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Seigniorage Hack Could Resolve Debt Limit Crisis

Soulskill posted more than 3 years ago | from the or-we-could-just-argue-more dept.

Government 696

UltraOne writes "With the US Senate voting to table the Boehner debt limit bill, the US is only a few days away from running out of cash to pay for all its obligations. Slate is reporting on a fascinating legal hack that could come in handy, described by blogger 'beowulf' back in January 2011. Seigniorage is the extra value added when a government mints a coin with a face value greater than the value of the precious metal contained in the coin. The statute governing the minting of coins contains a section (31 USC 5112(k) ) that authorizes the Secretary of the Treasury to mint and issue platinum coins in any denomination or quantity. To keep the government from running out of money, Timothy Geithner could order a $5 trillion platinum coin struck and deposited at the Federal Reserve. The money could then be used to fund Federal Government operations (blog post contains legal details)."

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Inflation (4, Insightful)

CrimsonAvenger (580665) | more than 3 years ago | (#36933000)

Can you say it?

Do this, and you make it clear to everyone in the world that we're willing to devalue their bonds/dollar investments to near zero just whenever we feel like it...

Re:Inflation (1)

Anonymous Coward | more than 3 years ago | (#36933024)

EXACTLY right. Many third world countries have done this and seen record inflation. This is just another short-sighted band-aid.

Re:Inflation (2, Interesting)

Anonymous Coward | more than 3 years ago | (#36933064)

Um...I'd rather hear what economists have to say, not IT dudes who think they know everything.

Re:Inflation (0)

Anonymous Coward | more than 3 years ago | (#36933140)

Doesn't take someone with an IQ of 6000 to work this one out.

You have 100 (add multiplier here) shares (I mean money, pounds, dollar or bitcoins, lol) you print more of them (or mine), this simply devalues the pool.

It's a silly idea, but hey, the UK did it a few years back!.

Re:Inflation (1)

elsJake (1129889) | more than 3 years ago | (#36933178)

I currently have like a gazillion $ on a type of cheque from my grandpa. Should've paid for collage. It's worth nothing after the local currency went through massive inflation.

Re:Inflation (1)

SquirrelDeth (1972694) | more than 3 years ago | (#36933208)

I'd rather read intelligent posts. And economists must not be doing their job. Look at the economy great shape huh?

Re:Inflation (2, Insightful)

realityimpaired (1668397) | more than 3 years ago | (#36933370)

They're talking about literally printing a large amount of money money to solve the debt crisis. You seriously think you need an economist to tell you what would happen as a result?

http://en.wikipedia.org/wiki/Hyperinflation [wikipedia.org]

This is high school economics. Well within the reach of pretty much everybody who posts here, and probably a course that was taken by many people posting here. You don't need somebody with a post-secondary or a post-graduate degree to tell you that when the government starts printing money unchecked, the value of that money goes down.

Re:Inflation (1)

Dunbal (464142) | more than 3 years ago | (#36933306)

I'd say this is not a band aid. It's more like a clamp on the aorta.

Re:Inflation (2)

Sir_Sri (199544) | more than 3 years ago | (#36933388)

Well for them it's different though. They are trying to wipe out the value of their debt (denominated in their own currency at least).

Think of it this way, the US owes about 14 trillion dollars. Most of that is in US dollars, but it owes some in Pounds, some in Yen etc. (In turn, those countries owe some of their debt in dollars). If you want to wipe out the value of the US debt, simply print a 14 trillion dollar bank note. You still owe the foreign currency amount, but if you have trade, foreign reserves or just small enough debt you sort of cope with it.

It does cause significant inflation. But no one has ever tried it for something so stupid as the situation the US is in today. In other countries if you cannot borrow money, or cannot afford to borrow money, then you start taking drastic measures like this. But getting a balanced budget back on track is not simple. In the case of the US there's the official budget (or spending bills that are essentially a budget), those still have be to paid for the fiscal year, and unless you can conjure 1.4 trillion dollars without causing inflation you're still on the hook for those same amounts. If you do cause inflation, and I'm not an expert on the US budget, but it might mean that the government still couldn't pay bills. Essentially if you're authorized 8 billion dollars for X, and within the year there's suddenly 20% inflation, well tough shit, I think you still only get 8 billion dollars, even though your costs have gone up 20% part way through the year.

Normally there's a constant hum of inflation, the population grows the government prints more money to try and match the population, but doesn't quite get it right. Making sure there is at least very slight inflation is preferable to even very slight deflation, as it constantly, slowly, chips away at the value of debt. So in effect governments everywhere are executing this plan in a very limited scope. But the US situation is a whole lot of screwed up. Causing inflation would gradually reduce the value of outstanding debts. But you still need to balance the budget. The US isn't doing that (well both parties are sort of talking about it, but neither of them is in a position to actually do it).

They could basically conjure up some money, but it would make the money they already have worth less. For a few days, the government churns through about 10 billion dollars a day it probably wouldn't be that big of a deal, investor confidence would be shot.

No matter what trying to print money doesn't solve the budget problem, and it's going to make it harder to borrow money when they are ready. It's bad all ways round.

Re:Inflation (0)

Anonymous Coward | more than 3 years ago | (#36933032)

What I'm surprised about is that this would mean that the USD would have more backing than "faith" on the US government, unless of course it isn't $5 trillion worth of metal. I would love to see it if it were that much metal. It may compete with the giant coin the Joker used to try to crush Batman with.

Well, on the positive side, if inflation does go up some more, it would make more sense than now to stop minting pennies, or any coin in fact.

Re:Inflation (2, Informative)

Anonymous Coward | more than 3 years ago | (#36933060)

Are you retarded? Of course it wouldn't be $5 trillion worth of metal.

Re:Inflation (5, Insightful)

hedwards (940851) | more than 3 years ago | (#36933040)

Not quite, it would only increase inflation if it hit the economy. The effect of having a $5tn coin to borrow against would be more or less identical to issuing another $5tn in bonds. This is just a loophole of sorts the effect on the economy would be mostly the same, although it probably would make the price of platinum spike if they actually went through with trying to mint a $5tn coin.

Re:Inflation (2)

CrimsonAvenger (580665) | more than 3 years ago | (#36933092)

Not quite, it would only increase inflation if it hit the economy

If it is used to increase our borrowing, it's increasing the money supply.

Otherwise, we can just make a million of these coins, lower all taxes to zero, and use those coins to back a near infinite amount of borrowing (essentially financing the government for the next 100,000 years or so...

Re:Inflation (2)

hedwards (940851) | more than 3 years ago | (#36933188)

Only at that point, just having the coin in a vault does nothing to inflation. But, as the government borrows against it the inflation would start to occur just like if the debt ceiling was raised as more bonds were auctioned off.

Re:Inflation (4, Informative)

mdmkolbe (944892) | more than 3 years ago | (#36933198)

Exactly. The inflation becomes a tax on anyone holding currency. Each day, everyone looses some percent of their money's value and the government gains some number of dollars.

On the plus side you don't need to pay the IRS to collect this tax, but that is about the only positive aspect.

Re:Inflation (2)

gman003 (1693318) | more than 3 years ago | (#36933108)

The coin doesn't have to be physically worth $5*10^12, it just has to be labeled that way. They could make the coin out of $0.05 in copper, mark it as $5*10^12, and basically get $4,999,999,999,999.95 for "free" (excluding all the inflationary problems that would cause). It might be an acceptable short-term solution, but I wouldn't try to repeat it more than once.

Re:Inflation (2)

exentropy (1822632) | more than 3 years ago | (#36933128)

Not quite, it would only increase inflation if it hit the economy. The effect of having a $5tn coin to borrow against would be more or less identical to issuing another $5tn in bonds..

It will 'hit the economy'; why would the government create new fiat money if they weren't going to use it?

Re:Inflation (1, Informative)

hedwards (940851) | more than 3 years ago | (#36933212)

Eventually the whole sum might hit the economy. They'd just be creating this so that they could pay their bills. It's a subtlety that a lot of folks don't seem to get. Just authorizing a rise in the debt ceiling isn't going to cause problems if there are spending cuts or tax hikes we might not hit that limit.

Same goes for this, if the deficit shrinks and reverses it's well within the realm of possibility that the whole sum wouldn't ever be used. Which of course is fantasy because we can't balance the budget without some new revenue and the Tea party hobbits won't allow that to happen.

Re:Inflation (0)

Anonymous Coward | more than 3 years ago | (#36933298)

We can, actually, balance the budget without new revenue. A mandatory 3% increase every year for each organizations budget is not necessary, and quite frankly has caused many organizations to grow well beyond their usefulness. Now, addressing the real problems of military, SS, medic-aide/are hits people where they don't like it.

Re:Hit the Economy (1)

TaoPhoenix (980487) | more than 3 years ago | (#36933368)

What happens if someone steals it? Though it would be un-cashable, but funny to watch someone try.

Re:Inflation (4, Informative)

LoyalOpposition (168041) | more than 3 years ago | (#36933256)

Well, it's going to hit the economy. It hits the economy when the Treasury starts issuing checks based upon it. The question is--what are others going to do? Normally, it's inflationary when the Treasury issues checks, and it's deflationary when the Treasury borrows (issues bonds.) The key is that it's neither inflationary nor deflationary if they issue the same amount in bonds as they issue in checks. Well, disregarding taxation for the moment, which has the same deflationary effect as bonds.

By others, I mean the Federal Reserve System. Normally the Federal Reserve System sells bonds to counteract the inflationary effect of the Treasury's issuing checks, or they buy bonds to counteract the deflationary effect of the Treasury's issuing bonds, whichever effect is prevalent at the moment. This is called sanitizing the monetary effects of fiscal acts by the Treasury. On the one hand I would expect the Federal Reserve System to start selling bonds. By all accounts the Federal Reserve System has a huge reserve of bonds. The net result then would be that the Federal Reserve System's store of bonds drops, and there's no effect on inflation, and the government would still be borrowing from the public; it would just be the Federal Reserve System borrowing instead of the Treasury. On the other hand, the Federal Reserve System has been trying to pump liquidity into the economy by keeping the Federal Funds Rate at 0% so it's conceivable that they would permit the increased liquidity to stand at the risk of future inflation.

~Loyal

Re:Inflation (0)

Anonymous Coward | more than 3 years ago | (#36933150)

Can you say hyper-inflation?

Re:Inflation (1)

mauthbaux (652274) | more than 3 years ago | (#36933266)

As I understand it, the typical American has more debt than they do fungible assets. Inflation only means that they'll have less relative debt burdening them. Of course, there's a multitude of other less desirable consequences of hyperinflation, but I'm sure a competent marketing company could make the public welcome such changes.

Disclaimer: I'm not an Economist; not even one of the armchair variety.

Re:Inflation (4, Insightful)

TheLink (130905) | more than 3 years ago | (#36933290)

The difference between other countries creating money and the US Gov doing this is: Petroleum, electronics, grains (wheat), sugar and zillions of other stuff are bought and sold in US dollars.

When Zimbabwe prints Zimbabwe dollars the rest of the world laughs at Zimbabwe. When the USA prints US dollars, most of the world is living in USA's Zimbabwe, so they shouldn't be laughing...

The other thing: the USA has already created trillions of dollars: http://www.google.com/search?q=trillions+federal+reserve

Just because they call them loans doesn't mean the money isn't created out of thin air. After all when the Federal Reserve loans out those trillions where do the minus figures appear? Under whose bank account?

Lastly, if the US is going to create trillions, the US citizens better insist that the US Gov actually builds and does some stuff for them with the money.... Before the rest of the world realizes the US dollar is not worth quite as much ;).

p.s. it's not convincing to say it doesn't cause inflation when you create the money and it doesn't "enter the system". If the money doesn't actually do anything, then there was no need to create it right? The fact that you need to create it means it is doing something.

um, yeah.. (1)

WittyName (615844) | more than 3 years ago | (#36933352)

check that dollar chart lately? Devalue much?

they are green pieces of paper. no more, no less. Only worth what somebody will give you for them..

New lows against the japanese yen and swiss franc.

Use your best judgment...

Re:Inflation (0)

Anonymous Coward | more than 3 years ago | (#36933386)

Hope no one steals that coin......

Why don't they give everyone a coin? (0)

Anonymous Coward | more than 3 years ago | (#36933004)

If capital can be created out of thin air, why don't they just make everyone rich instead of those connected enough to use the discount window?

Re:Why don't they give everyone a coin? (1)

Co0Ps (1539395) | more than 3 years ago | (#36933056)

Because the money is created - like all money in existence - in the form of a loan that needs to get payed back + interest. Money is debt. This leads us to another interesting question, why do the government (and anyone else) lend from private companies/establishments (e.g. the FED) when they could create all the money they need without paying any interest rate?

Re:Why don't they give everyone a coin? (2)

demonlapin (527802) | more than 3 years ago | (#36933106)

Because they thought that the Fed would be an apolitical board that would do what was best for the economy - and, in general, they've been right.

Re:Why don't they give everyone a coin? (1)

SquirrelDeth (1972694) | more than 3 years ago | (#36933240)

They do whats best for themselves not the economy. Any benefit you receive in an unintended consequence.

Inflation? (0)

Anonymous Coward | more than 3 years ago | (#36933008)

Doesn't this just inflate the money supply arbitrarily? That reduces the value of a bondholder's rate of return, because while he will get back 100% of what he's owed instead of maybe 80% with a default, the money will now be less valuable? Seems like that could just as easily cause a significant downgrade in credit rating?

Re:Inflation? (1)

pnewhook (788591) | more than 3 years ago | (#36933328)

Yes this is completely arbitrary and useless. The argument made in the article by beowulf only shows that he has no idea how an economy works. Basically every statement and assumption in that article is blatantly wrong.

Just regular inflation (2)

sourcerror (1718066) | more than 3 years ago | (#36933010)

It's not that much different than just creating virtual "account" money, as it's had been done so far.

Re:Just regular inflation (1)

atriusofbricia (686672) | more than 3 years ago | (#36933234)

It's not that much different than just creating virtual "account" money, as it's had been done so far.

In fact you're right but in action there is a difference in that this would be something everyone could easily identify with as being a fraud, just like the rest of the fiat monetary system. It's one thing to have the abstract concept of money created by debt, it's another thing to be able to point directly at the absurdity of a 5 Trillion Dollar coin. A psychological difference, but a real one.

"printing" money (0)

Anonymous Coward | more than 3 years ago | (#36933020)

Or they could just print dollar bills and use those to pay their debts.
But it's generally a very bad idea and creates worse problems than it solves by devaluing the currency.

Re:"printing" money (2)

GospelHead821 (466923) | more than 3 years ago | (#36933316)

Actually, there's a subtle and funny reason why they CAN'T just print dollar bills. The laws regulation the printing of paper currency place limits on how much can be printed at once or something like that. There is no such limit on money minted as coins. Therefore, in order for this hack to work, the money MUST be minted as a coin because statutes presently don't allow for that much paper money to be printed.

Better Idea (2)

Murdoch5 (1563847) | more than 3 years ago | (#36933038)

How about instead of increasing the debt limit they A) Stop pissing away money and B) Find a way to MAKE money. Making money doesn't mean in curring more debt. What US the is doing is what most people do in college, they discover credit cards, take out 10 of them, max them out and have to get more credit cards to pay off the one's they've always maxed out. This is EXACTLY what increasing the debt limit is, it's increasing your credit limit or taking out a credit cards because you can't pay them off. At one point stop spending and put money into your bills.

Where was I going with that? Well they can now strike a coin thats worth N dollars, so how is this any better. I'm going to increase my credit limit by N to save me? That is a horrible idea for a consumer let alone a country.

Re:Better Idea (3, Insightful)

Anonymous Coward | more than 3 years ago | (#36933152)

If you think national economics are equivalent or even similar to personal finances, then you really have not thought this through in any way at all.

Re:Better Idea (0)

Nexus7 (2919) | more than 3 years ago | (#36933224)

Bingo! It's a sad commentary on /. that someone who said this felt the need to be anonymous.

Bad Idea (5, Insightful)

RingDev (879105) | more than 3 years ago | (#36933162)

If the government is doing something profitable, they shouldn't be doing it. With all likelihood, if something is profitable, a guided free market should be able to manage it much more efficiently.

The government's duty is to perform services that are by their very nature not profitable. Public schools, police, fire, national defense, etc... it there isn't a profitable model that can provide these services at the level we expect, the it is up to the government to suplement or perform those services.

If the government is turning a profit, it's either doing something wrong, or doing something that someone else should be doing instead.

-Rick

Re:Bad Idea (1)

Nexus7 (2919) | more than 3 years ago | (#36933250)

Unfortunately for this theory, the definition of profit is, shall we say, very flexible. In fact, all the complexity of the real world is concealed in it. Look around you, any mess you see s very likely because it was "profitable" for someone.

Re:Bad Idea (1)

Murdoch5 (1563847) | more than 3 years ago | (#36933344)

I'm not going to argue that, what I'm saying is instead of increasing the amount they owe how about find a way to cut expenses to start paying it down. For example a senator could live off 50K a year, which is more then a lot of family's even make. If ever senator took that pay cut how much surplus would there be.

Re:Bad Idea (3, Insightful)

GospelHead821 (466923) | more than 3 years ago | (#36933358)

I could imagine a few hypothetical situations in which the government performing a profitable service is consistent with it being the government. Suppose that it can reasonably efficiently perform the service adjunctly to another service that it provides (one that isn't profitable.) The private sector would have to hire equivalent staff to perform the profitable service, which would counterbalance any efficiencies they might realize. Also, since the government requires funds to provide those unprofitable services, then government ownership of at least some profitable enterprises can offset the costs. "So would taxing private companies providing those same services!" you might object. The government can't tax those companies for 100% of their profits, though.

Re:Better Idea (0)

Lord Juan (1280214) | more than 3 years ago | (#36933172)

You don't realize that the economy of a country does not work in the same way than the economy of a college student. It's nothing like that, at all.

Re:Better Idea (1)

Murdoch5 (1563847) | more than 3 years ago | (#36933354)

Actually what I said was that there acting the same way, I never said they run the same way, they don't. All the US is doing is increasing what they owe, all a college student does is increase what they owe, so my example that I made works perfectly for this. I'm not saying you could call a country and a college student the same thing and compare all the way down, but for a base it's effective.

Re:Better Idea (1, Insightful)

atriusofbricia (686672) | more than 3 years ago | (#36933254)

How about instead of increasing the debt limit they A) Stop pissing away money and B) Find a way to MAKE money. Making money doesn't mean in curring more debt. What US the is doing is what most people do in college, they discover credit cards, take out 10 of them, max them out and have to get more credit cards to pay off the one's they've always maxed out. This is EXACTLY what increasing the debt limit is, it's increasing your credit limit or taking out a credit cards because you can't pay them off. At one point stop spending and put money into your bills.

Where was I going with that? Well they can now strike a coin thats worth N dollars, so how is this any better. I'm going to increase my credit limit by N to save me? That is a horrible idea for a consumer let alone a country.

As an analogy that is true. Something else I find interesting is that no one much is point out that the trillions of dollars in "cuts" they're talking about making are over a decade or more and still don't equal the amount of debt the current administration has piled up over just the last three years, never mind the previous administrations far less but still bad damage.

Re:Better Idea (-1, Troll)

strack (1051390) | more than 3 years ago | (#36933390)

every fucking time, someone comes along and tries to map the world of billion dollar finance to their fucking credit card. even bohner was talking about "cutting up the governments credit cards". so fucking idiots like you pretend they have a single fucking clue whats going on, vote those tea party mouth breathers in, they act on the will of their base, and we get shit like this.

apparently we have to have a subject line (2)

Hadlock (143607) | more than 3 years ago | (#36933044)

This is essentially what Greece is about to do. Announce your own currency, set it at $1 fake dollar = $1 billion real dollars, then give all your creditors $20 fake dollars, call it a day and the debt is resolved! Actually this is what every country does that isn't western europe about every 60 years when their economy craters. The reason the dollar is so strong is that we haven't had to do this since it became a popular tactic about 100 years ago. Once we do that, we lose relevance in the global currency market, and paying off dictators like Saddam, Gadaffi and others puts us on a much more level playing field with Iran, Russia, China, India, Brazil etc. becomes much harder, because their currency is just as likely to be worth something tomorrow, after, or in the middle of a global or regional war.

Re:apparently we have to have a subject line (5, Informative)

BZ (40346) | more than 3 years ago | (#36933122)

> that isn't western europe about every 60 years

France last did this in 1960. That's 51 years ago.

Germany last did this in 1923. Closer to 88 years.

Italy did this when they went to the Euro, as far as I can tell.

On the other hand, Canada hasn't done this. So I'm not sure what your "Western Europe" schtick is about.

Also note that if $1 "fake" has the same buying power as $1 billion "real" (which is how currency reforms of the sort you describe usually work), then it's not like the creditors lose out. They lost out during the inflationary period, not the redenomination.

One other comment. Our currency is "strong" because we've had it a policy that it be so (at the expense of domestic employment), and because other countries have policies of propping up the value of the dollar to improve their domestic employment situation.

Re:apparently we have to have a subject line (0)

Osgeld (1900440) | more than 3 years ago | (#36933166)

last time I looked Canada was not in western Europe

Re:apparently we have to have a subject line (2)

BZ (40346) | more than 3 years ago | (#36933186)

Yes, precisely. Grandparent claimed that all countries not in Western Europe do currency redenomination every 60 years or so. Canada is not in Western Europe and has not had such a redenomination to my knowledge, so is a counterexample, just like Western European countries that _have_ had redenominations are counterexamples.

Re:apparently we have to have a subject line (1)

alewar (784204) | more than 3 years ago | (#36933146)

I don't think they do this to resolve debt, but because due to inflation, they would otherwise end up paying $20,000 for a soda, which would be something very impractical to do even with $100 bills. At some point they have to convert their currency to something manageable again and as far as I know, the debt is also converted.

Re:apparently we have to have a subject line (2)

NoNonAlphaCharsHere (2201864) | more than 3 years ago | (#36933194)

No, it's not really like Greece. The thing with the US laws is that the debt limit applies to PAPER currency. By issuing a coin, the govt could get around the letter of the law. Here's a link to the same idea from Buzzfeed [buzzfeed.com] and CNN [cnn.com] from a few days ago. The CNN article is written by a Yale constitution-law professor.

Sure, instead of giving us no money.. (1)

Anonymous Coward | more than 3 years ago | (#36933046)

..you would give us worthless money. Just declare tree leaves as legal currency of the USA, then. Saves the effort and you get a 100 points for good geek style from me.

Re:Sure, instead of giving us no money.. (0)

Anonymous Coward | more than 3 years ago | (#36933300)

Consider the options. If you make tree leaves legal tender, this will result in a massive redistribution of wealth, where homeless people sleeping under trees suddenly become as wealthy as investment bankers. By contrast, the $5 trillion coin that nobody ever spends would allow the current holders of wealth to remain in their positions relative to everybody else. Which option do you think our Wall Street-trained fiscal overseers would choose?

Re:Sure, instead of giving us no money.. (1)

GospelHead821 (466923) | more than 3 years ago | (#36933378)

That's from an episode of the Upright Citizens' Brigade, isn't it?

Bad summary (1)

thrill12 (711899) | more than 3 years ago | (#36933050)

"All of its obligations"... Not true: monthly income would amount to some 300 billion US$, making the US able to pay only *part* of its obligations (the 300 billion part). Worst is not what the US cannot pay, but what the markets think the US cannot pay (in the near future) -> that is what makes stocks crash.

Re:Bad summary (1)

demonlapin (527802) | more than 3 years ago | (#36933126)

The US has more than enough money to pay all of its debt service. It doesn't have enough money to pay all its debt service and all of its other obligations, but actually paying the debt is not in question.

Postpone only (2)

hackertourist (2202674) | more than 3 years ago | (#36933054)

Given the willingness of both parties to force a default, I suspect any attempt in this direction will be quickly torpedoed by House or Senate.

Re:Postpone only (4, Interesting)

UltraOne (79272) | more than 3 years ago | (#36933248)

I am the OP. The reason this approach counts as an 'escape hatch' is that it appears that the executive branch already has the authority to carry it out (in 31 USC 5112(k) ). To stop it, Congress would need to pass a law. To do that in the face of a presidential veto would require 2/3 supermajorities in both the House and Senate. As long as Obama can get 34 of the 51 Democrats in the Senate (or 53 Democrats plus independents who caucus with the Democrats) to back this approach, there is nothing that the House can do to stop it.

Re:Postpone only (-1)

Anonymous Coward | more than 3 years ago | (#36933270)

Only the Republicans are willing to force a default. The Democrats want to increase the debt ceiling.

An analogy: if there was a fire, and a Republican wouldn't let a Democrat call the fire department to put it out unless the Democrat sucked the Republican's penis, you wouldn't accuse both of them of refusing to call the fire department. That's what's happening here.

Re:Postpone only (0)

Anonymous Coward | more than 3 years ago | (#36933276)

"Both Parties" again?

Sorry, buddy., it's just ONE party doing it. If a hostage taker wants ten billion in ransom but is willing to be talked down to five billion, it's not "both sides" who are keeping a deal from being made.

Re:both parties (-1)

Anonymous Coward | more than 3 years ago | (#36933350)

When you say "both parties", I assume you're referring to the Republican party and the Tea party.

Re:Postpone only (1)

drooling-dog (189103) | more than 3 years ago | (#36933364)

Given the willingness of both parties to force a default

And how would things go down if, say, only one party wanted to force a default, and that hypothetical party controlled the House of Representatives? Assume further that this party was totally ruthless and willing to go to any lengths and use any means to derail the economic "recovery" in time for the next presidential election, regardless of the harm this would do to the country and most of its citizens.

Both parties, indeed.

Unrealistic Article, Not going to happen. (1)

Anonymous Coward | more than 3 years ago | (#36933062)

There's legal loopholes in practically everything that allow you to do *anything* you want more or less if you're the gov. The reason this will not happen is because when this 5 billion $ coin is minted with a picture of who the hell knows what on it and put in a safe in a sewer under foggy bottom, the entire farce would look so ridiculous that the USD would more or less collapse.

One good way to fix the deficit would be too cut no child left behind completely, politically impossible but let's face it, kids are just as stupid or smart as they were before that legislation.

I will go a different direction (2, Insightful)

Osgeld (1900440) | more than 3 years ago | (#36933066)

INFLATION!! no seriously, this debate is a fluffed up scare tactic, the US is bringing in enough money to pay for its debt, but the US just wants to SPEND MORE than its bringing in so lets just see how much were willing to slit our own throat for bullshit smoke n mirrors projects...

I am not going to argue politics with anyone, and that is because I am disappointed with every single one of the self interest fat ass out of touch snakes in the grass fuckwit children, this administration and last

Been There Done That (0)

Anonymous Coward | more than 3 years ago | (#36933078)

The cost (read: intrinsic value) of a $100 note is roughly ten cents (http://www.bep.treas.gov/uscurrency/annualproductionfigures.html). Printing more dollars (or seignorage, or monetizing debt: it's all the same) doesn't solve the problem and produces inflation. Your government needs to stop spending beyond its means.

Eck. (3, Funny)

mikkelm (1000451) | more than 3 years ago | (#36933088)

All the while, the rest of us are stuck moving refrigerators and colour TVs.

Re:Eck. (4, Funny)

demonlapin (527802) | more than 3 years ago | (#36933134)

You should have to learned to play the guitar. You should have learned to play them drums.

Re:Eck. (0)

Anonymous Coward | more than 3 years ago | (#36933226)

But I got a blister on my little finger. And my thumb. :(

Re:Eck. (0)

Anonymous Coward | more than 3 years ago | (#36933170)

The little faggot with the earmark and the markup
Yeah buddy, that's his own hair
That little faggot got his own jet airplane
That little faggot he's a congressman

Better yet... (0)

Anonymous Coward | more than 3 years ago | (#36933110)

Just ask for some cash from Apple.. i hear they have a bit of cash floating around.

Bitcoin Slashvertisement? (1)

Eradicator2k3 (670371) | more than 3 years ago | (#36933120)

I give up! Is this another Bitcoin slashvertisement?

Stupid (1)

Anonymous Coward | more than 3 years ago | (#36933124)

Someone want to explain how this is different than just printing more paper money? The value of the platinum? Seriously?

Re:Stupid (2)

Hartree (191324) | more than 3 years ago | (#36933236)

It's not. It's just massive quantitative easing under another guise.

The only difference with this is there are statutes governing how much paper money you can print. This particular law on minting platinum coins apparently has no limitations built into it.

But, if you institute a policy reminiscent of Zimbabwe, expect the world to value your debt in the same way they value Zimbabwe's.

Not Gonna Happen (0)

Anonymous Coward | more than 3 years ago | (#36933148)

This "crisis" is going to be over within a week, why? Because all the politicians know that old people vote, and politically all hell will break loose if they can't send out the next round of Social Security checks because they need the money to pay our troops. Why prolong the struggle by striking this coin?

Moron (0)

Dunbal (464142) | more than 3 years ago | (#36933174)

I can't believe something this idiotic is on slashdot. Hey, why stop at 5 trillion? Why not make a $5000 trillion coin, and then we'll all be rich, right?

Re:Moron (0)

Anonymous Coward | more than 3 years ago | (#36933246)

I can't believe something this idiotic is on slashdot. Hey, why stop at 5 trillion? Why not make a $5000 trillion coin, and then we'll all be rich, right?

Mike Judge was right. [isteve.com]

Serious problem: (2)

John Hasler (414242) | more than 3 years ago | (#36933202)

Such a coin would not be compatible with existing coin-op machines.

Impeachment (-1)

Anonymous Coward | more than 3 years ago | (#36933204)

This sort of bullshit would likely trigger impeachment of the president. The house would likely have enough votes to impeach, but the senate would not be able to convict. I'm not sure Obama wants to be remembered this way by history.

Why a coin? (1)

PPH (736903) | more than 3 years ago | (#36933206)

Just sell the platinum. And the silver. And the gold.

This is going to make the 'back to gold' monetary system people (many Tea Party members among them) shit bricks as they watch the basis of their beloved economy whither away.

The single $5 trillion coin is a joke. What would it weigh? But more important: It's not divisible so nobody could spend it, making it illiquid and therefore worthless as currency. Mint, say, $1000 platinum coins and now you've got something people can deal with. And put in suitcases and fly out of the country.

Re:Why a coin? (0)

Anonymous Coward | more than 3 years ago | (#36933310)

Just sell the platinum. And the silver. And the gold.

This is going to make the 'back to gold' monetary system people (many Tea Party members among them) shit bricks as they watch the basis of their beloved economy whither away.

The single $5 trillion coin is a joke. What would it weigh? But more important: It's not divisible so nobody could spend it, making it illiquid and therefore worthless as currency. Mint, say, $1000 platinum coins and now you've got something people can deal with. And put in suitcases and fly out of the country.

Pay close attention. There will not be $5 trillion in platinum in the coin. It will be a normal sized coin made of platinum with the denomination of $5 trillion.
You're welcome.

Re:Why a coin? (0)

Anonymous Coward | more than 3 years ago | (#36933320)

>What would it weigh?
Just as much as any other coin. The idea of seigniorage is that you mint coins that are worth more than the metal contained within.
This way you can use the mint to force a tax upon a country unwilling to pay it. Normal taxes have to be actively collected, people may go through an effort to evade them, or maybe they simply don't have the money when you want to collect. But the subjects have no power to stop inflation, short of storming the mint.

At least we'll know... (1)

flinxmeister (601654) | more than 3 years ago | (#36933210)

...what the "gub" stands for in "gubmint"! Seriously, we'll completely kill Europe in collapse style points if we do this...

Not That I Dislike A Good Fight... (1)

IonOtter (629215) | more than 3 years ago | (#36933242)

...but I think I should point out that this is nothing but a theory, posted by a blogger, and now given some air-time by Slate.com.

Sure, it's legal, but so is lopping off my own arm, so long as I don't kill myself. (That's illegal.) Yet strangely enough, I'm not in any rush to do that just because I can legally do it.

Same thing here. The government may be able to legally take this "escape hatch", but they're not going to, because it would have the same effect as lopping off all their limbs.

Re:Not That I Dislike A Good Fight... (1)

mikkelm (1000451) | more than 3 years ago | (#36933264)

If you owed your creditors an arm and a leg, the arm would probably be a good place to start.

Serious logical flaw there (1)

gman003 (1693318) | more than 3 years ago | (#36933274)

You're making the rather large assumption that the government is intelligent enough not to do this. Prior experience suggests the only truly infinite government resources are stupidity and incompetence.

Artificial crisis (3, Insightful)

Ironchew (1069966) | more than 3 years ago | (#36933260)

It's depressing how the debt ceiling is such a matter of contention right now, when it's been increased without much hullabaloo every six months or so since WWII. The reason for any artificial crisis is for politicians to threaten the public with doom and gloom in order to sneak something past them that the public normally would not accept. With Democrats and Republicans both playing along, what do both parties want to sneak by us? My guess is deep cuts to vital social programs, since the Obama administration started calling them "entitlement programs" at the start of the debate.

Obvious implication: (2)

Hartree (191324) | more than 3 years ago | (#36933268)

In the congressional hearings sure to ensue:

"So, Mr. Secretary, you're telling us you were carrying the 5 trillion dollar coin in your pocket and you think you lost it when you pulled out coins for a soda machine?"

Yep, real smart (0)

Anonymous Coward | more than 3 years ago | (#36933272)

If you could do that, (make those coins) there would not be a problem. The problem lies in the inability to secure the oil, so the credit spigot will have to be closed, it's about the army fearing it can not protect the country anymore.

Also there is billions of dollar coins lying unused so let them use those..

I think it would be best if we just defaulted (0)

Anonymous Coward | more than 3 years ago | (#36933292)

Then we might have some actual change 'round here. Yeah, it'd be rough for a bit, but is pretty rough already.

Stupidest hack in the history of the USA (1)

NikeHerc (694644) | more than 3 years ago | (#36933308)

Only a fool thinks this is a good idea. Why can't our elected representatives do their jobs properly?

No Fair! (2)

Jeremy Erwin (2054) | more than 3 years ago | (#36933312)

This contradicts the entire spirit of a suicide pact. What's the point if you can cheat death?

No facepalm is adaquate for this stupidity. (0)

Anonymous Coward | more than 3 years ago | (#36933330)

So, clearly the US government is run by morons, but what is a citizen of said government to do? Renounce their citizenship, say 'I want nothing to do with these morons', and become Canadian or Mexican refugees? Maybe have the entire rest of the country conspire to just smile and nod when they're around, agree with whatever outrageous things they say, and then completely ignore them when they're not around and make up silly excuses when they nonsense they asked for hasn't happened? What the heck is the protocol, here?

Surely nothing will come from writing them a nice letter asking them all to stop being douches with the financial competence of a four year old that just found their fathers credit card.

Hell, why not? (1)

roman_mir (125474) | more than 3 years ago | (#36933336)

They should do it, just the lulz value of it will exceed 5 Trillion in no time, never mind the value of gold, that will double in a heartbeat, as people run in panic out of all USD denominated assets.

Just as planned.. (1)

gale the simple (1931540) | more than 3 years ago | (#36933340)

.. and with inflation clearly on the horizon, I wanted to salute our wise helmsmen ( and all their mercenaries ) for making sure our debt problem is solved in such a satisfactory manner. It is pure genius. Massive inflation and suddenly the trillion $ debt it easy to pay off. Wait a second, wasn't it something China warned US not to do?

http://www.zerohedge.com/article/republicans-are-pushing-brief-default-china-warns-us-playing-fire [zerohedge.com]

Such a shame its likely to harm all little schmuchks like me, but hey.. at least we will all be millionaires. Whoopee...

Debt free currency is a great idea! (1)

rcb1974 (654474) | more than 3 years ago | (#36933342)

Creating DEBT FREE currency even if it is in the form of coins is much better than borrowing money at interest from the private Federal Reserve Bank. The only thing the government needs to be careful of is not minting too much coin. This is a step in the right direction.

Weimar Republic anyone? (0)

Anonymous Coward | more than 3 years ago | (#36933362)

Cause as we've seen so many times in the past, devaluing currency and instigation Hyperinflation is always the way to fix economic woes.

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