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Paul Krugman bristles at mockery of 'trillion dollar coin' idea to raise debt ceiling


Skyrocket

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In the run-up to the August 2011 controversy about the raising of the debt ceiling, which requires congressional approval and was initially opposed by Republicans (who control the House of Representatives) who demanded more spending cuts, Yale Law Professor Jack Balkin proposed a novel solution. He claimed that there was a loophole in the law that would allow the Treasury to issue two $1 trillion platinum 'commemorative' coins which would then be deposited with Federal Reserve who would then deposit funds with the Treasury in return, thereby bypassing the legal requirement of Congress to control raising the debt ceiling.

With another executive fight with congressional Republicans looming over the debt ceiling in March, the 'trillion dollar coin' proposal has gained traction among some commentators, the most prominent being the left-wing Nobel Prize winning economist and New York Times columnist Paul Krugman:

Be Ready To Mint That Coin - NYTimes.com

The idea and Krugman's endorsement has been subject to ridicule from commentators on both sides of the political divide, but Krugman took particular offense to a comedy skit on Jon Stewart's 'The Daily Show' that mocked his endorsement of the 'trillion dollar coin':

Krugman, Stewart in trillion-dollar coin tiff - POLITICO.com (includes video).
 


Shpake

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Some simple questions:
will the amount of platinum in the commemorative coins equal (at least approximately on the date of minting) the value of the coin?
If so, who is going to pay for all the platinum? it's not paper you know
If not, I don't think the markets will be fooled, it's money printing without corresponding wealth creation and that tends to be inflationary
 

Spanner Island

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I heard about this trillion dollar coin idea a couple of weeks back and I thought the person who told me about it had either gotten it wrong or was losing their marbles...

I will have to apologise to that person.

The global financial system seems increasingly bizarre and to be built more on fairy tales and bullsh!t than it is on products and services that are of any real value.

Absolute madness...
 

Bill

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don't let Mr Burns deliver them :)
 
D

Dylan2010

Trust Krugman to endorse the idea, anything to keep the party going. Might as well pass a law saying that all americans can add 3 zeros to all the notes they have.
 
D

Dylan2010

I love Stewart's retort

Stewart on Monday night responded to Krugman’s comments, saying, “First of all, I’m pretty sure that is my brand.”

“And second of all, if somebody is ruining their brand with a trillion-dollar coin idea, I don’t think it’s the non-economist,” he said.
 

Trainwreck

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I want thme to do it and then for some entry level Fed clerk to stick it his pocket and walk out the door.

Wouldn't that be a great news story. The Federal Reserve loses trillion dollar coin.
 

SPN

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Krugman, King of the Money Fairy believers.

Krugman said:
A few months ago the vast majority of business economists mocked concerns about a ''double dip,'' a second leg to the downturn. But there were a few dogged iconoclasts out there, most notably Stephen Roach at Morgan Stanley. As I've repeatedly said in this column, the arguments of the double-dippers made a lot of sense. And their story now looks more plausible than ever.

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.
 

Ryan Tubbs

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In the run-up to the August 2011 controversy about the raising of the debt ceiling, which requires congressional approval and was initially opposed by Republicans (who control the House of Representatives) who demanded more spending cuts, Yale Law Professor Jack Balkin proposed a novel solution. He claimed that there was a loophole in the law that would allow the Treasury to issue two $1 trillion platinum 'commemorative' coins which would then be deposited with Federal Reserve who would then deposit funds with the Treasury in return, thereby bypassing the legal requirement of Congress to control raising the debt ceiling.
So an economist who has to try desperately to resist masturbating in public any time he hears the words "Democrats" or "Barack Obama" is having a spat with the Democrats/Obama's biggest media mouthpiece.....

It's just delicious how Demmycrats keep fighting with each other.

Well done to Stewart for ridiculing Krugmann's voodoo economics.
 

Ryan Tubbs

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My favourite Krugmann thingy was how he denounced Obama's fiscal stimulus as being tiny and not going far enough when it was passed into law, but has spent every day since hailing it as the greatest decision ever made, helped us avoid a second Great Depression, etc etc
 

ShoutingIsLeadership

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A lot of heat and very little light, so far on this thread.

Can someone explain why, in the context of the debt ceiling, this idea is worse than the alternative, please?

Mocking isn't very informative.
 

seabhcan

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A lot of heat and very little light, so far on this thread.

Can someone explain why, in the context of the debt ceiling, this idea is worse than the alternative, please?

Mocking isn't very informative.
I may be entirely wrong, but I think the 'mint-a-coin' idea is not all that different from the FF solution to the Anglo collapse - the famous promissory notes which are now the bane of our lives.

Basically FF decided to print 30 billion of pretend money, and use it as a 'asset' to borrow real money from the ECB.
 

SPN

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A lot of heat and very little light, so far on this thread.

Can someone explain why, in the context of the debt ceiling, this idea is worse than the alternative, please?

Mocking isn't very informative.
The alternative is to stop spending money you don't have.

Krugman's idiotic idea is to create money out of thin air.

It didn't work in Weimar Germany, or in Mugabe's Rhodesia.
 

Spanner Island

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A lot of heat and very little light, so far on this thread.

Can someone explain why, in the context of the debt ceiling, this idea is worse than the alternative, please?

Mocking isn't very informative.
Keep going like this - simply 'inventing' wealth, and in time you may as well get your Monopoly money out and start using that...

I'm beginning to think the global financial system is one of the greatest con jobs ever...

And the really sad thing about it is that it's being prioritised over people...
 

Amnesiac

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A lot of heat and very little light, so far on this thread.

Can someone explain why, in the context of the debt ceiling, this idea is worse than the alternative, please?

Mocking isn't very informative.
Krugman wants the government to keep spending like a drunken sailor. Fiscal stimulus is always the answer. He is as tied to his beliefs as the right-wing commentators he rails against.

The coin idea would be politically dangerous as it looks like Obama is playing games and circumventing the will of Congress, the arm of government supposedly responsible for the budget.
 

Orbit v2

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The notion that the coin idea would be legal is so laughable, it really hurts Krugman's credibility. No wonder he's angry.
 

Little_Korean

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Ah, well, at least Krugman's consistent. Spend, spend, spend is his usual refrain. That's been working out so well for everyone so far, right?
 

lies

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yes
The alternative is to stop spending money you don't have.

Krugman's idiotic idea is to create money out of thin air.

It didn't work in Weimar Germany, or in Mugabe's Rhodesia.
Ludicrous... for this ^^^ to be the solution you'd need a time machine... most of the debt in the so called debt ceiling is from policies implemented years ago...

And MANY of the people calling for this refuse to put their own pet projects on the chopping block.

Note that Republicans by and large refuse to discuss meaningful cuts in defense or "homeland security," yet threaten to shut down the government (and not pay debts owed by the government) is someone doesn't do something to cut the pittance the working poor receive...

It's the fiscal cliff all over again... we'll raise taxes, say the right, as long as it's not on the top 1% of the population...

The voters rejected this and even Republicans are now rejecting the House GOP as being WAY too extreme.
 

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