Why not do the 1 trillion dollar coin seigniorage via treasury to avoid fiscal cliff?

Discussion in 'Economics' started by noob_trad3r, Dec 4, 2012.

  1. Requires none of this mess with Congress, All Obama has to do is call up Geithner and tell him to mint that special edition "Obama collectors coin" and have the fed pay 1 trillion for it.

    Put that up as the big stick for negotiations.

    Our T-bill yields are at record lows anyhow. And velocity of money is dead anyhow.

    This would wipe out a big chunk of our debt and we can move on. our exports would also become more competitive due to the currency weakening agains chinas yuan.
  2. zdreg


    "velocity of money is dead anyhow."

    if you were famous this would be the equivalent of fisher's remark in 1929 we have reached a permanent high plateau in stock prices.

    "our exports would also become more competitive due to the currency"
    you cannot devalue your way to prosperity. same nonsense repeated over and over doesn't make it true.
    if that were true argentina and zambia etc.would be kings of the heap.
  3. The trillion dollar coin is back.


    More seriously, last year I was also worried that the creation of a trillion coin would be "highly inflationary." (Others also worried about inflation.) This concern now seems to me to be seriously misplaced. There would really not be any additional inflationary pressures caused by a trillion coin

    The key point here is that the government would not be throwing an extra trillion dollars into the economy. It would, rather, be spending exactly how much it planned to spend anyway. It would not be issuing bonds to cover some of that spending but bond issuance by the Treasury does not do very much (probably nothing at all) to combat inflation anyway. The amount of government issued financial assets remains the same, even though the composition of dollars and Treasury bonds changes.
  4. TGregg


  5. TGregg good post. We never have any thing like that in the Raleigh N&O.
  6. Man that would be quite interesting to see. Obama announcing a press conference and walking with Geitner and Bernanke and then opening up a special haliburton zero suitcase with 4 1 trillion dollar coins and handing it over to the Geitner which then he hands it over to Bernanke.

    I wonder how the markets would react.
  7. No because QE means the debt is purchased by the FED but we still have a debt on the balance sheet.

    This wipes out the debt, we are not borrowing from the FED but selling them a special limited edition collectors coin for 1 trillion bucks.
  8. TGregg


    Thanks. Lotta bankers here in Charlotte, so we get more financial news. :)
  9. TGregg


    Even better. 16 or more coins. Then Obama announces the debt has been paid off on his watch, earning him another Nobel prize.

    Wonder what the markets would do then? Wow.
    #10     Dec 7, 2012