Patterico's Pontifications

1/11/2013

Yet Another Reason To Point And Laugh At Krugman

Filed under: General — JD @ 8:04 am

[Guest post by JD]

Paul Krugman has long since traded in whatever credibility he had on economics for his role as overt Leftist hack. Whether or not a policy is good or bad is totes dependent on who is proposing it, and who is in the White House.

In this column, he proposes the newest leftist unicorn fairy idea that we should mint a Trillion dollar coin, pay for it with new borrowing and it wouldn’t be inflationary. As additional options, he proposes that Obama ignore the law on the debt ceiling, or issue IOU’s or coupons. He has the temerity to call people that want to control spending crazies, and suggests that we don’t have a spending problem, just a recession, and recovery will cure everything.

In a sane world, he would be laughed off the pages of the NY Times. In this world, he graciously declines a position as Secretary of the Treasury that was never offered to him, publicly, but one that has no shortage of support on the professional Left.

And people wonder why I fear midgets. See also, Robert Reich.

That is all.

– JD

113 Responses to “Yet Another Reason To Point And Laugh At Krugman”

  1. What a clown

    JD (b63a52)

  2. It’s a good thing the ratings agencies are not paying any attention to the efforts of the top thinkers of the Democrat party to put this country’s finances back on a path of fiscal sustainability.

    daleyrocks (bf33e9)

  3. They probably have trillion-dollar coins in Zimbabwe.

    Krugman is ahead of his time.

    Amphipolis (d3e04f)

  4. It wouldn’t be inflationary. In fact, you’d have to aggressively try to misunderstand economics to believe that it would.

    Look, that spending already exists, it’s not new spending. Since it exists, the wealth likewise exists — it makes conservatives’ heads explode, but debt creates wealth. in fact, interest paid on debt is THE major wealth creator in our economy. If you doubt that, then explain where interest comes from — the interest fairy?

    So a trillion dollar coin would introduce no new money into the economy. It would merely create a physical presence for money already being spent. No new money = no inflation. It’s very simple. As I say, it takes an effort to misunderstand economics so badly that you’d think anything else.

    Wisco (070b4d)

  5. For me, as a Princeton grad and further, with an economics degree from that Univ., it is an embarrassment that that Krugman has the title of “Professor” at said Univ.

    jb (8c1035)

  6. i see Krugman has a partner in ignorance, because math is hard.

    on the upside, there’s a Blondie video at the end, because that’s just how us morons roll.

    redc1c4 (403dff)

  7. “So a trillion dollar coin would introduce no new money into the economy.”

    Wisco – If the Treasury already has the funds to purchase the platinum for a bullion-backed or platinum proof coin, why don’t they just spend the money paying their bills instead of going through the charade of minting a coin?

    The answer is because they don’t have the money, the idea is to create money out of thin air (but not call it a borrowing), and the whole concept falls apart on close examination.

    Thanks for playing. Collect your free lunch on the way out.

    daleyrocks (bf33e9)

  8. “he proposes the newest leftist unicorn fairy idea that we should mint a Trillion dollar coin, pay for it with new borrowing and it wouldn’t be inflationary”

    Because having a huge increase in the amount of money chasing an essentially unchanged amount of goods and services will in NO WAY drive prices up.

    Damn, man, I learned otherwise in Econ 1 and 2. I guess Krugman must be usin’ that new-fangled quantum Star Trek econ.

    Mitch (341ca0)

  9. Wisco reminds me of the candid inner party member, O’Brien, holding forth in the final chapters of Nineteen-Eighty Four about how he can believe two and two make five because, unlike protagonist Winston Smith, he is mentally disciplined.

    Brllliant, completely wrong, never in doubt.

    O’Brien silenced him by a movement of his hand. ‘We control matter because we control the mind. Reality is inside the skull. You will learn by degrees, Winston. There is nothing that we could not do. Invisibility, levitation — anything. I could float off this floor like a soap bubble if I wish to. I do not wish to, because the Party does not wish it. You must get rid of those nineteenth-century ideas about the laws of Nature. We make the laws of Nature.’

    Mitch (341ca0)

  10. and then we can all go roller boogie with olivia newton john and the dr. pepper guy!

    this is gonna be effing awesome

    happyfeet (4bf7c2)

  11. Krugman is a God. You conservatives just cannot think as deeply as Krugman. He is brilliant.

    Gus (bb7491)

  12. I wonder if Krugman came up with the idea of using Corn for fuel?

    Gus (bb7491)

  13. Debt creates wealth

    And we can spend our way out of bankruptcy

    JD (8c9367)

  14. Since debt creates wealth, ima gonna go borrow a billion dollars so I can be a billionaire.

    JD (8c9367)

  15. WISCO, are you from GREECE.

    Gus (bb7491)

  16. “I wonder if Krugman came up with the idea of using Corn for fuel?”

    Gus – Krugman invented the internet, but he is so humble he let Al Gore take credit.

    daleyrocks (bf33e9)

  17. Daley – I thought Wisco did that.

    JD (8c9367)

  18. “Since debt creates wealth, ima gonna go borrow a billion dollars so I can be a billionaire.”

    JD – If we all did that we could have this economy humming in no time flat. I’m with you!

    daleyrocks (bf33e9)

  19. instead of borrowing the money, i’ll just have Resident Evil write me a check and deposit it in my account, then, i’ll so the same for her, so we’re both billionaires!

    then we can afford to move out of Failifornia.

    redc1c4 (403dff)

  20. JD – We could could call it “Barack’s Borrow a Billion for America” plan to get America back on its feet. Of course then you might half to pay for your own Obamaphone but you could probably still keep your food stamps, they never check on that stuff.

    daleyrocks (bf33e9)

  21. Every time I see Krugman on one of the Sunday shows I think he’s more like a made up over the top SNL comic character than a real person who desperately wants to be taken seriously. His haughty demeanor and body language, his shifty eyes and fakey put on diction are laughable. Just laughable.

    elissa (482a92)

  22. It’s amazing the way Paul Krygman ignores, or is oblivious of, and he shouldn’t be, things wrong with some of his arguments.

    He could make an at least passable argument for some of what he says, but he’s got things in it that everyone who is familiar with this subject knows is just plain wrong.

    But for historical reasons any increase in federal debt must be approved by yet another vote

    This completely misunderstands what’s going on here. It’s not just historical reasons. The constitution says that every act of bprrowing by the United States must be authorized by Congress. This used to be done on an ad hoc basis, but at the time of Worldr I, the Congress gave the Secretary of the Treasury very very general authority to borrow. The reason there’s a limit is because it is only authoirized up to a certain dollar amount. With time the basis of all this was forgotten but people rediscovered it in 201

    First, raising the debt ceiling wouldn’t grant the president any new powers; every dollar he spent would still have to be approved by Congress

    True, but a lot has been permanently approved. I think entitlements are like that.

    Paying interest in the debt was approved for all time in 1847 or so.

    Military appropriations are limited to two years in advance by the constitution but there are no other limits.

    Still, this is a pretty bad way for Congress to gain control. It happens because it is another must-pass bill.

    Second, if the debt ceiling isn’t raised, the president will be forced to break the law, one way or another; either he borrows funds in defiance of Congress, or he fails to spend money Congress has told him to spend.

    Not spending money authorized actually, doesn’t strictly violate the law. The Supreme Court said that President Nixon couldn’t simply refuse to sopend money that had been appropriated in a bill that was passed over his veto, but it never said he had to sopend every penny appropriated regardless of the circumstances and anyway, Congress created an impoundment procedure.

    I also read that the United States government did hit the debt limit during the Eisenhower Administration, and some payments otherwise scheduled weren’t made.

    Finally, 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

    What affects that mostly are instruments that are traded, not money owed to contractors, or from medicare or anything else like that.

    Sammy Finkelman (d22d64)

  23. Who needs a “trillion dollar coin” when we have the Brooklyn Bridge and beach-front property in New Mexico ?

    Neo (d1c681)

  24. In case you’re wondering, no, this wouldn’t be an inflationary exercise in printing money.

    What he means here is that not all that trillion dollars would IMMEDIATELY be put into circulation. And that nothing actually would change from the way it happens now. And that we have excess capacity.

    Some objections to this idea center around the fact that this can transfer control of monetary policy to the Secretary of the Treasury. One argument in favor is why should the United States pay interest on money it creates, and I think it is said that Canada does not.

    Maybe the president can simply declare that as he understands the Constitution, his duty to carry out Congressional mandates on taxes and spending takes priority over the debt ceiling

    Krugman here shows he just does not understand what the debt limit is. It’s the limit of the authorization to borrow.

    Or he might be able to finance government operations by issuing coupons that look like debt and act like debt but that, he insists, aren’t debt and, therefore, don’t count against the ceiling.

    This might be true. He’s talking about scrip, or perhaps consols.

    http://en.wikipedia.org/wiki/Consol_(bond)

    Timeline

    1751 Consols first issued

    1752 Consolidated 3.5% Annuities

    1752 Reduced 3% Annuities

    1757 Consolidated 3% Annuities

    1855 New 3% Annuities

    1888 National Debt (Conversion) Act 1888 (Goschen’s Conversion)

    1888 2¾% Consolidated Stock

    1903 2½% Consolidated Stock

    5 April 1923 first redemption date

    1923 to present 2½% Consolidated Stock

    Sammy Finkelman (d22d64)

  25. 5. Comment by jb (8c1035) — 1/11/2013 @ 9:11 am

    For me, as a Princeton grad and further, with an economics degree from that Univ., it is an embarrassment that that Krugman has the title of “Professor” at said Univ.

    He doesn’t get good grades on ratemyprofessors.com

    One person, on November 28, 2008, wrote:

    avoid at all costs. he routinely came to class unprepared, clearly had thought little about what he was to teach that day (much less how), and broadcast the impression that he was showing up only to justify his professor’s salary. universities hire people like krugman as “prestige” professors and con’t care whether they actually can teach.

    This was quoted in a magazine article. Some other ratings are more favorable.

    http://www.ratemyprofessors.com/ShowRatings.jsp?tid=243005&all=true

    /SelectTeacher.jsp?searchName=krugman&search_submit1=Search&sid=780

    Sammy Finkelman (d22d64)

  26. “What he means here is that not all that trillion dollars would IMMEDIATELY be put into circulation. And that nothing actually would change from the way it happens now.”

    Sammy – First I have no idea of what you mean by put into circulation and second, the only problem with the idea that it represents no change from the way it happens now is that it is patently false.

    daleyrocks (bf33e9)

  27. Do we really need any more reasons to laugh at Krugman?

    Biff Gunderson (83c29b)

  28. “This might be true. He’s talking about scrip, or perhaps consols.”

    Sammy – Zero coupon debt is still debt.

    daleyrocks (bf33e9)

  29. This $1T coin would do what to the “M” measurements?
    As if the Fed even looks at them anymore, but they are still important indicators of the health of the economy.

    askeptic (b8ab92)

  30. “Do we really need any more reasons to laugh at Krugman?”

    Biff – There are 365 reasons a year to laugh at Krugman.

    daleyrocks (bf33e9)

  31. Correction – At least 365.

    daleyrocks (bf33e9)

  32. As the proprietor alluded in an earlier post on the matter, a $1 Trillion platinum coin is worth little more than his 100 Trillion Zimbabwean bill.

    The putative value in persuading hapless dolts that it has any real value is worth even less.

    We are in the very worst of hands.

    gary gulrud (dd7d4e)

  33. Both the “trillion dollar coin” and the “IOU” jokes would be signals to everyone that there’s no intention of repaying what we’ve borrowed. The dollar would soon be worth less than a Confederate dollar — which at least has collector’s value.

    Rob Crawford (e6f27f)

  34. Ann Althouse has a picture of the best design for the $1 trillion coin – a picture of the bear from the Charmin toilet paper commercials.

    SPQR (768505)

  35. Why do the advocates for this idea limit themselves to minting just a single $1T coin if the concept is based on solid economics? Why not a few dozen?

    Sewer Urchin (a9af0e)

  36. Wisco’s sophistry is amusing, I guess.

    In a way, I see what he’s trying to convince himself of. The inflation was created by the spending that is again triggering the debt ceiling, so it’s not the fault of the measure the democrats are using to break the debt ceiling law. The ‘proximate cause’ is the spending that got us here.

    But Wisco then pretends not to know what happens next. With the debt ceiling dispatched, what happens? More spending. Spending that otherwise would not happen. Inflation.

    When you use currency to prop up a failed budget (or a lack of one), you can spend more. Some might say the currency itself didn’t do it, but if the democrats can use this coin to avoid a deal on the debt ceiling (with a decent budget), then it is of course going to cause inflation.

    Wisco says that debt creates wealth. Well, it really can, that’s true. But it also can cause poverty. In responsible hands, many use debt to buy a home that builds a nice asset and makes them wealthy, and at the same time, their financier makes a profit on their investment.

    But there are other possibilities. You could pay your rent with a credit card and wind up very poor, and your financier might not be able to collect, because you spent money you hadn’t budgeted.

    At any rate, the ‘wealth’ being created by our spending is probably the interest payments we are mailing to China. And to some extent, it’s in those Obamaphones and food stamps that take the place of goods people would be able to buy if they were working (and many of these folks could and don’t).

    Dustin (73fead)

  37. 27.“This might be true. He’s talking about scrip, or perhaps consols.”

    Comment by daleyrocks (bf33e9) — 1/11/2013 @ 11:06 am

    Sammy – Zero coupon debt is still debt.

    British Consuls are not zero-coupon debt. They have coupons but no maturity date. No maturity date, no money owed. They are not debt, but stock!

    But I think they would have to be authorized by Congress.

    On the other hand, maybe a plain vanilla perpetual bond could be issued. You’d need to check the law.

    Sammy Finkelman (d22d64)

  38. The level of delusion on the left, that they can somehow create a magic currency that will not be inherently inflationary,is now dangerously beyond reason. If it’s a good idea, why stop there? The Fed could hand out trillion coins like pez if it made any sense at all. And even as profligate outfit as the Fed won’t allow something so inflationary.

    Bugg (ba4ca9)

  39. 34. Comment by Sewer Urchin (a9af0e) — 1/11/2013 @ 12:31 pm

    Why do the advocates for this idea limit themselves to minting just a single $1T coin if the concept is based on solid economics? Why not a few dozen? </i.

    That's why some thers say they shoujjldn't be worth a $ trillion.

    Obviously, it is to limit it.

    But right now, the Federal Reserve Board in effect has an infinite supply of money.

    Ѡ That's the cloest I can get to an 8 laying on its side. Here it looks like a molar. At least i can this: א

    The Federal Reserve Board limits what it spend by only buying U.S. government bonds (mostly) or by targeting an interest rate – they spend what they need to keep a rate at a certain level.

    At least the Secretary of the treasury would ahve to have a certain amount of platinum and mint an actual coin.

    Sammy Finkelman (d22d64)

  40. The problem is that a dollar is worth whatever someone thinks it is.

    If we keep screwing around, people are going to start trusting it a lot less. I think that could get out of hand very quickly because then our barely manageable debt becomes a true crisis.

    I think this will be Obama’s legacy.

    Dustin (73fead)

  41. Based on my review of an extensive record of evidence, neither the Paul Krugman nor the NY Times are credible sources about much of anything (with the possible exception of sports scores and standings).

    But ultimately, they fail to ask the real question …
    Why not a quadrillion, quintillion or (Bill Clinton’s favorite) sextillion dollar coin ?

    Why so short-sighted ?

    Neo (d1c681)

  42. 37. Comment by Bugg (ba4ca9) — 1/11/2013 @ 12:36 pm

    The level of delusion on the left, that they can somehow create a magic currency that will not be inherently inflationary, is now dangerously beyond reason. If it’s a good idea, why stop there? The Fed could hand out trillion coins like pez if it made any sense at all.

    The reason for doing $1 trillion dollars is to take care of the debt limit for one whole year.

    If $1 trillion is more than the Fed would do, the Fed can get rid of money too by buying Treasuries

    And even as profligate outfit as the Fed won’t allow something so inflationary.

    Krugman says there’s not even potential inflation until the money is spent and how much is spent is regulated by Congress, more or less. Till it is expended it’s just a figure in a bank account – and the Fed’s bank account is infinite, so we have that already.

    Of course it could also be $1 billion coins, and they would be minted as needed. We’d need about 100 a month.

    Sammy Finkelman (d22d64)

  43. 19. Comment by redc1c4 (403dff) — 1/11/2013 @ 10:26 am

    instead of borrowing the money, i’ll just have Resident Evil write me a check and deposit it in my account, then, i’ll so the same for her, so we’re both billionaires!

    That’s kiting checks.

    Sammy Finkelman (d22d64)

  44. “They are not debt, but stock!”

    Sammy – Cool! I did not know the government issued stock in itself.

    daleyrocks (bf33e9)

  45. Krugman strikes me as someone who is probably intellectually most comfortable on the center-left, but once he started using his NYT column to bash George W. Bush he suddenly discovered how popular that made him with the far left, and some sort of repressed neediness (perhaps from being a short, nasally bookworm in his youth) and general narcissism caused him to lurch way over in that direction in order to bask in their continued adulation. Even if he wanted to move back to the center, he has already crossed the point of no return.

    And regarding Sammy’s introduction of Krugman’s rating at Rate My Professor, of course he is an awful teacher. Think about how much time he spends as a television talking head, doing his NYT column and blog, writing textbooks and popular books, and then figure out how much time that leaves him to actually try to teach students. One of the things that is killing the reputation of Ivy League schools is the cult of the celebrity professor with an omnipresent media status who no longer does any serious teaching or research.

    JVW (4826a9)

  46. Well I noticed with some of Juan Cole’s early work, he was a fairly perceptive scholar particular with details about Shia history and customs, although ever since he went Moonbat. . .

    narciso (3fec35)

  47. Krugman is saving the country money by minting the coin.
    It would take a lot of time and paper and ink to print that much cash.

    mg (31009b)

  48. 42. Once again, glue pot open at Sammy’s, over sterno this time.

    gary gulrud (dd7d4e)

  49. That’s kiting checks.

    Comment by Sammy Finkelman (d22d64)

    Um… that’s his point.

    Our government is essentially doing the same, only in an endless cycle that is creating an apparently infinite set of IOUs paid with IOUs paid with IOUs.

    We need some kind of limit on this. The debt ceiling was supposedly such a limit. I bet a few years ago zealots would have screamed that it is, just as they would have screamed that a trillion dollar coin idea would never be supported by democrat pundits and leaders.

    Oh well, I guess.

    Dustin (73fead)

  50. Newest fad in the Big Apple.

    http://www.zerohedge.com/news/2013-01-11/new-yorks-other-epidemic

    Let’s ban heights.

    gary gulrud (dd7d4e)

  51. Now they tell us:

    http://www.zerohedge.com/news/2013-01-11/us-q4-gdp-25-sub-1-under-six-months

    Guess light at the end of the tunnel was just a lineman returning at the end of his shift.

    Not to worry:

    http://www.zerohedge.com/news/2013-01-11/35-us-2013-gdp-could-evaporate-due-enacted-tax-hikes

    Ok. China at 3.5% and the rest of the world slipping under. Eff us all to hell.

    gary gulrud (dd7d4e)

  52. From a default authority:

    http://www.zerohedge.com/news/2013-01-11/trillion-dollar-platinum-coin-not-solution-pimcos-gross

    IOW, Mr. Gross manages the largest domestic portfolio of US Treasuries. He may not know squat.

    But you’d be a damn fool not to listen.

    gary gulrud (dd7d4e)

  53. A somewhat abbreviated but technical explanation of a source of confusion for S.F. and transient commenters of liberal persuasion.

    That $2 Trillion in ‘Bank Reserves’ against losses the Fed is holding for banks which was created digitally, no cash cnanged hands, on the purchase of toxic MBS, in 2009 and currently.

    “Reserves means money not in circulation, right?”

    Au contraire, bumptious bumpkin.

    gary gulrud (dd7d4e)

  54. The bad thing is that soon, that Trillion dollar coin will be eventually be needed to get a Coke out of a drink vending machine.

    RS (410442)

  55. In college I worked on Wall Street as a lowly data entry clerk for EF Hutton. Hutton, despite being well-respected, having great marketing and political connections, found itself out of business because it became untrustworthy. And it went out of business because of check kiting. There is no real money, but the Buffalo office writes a check to the Miami office for $50 million, Miami does the same thing to Dallas, Dallas to LA, LA to Chicago, and so on. There is no $50 million, but the interest on imaginary money pays some bills, especially in Carter Error America of 20%+ interest rates.

    One day one office in Buffalo forgets to write the big ass check or doesn’t go to the bank(either collapse the scam), and the bank branch for the Buffalo office freaks out when their books for lack of said check or daily deposit show there is no $50 million and they are insolvent. Gecal matter hits cooling device, SEC alarm bells go off, investigations ensue, fingers aare pointed, hariy eyeballs cast, customers flee.

    This is little different. At some point no one takes the numbers seriously. In such a crisis of confidence The dollar will cease to have the value we have assumed it has.At some point above $16.5 trillion in debt and $85 trillion in unfunded liabilites you have to make good on your debts no matter hwo you are. A trillion dollar coin is basically no different than the Buffalo bank branch waking up one day to find that the scam has left them insolvent because the scam wasn’t foolproof.

    We are the Buffalo bank.The coin would confirm the fools are in the White House, in the Fed, in the Treasury who failed to understand you cannot keep this going forever. We have for too long accepted an empty shell game as reality.The silly coin would probably be a tipping point and these fools do not even grasp it.

    Interesting thing; stayed friendly with a few people who found themselves jobless after Hutton shut down(and these were not people who knew nor participated in it). With few exceptions nobody ever went back to Wall Street. You get burned like that and your confidence in finance is shaken for good. Lots of cops, firemen, electricians, nurse, teachers.

    And that ultimately is the end game; once Americans confidence in our currency is shaken, the inflation as bad as it will be, will pale in comparison to how shaken we will all be in the Fed, the President and the Treasury going forward. You do not get it back.

    Bugg (b32862)

  56. Krugman is on to something.

    Mint a few trillion dollar coins.
    Use one to fund the federal retirement system.
    Give another one to the California Public Employees retirement fund in exchange for current assets in the fund.
    Give yet another to the Chinese and call it even with their US T-Bills.

    craig (0c1187)

  57. Krugman strikes me as someone who is probably intellectually most comfortable on the center-left, but once he started using his NYT column…

    Speaking of his employer, and in light of his like-minded liberal colleagues — all of them undoubtedly taking delight in the ongoing leftist nihilism and lunacy of the US in this age of Barack “goddamn America” Obama, there is one word that comes to mind when I read the following:

    politico.com via drudgereport.com:

    The media business was shaken on Friday when it was reported…that managing editor John Geddes, assistant managing editor Jim Roberts, dining editor Susan Edgerley, former Washington editor Rick Berke, and former Times Magazine editor Jerry Mazorati could all be casualties of the [New York] Times’ effort to cut costs.

    The Times underwent a round of buyouts and layoffs in 2009, but the possible departure of high-level Times staffers signals just how dire the current state of news media is.

    “It is hard to imagine there are too many sacred cows left in any newsroom, given the general state of our industry,” Raju Narisetti, the head of The Wall Street Journal Digital Network and a former Washington Post managing editor, told POLITICO…

    [NY Times executive editor Jill] Abramson… sought to temper some of the hype and the rumors [about the cutbacks]. “We had buyouts and layoffs in 2009. These are not different,” Abramson told POLITICO Friday afternoon.

    But sources at the paper, who spoke to POLITICO on the condition of anonymity, said this time feels different. “Whatever sense of invincibility that Times employees still feel after the earlier rounds of cuts is being chipped away in this round,” said one Times guild member, who is not affected by the latest round of cuts.

    And the word in question, which I can’t help but think of when dealing with foolish, destructive, self-destructive, phony-baloney liberals on the receiving end of some good ol’ destructiveness and self-destructiveness?

    Schadenfreude.

    Mark (7ca0d5)

  58. I saw a piece on the state of Social Security recently and the author said not to worry that there is a trillion dollar plus “trust fund” that backs it up. What he doesn’t realize is that the “trust fund” has already been spent and that the “trust fund” is simply a claim against current (at the time) general revenues. Wisco believes that there is a trust fund. Reality based community my ass.

    Ipso Fatso (1e3278)

  59. 56. Thank you for sharing your practical experience, a commodity purchased with that most precious of assets.

    gary gulrud (dd7d4e)

  60. If this scheme worked, ad reduced the federal debt, we would have lower interest payments. BUt that is not the case, so this is just a crock.

    The Constitution is pretty specific on this: Se Article I, Section 8, clause 2:

    [The Congress shall have Power t]o borrow Money on the credit of the United States

    and more interestingly, clause 6:

    To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

    If the President went and issued securities without Congressional approval, the House should consider it counterfeiting and impeach him for it.

    Kevin M (bf8ad7)

  61. [must learn to type]

    Kevin M (bf8ad7)

  62. I.F.–

    Now there’s an idea. Pay the SS Trust Fund back with those platinum coins. That way the debt is actually reduced and you CAN avoid paying the Trust fund the interest.

    Problem solved!

    Kevin M (bf8ad7)

  63. Ipso Fatso, the ignorance of people who toss around “SS trust fund” can be astonishing.

    They don’t seem to realize that the “trust fund” is a filing cabinet full of Treasury “bonds” that have no value, can’t be sold to private parties. They are nothing but a person writing “IOU” on a napkin and putting them in their own wallet – and telling themselves how rich they are.

    SPQR (768505)

  64. That’s kiting checks.

    Which is the game the Treasury and Fed, with the explicit acquiescence of the Congress and President, have been playing for years now.
    Now, the interesting question is, did they learn it from Wall Street, or teach it?

    askeptic (2bb434)

  65. How quickly people forget the discussion in ’00 over AlGore’s “lock box”.

    askeptic (2bb434)

  66. “Now there’s an idea. Pay the SS Trust Fund back with those platinum coins. That way the debt is actually reduced and you CAN avoid paying the Trust fund the interest.”

    Kevin M. – Why stop with Social Security? You could use the coins to shore up Medicare and Medicaid and NPR as well.

    daleyrocks (bf33e9)

  67. Obama could instruct the Treasury to mint enough platinum coins to pay the mortgages of all Americans for the next 50 years if he wanted, right? That wouldn’t be inflationary, would it?

    daleyrocks (bf33e9)

  68. I’m starting to like this platinum coin idea. They are like stem cells. Obama can use as many as he wants for whatever he wants without inflation or affecting our currency. Liberals are geniuses!

    Why can’t conservatives come up with ideas like this?

    daleyrocks (bf33e9)

  69. askeptic, did President Goldman Sachs learn anything from Wall Street? Hmmmmm….

    SPQR (768505)

  70. With Lew’s record at Goldman before joining the administration, Treasury should soar….right off the cliff down into the depths.
    The Feds bailed out Lew’s disasters at Goldman, who is going to bail him out at Treasury?
    Angela?

    askeptic (2bb434)

  71. Using trillion dollar coins, Obama could offer every unemployed American a government job.

    Legacy secured!

    daleyrocks (bf33e9)

  72. If you oppose the trillion dollar coin plan to save America you are obviously raaaaacist, homophobic and a horrible person.

    daleyrocks (bf33e9)

  73. Guilty!
    Now, quit bothering me while I’m reloading.

    askeptic (2bb434)

  74. askeptic – HEARTBREAK! According to Ezra Klein (twitchy), Treasury announced today that it will not mint the coin nor will the Fed accept the coin.

    The trillion dollar coin wet dream of an end run around constitutional checks and balances by the Executive Branch to demonstrate that the country has no ability to effectively manage its fiscal affairs in the normal course of business dies.

    The horror, the horror.

    daleyrocks (bf33e9)

  75. Unfortunately, the reality is, that the solution that the Obamatrons will come up with will make the Platinum Coin ploy seem reasonable.

    Can’t wait for DC to be renamed:
    Athens-on-the-Potomac!

    askeptic (2bb434)

  76. Look, that spending already exists, it’s not new spending. Since it exists, the wealth likewise exists

    DimWitsco, Just because you can print money does not mean the wealth it represents exists. You’re only diluting the pool of existing dollars that nominally ALREADY represents the wealth in existence.

    If I have $100 in Monopoly Money, and I take out ten buck and xerox it, that doesn’t make me any richer even in Monopoly money. The assets haven’t changed, only the markers to track the assets.

    Theoretically, the total money supply represents the total existing assets of the nation. The amount of actual dollars added to the system each year should be equivalent to the new wealth added to the system less the maintenance costs on existing assets and and destruction costs for disposed assets (toxic chemicals, etc.) If less is added, then the value of the dollar goes UP (i.e., it represents MORE assets than it did the year before). If more is added, then the value of a dollar goes DOWN, that is, it represents fewer assets than the year before — i.e., “inflation”.

    THAT is the money supply in a nutshell. There are nuances that doesn’t cover but that’s the gist of it.

    Smock Puppet, 10th Dan Snark Master and Misapprehension Correction Specialist (98ae1f)

  77. Using trillion dollar coins, Obama could offer every unemployed American a government job.

    The hell with THAT crap!!

    Just give me my trillion dollar coin, I have bills to pay!!

    If they don’t affect anything when you make them, then why can’t I have one of my own?

    …Or is Krugman one lying mother-f***ing son of a bitch piece of sh**?

    Wait, don’t answer that. Just take the coin out of Krugman’s hand with a chainsaw.

    In the woods.

    Far from any hospital.

    Smock Puppet, 10th Dan Snark Master and Misapprehension Correction Specialist (98ae1f)

  78. “Theoretically, the total money supply represents the total existing assets of the nation. The amount of actual dollars added to the system each year should be equivalent to the new wealth added to the system less the maintenance costs on existing assets and and destruction costs for disposed assets (toxic chemicals, etc.)”

    Smock Puppet – I can’t get my arms around those definitions even on a theoretical basis. For example, a large chunk of the nation’s wealth resides in the unrealized appreciation of assets, whether it is private businesses, real estate, collectibles, etc. That type of stuff is not marked to market every year but can certainly serve as collateral for borrowings if the owner wants. How does that unrealized value of assets or wealth find its way into your theoretical calculation of the nation’s assets or money supply if nobody is actively revaluing them?

    daleyrocks (bf33e9)

  79. “If they don’t affect anything when you make them, then why can’t I have one of my own?”

    Smock Puppet – Heh. There you go. Those are the type of tough technical questions you are not supposed to ask.

    daleyrocks (bf33e9)

  80. Obama could instruct the Treasury to mint enough platinum coins to pay the mortgages of all Americans for the next 50 years if he wanted, right? That wouldn’t be inflationary, would it?

    That all depends. The money they created to cover the mortgage crash wasn’t inflationary because similar amounts of wealth evaporated.

    I’ve always thought that they did that all wrong — the tried to cover the effects in the derivative market (swaps, insurance, firms, etc) rather than shoring up the underlying mortgage securities. If they had bit the bullet early on and had the fed pay off 10% of all owner-occupied mortgages (up to some limit), the market might have stabilized. They could have got it back over time by removing the $500K capital gains exclusion on houses. Sure it would have cost a trillion or two, but what the Fed ended up paying out was far more.

    Kevin M (bf8ad7)

  81. Look, that spending already exists, it’s not new spending

    Um, the money hasn’t been spent yet. That’s why the Treasury has to find it. So in what sense does it “exist”?

    Milhouse (15b6fd)

  82. it makes conservatives’ heads explode, but debt creates wealth. in fact, interest paid on debt is THE major wealth creator in our economy. If you doubt that, then explain where interest comes from — the interest fairy?

    This is gibberish, of course, but I think there’s a kernel of sense in there somewhere; “Wisco” must have read or heard something once, and misunderstood it, and this is the result.

    Where does interest come from? The debtor’s pocket of course. The debtor pays it out of whatever income or wealth he has; if he can’t pay it then it doesn’t get paid. There is no interest fairly, and debt doesn’t magically create the interest with which to service it, or the principal with which to repay it. I mean, really, where did you think it came from? Have you ever borrowed money? Where did you get the money to pay the interest, or to repay the loan?

    However, it is true that debt can be used to create wealth. If you borrow money and invest it in something that returns more than the interest rate you’re paying, then the debt can be said, in a shorthand way, to be creating enough wealth to pay the interest; but it’s not really the debt that’s creating the wealth, it’s the investment that the debt made possible. If you borrow money and don’t invest it, if you borrow money and just spend it on food or rent or a stereo system, then no wealth is created, and the interest will have to come out of whatever it is you do that you live on.

    Government spending, of course, falls into the latter category. The government doesn’t invest in productive enterprises, it just spends. So the debt it accumulates is just debt, and will have to be paid out of people’s production.

    Milhouse (15b6fd)

  83. If the President went and issued securities without Congressional approval, the House should consider it counterfeiting and impeach him for it.

    If the president were to borrow money in his own name rather than that of Congress, that would be grounds for impeachment. Or Congress could simply announce that it will never appropriate money to repay these unauthorised borrowings, and nobody should be such a fool as to lend.

    But I don’t think the bills would be counterfeit. For one thing, do they actually print physical bonds nowadays? I thought it was all done electronically, so what exactly would he be counterfeiting? But even if he did print paper bonds, I don’t think it’s possible for the president to counterfeit, just as it’s impossible for the president to leak, or to violate the Logan Act. Whatever he issues is by definition not counterfeit. But nor is it debt of the United States.

    Milhouse (15b6fd)

  84. “They are not debt, but stock!”

    Comment by daleyrocks (bf33e9) — 1/11/2013 @ 2:08 pm

    Sammy – Cool! I did not know the government issued stock in itself.

    It hasn’t yet, and Congress probably has not mad provision for it, although nobody has made a careful examination of all the statutes. *

    This would be preferred stock, not common stock, because it paid a fixed dividend, and would carry no voting rights.

    Sammy Finkelman (a69e24)

  85. * I am getting ahead of myself, but I wonder why, in the White House’s most recent statement about the coin, they used both the words “can and “should”.

    http://www.washingtonpost.com/business/treasury-fed-oppose-using-platinum-coin-to-avoid-debt-ceiling/2013/01/13/4d15bc86-5d41-11e2-b8b2-0d18a64c8dfa_story.html

    If you have “can” why do you need “should?” “Should” is of course an argument about the independence of the central bank, but would presume it legal and therefore “can” is wrong and should be edited out. And why would the Fed be offering legal opinions, anyway? Did they ask Eric Holder?

    Does “can” therefore refer to practical, not legal, difficulties? Like there’d be a panic or something?

    Or is it simply that it could be done, but only in a slightly different way? The coin(s) could not be deposited at the Fed, but they would first have to be sold to the likes of Warren Buffett or Bill Gates, or corporations like General Motors, or maybe banks like J.P. Morgan Chase. So since “can” has a workaround, they also need “should.”

    Or was “should” first and then a legal opinion was added? And who gave it?

    Sammy Finkelman (a69e24)

  86. “This would be preferred stock, not common stock, because it paid a fixed dividend, and would carry no voting rights.”

    Sammy – You remain very confused. What proponents of these ideas are doing is looking at securities issues by financial institutions – banks and insurance companies and even Fannie and Freddie – and how the securities are viewed by regulators and rating agencies for the purposes of capital adequacy and capital tests. The securities remain debt and preferred stock for accounting purposes.

    daleyrocks (bf33e9)

  87. “If you have “can” why do you need “should?””

    Sammy – Using both words takes the wind out of the sails of those who still believe the Treasury can legally mint the coin. Then the answer become so what, we disagree, we don’t think the Treasury should mint the coin.

    daleyrocks (bf33e9)

  88. Before that, The Saturday, January 12, 2013 New York Times had a story that 4 leading Democratic Senators sent a letter to the White House.

    ‘Any Lawful Steps’ Urged to Avert Default – NYTimes Jan 12, 2013, page A11

    This letter was signed by Senators Harry Reid of Nevada, Dick Durbin of Illinois, Charles Schumer of New York and Patty Muray of Washington State.

    The story says that Harry Reid wanted the letter to say the president should declare he had unilateral authority under the 14th amendment to exceed the debt limit. He found that more politically tenable than the trillion Dollar coin. But the 14th amendment claim is just flat out wrong, and misunderstands what the debt limit is – it’s the limit of positive authority to borrow money. Also such questionable bonds would probably sell at a premium even if most people thought they’d be made valid retroactively.

    So the other signers prevailed upon Harry Reid to use the ambiguous phrase “we believe you must be willing to take all lawful steps too ensure that America does not break its promises and trigger a global economic crisis – without Congressional approval, if necessary.”

    So that way anything could apply. It would include the coin, but they wouldn’t say the coin.

    Back in 2011, Obama had already said about the 14th amendment claim that his lawyers “are not persuaded this is a winning legal argument”

    The New York Times reported the plan was to offer legislation that would allow the president to raise the debt limit by himself, perhaps in $1 trillion increments.

    Sammy Finkelman (a69e24)

  89. U.S. Constitution:

    To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

    Comment by Kevin M (bf8ad7) — 1/12/2013 @ 10:19 am

    If the President went and issued securities without Congressional approval, the House should consider it counterfeiting and impeach him for it.

    Counterfeiting is if it pretends to be something other than what it is.

    Non-debt debt, like notices of money owed, or scrip, probably wouldn’t be that, and the whole point about the platinum coin was that it, unintentionally, been authorized in the 1990s. Of course was was intended was that the coins be sold above face value, or that the face value be something like double or triple the current worth in metal. Not a million or a billion times as much.

    (and from what I read quoted the Secretary of the Treasury could issue a variety of coins. You could start will $250 million denominations, and later on make slightly larger, or even smaller, $1 billion coins. No need for a one-time decision.)

    Sammy Finkelman (a69e24)

  90. “The story says that Harry Reid wanted the letter to say the president should declare he had unilateral authority under the 14th amendment to exceed the debt limit.”

    Sammy – All these stories miss the basic point. There is no need for Obama to risk a constitutional crisis by unilaterally raising the debt ceiling. All Obama has to do is negotiate an agreement with Congress, which is what he desperately wants to avoid.

    daleyrocks (bf33e9)

  91. Obama actually said he wouldn’t pick up the phone.

    Now also coming up is the sequester (March 1) and the expiration of the continuing resolution (late March)

    Of course he can negotiate about the other things. It’s all the same.

    I read that some Republicans feel bad hat the debt limit is coming up first.

    I suppose they could pass a bill adding $100 billion to the debt limit to make the debt limit last.

    But Obama seems to want to win, anyway.

    Sammy Finkelman (a69e24)

  92. “But Obama seems to want to win, anyway.”

    Sammy – No, he doesn’t want to do his job.

    daleyrocks (bf33e9)

  93. Counterfeiting is if it pretends to be something other than what it is.

    Since the coin thing is 1) now disavowed, and 2) BS anyway, the real issue is issuing T-bills that are not authorized by Congress. Since only Congress can authorize them (the part of my post you left out), these would be counterfeit US securities.

    Kevin M (bf8ad7)

  94. Kevin, are T-bills still printed on paper? If they’re not, then it’s impossible to counterfeit them.

    In any case, I doubt the president can ever be guilty of counterfeiting. But if he purports to borrow money on his own authority, then he ought to be impeached for that, not for some BS counterfeiting claim.

    OTOH maybe it would be a good thing for America; after all, that would be free money, that would never have to be repaid. Any sucker who lent that money would lose it.

    Milhouse (15b6fd)

  95. There are some problems with the statements about the coin and other matters.

    1) On Saturday afternoon White House spokesman Jay Carney said, “There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default…”

    This is not true. The nation would not have to go into default if spending were suddenly constrained.

    2) It seems like since 1967, seigniorage has been treated as a way of financing the debt, but not as income to the treasury. This may not be correct.

    So President Obama may be artificially limiting the choices because he wqants to force the republican members of the House of Representatives to vote for tax increases (or teh Speaker to let a coalition consisting mostly of Democrats vote it through)

    Sammy Finkelman (d22d64)

  96. These are the positipons:

    Obama claims not raising the debt ceiling is like deciding not to charge your credit card after oordering a meal at a restaurant. We already committed to the spending. He will negotiate separately on taxes and spending

    The Republican House wants to reduce projected spending by $1 for every 41 increase in the debt limit. (There’s no logical connection between the two things)

    President Obama wants every dollar of spending cuts to be matched by one dollar of tax increases, and he also would like some more tax cuts, like reversing the increase in the payroll tax that just took place.

    If nothing happens, well, he may give the Republicans such immediate spending cuts that they’ll scream uncle.

    Simultaneously, he also wants to argue with the Republicans on guns and immigration. On immigration he wanst one bill.

    Sammy Finkelman (d22d64)

  97. “Obama claims not raising the debt ceiling is like deciding not to charge your credit card after oordering a meal at a restaurant.”

    Sammy – In 2006 Obama said raising the debt ceiling meant America can’t pay its bills.

    In 2013 Obama is saying not raising the debt ceiling means America can’t pay its bills.

    Can you explain what he means?

    Also, the government is operating on a continuing resolution, not a budget. The White House has told Paul Ryan it would not deliver a budget by the legally required date of February 4, 2013. It has missed three out of the past four legal deadlines. What spending is Obama talking about that has been committed if there is no existing budget?

    daleyrocks (bf33e9)

  98. Comment by daleyrocks (bf33e9) — 1/14/2013 @ 2:13 pm

    Sammy – In 2006 Obama said raising the debt ceiling meant America can’t pay its bills.

    In 2013 Obama is saying not raising the debt ceiling means America can’t pay its bills.

    Can you explain what he means?

    I didn’t look up his exact words, but in 2006 that would seem to mean America couldn’t pay it without borrowing, and in 2013, America couldn’t pay it period. He was not counting borrowing the first time.

    Also, the government is operating on a continuing resolution, not a budget. The White House has told Paul Ryan it would not deliver a budget by the legally required date of February 4, 2013. It has missed three out of the past four legal deadlines. What spending is Obama talking about that has been committed if there is no existing budget?-

    What’s in the continuing resolution. The debt limit runs out before the continuing resolution does. Otherwise, it what would be in another continuing resolution.

    This reminds me. Jack Lew said at one point (Feb 2012) that “You can’t pass a budget in the Senate of the United States without 60 votes.”

    http://www.politifact.com/truth-o-meter/statements/2012/feb/13/jack-lew/white-house-chief-staff-jack-lew-says-budget-requi/

    That isn’t true. But that may be why Harry Reid has not brought up any budget resolutions in the Senate recently. Because then suddenly only 51 votes are needed to do anything.

    Sammy Finkelman (d22d64)

  99. “I didn’t look up his exact words, but in 2006 that would seem to mean America couldn’t pay it without borrowing, and in 2013, America couldn’t pay it period.”

    Sammy – I don’t understand. In 2013, couldn’t America pay its bills if it allowed Obama to borrow? What is the difference?

    Obama keeps talking as if this is all the fault of Congress for running up bills, but Obama’s hands are not exactly clean, are they? Didn’t he sign the spending bills presented to him?

    daleyrocks (bf33e9)

  100. Comment by daleyrocks (bf33e9) — 1/14/2013 @ 3:51 pm

    Sammy – I don’t understand. In 2013, couldn’t America pay its bills if it allowed Obama to borrow? What is the difference?

    Difference between what and what?

    Obama keeps talking as if this is all the fault of Congress for running up bills, but Obama’s hands are not exactly clean, are they?

    He’s not saying Congress agreed to spend too much! Just that it authorized and appropriated money to be spent, but isn’t now making it possible to do that – which means somebody who has been promised money isn’t going to get it.

    Didn’t he sign the spending bills presented to him?

    Yes. and he would sign any bill allowing him to borrow, too.

    Sammy Finkelman (5b43a3)

  101. “Difference between what and what?”

    Sammy – The two phrases at the beginning of your comment. Duh!

    daleyrocks (bf33e9)

  102. Sammy – What is the difference between why Bush needed to have the debt ceiling raised and why Obama needs to have it raised? Please explain.

    daleyrocks (bf33e9)

  103. Ibn Dunham, Presendente Obama, otherwise known as JEF, jug-eared fool, is a SCOAMF, buggerer, and death cultist.

    gary gulrud (dd7d4e)

  104. The big swindle in the President’s position is the proposition that any spending appropriated by Congress is automatically an obligation of the United States. That’s nonsense. The President is legally obligated to spend such money, if he has it, but the United States isn’t obligated to anyone for it. An obligation is something that can’t be repudiated. The debt is an obligation; Congress can’t just say “we’re not paying it”. Social Security is not an obligation; at any moment Congress could cancel the whole program, if it wanted to.

    Milhouse (15b6fd)

  105. 107. That is true, Obama seems to be calling Social Security (and a lot of other things) an obligation, and in a very strict sense, it isn’t, (it is as long as Congress has mandated it) and furthermore, not all obligations are the same type of obligation.

    But Obama is playing politics here, or otherwise he wouldn’t rule out the platinum coin(s)

    I described the situation in comments 96 and 99 here.

    Obama wants to force the Republican members of the House of Representatives to vote for tax increases (or the Speaker to let a coalition consisting mostly of Democrats vote it through)

    Obama will not negotiate with regard to the debt ceiling, but he will sign any debt ceiling that passes Congress, even one for a week or a month, but he will negotiate separately on taxes and spending.

    Now

    1) The Republican House wants to reduce projected spending by $1 for every $1 increase in the debt limit.

    2) President Obama wants every dollar of spending cuts to be matched by one dollar of tax increases.

    and

    3) The Republicans want to match any tax increase with a tax cut somewhere else, and otherwise no new taxes.

    They are therefore at an impasse unless you can think of something that the Republicans will call a spending cut and Obama will call a tax increase, or something that the Republicans will say is tax neutral and Obama will call a tax increase. (higher penalties for paying taxes late?)

    If nothing happens, which is where we are headed, and the debt limit does not get raised, perhaps after the can has been kicked down the road once or twice, he’s threatening to give the Republicans such immediate spending cuts, like delaying Social Security checks, that he hopes they’ll scream uncle after they hear from their constituents, because he’ll place the blame squarely on them.

    But he will never agree to more moderate planned spending cuts unless balanced by a equivalent amount of tax increases.

    And then he will take credit for anything that does not affect the average voter negatively, and for any benefits, and he will give the Republicans “credit” for anything that impacts average people adversely.

    narciso linked to an article noting that Obama does not have to delay Social Security checks.

    http://www.theblaze.com/stories/2013/01/15/ap-fact-checks-obamas-claim-that-social-security-checks-veterans-benefits-will-be-delayed-if-debt-limit-isnt-raised/

    Sammy Finkelman (5b43a3)

  106. Comment by daleyrocks (bf33e9) — 1/14/2013 @ 5:19 pm

    Sammy – What is the difference between why Bush needed to have the debt ceiling raised and why Obama needs to have it raised?

    There isn’t any difference. Obama is not claiming there is any difference. He’s just putting his earlier vote into the memory hole.

    I suppose he could say that was a protest vote, and he know he would lose. Or that Bush was being really irresponsible in planning government financing and he is not, because, er, – hes cutting the military budget drastically!!

    Look, he’s doing almost nothing in Mali, letting France and assorted African countries do almost all the work.

    Sammy Finkelman (5b43a3)

  107. 104. What two phrases?

    Sammy Finkelman (5b43a3)

  108. Useless State mouthpiece behind paywall of dying Ministry of Troof organ:

    http://www.breitbart.com/Big-Government/2013/01/14/krugman-knows-the-jig-is-up

    If anyone but Schlong has their way its disaster.

    Even Fwench Fitch says Pwesident Downgrade is playing on penalty time.

    gary gulrud (dd7d4e)

  109. 3. They probably have trillion-dollar coins in Zimbabwe.

    Krugman is ahead of his time.

    Comment by Amphipolis (d3e04f) — 1/11/2013 @ 8:58 am

    I don’t believe so. I did find a one billion Zim dollar bill being used as a bookmark in the library of a guest house I was staying at in Harare in 2009.

    My favorite Krugman beat-down:

    President Of Estonia Slams Paul Krugman: ‘Smug, Overbearing & Patronizing’

    “We’re just dumb & silly East Europeans. Unenlightened. Someday we too will understand,” he tweeted. “Guess a Nobel in trade means you can pontificate on fiscal matters & declare my country a “wasteland”. Must be a Princeton vs Columbia thing.”

    Estonia, which in 2011 became the latest country to join the eurozone, has been heralded by some as an austerity success story. That year, it clocked a faster economic growth pace than any other country in the European Union, at 7.6 percent. Estonia is also the only EU member with a budget surplus, and had the lowest public debt in 2011 — 6 percent of GDP. Fitch affirmed its A+ credit rating last week.

    Steve57 (fe2b65)

  110. “104. What two phrases?”

    Sammy – Forget it, it’s over your head.

    daleyrocks (bf33e9)


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