left right politics showbiz tech invest good life gossip fun hot
Mother Jones Hot Air Huffpo Variety Engadget Seeking Alpha Lifehacker TheSuperficial Daily Beast reddit
Daily Kos Michelle Malkin Politico Billboard Boing Boing TheBigPicture Luxist TMZ.com Fark BuzzFeed
ThinkProgress RightWingNews First Read CNN Showbiz Gizmodo FT Alphaville Joystiq Perez Hilton 4chan memorandum
Crooks+Liars Power Line CNN ticker E! Online Techcrunch Josh Brown Kotaku gamer Bastardly Post Secret Techmeme
TalkngPtsMemo Ameri..Thinker Swampland TV Guide Ars Technica 24/7 Wall St. TreeHugger Egotastic hascheezburgr Drudge
The Raw Story NewsBusters The Caucus Ent. News Mashable bloggingstocks Consumerist PinkIsTheNew dooce digg
Wonkette Wizbang fishbowlDC HlywdWiretap Google blog DealBook lifehack.org CelebrityBaby Someth'nAwful trends
Atrios Taki Magazine WashWhisprs DeadlnHllywd Read/Write Jeff Matthews 43folders GoFugYourself Neatorama PSFK
Firedoglake Big Hollywood The Fix MSN Ent. OReilly Radar PhilsStockWorld Autoblog Page Six Cool Hunter BBC
Young Turks IMAO Capital Gains Rot'nTomatoes GigaOM Daily Rec'ng Deadspin BestWeekEver stereogum Timespop
Americablog AceOfSpades Open Secrets Cinematical ProBlogger Zero Hedge DownloadSqd Dlisted CuteOverload media eye
Politicususa Redstate WikiLeaks law Cool Tools Bespoke MediaZone PopSugar Dilbert blog TVNewser
CounterPunch Jawa Report econ law.alltop Scobleizer BtwTheHedges Deviant ArtHollyw'dTuna gapingvoid BuzzMachine
TalkLeft Patterico EconLog Volokh Consp. Apple Blog Minyanville Gothamist x17online DailyGrail MediaGazer
Feministing Townhall.com Freakonomics Legal Insurrec.. Valleywag Fast Money Curbed DailyBlabber Prof. Hex Steve Rubel
PolitAnimal OutsideBeltwy CrookedTimbr Conglomerate mozillaZine RealClearMkts FabSugar Gawker OvrheardinNY MediaBlgNRO
Truthdig Moonbattery MarginalRevo SportsLawBlog Smashing W$J Mktbeat Gridskipper Radar Last.fm Threat Level
Alternet RealClearPoli crime W$J Law BlogTechdirt AbnormalRtrns Material Defamer kottke.org Seth's blog
Media Matters Instapundit CrimeblogsBalkinizationMAKE RandomRoger Sartorialist Jossip PumpkinChuckin mediamatters
The Nation Hugh Hewitt All Crime Credit Slips SrchEngLand Stock Advisors Drink'nMadeEasy Just Jared Maps Mania Newshounds
Maddow Blog PJ Media Smoking Gun FindLaw VentureBeat Slope of Hope Mark Cuban Celebitchy CollegeHumor FAIR

Friday, January 11, 2013

Champagne Wishes and Platinum Dreams: Do all roads in D.C. lead to the U.S. Mint?

Do all roads in Washington lead to the US Mint? And the trillion dollar coin (TDC)?
Step-by-step the Obama administration and the Republican House of Representatives continue going down the road leading to the U.S. Mint. And the minting of the Trillion Dollar Platinum (TDC) coin.

When the currency is involved you can bet that the name calling will get much more intense - 'mess with my money and I'll mess with your mama'. Right now the debate is in the crazy clown phase.

Somewhere during these next couple of months of debate leading up to the debt ceiling deadline expect that some crazy person will strip naked, paint themselves platinum and dance in front of the Treasury building to protest the coin. That will just be the halftime show...

Here is the latest roundup:
Paul Krugman / New York Times:
Coins Against Crazies — So, have you heard the one about the trillion-dollar coin? It may sound like a joke. But if we aren't ready to mint that coin or take some equivalent action, the joke will be on us — and a very sick joke it will be, too. — Let's talk for a minute …

just consider the vileness of that G.O.P. threat. If we were to hit the debt ceiling, the U.S. government would end up defaulting on many of its obligations. This would have disastrous effects on financial markets, the economy, and our standing in the world. Yet Republicans are threatening to trigger this disaster unless they get spending cuts that they weren’t able to enact through normal, Constitutional means.

Republicans go wild at this analogy, but it’s unavoidable. This is exactly like someone walking into a crowded room, announcing that he has a bomb strapped to his chest, and threatening to set that bomb off unless his demands are met.

Which brings us to the coin … it’s the president’s duty to do whatever it takes, no matter how offbeat or silly it may sound, to defuse this hostage situation. Mint that coin!
ntroducing 'The Krugmanerrand' - fundamentally unserious currency
The Krugmanerrand
Smitty / The Other McCain:   
NYT Has Bum Strapped To Column, Plus, Introducing: ‘The Krugmanerrand’ — The only way in which Krugman could seem to be rational is if one were to accept that the Progressive Project has affected some kind of Article V re-write of our Constitution …

the pretzel logic of our Ruling Class, then, sure: the idiocy of Krugman and the rest of the Beltway Clown Car comes into focus.

We’re a fundamentally unserious people with a fundamentally unserious government, advised by fundamentally unserious ‘eclownomists’: we deserve a fundamentally unserious currency.
Clay Waters / NewsBusters.org:   Krugman Coins Another Insult: GOP Acting Like Someone With ‘Bomb Strapped to His Chest’
Henry Blodget / Business Insider:   If The Republicans Seriously Threaten To Default, They Will Surrender Any Claim To ‘Economic Prudence And Conservatism’ The Republican Party of my parents--the party of fiscal prudence and conservatism--appears to be an ancient memory.

Mohamed El-Erian / Fortune:    
How the platinum coin could work (or backfire) — The unusual move of minting a large platinum coin might shock politicians into cleaning up the fiscal mess. But the rest of the world may see it as inflationary …
The best way forward for everyone is for Congress to change the way it is currently handling its important economic responsibilities. Should this fail to occur, options such as the platinum coin will garner lots of attention in the months and years ahead.
Some random speculation....
Brad Plumer / Washington Post:
Would the platinum coin freak out financial markets?   Out of morbid curiosity, we asked a number of analysts what they thought would happen. Predictions fell into a couple of broad camps:
  • The platinum coin might trigger a panic!
  • The platinum coin might be fine.
  • The platinum coin might be legally risky.
  • It all depends on how the platinum coin is used. …But, El-Erian adds, the government couldn’t rely on platinum coins forever — eventually Congress would need to lift the debt ceiling so that the government could get rid of the coin and go back to normal. “If the coin approach were to prove an end in itself, the consequences would be quite different, …
Ezra Klein / Washington Post:
A lot can go wrong with a platinum coin  Mohamend El-Erian of PIMCO argues that whatever its downsides, the platinum coin beats blowing past the debt ceiling
Minting the coin would interrupt [the process of shaming the Republicans to raising the debt ceiling], uniting Republicans — and many voters and business groups — against what they would see as an unsettling, illegal and inflationary power grab from the executive. And if you think the press spreads blame too equally over the debt ceiling, wait till you see the coverage if the White House decides to respond by creating a trillion-dollar coin out of nothing. You can explain the basic logic of fiat currency until you’re blue in the face, but it’s not going to matter. That coin would drive our country’s increasingly deranged politics, which are really at the heart of this crisis, to the edge. …
Zero Hedge:Trillion Dollar Platinum Coin Is "Not The Solution" - PIMCO's Gross — PIMCO founder and co chief investment officer Bill Gross gives no credence to the trillion dollar platinum coin scheme. …
via Donkey Hotey: Trillion Dollar Coin adapted from Statue of Liberty Coin designed by Don Everhart from the Presidential Coin Series at the US Mint.
Greg Ip / The Economist:
Platinomics — The economics of the platinum coin option

In the many years I’ve spent scrutinizing monetary policy, I had never devoted more than a thought to coins. In the scheme of all things monetary, they seemed, well, pocket change.

Needless to say, the prospect of the Treasury issuing a $1 trillion platinum coin to circumvent the debt ceiling changes that. I won’t repeat the details; you can get up to speed by reading Matthew O’Brien of The Atlantic here and my colleague here. If nothing else, unpicking the consequences is a fun exercise. I’ve concluded the economics are more complicated and more benign than appreciated, but the political consequences are graver.

while the platinum coin option expands the Fed’s balance sheet and, ultimately, the monetary base, it has no implications for inflation, even if the Treasury never buys back the coin. …
Buying a coin solely to finance the deficit is monetizing the debt, precisely the sort of thing central bank independence was meant to prevent.
David Weigel / Slate:
Would #MintTheCoin Bring About Another Downgrade of America's Credit Rating? — So how would the ratings agency react if the next crisis -- set for the end of February -- was averted by the minting of a $1 trillion platinum coin? I asked John Piecuch, director of communications at Standard & Poor's, whether. He cautioned that the agency wouldn't go into too much detail gaming out a hypothetical. But he didn't exactly ring the bells of doom. …
Atrios / Eschaton:  
Unilaterally  — I know all the serious people hate the coin idea, but the more I think about it the more convinced I am it's actually the only legal/constitutional path forward. … All that's left is the coin.
Rep. Jerrold Nadler / Economy and Budget:
The debt ceiling must go  —  Here is a stubbornly well-kept secret: the debt ceiling is arbitrary, doesn't affect the deficit, and serves no real function in keeping spending down.  In addition, it has recently become a cudgel which extremist Republican legislators use to beat the rest of us into submitting to political blackmail. …

Repealing the debt ceiling would ensure that Republican radicals can no longer play a dangerous game of chicken with the full faith and credit of the United States.
UP with Chris Hayes / MSNBC:
Saturday’s guests (Jan. 12): The phenomenon of the trillion dollar coin...  — On Saturday’s Up w/ Chris Hayes, we’ll discuss the origins and merits of a novel proposal making its a way around the Beltway: the trillion-dollar coin. Serious observers — from Nobel laureate Paul Krugman to former U.S. Mint director Philip Diehl — are calling on the federal government to use its authority under a little-known statute to mint a platinum coin worth $1 trillion and deposit it into the Treasury Department’s bank account, as a way of eluding a brewing fight with Congressional Republicans … 
Reid to Obama: OK to skip Congress on debt ceiling  Senate Majority Leader Harry Reid and other top Democrats are putting new pressure on the White House to circumvent Congress to boost the nation’s debt ceiling if no bipartisan agreement can be reached.

In a strongly worded letter to President Barack Obama obtained by POLITICO, Reid and his leadership team argue that failing to raise the $16.4 trillion debt ceiling would threaten the full faith and credit of the United States. … 
Jonathan Alter / Bloomberg:
The Platinum Coin Wouldn't Have Been Goofy to FDR — I love the trillion-dollar platinum coin solution to the debt-ceiling blackmail threat, though lots of people find it too gimmicky. They say that a serious government can't pull stunts like that to bolster the financial system.

Oh, really? Ask Franklin D. Roosevelt.

Roosevelt took the oath of office on March 4, 1933, at the bottom of the Great Depression...

After staying up all night playing his guitar, [Treasury Secretary] William Woodin hatched his own idea for printing more money without setting off inflation. Every dollar bill had (and has) a line at the top reading: “Federal Reserve Note.” Woodin decided to temporarily change the line to “Federal Reserve Bank Note.” The difference was that this new paper currency would be backed not by gold but by the collateral of all banks associated with the Federal Reserve. “It won’t frighten people. It won’t look like stage money. It will be money that looks like money,” Woodin said.

FDR approved Woodin’s proposal to change the wording on paper currency and -- with the help of other provisions of the bank rescue plan -- the crisis passed. Banks reopened and the country breathed a sigh of relief.

Was that any less gimmicky than the platinum-coin solution?
Federal Reserve Bank Note - issued in denominations under $100 by FDR
FDR funny money: under $100 Federal Reserve Bank Notes
Brian Beutler / Talking Points Memo:
The Wild Origins Of The Trillion Dollar Platinum Coin — Political elites won't shut up about the trillion dollar platinum coin. — For over a week now, pundits and power brokers — including members of Congress, a Nobel Prize-winning economist, a former director of the Congressional Budget Office …

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia