"The idea to Mint a $1 trillion coin to solve the Debt-Ceiling Crisis on American"

[lifeintruth74]

Originally Posted by GermanBJJ

The debt ceiling doesn't allow for more spending; it simply gives the President the ability to pay for the spending that has previously occurred.

It's like this: A husband and wife sit at the dinner table, look over their finances and decide to buy a Chevy Tahoe. They go to the dealership and sign the papers. The couple drives it for the first month. Then the bill comes. The husband turns to the wife and says, "Give me backrubs during every NFL game or I won't pay this car bill and I'll destroy our credit score."

In this situation, clearly the husband is a nut. They both agreed to spend the money in the past. They both used the vehicle for a month. The husband can't then hold their family's future hostage just to get what he wants today.

If the wife is concerned about the credit rating then why doesn't she just sell the vehicle and pay off the loan?

[m249viking]

Originally Posted by GermanBJJ

It's like this: A husband and wife sit at the dinner table, look over their finances and decide to buy a Chevy Tahoe. They go to the dealership and sign the papers. The couple drives it for the first month. Then the bill comes. The husband turns to the wife and says, "Give me backrubs during every NFL game or I won't pay this car bill and I'll destroy our credit score."

Its clearly more like a lease on a Mitsu Gallant.

[crowded]

Originally Posted by Gandhi

It's kind of fucked up but I think the journal entry for printing money is

DR Cash on hand asset
Cr Cash in circulation liability

Or dr cash cr magic box

It's fiat money so it really backs itself up

But in the case of the coin it's never issued or even circulated so there is no real entry : It's just a gimmick to break the debt rule.

Thats the best i have been able to work out but if someone has something better please add.

That rules.

But it would be true that with this coin the amount of money in circulation would stay the same but credit line (issued to the US gov't who would then spend the money) would increase?

[xilliun]

Why only one coin, not two, or ten?

[Jack V Savage]

Originally Posted by crowded

Words have more than one meaning usually. I thought I was clearly using inflation as defined by increasing the money supply (which all things being equal results in rising prices).

http://wiki.mises.org/wiki/Inflation

Not sure why that matters at all if there's no resulting rise in prices (and it's not "locked in" because the plan would be to just deposit the coin and then buy it back when the idiotic debt ceiling thing is resolved).

Originally Posted by crowded

The coin increases the amount of money in circulation by allowing expanded debt doesn't it? Which debt will be succesfully retired with the coin?

No, the coin doesn't increase the amount of money in circulation. It temporarily pays off debt to the Fed, and then buys it back when the issue is resolved. It's just a gimmick that has no impact on the real economy (other than to prevent uncertainty related to the debt ceiling or catastrophe related to forced defaulting on obligations).

Originally Posted by crowded

Why buy back the coin?

Precisely to avoid what you've been talking about. The point isn't to pay off debt with printing; it's just to work around the debt ceiling.

Originally Posted by crowded

Well, technically if you run out of money and borrow/create more so that you can continue to pay your bills then it seems to me it actually does allow for more spending.

The gov't hasn't run out of money. It's run up against a bunch of zealots who want to temporarily prevent bond issues to extract policy that they wouldn't be able to get through democratic channels. The spending is already legally mandated (much of the services that are to be paid for have already occurred).

Originally Posted by crowded

One might suggest this is temporary, but evidence suggests we won't see any reduced federal spending. I understand what you are saying though about the expenditures already being approved and scheduled.

Not sure what you mean here.

Originally Posted by xilliun

Why only one coin, not two, or ten?

Because one will last a while, and the whole debt-ceiling issue should be resolved before more are needed. Both parties and everyone else realizes that we need to raise the debt ceiling. The GOP leadership is just trying to use the crazies in the party to credibly threaten ruinous harm to the American people in order to get policy that their donors want through despite not getting enough votes to pass that policy democratically.

[Eagle Press]

Originally Posted by killakoy

The right's argument is going to be very real. You are essentially raising the debt ceiling without addressing any of the spending issues. You do this without a spending cut and it will hurt the US credit rating and investor's faith in the economy.

The government does this and it's just kicking the can, yet again. Basically, it should only be used as leverage to counter the right's threat of sequestration.

We've already "spent" the money in real terms. This allows us to pay some of what we owe.

[Denter]

Originally Posted by m249viking

adding a trillion+ a year is fine, hell lets make it 10 trillion a year or how about giving everyone in America a couple of those trillion dollar coins?

Don't get me wrong, it is a very serious problem. Its just isn't immediate- meaning the debt won't really start giving us problems this year, or five years from now. But fifteen or twenty years down the road we will have major problems if we don't do something to correct course.

And now is the easiest time to do it, it gets harder and harder the longer we wait.

[Snoowpy]

ever heard of inflation?

[Gandhi]

Originally Posted by crowded

That rules.

But it would be true that with this coin the amount of money in circulation would stay the same but credit line (issued to the US gov't who would then spend the money) would increase?

Yes the money in circulation would stay the same. Borrowing money theoretically removes money but then it gets spent by the govt so no change in total money supply. It does allow an end run around the debt ceiling, which I guess you could call a credit limit.

[Michaelangelo]

Going to need 16 of those coins.