WC Varones

Don't lend your hand to raise no flag atop no ship of fools

Zimbabwe Ben, meet Zimbabwe Timmy

It turns out that Ben Bernanke isn't the only one with the unlimited power to print infinite amounts of money.

Timmy the Tax Cheat has a little legal clause that allows him to make platinum coins in whatever insane denominations he imagines.  Trillion?  Heck, why not go for googolplex?

WaPo:
Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.
Yeah, the ceiling is no longer an issue. The fact that the U.S. is still running trillion-dollar deficits and printing money out of thin air to fund them? Kinda still an issue.

Congress created this monster in 1996 with the following:
 (k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
Ostensibly, this was an oversight and they thought they were just giving Treasury the power to make commemorative coins for sale for a few hundred or thousand bucks, and they never intended to let Timmy go Full Zimbabwe.  Cynics might say the bill's author knew exactly what he was doing.

Back to WaPo:
“I like it,” says Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”
In theory, this is much like having the central bank print money. But, says Gagnon, the U.S. government would simply be using the money to keep spending at existing levels, so it wouldn’t create any extra inflation. 
Joseph Gagnon of the Peterson Institute for International Economics has shit for brains. Running 7% GDP deficits and printing the money out of thin air "wouldn't create any extra inflation?"  How does that work, Joe?

If it's not clear to you yet that the dollar is a complete farce and is grounded in absolutely nothing, you're not paying attention.  Have you seen your gold dealer recently?

Is minting trillion-dollar platinum coins insane?  Of course it is.  But so is our current debt crisis.  And with every passing trillion spent, any remaining sane exit strategies are increasingly closed off.  And the Washington Post, a favored mouthpiece of the regime, has been flogging this idea for more than a year, so it's obviously a trial balloon the regime wants to keep floating.

The least painful way out of our current debt crisis would be a combination of austerity and devaluation (as we did post-WWII): Boner and Barry agreeing to serious entitlement reforms and spending cuts and tax increases, and monetization of existing debt via platinum seigniorage or the Dirty Fed just forgiving debt or maintaining a permanently huge balance sheet. But neither Boner nor Barry want austerity, so we'll get more devaluation instead.

The dollar has already been massively devalued by Obama's reckless spending and the Dirty Fed's enabling monetization.  You just haven't seen most of it yet in consumer prices because people are still afraid to spend.

6 comments:

K T Cat said...

It's like they don't live in the same world as we do. Listening to Obama ask for the elimination of the debt ceiling was surreal.

Negocios Loucos said...

Yeah KT, here in SF the collective orgasm was unbearable. I feel like this is what it must be like to be at the Vatican, Mecca or Salt Lake City. Dear Leader is absolutely righteous and good. Whatever he wants must be good and whoever opposes, even questions Dear Leader's proposal is evil.

أوباما عظيم!

Doo Doo Econ said...

Maybe President Obama has just finished watching the movie "Lincoln" and feels that dictating is righteous.

drozz said...

the weimar republic was never this crafty

Anonymous said...

Saying someone has shit for brains doesn'tmake it so; it sure has hell doesnt sound like you know what you are talking about. Money has to corculate in the economy tobe inflationary, stupid... and paying off debtone agency of the government owes another isnt money circulating in the economy.

W.C. Varones said...

Money is not "corculating" because people and businesses are scared shitless in the Greenspan/Bush/Obama/Bernanke Depression.

That doesn't mean that running 7% - 10% GDP deficits and monetizing them all the way will not eventually lead to inflation, stupid.

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