouthernLiberalinMD on Tue Jan 15, 2013 at 04:12:43 PM PST

      [ Parent ]

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