Editorial
The Trillion Dollar Coin Is a Great Idea!
SF Gate explained in a recent editorial that the "'trillion dollar coin' idea is worthless."
But, of course, it's not. It's a great idea! I'll tell you why in a minute.
The SF Gate editorial gives us the background. "The idea of a 'trillion-dollar coin' came from the Internet, where a few political observers noted that the White House might be able to avoid the upcoming fight over our national debt ceiling by simply minting a platinum coin with a face value of $1 trillion."
These observers understood that legally the Treasury could mint and issue platinum coins in any denomination it chose. Thus evolved the idea that the Treasury could simply create a coin and deposit it with the Federal Reserve of the Bank of New York to cover significant US debts.
This is because the US government owes the Fed and other debt-holders trillions. If the Congress refuses to pass a debt-ceiling increase then the US is technically defaulting and could lose its current strong rating, which would cause the cost of money to rise.
The SF Gate editorial labels such an idea "crazy." Here's more:
Unfortunately, the fact that Washington is gearing up for a fight over the debt ceiling is equally crazy - so the "mint the coin" movement moved from the Internet to the Beltway at warp speed, and it's become an element of political strategy. At a Jan. 9 news conference, White House spokesman Jay Carney wouldn't say that a coin was illegal or that the idea of minting one had been ruled out.
The coin might sound like a great idea to Democrats, who are rightly frustrated with House Republicans for threatening a showdown over the debt ceiling. And it would be absolutely calamitous for Congress to refuse to raise the debt ceiling, which would mean a U.S. default on bills to creditors all around the world. Failing to raise the debt ceiling would have massive consequences for the United States in terms of our credit rating, our interest rates, and our global credibility.
But the problem with the coin is that it takes a political problem - Congress' inability to act responsibly - and turns it into a financial one. The United States can't just print money just because Congress doesn't want to behave responsibly. The world's most powerful nation can't afford to act that way.
"Minting the coin" comes with its own legal and political dangers, too. It could terrify investors, possibly leading to a dip in our credit rating and a spike in interest.
SF Gate claims that the solution is not printing a trillion dollar coin but "political responsibility." However, I'm glad the trillion dollar coin idea has been brought up.
I think it's a good idea not from a practical standpoint but an educational one. It draws attention to the one thing the mainstream media – and the power elite that stands behind the media – never, ever wants to discuss. And that is the "power of the purse" that governments have created for themselves over the past century.
Today, unlike in the past, over 150 central banks print money recklessly. The Federal Reserve is surely the worst offender because of the dollar's reserve status. Because nations need dollars to buy oil, officials around the world need to hold dollars. The US can print massively without feeling the immediate result from price inflation.
Of course, price inflation happens – and is happening. More is yet to come because US officials have been so reckless. That's why I think the trillion dollar coin idea is a good one. It illustrates the insanity of the modern money system where people accept bits of paper as money simply because they've been printed by the government.
Money, ultimately, is NOT paper, not historically anyway. For thousands of years the market determined that the best medium of facilitating trade and servicing a transportable store of value is gold and silver. Not one or the other, but both.
Historically, gold served as the primary money metal for larger transactions and storing larger amounts of wealth. Silver, on the other hand, tended to better serve smaller transactions. Together they worked to satisfy the basis of trade and commerce around the world and left unhampered, they would still do that today.
However, there are others more desirous of using the levers of monetary control to manipulate the financial system and, like parasites, feed off the productive, thus draining the wealth and productivity of nations. And they have done a great job of spreading their government-sanctioned central banking disease all over the world.
You see it today in the Middle East and throughout North Africa where the US Department of State, hiding behind various front groups such as the Alliance for Youth Movements (AYM) is hastily building an Islamic Crescent to support the "war on terror."
The real reason the US – the world's leading Bad Boy enforcer – along with NATO and the rest of the Western Powers (and yes, Russia and China are part of the same crowd), is because the intergenerational families that set up the central banking edifices in the first place use its powerful benefits to fund their control of mainstream media and the larger military-industrial-political complex.
They do this with but one agenda ... to create WORLD GOVERNMENT. But there is one factor they didn't expect: The Internet and today's Reformation – the Internet Reformation, if you will – that is spawning an awakening.
This is giving millions of people (who choose to see) an understanding of how Dominant Social Themes have been used to cement memes into our collective brains. Today, hope is in the air for millions who are waking up. The "reformation" is inspiring many to act. And they should!
At the very least people should transfer out of harm's way by exchanging devaluing paper money for real honest money – gold and silver. There is no time to delay.
In my book, High Alert, soon to be released in a 4th edition and available free to all members of The Daily Bell, I postulated that the 2 percenters were the battleground where most of the "great discussion" has traditionally occurred – far outside the mainstream living rooms around the world. As the truth began to circulate on the 'Net, it would become inevitable that we would experience an addition to the 2% number.
Anyway, like the Gutenberg press before it, the Internet is blowing a wind of truth across the world. People feel it and as they become aware, they want to free themselves from the "machine." And as they are becoming free they are dumping the "inflationary" monopoly paper money and moving into the "unable to be created out of nothing" honest money.
I strongly encourage readers looking to protect themselves and hedge against the "system" to transfer out of the devaluing mess and obtain physical holdings of gold AND silver.
Buy it from an honest dealer with no intent on leveraging you into speculative coins – numismatics – or leveraging your currency exchange (because that is what it is) into gold and silver weight that you cannot afford should the price of either metal go down in the short term. Just keep it simple. Transfer out of the monopoly fiat into gold and silver on an even up basis.
Thanks to the Internet, in particular, there are plenty of illuminating arguments about what money is and should be.
I have nothing against competing money systems – even fully fiat ones – within the context of monetary competition. But we've always written that gold and silver would likely find their rightful place within monetary competition, as they have for thousands of years.
People trust gold and silver because they are malleable, beautiful, transportable and rare. Money competition long ago decreed these two metals as "winners." And today they remain as much in demand as ever.
Some things never change.
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P.S. – Later this week I intend to release a new Special Report in which I will introduce my recommended source for physical gold and silver purchases in the Member Zone. If you aren’t already a member, click here to register – it’s free.
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Posted by jetgraphics on 01/12/13 05:46 PM
Constitutionally speaking, Congress has no power to create money. It has the delegated power to coin money (stamp bullion) and borrow money. It can't create bullion. Nor would it need the power to borrow what it could create. Furthermore, only gold and silver coin are lawful money that pays debt. Which means the national debt, in excess of 16 T is impossible to repay, if you compute it with respect to the pre-1933 law. (post 1933 laws are under the state of emergency and do not comply with the constitution).
Of course, the validity of the impossible debt cannot be challenged, pursuant to the 14th amendment.
In a word, we're [expletive deleted]!
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Posted by dave jr on 01/12/13 05:35 PM
Since I instigated it, I apologize to DB and the Readers. And thankyou Ingo for an honest discussion.
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Posted by dave jr on 01/12/13 05:17 PM
"Yes, you are off into the giggly weeds"
Funny I met you there. lol
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Posted by dave jr on 01/12/13 05:16 PM
Ingo,
"Nobody produces, if the resultant product has no USE VALUE"
Not puposely. And that lends to my belief that it is subjective. It is prone to error. Freedom to err is an essential part of liberty.
I am not arguing against a standard. A standard is required in a market and will happen naturally. Gold as a standard happened naturally. That is good.
It is only your incessant claim that gold and only gold can constitute money that causes me to question.
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Posted by Bischoff on 01/12/13 05:08 PM
@ Dave
DAVE: "I know, I am off in the giggly weeds, but extrapolate it to the larger economy. Who will enforce it?"
BISCHOFF: LOL... .Yes, you are off into the giggly weeds. Who will enforce it... ??? The MARKETS, of course.
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Posted by Bischoff on 01/12/13 05:03 PM
@ DB
DB: "Yes, Ingo. Please be careful about monopolizing the discussion. We've always provided you a platform, but you can make your points without repeating them over and over, which can come across as a kind of bludgeoning that clogs the thread without benefiting your argument."
BISCHOFF: I do take your point. Yes, you have been very generous in allowing to make my points.
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Posted by dave jr on 01/12/13 05:01 PM
"The man dying of thirst couldn't bargain."
What if a man was dying for a vintage batman comic book to complete his collection and would be willing to pay $10,000 for it. Then found it in a garage sale for a nickel. Who could enforce a declared value?
I know, I am off in the giggly weeds, but extrapolate it to the larger economy. Who will enforce it?
Reply from The Daily Bell
Austrian value theory provides a pretty good answer: Individuals enforce value among themselves.
"Value is in the eye of the beholder, and hence voluntary trades are win-win activities in which both parties benefit by giving up something of lesser value in exchange for something of greater value."
Click to view link
(Subjective value theory)
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Posted by NAPpy on 01/12/13 04:44 PM
To supplement the discussion on economic definitions, I summarize the definitions from Mises Praxeology here, including value:
Click to view link
And here are the economic laws (catallactics / austrian economics) derived from the laws (categories) of Praxeology:
Click to view link
Reply from The Daily Bell
The second link defining value and marginal utility is really great. Thanks, NAPpy.
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Posted by Lawrence N on 01/12/13 04:42 PM
Why not repay the fed with coins of limited value, that value of which is still more than all the worthless paper they conjure out of thin air, and then loan to us, at interest. The fed is a criminally corrupt rip off scam of monumental proportions, and all it's members and supporters should be incarcerated. They'd be lucky to escape jail with a few shiny coins in their pockets.
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Posted by Agent Pete 8 on 01/12/13 04:41 PM
Ingo, get some sleep - you sound cranky as. I sincerely hope you are well and recover to civility soon.
Reply from The Daily Bell
Yes, Ingo. Please be careful about monopolizing the discussion. We've always provided you a platform, but you can make your points without repeating them over and over, which can come across as a kind of bludgeoning that clogs the thread without benefiting your argument.
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Posted by bionic mosquito on 01/12/13 04:39 PM
IB: If something is not wanted or desired, it has no value.
BM: You earlier stated: 'Value is directly related to human exertion.' Do you now wish to add a qualifier to this? Value is directly related to human exertion only when that exertion is valuable? Rather circular on your part.
IB: Would anyone produce something, if he knew it wouldn't have value?
BM: The producer doesn't know - not with certainty. That is why the term 'loss' appears in the phrase 'profit and loss.'
IB: On what does the decision to produce depend?
BM: Speculation and judgment by an entrepreneur.
IB: If value is an expression of judgment by one person, is it not likely that the judgment by another person will differ?
BM: it is not only likely, it is certain. In this world, no two humans are exactly alike.
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Posted by Bischoff on 01/12/13 04:38 PM
@ Dave
DAVE: "Money is created to intermediate exchange value period. Use value lays with you, not the money."
BISCHOFF: USE VALUE rests with the decision to produce. Nobody produces, if the resultant product has no USE VALUE. If excess production with USE VALUE can be exchanged for value of a product with greater utility, aka EXCHANGE VALUE, the arbitrage process (markets) uses the STANDARD OF VALUE represented by the value of gold (work required to mine and refine it), aka MONEY to arrive at a price quoted in aliquot parts of a specific amount of gold. (U.S. Eagle, African Krugerand, Canadian Maple Leaf, etc.)
MONEY allow MARKETS to function. What are markets other than the arbitrage process... ??? What's so difficult in understanding this... ???
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Posted by dave jr on 01/12/13 04:30 PM
BM,
Interesting. Consumers can demand flying cars, but nothing comes of it. Producers may be able to develop flying cars at a cost out of reach of enough consumers to justify a profit potential. Shall we just call it a beautiful dance, the free market?
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Posted by MikeCPA on 01/12/13 04:18 PM
DB: The Internet Reformation is not a political process. It is an observation regarding an evolution.
The Gutenberg press required people who could read. The Internet Reformation will have minimum requirements, too. That half the voters voted for Obama and the other half voted for Romney show, prima facie, that we may not meet those minimum requirements, and we're too close to the crisis stage. If you ask me to believe in things I cannot see, I choose God. As Voltaire said, "If God did not exist, it would be necessary to invent Him."
Reply from The Daily Bell
"The Internet Reformation will have minimum requirements, too."
What do you mean "will?" You're participating in the Internet Reformation right now!
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Posted by Bischoff on 01/12/13 04:15 PM
STATEMENT: "Value always expresses a judgment of the estimation in which something is held, because a thing has value if and only in so far as it is wanted or desired."
QUESTION: If something is not wanted or desired, it has no value. Would anyone produce something, if he knew it wouldn't have value?
QUESTION: On what does the decision to produce depend?
QUESTION: If value is an expression of judgment by one person, is it not likely that the judgment by another person will differ?
Considering the example of the extreme, cited by Fuastino Ballve, comparing the value of diamonds belonging to a man dying of thirst in the desert with the value of water which could relieve his thirst, but possessed by an other man, it sheds no light on the question of VALUE.
The USE VALUE of two goods are usually such that the two use values can be arbitraged to arrive at an EXCHANGE VALUE for each. Arbitrage implies a "market". If the value of gold, derived from expending human exertion in mining and refining it, is set as the STANDARD, then arbitrage to arrive at a "market price" is possible.
The Ballve example is not valid when drawing a conclusion about values which lead to market prices. There was no MARKET in the Ballve example. The man dying of thirst couldn't bargain.
If you look at it from a cynical stand point, the man with the water was going to end up with the other man's diamond in any case.
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Posted by bionic mosquito on 01/12/13 04:11 PM
JR: The producers are in charge
BM: Dave, I may be misunderstanding your comment, or perhaps just not following the context. If so, I apologize in advance... .
In a market-driven economy, it is the consumer who is in charge. The consumer votes with every transaction, selecting the winners and losers by his choice.
The producer must speculate on what the consumer wants and what the consumer will pay at the time in the future when his product will be available. The consumer decides if the producer speculated properly.
The producer is at the consumer's mercy, aided only by his (the producer's) ability to predict and forecast.
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Posted by tjdetmers on 01/12/13 03:57 PM
I find it intriguing that most sheeple think the trillion dollar coin is a monopoly money type of idea. "Surely this is some kind of joke" they say.
They are correct in that observation... ..but it may also twig the sheeple onto the idea that the whole monetary system is based on the very idea of the trillion dollar coin. The ante has been lifted to a new level.
I would agree that the trillion dollar coin is a great idea... ... just not in a savings portfolio.
Reply from The Daily Bell
They are correct in that observation... ..but it may also twig the sheeple onto the idea that the whole monetary system is based on the very idea of the trillion dollar coin. The ante has been lifted to a new level.
Very good! This was just the point of the editorial ...
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Posted by pauloportugal on 01/12/13 03:53 PM
@ Bischoff
Once agin there you go presuming to know me ... same as you do with anyone else who disagrees with you.
Thanks to BM and Dave Jr. there is not much more needed to be said about your views ... they are juvenile.
But go ahead and tell us all how YOU, the self-proclaimed master of economics, know all and we are just mere mortals. You are the most pathetic poster I have ever run across on any blog.
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Posted by dave jr on 01/12/13 03:44 PM
Ingo,
To say "An EXCHANGE VALUE is always equal to, or higher than the USE VALUE" doesn't jive with my observation of the natural world. To say it is 'typically' higher, I would agree, but 'typically' doesn't apply in the creation of definitions.
It is the 'use value' that is subjective and variable and the 'exchange value' only cues from it.
For example, if a factory with 100 million invested in land, building and modern machinery goes under, what is its exchange value? Under duress it may be several orders of magnatude less than its use value. This is important in any economy as a leveling factor. Nothing is a one way street forever, no matter what laws are instituted to make it so.
Money is created to intermediate exchange value period. Use value lays with you, not the money.
Of course money has no price, it is the price. I agree with you. A yard stick has no lenght, it is the lenght. But there are also meters, chain, rod, horse lenght, etc. Are you prepared to give me the definition of lenght? Who made you king? The unit of measure is what developes naturally among those using the measure.
The producers are in charge and politics can only interfere, distort and usurp the 'aliquot'.
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Posted by MikeCPA on 01/12/13 03:37 PM
Why waste platinum, just print the $16 trillion in paper money to pay off the debt... how about trillion dollar green energy notes? Give those to the Fed as payment in full. Signed by Al Gore!
I imagine that Woodrow Wilson is roasting in a very hot place, and deservedly so. Most of our troubles would vanish if we could roll things back to our pre-1913 state. This would also reverse FDR's gold grab of 1933(?). We want our gold returned.
As for the Internet Reformation, it wasn't enough for Ron Paul or Gary Johnson, and it won't help those useful idiots who don't know, and don't know they don't know. To be informed, people must seek out the truth, which apparently does not happen in large enough numbers to be helpful. Then there's the subversive tactics, as described by Yuri Bezninov (bless his heart), to which the internet is readily adaptable as a tool for mischief and misinformation.
Reply from The Daily Bell
The Internet Reformation is not a political process. It is an observation regarding an evolution.
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