So the notion being pointed out is that, rather than raise the debt ceiling by a trillion dollars, why dont we just avoid the whole mess and mint a trillion-dollar coin instead?
Or, in other words (mostly Robert Mugabe’s), why don’t we just print the money we need?
And then some wag at the Mint says:
“Voila, we’d have bought ourselves the equivalent of a trillion-dollar increase in the debt limit, without any impact on inflation,” says Diehl.
Without any impact on inflation? Isn’t the textbook definition of inflation that you increase the money supply you cause the currency to lose value? Am I missing something here?
The future is going to be either a) horrors born of economic malfeasance or b) horrors born of the steps taken to mitigate the economic malfeasance. Either way, it’s a lot of canned goods and bargain-store shopping in your future.
They have changed the definition of inflation to an increase in prices not an increase in money supply. That way they can blame the rising prices on supply chain, shortages, Trump industry consolidation etc and not on their crappy economic policy. Hold on its about to get crazy.
It’s not the debt ceiling per se that drives inflation but government spending. Since the spending is already mandated, raising the debt ceiling will not cause any additional damage beyond what the spending itself will do, if that makes sense. That’s the idea.
Or to put it another way, it’s spending too much that bankrupts you, not the mere fact of having a line of credit.
The debt ceiling needs to be raised and (almost) certainly will be despite all the kabuki theater surrounding it. To put it in household terms, if you are spending more money than you are making, then you need to make arrangements to borrow the difference from somewhere before your checks start bouncing and your car gets repo’d. Who is to blame for the underlying situation is not as important as averting the immediate crisis. (Obviously, the ideal would be to live within one’s means, but as far as our government goes, that would seem to be a political non-starter.)
The trillion-dollar coin thing makes no sense though. I think the people who push that idea are under the impression that all money must be physically minted as currency before it really exists. But that’s not how it works. Money can be created by simple fiat of the Fed. Most money only exists as entries in a database. If the government wanted to wish a trillion dollars into existence, they could simply have the Federal Reserve write them a trillion dollar check. Or a ten-trillion dollar check. The Fed has as much money as they say they have. As it is, more than half of the government’s debt is paid for in this way *already* by the Fed creating new money and buying government bonds. Having the Fed start “gifting” this funny money to the government instead of buying bonds with it would not require them to mint platinum coins or whatever.
Except you miss the most critical point – the Treasury BORROWS the money from the Fed – with interest. That is the part where the citizens are fleeced. The reason this works so well as a legal method of theft is that the average person cannot comprehend the exponential function.
The Fed is the lender of last resort, however the treasury has been selling T bills to finance the county to all.manners of organizations. Indeed because the USD is the world’s reserve currency T Bills are held by national central banks world wide as the method to reconcile internal debts.
What the fed creates are Federal Reserve Notes, not really money, but non interest bearing bearer bonds. they’re not dollars they are payable in dollars, the
Y stopped printing that little distinction on the FRNs some time in the early 1950s, maybe even in 1950.
Coinage is actual money. It is produced by the mint which is a division of the US Treasury. Outside of the FED.
the theory is that they mint the coin, buy back 1trillion in debt with it, then later when the debt ceiling is raised. The FED uses the coin to buy a trillion in T Bills. However I suspect that the 1T coin won’t happen because if the FED even held it for a short time they would lose untold hundreds of millions of Dollars the interest and would lose a lot in the inflation that would occur while they held it.
Later the FED buys back a Trillion in T Bills
They might as well do it. It’s not as though this shit-box isn’t going to collapse sooner or later anyway. I don’t look forward to a reset, but since it’s going to happen, it might as well happen while I’m still functional.
Went out and procured good quantity of lids and rings based on your previous post….
When working the retail firearms dealer position for years the sales pitch that I would utilize to sway the on the fence shopper was a simple phrase that resonates in anyone’s vernacular. “WHAT EVER YOU PAY TODAY, WILL BE CHEAPER THAN WHAT YOU MUST PAY LATER”. It closed many deals and a customer will pat themselves on the back later for being so shrewd at their buying timing. One may want to close out those FRN denominated investments and holdings and just shop out everything prepper related in those remaining backlogged off port shipping containers. This does not end well. Stay frosty out there.
So even a year ago I figured that there was going to be a financial collapse, and with it a socio political implosion equivalent to Yugoslavia. That access to many goods that we take for granted would be limited or even unobtainable, perhaps for a long time.
Now I’m far less optimistic about the future, and it’s a near future at that. Once the ramifications from the Covid injections become apparent, I suspect that they will foreshadow a collapse equivalent to the 1177 BC collapse that destroyed the civilizations of the late Bronze Age.
Magical thinkers, leftists….
As I understand it, we can raise the debt ceiling all we want and place any value we want on the dollar without affecting anything else or the value of anything else. Point being the value of the dollar is what the fed says it is, it’s not based on anything of value, such as Gold, Silver, Platinum, rare minerals, tangible goods, it’s based on “promises” and our ability to repay. However. many generations it may take. At this time our debt can be repaid, with any luck, in you grandkids great grand children’s lifetime. And at the rate this society is going, that may be a future event that simply will not exist. Besides, we only have 11 years left before the world becomes inhabitable, according to AOC, the physicist in charge of the brain power of the present congress.
This should be required viewing before you are allowed to cast a vote!!!
heard an analyst opine some time after 9-11 ‘…planes crashing into buildings full of people won’t destroy a country, financial collapse will…’ Bank of America meets 75% of the criteria for bankruptcy.
I’m resigned now. Just trying to have a good time until the ship goes under. Maybe I should cash out my 401k and do hookers and blow until my heart explodes. Over/under on that ~ 30 minutes. Smart money is on the under.
I’ve noticed that when a country enters into hyperinflation they increase the denominations of their currency. Zimbabwe’s 100 trillion dollar bill is a good example.
Does that tell you anything about our economy when this is being proposed?
It is high school drop outs being let by college failures.
They do not understand micro or macro economics.
They just don’t get it or they don’t care. Either way we are screwed in the short term.
I also it goes pear shaped before I am too old as well. Today I crossed 66 so it needs to be soon.