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.
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.
Posted by bionic mosquito on 01/12/13 03:01 PM
Faustino Ballvé addresses the issue of value in his book entitled 'Essentials of Economics: A Brief Survey of Principles and Policies.'
Click to view link
For those who don't want to click through, a snippet:
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. For example, a millionaire can buy a diamond for a hundred thousand dollars and find himself dying of thirst in the desert and unable to obtain even a glass of water in exchange for his diamond, which there lacks all value.
Reply from The Daily Bell
This is a good definition. It explains why gold and silver have held their "value" ... they have been considered desirable for thousands of years in a number of different circumstances.
Posted by bionic mosquito on 01/12/13 02:52 PM
DB: SF Gate explained in a recent editorial that the "'trillion dollar coin' idea is worthless." But, of course, it's not.
BM: I agree. The idea certainly has value. Of course, what has value for one may not have value for another. Or perhaps not the same value, subjectively speaking.
Adam: Understanding Economics: Definitions
BM: This is quite helpful, at least providing a common baseline and at least narrowing it down a bit. Of course, not only is value subjective, but the definition of the term 'value' is bound to be subjective, as are many terms dealing with human behavior and human action.
IB: Here is my explanation of VALUE: Value is directly related to human exertion.
BM: Dig a ditch, fill a ditch; dig a ditch, fill a ditch.
IB: Value comes into being as human exertion (work) is applied on or to LAND.
BM: Dig a ditch, fill a ditch; dig a ditch, fill a ditch.
IB: The resultant product is WEALTH.
BM: Maybe for some. Maybe not for others. I suggest that this conclusion would certainly be subjective, based on how one values the 'resultant product' of dig a ditch, fill a ditch; dig a ditch, fill a ditch.
Posted by Bischoff on 01/12/13 02:45 PM
You wouldn't know Georgist propaganda, if it bit you in the behind.
Come on, if you want to argue with me, use something else than Argumentum ad Hominem... ... if you are capable, that is.
Posted by Bischoff on 01/12/13 02:35 PM
No, I don't have a better set of definitions than given in the link to which you referred me, except to qualify the definition of RENT.
The site states: "RENT is that part of aggregate production which is the return for the use of land."
My definition is: "RENT is the collection of that part of production by the land holder (holder of fee simple title/exclusive use title) which is attributable to the advantages provided by nature.
Posted by Bischoff on 01/12/13 02:28 PM
I don't mean to be condescending, though I am sure that is the way I come across. If you feel offended that I point out a difference in your understanding of 'value' and my understanding of 'value', as I used it in my comments, I am sorry.
Yes, communication requires an earnest attempt to capture the information each party is trying to convey. In that attempt, it is useful to have a clear understanding of the terms used. If there is no such clear understanding, a comparison of apples to apples is answered with a comparison of apples to oranges, making logical conclusions impossible.
You say, "In regard to your question, it takes action to mine and refine gold. That is where the value comes from. The gold was always there, it was not always in your hand. Delivering it to you is for the purpose of transfering value to my account else I wouldn't have done it. If you hold nothing I value, you have no account with me."
There is some truth to what you say. (Truth being a premise leading to a logical conclusion). Here is my explanation of VALUE:
Value is directly related to human exertion. Value comes into being as human exertion (work) is applied on or to LAND. The resultant product is WEALTH. When WEALTH is produced for personal consumption, it clearly has USE VALUE. When surplus WEALTH, having USE VALUE, is exchanged for other WEALTH having use value, the transaction is concluded by arbitraging the USE VALUES to arrive at an EXCHANGE VALUE. An EXCHANGE VALUE is always equal to, or higher than the USE VALUE.
In barter, the arbitrage process is a direct transaction between to parties, limited as to space and time.
The use of MONEY as an intermediate to translate USE VALUE to EXCHANGE VALUE removed the limitation of space and time. MONEY allowed arbitrage to take advantage of "market prices", which are expressed in aliquot parts of MONEY.
Therefore, MONEY has no price PRICE. Gold has been MONEY for millenia. As MONEY, gold is an excellent commodity to be the STANDARD OF VALUE, as well as a STORE OF VALUE. As CURRENCY (medium of exchange) it is lousy.
As CAPITAL (WEALTH used in production) reduces the amount of human exertion (work) required to mine and refine gold, the VALUE of gold (MONEY) changes. The value between gold (MONEY) and other goods and commodities varies to the extent that the labor reducing CAPITAL which benefits mining and refining of gold also does or does not benefit the production of other goods and commodities.
MONEY as the STANDARD OF VALUE measures the value of goods and commodities in terms of the value of gold, and the EXCHANGE VALUE is derived through the arbitrage process and it is express in aliquot parts of MONEY.
While the VALUE of MONEY can vary, the aliqout parts of MONEY always stay constant. That is known as the STANDARD OF PRICE.
From these remarks, and from my earlier remarks, you should be able to piece together how it all works.
Posted by pauloportugal on 01/12/13 02:15 PM
Ingo is notorious for bleating his Georgist propaganda all over these threads and berating anyone who differs in opinion with him. I agree with you ... value is subjective. Bischoff and his kind would rather tell you what value is and force it into being.
Posted by Adam on 01/12/13 01:33 PM
Do you have a better online source for commonly misunderstood economic terms?
Understanding Economics: Definitions
Click to view link
Posted by dave jr on 01/12/13 01:28 PM
I'm sorry I don't speak the language that fits into your ears. I don't have the education to be recognized on your floor.
I know you understand what I am trying to convey. Effective communication is a reach from both ends. But if you would rather obfuscate, that is fine, I get it.
In regard to your question, it takes action to mine and refine gold. That is where the value comes from. The gold was always there, it was not always in your hand. Delivering it to you is for the purpose of transfering value to my account else I wouldn't have done it. If you hold nothing I value, you have no account with me.
Posted by Bischoff on 01/12/13 12:45 PM
@ dave jr
DAVE: "I admire your loyalty Ingo. You are steeped in history, but not in principle. Value is subjective and not cemented in gold. Peoples holding each to account of their actions is the principle."
BISCHOFF: See, that's were you are wrong, Dave. You simply lack the knowledge of economic terms. I don't blame you for your confusion. It is common, and actually quite deliberate to confuse the terms used in economics by attributing to the economic terms the meaning of words as they are used colloquially.
You chide me for failing to hold to principle. You say that "value" is subjective, parroting the word "value" in its colloquial use. Then, you proceed to judge my comments as inconsistent based on what you understand of the meaning of "value".
Your comments prove that you do not understand the meaning of VALUE as used in economics, just as you proved that you do not understand other economic terms, such as LAND, LABOR, CAPITAL, WEALTH, MONEY, CURRENCY, PRIVATE PROPERTY, REAL PROPERTY, etc., etc. I come to this judgment from past comments that you have made.
As I said, to fail to understand the concrete definitions of terms necessary in discussing questions of economics, is common. Politicians, certain bankers and corporate interest who control the main stream media and advertising, and the totally coopted education establishment will not educate the public about the necessity to use concrete definitions for terms needed to construct a logical discussion about political economy. A logical discussion of political economy is the last thing these special interests want. I am sorry to say, Dave, but you are only playing into their hands with your lack of specificity in using words ad their meaning.
BTW, what do you mean by "Peoples holding each to account of their actions is the principle." In the context of discussing "value", what does this comment have to do with anything... ???
Posted by Nustart on 01/12/13 12:44 PM
Hey! To take Martin B's idea a step further, let's go ahead and print a Quadrillion dollar coin. That way we will pay off everything and have an 800 Trillion surplus! We could then have all the socialst-oriented goodies Obama and his cronies can dream up, fund endless militarism around the world- with all the best whiz-bang hardware the military-industrial complex can devise, and do away with the IRS to boot!
Posted by 1776 on 01/12/13 12:25 PM
Demand for gold rises as central banks diversify reserve holdings Updated: 2013-01-12 By Wu Yiyao in Shanghai (China Daily)
Click to view link
Posted by maryh4548 on 01/12/13 12:18 PM
Thanks for the insights about the trillion dollar coin.
I thought you were great on RT and spoke so well. I understand why you had to quit RT.
Do you have any other youtubes or could you start your own channel?
You are good on film.
One of your readers awhile back wanted you in Hollywood, remember?
Reply from The Daily Bell
Mr. Wile will be doing more video presentations for The Daily Bell. Not for RT or other third party entities. Thanks for asking.
Posted by arias4me on 01/12/13 12:04 PM
Should the government decide to create the trillion dollar coin, I hope they will put a man on the front of it with his pockets pulled out to show that he is broke.
Posted by dave jr on 01/12/13 10:56 AM
I admire your loyalty Ingo. You are steeped in history, but not in principle. Value is subjective and not cemented in gold. Peoples holding each to account of their actions is the principle.
Posted by Bischoff on 01/12/13 10:36 AM
DB: "Money, ultimately, is NOT paper, not historically anyway."
BISCHOFF: True. Paper is not historically, nor in any other way MONEY.
MONEY is a commodity which serves as the STANDARD OF VALUE. As such, money facilitates exchange transactions (trade). It serves as a standard to translate "use value" into "exchange value" by expressing the "price" as a result of arbitrage (markets)in aliquot parts of the STANDARD OF VALUE (Money).
How can you tell which commodity serves as MONEY... ??? It is the commodity which has constant, or nearly constant marginal utility.
Therefore, if and ONLY if, two commodities have identical marginal utility, can both commodities be MONEY. QED
Reply from The Daily Bell
Money is gold, silver or anything else that a group of people wish it to be, Ingo. History clearly shows us this. Sorry.
Posted by Martin B on 01/12/13 09:57 AM
Yes, why not 17 coins and pay off the fake level of US sovereign debt, or maybe 200 coins and pay everything off. The coin idea shows the clowns in Washington have no answers to the nightmare situation they have put the world into. Such scum, almost all.
Posted by dave jr on 01/12/13 09:43 AM
I wonder why platinum and only a trillion. If the price of a loaf of bread rises to a billion dollars... Sooner or later they will have to switch to lead.