(from here)
For those who aren’t aware of what “mint the coin” refers to, due to legislation about types of coins that the U.S. Treasury can mint, there is actually, as stupid as this seems, an option to mint a platinum coin with a ridiculous value that can be used to pay the national debt, instead of issuing more debt.
This bit of arcana matters because Speaker McCarthy in his desperate attempt to stop getting punched in the nuts on national television over and over again to win the House Speaker position has promised to use the debt ceiling–the process where Congress sets a cap on the amount of debt that can be issued–as economic terrorism to force all sorts of horrible policy, including sweeping Social Security cuts. Admittedly, this is a long-standing Republican strategy*, but it’s become increasingly likely they will do this.
Even the liberal New Republic Jon Chait thinks we need to mint the coin (boldface mine):
In the current circumstances, a successful hostage release would be all but impossible. Imagine a Republican Speaker — any Republican Speaker — figuring out a ransom that almost the entire caucus could agree on. The intraparty dynamics virtually guarantee that anything a Republican leader could agree to would immediately be seen on the far right as too little.
All is to say that even if you think Biden ought to negotiate a debt-ceiling-ransom demand, it’s now a practical impossibility. The only way to accomplish the goal is to separate it from policy altogether. The best way to do that would have been for Democrats to lift the debt ceiling when they still had control of Congress. (Their failure to do so could potentially prove to be the decisively catastrophic choice of the last four years.) The best remaining option is for the Treasury to use its Congressionally inscribed authority to mint coins in denominations it chooses[**]…
All this may sound implausible and difficult to imagine. But picture trying to sell a bipartisan negotiation to a member of Congress who thinks breaching the debt ceiling and keeping the government open are the same thing or that forest fires were caused by the Rothschilds via a secret space laser.
This is really stupid and ridiculous, but so is any Congress that contains QAnon conspiracists, outright fraudsters, and pedophile pimps. Meanwhile, Biden won with the majority of the vote. It’s time for him to exert his popular mandate and protect the full faith and credit of these United States.
*A cynic could argue there are some Democrats who are willing to use the need to compromise–that is, surrender to economic terrorists–on the debt ceiling to enforce the politics of austerity. This hypothesis has more supporting evidence than one would like.
**Chait is incorrect, in that it has to be a platinum coin. Yes, this is really stupid, but so is economic terrorism by way of the debt ceiling.
mikethemadbiologist
“(Their failure to [eliminate the debt ceiling] could potentially prove to be the decisively catastrophic choice of the last four years.)”
How many of us were trying to urge Congress beforehand to eliminate the debt ceiling?
Counsol bonds would work, too.
https://en.m.wikipedia.org/wiki/Consol_(bond)
OK, coin, bonds, whatever. Spreading the word that federal fiscal policy is not “tax and spend” would work even better. It can’t be that sequence. Where would taxpayers get the dollars with which they pay taxes if the monopoly provider of dollars–the federal government–didn’t spend them out into the economy first.
It must be “spend first, then retrieve some dollars in taxes”–so spending is independent of tax revenues. Taxes do not provision federal programs, they make dollars worth something.
And what do we call the dollars spent, but not retrieved in taxes? a) The dollar financial assets of the population. b) National ‘debt’ — both a) and b) describe *exactly* the same thing. This is analogous to bank accounts. Your bank account is your asset, but to the bank, it’s a liability.
So…”debt” matters, but marching down to the bank to demand it reduce its debt (i.e. make your bank account smaller) is not sensible. Neither is the anxiety about national ‘debt.’ It ain’t like household debt.
…and imagine if your mortgage were payable in money you made yourself. What kind of a “burden” would that be? Pretty light, eh?
Anyway, talking about national ‘debt’ is a good way to discover just how little people know about economics. Conventional economists (Samuelson!) even admit this dirty little secret–the “debt” conversation is just to scare the population into accepting that they can’t have nice things. The federal government can mobilize any resources it finds in its economy, without limit.
Here’s something no one said, ever: “OK, so the Japanese bombed Pearl Harbor, but we’re short of cash, and we need a trillion-dollar coin, or we won’t respond.” In World War II, the government took over 50% of the economy. The Green New Deal would only take 5% of our economy now.
B..but we can’t afford it because “debt”! … truly pathetic, if you ask me.
For more, see Randall Wray’s article here: https://www.huffpost.com/entry/the-federal-budget-is-not_b_457404
Nice thing about a president with some background. Few people remember that he stood with Colonel William Prescott when he gave his famous order to “keep your powder dry” or something.
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