Mr. President, Mint that Coin and Keep that Option. Don't Sell Us Out

We know by now that fake tough talk from the President on letting the Bush tax cuts above those making $250,000 expire being an absolute was just that, fake. So there's absolutely no reason to believe that Republicans do not have all the leverage in this upcoming debt ceiling fight coming up. They do.

US Double-Dip Death Watch Continues

Jay Carney’s press conference today leaves no doubt that the situation is substantially as I described it in my previous post. The White House commitment not to negotiate on the debt ceiling is mainly fluff. Their public position is that the Congress must lift the debt ceiling with a “clean” vote first, before a deal can be struck on the massive spending cuts that will take place automatically in March. Carney implores listeners to believe that the debt ceiling and sequester are “separate” issues, and insists that “this not a negotiation the White House is going to have.” But of course the entire press conference is itself a public gambit in an ongoing negotiation that obviously includes back-channel talks.

There's also no reason to believe the President won't put up huge cuts to our safety net just to raise the debt ceiling thanks to what we know from the austerity memo from Jack Lew's office when he was head of Obama's OMB in 2011.

This was all thanks to the gross incompetence of not adding a raise in the debt ceiling in the original 2010 deal that extended the Bush tax cuts as I have repeatedly pointed out. However more than half of you already know this, so let's get to the here and now; there are only two options.

There is the 14th amendment challenge to the SCOTUS option and there is the minting of a 1 trillion platinum coin to start off with. We know the 14th amendment challenge is the least likely scenario to be pursued now. So given the lack of appetite there, there is only one other option and the President better consider it because no one believes the fake posturing about a debt ceiling raise "not being for debate." Too late. It is.

It didn't have to be, but the President made it that way by trusting John Boehner with the full faith and credit of the US so now political default(the only way it could happen as a currency sovereign) is a possibility thanks to this mess. So a Trillion Dollar Coin (TDC) is the first step and a small chance at redemption that suddenly is bigger than the blogger and the blogs talking about it thought it would be. It suddenly got real and thank goodness it did because we need to go further. To defeat austerity for the future we also should go from a Trillion Dollar Coin (TDC) towards Platinum Coin Seigniorage(PCS) and think about minting coins of a higher value up to 60 trillion. Therefore, as a first step, I urge all of you to instruct the President to...

Direct the United States Mint to make a single platinum trillion dollar coin!

Now is the time; thanks to the originator of this idea, beowulf, and the tireless efforts and advocacy of our own Letsgetitdone; the TDC and PCS have now gone mainstream. Markos covered it on the front page recently referencing the co author of the law explaining it in very clear terms anyone should be able to understand. Democratic Congressman Jerold Nadler is going to push for it in Congress, and I have even heard that even Hong Kong papers are mentioning #Mintthecoin.

Of course that doesn't mean it won't have its detractors and it does, but it's pretty ridiculous considering our long history of doing so and what is in the Constitution.

U.S. Constitution - Article 1 Section 8

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

I don't always agree with Joe Weisenthall on everything; for instance, any amount of face value created with PCS would not be circulated and would not cause inflation(60 trillion in the Treasury General Account (TGA) does not mean Congress could spend it because all money created and spent has to be appropriated by Congress), but I am glad he is on board for the 1 trillion Platinum Coin option. He's right about this debate. He also references what sadly sounds a lot like some people on this site and others who want to scoff at this idea. When they do they sound like GOP Congressman Greg Walden whom is looking to legislate this authority away. However to make up for that he references the ever so wise deficit owl UMKC economist Stephanie Kelton who has long supported the idea.

Why The Fight Over The $1 Trillion Coin Is The Most Important Fiscal Policy Debate You'll Ever See In Your Life

When GOP Congressman Greg Walden introduced his bill proposing a ban on minting a trillion dollar coin, he specifically likened a government to a small business:

{..........}

Stephanie Kelton, an economics professor at the University of Missouri Kansas City and one of the earliest defenders of the coin, explained via email:

Until the idea of minting a $1 trillion coin became a reality, most people probably never gave much thought to the government’s financial operations. We understood that the government spent money, and we knew the money had to come from “somewhere”, but we assumed there were limits to how much the government could afford to spend.

Like a household, we were told that the government could spend more than it takes in, but only as long as private lenders remained willing to extend credit. Borrow too much, and your credit rating will suffer. From there, it’s a hop, skip and a jump to “shared sacrifice” and “tough choices” to avoid becoming the next Greece.

Enter the coin. An idea so simple the mind recoils. The Treasury has the power to end-run the process by cutting out the middlemen – taxpayers and bond markets –simply directing the Federal Reserve to add some numbers to its balance sheet. Saints preserve us! People are freaking out because the coin appears to remove the constraints on government finance by allowing the government to just “print” money. The truth is, the government is already the issuer of the currency. It is already not revenue constrained. The coin doesn’t change anything fundamental, but most people don’t realize this because they don’t know anything about the mechanics of the way the government currently gets numbers into its account at the Fed.

The ever so wise deficit owl is correct. All denials and fear mongering about macroeconomic effects and scary inflation that will never happen are from those that simply do not understand our system; otherwise they wouldn't be throwing a fit about what already happens on a run of the mill basis; even if the coin was not going to be melted down which it is once the debt ceiling is raised as it is a stop gap measure.

To expand on the point and I have been repeating over and over again, I will turn it to Stephanie Kelton's colleague and brilliant protege of the great economist Hyman Minsky MMT UMKC economist L. Randall Wray.

Update on Trillion Dollar Coin: Not Inflationary–it is a Duration Trade

The Platinum coin has been all over the blogosphere as well as the media. Some have been arguing it will cause hyperinflation. How can issuing a coin to be held at the Fed to allow the Treasury to spend up to budgeted amount lead to hyperinflation? It has no first round effect that is different from selling a bond into private banks and then having the Fed buy the bond to replenish bank reserves (the current operating procedure); the second round effect–if there is any–is deflationary because it can remove interest income. Some “challenged” politicians are advocating that we remove the Treasury’s ability to coin platinum.

You see? This is already how our system works. We will be creating fiat money with legal tender to pay what we already rung up. That's is what this debate is about. No perceived "market confidence" or "market reaction" is going to change the reality Randy Wray spelled out. This will not cause inflation. The mechanics are no different; it's just a slightly different way to turn the wheel.

To expand on that, I also have to reference the brilliant MMT economist Bill Mitchell to alleviate the scare mongering fears of a circulating inflationary trillion dollar platinum monster or even a 60 trillion platinum monster! OMGZ! One that escapes the TGA and drives up prices everywhere, except I already explained that Congress has to appropriate the funds or the monster stays chained at the Treasury.

This is similar to when the Fed buys bonds from commercial banks giving them cash making up private bank reserves on their books. Those "scary" cash reserve monsters do not chase goods either despite any hyper-inflationary fairy tales you might have heard! This is true regardless of QE because private banks create money by creating loans and despite while getting the reserves for free later anytime they want.

Building bank reserves is not inflationary

So just stop it. None of this is inflationary regardless of the Market Gods some think are going to be angry at the Mount Olympus bond market. Banks' reserves do not expand credit either as the money multiplier theory is false. Therefore with this much unused capacity and demand there won't be any massive expansionary credit that fuels inflation either. Issuing debt that is auctioned off via liquidity points does not really have much of a purpose because it doesn't really finance government spending and neither does revenue.

Issuing debt to be sold is useful as merely one interest rate setting tool out of many such as the Federal Reserve's monetary policy rate, the federal funds overnight rate, and the rate that it pays to commercial banks for excess reserves left in the system overnight; the Treasury and the Fed set all of this together thus decreasing the meaning of issuing debt to be auctioned off it in the modern money age. So what I hear from too many about what we "know about debt and economic policy" denying what the PCS law clearly states in a hyperventilating fashion or willful cognitive dissonance because the POTUS is unlikely to consider it is absolute garbage.

It would be one thing if people were just wrong and that was the damage alone but it's not. The austerity that will be passed to raise what was once routine(debt ceiling) thanks to all the flubs and/or sellouts that led us here will hurt real people suffering. I guess it's a matter of priorities; some people are worried about the tone when it comes to advocating for the disadvantaged, others actually care and are upset about this and read poverty stats.

Those are real people that need resources austerity sucks away from them. Real people who didn't want to be pawns in this sick game of political debt default, automatic recession or slashing their safety net they will die without; all because either our leaders want them to suffer or they forgot how to represent these real people they work for. These real people don't need a polite debate in Washington or anywhere else. They need someone to advocate for them and make no apologies about it.

They need help, not politicians. The fact that we are here today at this moment is sort of a national embarrassment and our entire government is to blame on a bipartisan level. So I am more optimistic thanks to the PCS and #mintthecoin going viral, but if by some miracle the POTUS wakes up or remembers who put him in office on the low end and pushes for this, we need to go beyond just the 1 Trillion Platinum coin solution.

We must ignore Josh Barro and others that would have us legislate this authority away just to raise the debt ceiling. Letsgetitdone is right once again.

Wake Up Progressives: The Bad Guys Are Trying To Steal the Trillion Dollar Coin for the 1%

In the latest outburst of posts, tweets, articles, and videos about the TDC, we're beginning to see, a feeding frenzy in which the participants self-organize around the TDC meme AND the objective of avoiding the debt ceiling, but without providing any consideration at all to higher value PCS options that could both make the debt ceiling a dead letter and also remove the driving force for austerity politics. This focus on the bare TDC and its application to the debt ceiling is “small ball” policy analysis that ignores larger issues related to PCS. It needs to stop before it totally drives PCS into a defend the status quo solution, that may defuse the debt ceiling, but still leave us in the sorry state of austerity-driven politics.
 

The focus on “small ball” policy analysis of PCS is emblematic of the superficiality of media outlets and what passes for “journalism” in the early 21st century. Too many content professionals are no more than marketers and propagandists, and don't make even minimal attempts to get at the heart of the larger PCS news story.
 

If the small ballers get to control the PCS debate it will result in the waste of a remarkable opportunity to change the whole direction of American politics. Progressives need to wake up and try to grasp this opportunity, before the fiscal conservatives save their version of the financial system with its increasing tendency to impose austerity on the rest of us while the 1% get more and more wealthy.

There has been enough deficit terrorism and the bipartisan deficit terrorists can never get enough pounds of flesh to extract for the market bond vigilante confidence fairy Gods. We must take away the power they have literally and figuratively over the collective mindset that drives austerity politics. Assuming this is even considered, and we must use this momentum to make it so, we cannot accept just a "small ball" TDC. We must go beyond to make the high value non inflationary PCS a weapon in our arsenal against the deficit terrorists and those that enable them in any way.

The long term unemployed and everyone else that needs resources they cannot afford have been terrorized enough in this economy. It's time to actually care about them instead of excuses for not pursuing this option because of an arrogant disregard for common law or support of a politician. The fact that we are in this position on top of record income inequality and official 7.8 to 14% real unemployment along with the worst employment to population ratio to workforce participation rate in 30 years as people keep dropping off the rolls not being counted is bad enough. Congress and the White House put us in this position by creating this mess on top of all this.

Now we'll see if they are interested in real solutions to the mess they created or will they play make believe and slap us all in the face as if we don't understand how they are ignoring us; as if we don't remember how we were sold down the river two years ago? If none of these solutions are considered I'll know what was just reported in TIME was true.

Conspiracy of Two

“I’m the President of the United States,” Obama told Boehner [in 2011]. “You’re the Speaker of the House. We’re the two most responsible leaders right now.” And so they began to talk about the truly epic possibility of using the threat, the genuine danger of default, to freeze out their respective extremists and make the kind of historic deal that no one really thought possible anymore — bigger than when Reagan and Tip O’Neill overhauled the tax code in 1986 or when Bill Clinton and Newt Gingrich passed welfare reform a decade later. It would include deeper cuts in spending, the elimination of all kinds of tax loopholes and lower income tax rates for all. “Come on, you and I,” Boehner admitted telling Obama. “Let’s lock arms, and we’ll jump out of the boat together.”

Time will tell. There is slight optimism in general just because of the #mintthecoin going viral, but I also share a healthy dose of skepticism given where we are.

Please sign the petition up top. Thank you.

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Comments

Mint 16 coins!

sartoris's picture

Why stop at one?  I love this idea.  It's so absurd and so perfect. 

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No need. You can just mint one or two and regulate the value

priceman's picture

like the 60 trillion coin kept in TGA not circulated. But when you think about it, issuing debt is also absurd now as I outlined above, but not as absurd as the debt ceiling itself and those that would have us ignore section IV the 14th amendment.

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I was sleep deprived earlier so I will better answer now

priceman's picture

If the national debt goes to zero there will be no more private sector wealth and there would be a huge recession like when Andrew Jackson paid it off so the point isn't to mint coins to retire the debt it's to get around the debt ceiling debacle and make the payments as they come due which is the only thing national debt wise we should be worried about.

MYTH #3: If this idea is so great, then minting a $16 trillion dollar coin could just solve our debt problem!
This line of reasoning ignores the point completely. People who say this (or say we should print a $100 trillion coin) are mistakenly thinking that the point of this exercise is to pay off our debts and get out of the hole.
That's not it. Our debts are plenty manageable at current levels, and with interest rates the way the are. The point is to stay within the law, while getting around the technical problem of the debt ceiling. So there's no point to the $16 trillion coin or the $100 trillion coin, or anything else so absurd. This is not about having money to spend. This is about avoiding a legal crisis where the government had obligations to much (such as on its debt) but didn't have the authority to borrow and spend money.
And furthermore, if we actually did try to eliminate our debts just by creating a coin, we would create the aforementioned inflation problem (via a massive expansion of money) and it would result in buyers less inclined to buy dollar assets.

Read more: http://www.businessinsider.com/3-huge-myths-about-the-plan-to-save-the-e...

I disgaree with Joe that minting a 60 trillion dollar coin is a bad idea because it would not be in circulation and could take the place of extending the debt ceiling which is just making the payments, but retiring the debt is not the point and there would be no reason to invest in this country if that were the case.

 

Anyway, I hope that clears things up, Sartoris. Thank you.

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I'd mint 30 $100b coins ...

BruceMcF's picture

... and deposit them one at a time on a Monday the week the debt ceiling is supposed to kick in. Drive the hard currency nuts batty-er.

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I don't get it

Shahryar's picture

wouldn't it have to be backed up by something? I can see how printing more money or minting coins would work on the economy within the United States but don't we have a debt with other countries?

This makes it seem, and perhaps I just don't understand, that we can mint a trillion dollar coin, hand it to our creditors and say "there. We've paid off what we owed you."

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Our money is backed by the productive capacity of our economy.

BruceMcF's picture

Our debt HELD by other countries is not a mortgage BETWEEN the US government and those other countries. They hold US treasury securities by choice, but if they elect to not hold US treasury securities, then they can decide between (1) simply selling them off seeing their exchange rates rise, and US domestic sales and exports start taking over markets they have been taking with discounted exchange rates, exporting their employment to the US (and we surely could use that employment) or else (2) replacing them with US private debt, so a larger share of the US treasury securities would end up

The US government is not like a state government. Its US money, issued by the US government (though under a set of arcane rules and organizations to pretend that its being done by an organization owned by the commercial banks but regulated by the government) ~ we can ALWAYS just monetize as much of the debt as makes sense.

The question is, how much monetization of the debt makes sense. Tight labor markets and demand-pull inflation are the measures of when we are risking doing too much monetization of the debt. Mass unemployment is the measure that we are doing too little direct government employment. And when we can borrow in the open market at interest rates lower than the rate of inflation, then we can clearly simply print money to pay for much of that direct government employment.

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Priceman

LaEscapee's picture

This is a very informative and easily understandle explaination of what is at stake, thank you for that.

I think this idea should pushed far and wide until TPTB are forced to confront the fact that people do know what is happening in their theater and realize there are solutions that just just don't want to talk about.

Moving Lew to treasury? Yeah that's what we need another flunky that agrees with the status quo and thinks it's just hunky dory to use the less fortunate as food for the beast.

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Thank you, LE!

priceman's picture

Like I said this started from a blogger and everyone is talking about it. That gives me hope that people are finally going to have to confront the way our money system operates someday. I'm also glad it was easily understood. You're right. They don't want to talk about real solutions or fiscal or Monetary reality. they want everyone to think we are in the gold standard where we have to balance the budge because we have to dig up gold, but we don't.

Eww, Lew, another Wall St tool. This shit makes me sick reading about all the failures and all the corruption. I guess to me, it was cool that Letsgetitdone had faith in me to write a piece at least. I respect that guy a lot.

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I have to admit, I don't understand it

geomoo's picture

I have a hard time believing there is a way to avoid a down side to over-spending on wars and such.  I have tried to understand these things many times, but I just don't have a head for economics and fiscal policy, although often enough I learn that an economic concept which I failed to understand turns out to have been hocus-pocus to begin with.

I do understand one thing all too well:  this debate is best understood as a competition among competing agendas rather than as a good faith disagreement about how the world works, just as most climate change debate springs from ideology rather than from honest disagreement over the scientific data.  I am saying that the motivations of the actors must be taken into account.  Specifically, there are a powerful group of people who constantly seek ways to transfer money from others to themselves.

When I was very young and would see an enormous crowd of people at, say, a sporting event, I would dream of asking each of them to give me a penny or a nickel. I would then calculate how much that would add up to for me.  It turns out, there are those who have figured out how to extract such spread-out wealth from the many to concentrate it in their own hands.  These people saw that much of the middle class wealth was in homes, so they cooked up a scam to extract that wealth and concentrate it into their own hands.  Any analysis of what happened over the last decade plus in real estate which leaves out this nefarious motivation will miss the point.  Similarly, much of the wealth of the many was in pension funds and in the same way the same people cooked up a way to extract this wealth from those funds.  These things do not simply occur as a force of nature--they are the direct result of people having a motivation, forming a plan, and creating circumstances which bring that plan to fruition.

There is money in social security and therefore there are those who would like to steal that money.  That is the motivation of one side of this debate.  They are not concerned about inflation, nor the Consitution, nor even the over-all fiscal health of the nation.  They are concerned to continue their schemes for transferring wealth from the many to themselves.  This MUST be recognized in order to make sense of the discussion.  Such people, who to all appearances have Obama firmly in their pockets, do not seek a solution to the debt ceiling which does not include taking money away from social security.  Whatever "facts" they cite will necessarily be in the service of furthering their plan.

There was testimony before congress a year or two ago in which, in a moment of surprising candor, a chief operating officer for the one percent, perhaps Paulson or Summers, made a stunningly candid statement before Congress.  He was asked, "Why social security?"  Perhaps he thought he was being clever when he responded, "Because that's where the money is," thus channeling bank robber Willie Sutton who gave this exact answer as his reason for robbing banks.  If anyone remembers this, I would love to find the video to post in essays like this one.  Nothing better tears away the veil of self-serving "analysis" more directly than that simple statement.

Having lost most of their pensions and real estate wealth, the middle class still owns value in the social security they have been contributing to faithfully, paycheck after paycheck.  The oligarchs are coming after that money now.  This is what this debate is about.  The question is whether the many can prevent the few from continuing to concentrate wealth in their own hands.  The question is whether there is still functional democracy in the USA.

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The quote came from Bernanke during his confirmation hearings

geomoo's picture

In 2009, during his confirmation hearings, Bernanke was involved in an extended conversation in which social security was treated as an "entitlement" which is part of the deficit. As reported by Firedoglake in December 2009:

Bernanke reminded Congress that it has the power to repeal Social Security and Medicare.

“Willie Sutton robbed banks because that’s where the money is, as he put it,” Bernanke said. “The money in this case is in entitlements.”

A long-term plan to raid social security is nearing fruition. During the presidential race of 2000, Al Gore was already attempting to fight this theft with his famous "lock box" stance. Sadly for most of America, people laughed at Gore's style rather than take the time to understand what he was talking about.

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Thank you, geomoo

priceman's picture

Most MMT economists do not want to spend on wars because it wastes productive human capacity and the benefits are small. You're right about the 1% wanting to extract whatever wealth is left and that is what is behind the housing bubble as well. IT's also behind the campaign to go after SS and the Willie Sutton quote. It's because the special issue securities were already issued and interest earned and there for the taking though operationally there is nothing stopping the government from issuing more or just funding SS. It can't go bankrupt and neither can the nation but we can all live a life of misery in an economic income inequality coma.

Thank you for weighing in.

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While we are overspending on wars and such ...

BruceMcF's picture

... we are also underspending on other things. Total Federal Government spending goods and services has been growing over time at a slower rate than the economy as a whole.

The obvious test of how much stress that total government spend on goods and services is placing on the economy as a whole is to look at the unemployment rate: if government spending was threatening to over-commit the nation's productive resources, labor markets would be tight. Unemployment would be well under 5%, and the Unemployment/Vacancy ratio would be under 1 instead of well over 3.

Now, the MIS-allocation of resources means that we are getting worse outcomes from that government spend than we ought to be getting, but that is not due to pressing up against our productive limits, and refraining from engaging in domestic government spending because we are over-spending on the military will only increase the imbalance.

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Signed the petition

shaharazade's picture

although there is no way that this administration will do anything that would derail the next round of bogus deficit/debt theater. The script is written and it's an ongoing cliff hanger series. What good is a fake crisis that can be resolved to a disaster capitalist. They keep us in line by applying shocks and this would definitely defuse the set up. Thanks for the explanation as well as making the mint the coin movement understandable it also sheds light on how bogus the whole deficit/debt grand bargaining really is.  This really has become the theater of the absurd and the more people that are able to see through the Shock Doctrine the less they will react to the cooked up crises that just keep coming. 

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Thank you, shaharazade!

priceman's picture

This is a shock doctrine scenario. I am glad this is understandable and thank you for signing the petition.

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I disagree with this whole concept. No magical coin is going...

Ohio Barbarian's picture

...to save us. It misses the whole point, which can be framed by the question: who should have real political power? It does nothing about wealth inequality, or suppression of workers, or stopping unnecessary imperial wars. It does nothing about destroying the moral evil that is capitalism. 

All it does is wave this magic wand, purveyed in arguments that are always ridiculously long, as if the ability to string lots of words together with good grammar proves how Very Intelligent the proposal must be. 

If it sounds too good to be true, it probably is. I think this trillion-dollar coin idea sounds way to good to be true. 

Now we will see how well dissent is tolerated in this forum. 

 

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Dissent is of course tolerated

priceman's picture

But with going beyond the 1 trillion dollar platinum coin it does address income inequality, because spending is income and austerity sucks away income and what the coin will right is the excuse that there needs to be another shock doctrine scenario and seniors having their SS cut. This is about stopping politicians from slashing away whatever is left after the Great Divergence from 1979 to now where incomes stopped being compressed as they were in the Post WWII boom.

This isn't supposed to be our full on salvation but pursuing the TDC and going beyond to PCS to other aspects of MMT is important in my view. I respect your views, but giving people resources today in any way is important an they wont' magically rain down even if the whole system ends right now which is my problem with a lot of theories and focus on ending the system as we know it completely(without any transition) though I agree with a lot of socialist theories except of course the dictatorship of the proletariat which will always produce a failed state like Bukanin said(who's natural state hypothesis has its own problems IMO but he is right about this and proven so multiple times); there aren't many non Revolutionary theories that have been tried.

So anyway thank you for your comment though i don't agree with it this time though I appreciate your contributions.

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I'm sorry, but any proposal that seeks to allow capitalism, or..

Ohio Barbarian's picture

uninhibited profits, or unlimited growth, or unlimited accumulation of wealth to continue unabated fails to address our fundamental problems, in my view. Any system that allows such things eventually runs into a problem that it can't simply outgrow, and then it collapses because it no longer works. 

I find this theory you advocate a bandaid over a gushing wound, and the cause of that wound is the glorification of the profit motive itself. I don't claim to have The Answer, but I do claim to know what the fundamental problem is, and I think capitalism's elevation of greed and selfishness to a virtue is that problem. 

We need something else. Your proposal might delay inevitable collapse for awhile, I don't know, but it won't prevent it. 

Thanks for the respectful reply. 

 

 

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It's all about the metrics

priceman's picture

and how you define the input of growth.

Modern Monetary Theory and environmental sustainability – Part 1

 

You can tax wealth and compress incomes while figuring out what central planning needs to happen for the future a far as climate change and I'm sorry, that's where Anarchist thought and Marxist revolutionary doctrine(dictatorship of the proletariat) both have flaws; little anarchist pockets spread across the US are not going to be able to all make the right decisions for a growing carbon outputting population .

You can concentrate on what they got right and push for more ownership of what workers produce which already exists in some small ways at coops while redefining what grows while working on Democratic control of it which is where the problem lies. I'm almost there as fr as ending finance capitalism as we know it because that is looking increasingly irrational by the less than as second high frequency trading happens.

I already explained PCS and how it's a fight to spread real resources available now from those looking to slash them, which won't be assuming the system falls and society crumbles(not a utopia or worthy self sacrifice for the earth if we are talking quality of life).

But all views are welcome and there are certainly others who share your views. We Post Keynesians are not the enemy though.

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now that's one charming pig

sartoris's picture

I don't think the idea is intended to fix your litany of wrongs....."It does nothing about wealth inequality, or suppression of workers, or stopping unnecessary imperial wars. It does nothing about destroying the moral evil that is capitalism."

The concept of the 'magical coin' is intended to highlight the foolishness of the debt ceiling debate. 

As for destroying the moral evil that is capitalism, I am not a doctor, however, I would have to recommend that you not hold your breath while waiting for the demise of capitalism. 

What system would you like to see replace evil?  I'm curious.  I've asked you this before and you did not respond.  I'm not 'demanding' that you respond, I'm just curious what you would like to see replace capitalism. 

Oh, and you may or may not know this, every Sunday night a group called: Anti-Capitalist Meetup posts essays on this site. 

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Debates over tactics are most welcome

geomoo's picture

and this strikes me as a debate over tactics.  Mischaracterizing the opposition, however, is problematic, as is an argument that if something fails to solve all problems all the way to the root that they have no purpose.  At the very least, offering an alternative to the gloom and doom scenarios which, btw, won't be solved through social security cuts, makes it more clear what TPTB really want.  It may not be much, but it's something.

I can't figure this stuff out, but I share your deep skepticism about the worth of this.  I've always heard that dealing with debt by printing money leads to trouble.  It is difficult for me to imagine how it could be otherwise.  If a thing (spending trillions on violence) can't continue forever, then it won't.  What is interesting to me, and what is valid about this debate, is the way it puts those who have their plan all hatched in an uncomfortable position.

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I don't see the difference between printing money and...

Ohio Barbarian's picture

depositing some coin, of whatever kind of metal, into the Treasury and then decreeing it is worth X amount of dollars. It's still faith-based, just like the monetary system we have now. It only works so long as people believe it does. 

Of course, our current financial system is also faith-based, and I lost mine in it long ago. 

 

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The difference is that the direct printing of money ...

BruceMcF's picture

... which is indeed the appropriate policy under current circumstances, is not allowed under current monetary rules, and getting new rules passed requires the cooperation of the very hard currency nuts in the majority in the House of Representatives who insist on cutting government demand for goods and services made by workers will somehow cut rather than increase unemployment.

By contrast, the minting of a platinum coin of very large denomination is allowed under current law, so it can be done without the hard currency nuts in the House being able to stop it.

Money IS just tickets to ride the rides that make up our economy. If the problem was that there were not enough seats to go around, printing more tickets would not fix it. That is, a lack of real resources cannot be resolved by printing money.

However, the most immediate problem is unemployment of resources ~ the most critical of which is labor. That demonstrates that there are empty seats, and printing more tickets and distributing them will allow us to fill up more of those seats. We have the real resources, lying idle and unused. What we lack is the the capability to pay for the products that could be made with those resources. And that is a problem that can indeed be fixed by printing more money.

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Um, I was attempting to agree with you . . .

geomoo's picture

on the notion that minting a coin, which I somewhat sloppily referred to as printing money, seems to me to be not so clearly unproblematic as many I trust are claiming.  But that's not the main point--the main point to me is that this argument is one way to expose the motivation of the 1% who are creating these "problems" for nefarioius reasons.

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The magical thinking is the hard currency ...

BruceMcF's picture

... ideologues imposing unnecessary, counter-productive political limitations, aimed at making it hard to solve the simplest of macroeconomic problems, thereby keeping the simplest of macroeconomic problems in front of us and stalling us from pushing on to working on the harder problems.

The coin is not magical, its just a slipknot that happens to exist in the way that we've ended up tying one hand behind our backs. Since the inability to solve the simple problem is caused by writing idiotic rules, it is not surprising that it can be addressed to taking advantage in a loophole in that set of idiotic rules.

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One way of looking at the problem

geomoo's picture

it occurs to me, is to take a step back and say, whatever economic system is in place, we need to recognize that what is called the economy is not the purpose of our society.  We need to place the economy in service to the meaningful goals of our lives.  Even according to capitalist theory, the profit motive is intended merely for regulating economic behavior, not for being the driving force of one's life.  Of course we are seeing increasing dysfunction as profit takes the place of god, mutual well-being, happiness, or whatever other principles might guide healthy societies whose members enjoy enough self-respect and dignity to look for meaning in their lives.  ANY economic system which is instituted as the be-all and end-all of society will fall depressingly short.  Meaning and direction must come from within and economic behavior engaged in service of that meaning.

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all financial matters are 'faith based'

sartoris's picture

Gold has no 'intrinsic' value.  Oil has no intrinsic value.  Everything that is related to finance is based upon the value that is assigned to it by the people wishing to own the commodity.  Tribes living off the grid in the Amazon are not particularly impressed with the value of platinum anymore than you appear to be impressed with the value of 'fiat' money.

What would you like to see replace our system? 

 

 

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"intrinsic value"

Shahryar's picture

I am attracted to shiny things, be they beads or rings or whatever. I would have taken the rumored $24 in beads and given away Manhattan.

Having said that, I think we all have agreed to play by the rules of this society, as long as we are living in the society, at least in terms of recognizing that dollars have power.

Of course if we were tripping on acid we'd look at dollars and cents and not care about them. In that case we'd take the shiny beads. Let's face it, shiny beads are better for the soul than American currency.

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exactly, exactly exactly

sartoris's picture

100% agreement with this statement: "I think we all have agreed to play by the rules of this society, as long as we are living in the society, at least in terms of recognizing that dollars have power."

We can have discussions about FIAT money, gold standard, silver standard and bartering with sex and cigarettes.  What the last economic collapse demonstrated is that unregulated capitalism is unacceptable.  Capitalism is not going away.  It's just not.  What works is regulating the markets to prevent unrestrained markets from destroying the economies of the world.  Deregulating the markets will allow 2008 to happen again and again with increasing ferocity.

 

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