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Thursday, January 10, 2013

The Trillion Dollar Coin (TDC) is Left on the Bargaining Table

The trillion dollar coin (TDC) debate has forced many folks to look up that old Anglo-French word, seigniorage. Which simply means making money by making money. However, not everyone has had the energy to do a simple Google search, like the National Republican Congressional Committee (NRCC) and a few others. Never let the facts get in the way of a good meme.

Meanwhile, the White House has left the TDC on the bargaining table with Congress. This TDC idea does not look like it will die until Congress raises the debt ceiling without any onerous strings attached. The fist fighting will begin shortly in Johnsville and elsewhere.

So here is the latest daily dose of rants, pants, slights and slants from the minters and melters opining upon the trillion dollar platinum coin, enjoy:

Justin Sink / The Hill:
White House declines to rule out the minting of a ‘platinum coin’  —  The White House on Wednesday declined to rule out minting a “platinum coin” to avoid default if Congress fails to raise the debt ceiling.  —  Press secretary Jay Carney on Wednesday said there is “no substitute” for Congress raising the borrowing limit but declined to explicitly rule out issuing new currency to pay the government's debts.

"The option here is for Congress to do its job and pay the bill," Carney said. "There is no Plan B, there is no backup plan. There is Congress's responsibility." ...

"You can speculate about lots of things," Carney said. "Nothing needs to come to these kinds of speculative notions about a problem that can be resolved by Congress doing its job."
Donald Marron / Forbes:
  1. A legal loophole gives the Treasury Secretary apparently unlimited authority to mint platinum coins.
  2. Most observers think this is a terrible idea, but the legal arguments against it are weak at best.
  3. The economic arguments against the coin are stronger but manageable.
  4. The best arguments against the platinum coin involve image and politics.
  5. Nonetheless the platinum coin strategy might be better than the alternatives if we reach the brink of default.
Annie Lowrey / NY Times:
A Trillion-Dollar Coin Brings a Jackpot of Jests — Thus, some members of the liberal intelligentsia and a number of prominent economics commentators — most notably Joe Weisenthal of Business Insider, who is also a prolific user of Twitter, and Josh Barro of Bloomberg View — resurrected the trillion-dollar coin idea.

This time, they went on a vigorous public relations campaign as well. The hashtag #mintthecoin has drummed up hundreds of social media responses, and a petition on the White House Web site has more than 7,000 signatures. The idea also won apparent support from some heavy hitters, like the Nobel laureate and New York Times columnist Paul Krugman and Donald Marron, the Republican economist who heads the Tax Policy Center. (Mr. Marron, to be fair, suggests minting a $25 billion coin, not a $1 trillion one.).…
Matthew Yglesias / Slate:
The Biggest Myth About The Platinum Coin Option  —  The biggest and weirdest myth out there about the $1 trillion platinum coin is the idea that it would require a large quantity of platinum to make one.  The National Republican Campaign Committee, for example, is out there warning that "The amount of platinum needed to mint a coin worth $1 trillion would sink the Titanic."

National Republican Congressional Committee: Tell Obama Spending is the problem

Warren Mosler / Mosler Economics:
Japan should buy the platinum coin? — note that the purchase of a US Treasury $1 trillion platinum coin would weaken the yen and put off the US debt ceiling issue…

[Japan would sell yen/buy dollars in the ‘marketplace’ to pay for it. Probably would want to do maybe $20 billion at a clip…]
Monetary Realsism:
Treasury and the Federal Reserve – Platinum/QE Integration — This platinum coin strategy has obviously been the subject of much recent public comment and debate. The platinum strategy more broadly is not the primary question for consideration in this post. The topic here is the potential for the specific operational integration of a platinum strategy with overall Federal Reserve balance sheet management...
Alexandra Petri / Washington Post:
One nation, under the Platinum Trillion-Dollar Coin  — In fact, I am frankly disappointed with how serious this idea has become. We ought to embrace the inherent bizarreness of this solution, insisting that the coin be at least eighteen yards in diameter and that we should get to suspend it over the Capitol by a tiny thread, with a soothsayer standing next to it muttering ominous things. It should have a giant portrait of Honey Boo Boo on it. The president should mint it, and then he should stand in front of this embarrassing large platinum coin and say, “Seriously, America? Seriously, Congress? Surely this has gone far enough.”
Tom Maguire / JustOneMinute:
He's Ready For The Clown Suit — Paul Krugman explained that as long as we can get comfortable with the idea of our Treasury Secretary briefly donning a clown suit to save the country, we should be ducky with the idea of the Trillion Dollar Platinum Coin. — Well, the reported … 
Ann Althouse / Althouse:   Hope and change... into a clown costume.
Firedog Lake:
The Small Ball Trillion Dollar Coin Seigniorage Exception  —  In short, there’s no way that PCS in itself can have an inflationary impact, no matter how high the value of the platinum coin is. That’s because repayment of already held debt is less inflationary than continuous rollover of and gradual increase of debt, repayment of debt to government agencies including the Fed doesn’t enter the economy, and using PCS-generated funds to cover deficits is not in itself inflationary unless deficit spending is so large that it continues past full employment.

So, that’s the true narrative about PCS and inflation. Not, ZOMG “Weimar, Zimbabwe.” That’s nonsense! Let’s hope that Joe Wiesenthal, and other MSM bloggers who have jumped into the PCS pool in the past few weeks read it and cease to spread “the silly idea” that PCS, in whatever denomination greater than say a few Trillion Dollars may be used, is inherently inflationary...
Ross Douthat / NY Times:
The Politics of the Platinum Coin — I would just ask platinum coin proponents, is this generally how politics works of late? One party behaves irresponsibly, the other side counters with a wave of irresponsibility of its own (because that’s the only way to make those crazies see reason …), and then the first party recognizes the error of its ways and everyone returns to behaving reasonably? Does that pattern describe the polarized Washington that we’ve come to know and love? ...
Neil Irwin / Washington Post:
The platinum coin idea is idiotic. That is the point.  — I’ll lay out this econo-pundit’s conclusion upfront: I hate the platinum coin idea. But if there is no resolution of the debt ceiling through the legislative process, I hate some of the alternatives more...
Maura Pennington / Forbes:
Platinum Coin? Grow Up. — We tell children to dream, yes, but we also tell them to have common sense. If someone is able to advocate publicly for a trillion-dollar platinum coin, their parents and teachers only did half their job. Who can type the words “platinum coin” and “solve problem” and not wonder if maybe that would be a good idea for a screenplay? Fiction is not the statesman’s milieu, though, so our legislators (and sideline commentators) can stop posing...
Dan Kois and Andrew Morgan / Slate:
Design the New $1 Trillion Coin! — Who should be on the front? Reagan? MLK? Harry Truman giving the thumbs-up?

Design proposal for the $1 Trillion Platinum Coin (TPC)
The latest count has 7,268 people signing the White House Petition to make the TDC:
White House Petition: Direct mint to make trillion dollar platinum coin

Related: Here is the coverage of Platinum Coin Seigniorage (PCS) by The Johnsville News since 2011:

July 29, 2011:
Debt Watch / Coin Trick: the Trillion Dollar Coin — First roundup of how the trillion dollar coin idea germinated and spread on the internet leading up to the debt ceiling debate during the summer of 2011.

December 15, 2012
Neutering Option for Ben Bernanke and the Federal Reserve — Thinking Big: Give the US Government a $60 Trillion Blank Check [mega sizing the platinum coin to neutralize the Fed]

January 4, 2013:
Hammering Away at the Platinum Coin Gambit — with the tax question settled Washington turns to the debt ceiling and PCS roars into the New Year, roundup.

January 8, 2013:
Champagne Wishes and Platinum Dreams versus Tea Party Steel. (roundup)

January 9, 2013:
More Champagne Wishes and Platinum Dreams (roundup)

Background, the use of PCS has its roots in MMT (Modern Monetary Theory), discussed here: June 29, 2011, Modern Monetary Theory (MMT) in a Nutshell

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