The Democrats want to continue spending the US dollar into worthlessness. The Republicans are trying to get some budget cuts in exchange, but Biden is saying his way, or default. He is laying the blame on Republicans because he is refusing to budge. The solution, some on the left are saying, is to mint a $1 trillion coin, and deposit it with the Fed.
The idea is to mint a worthless coin that has face value of $1 trillion. That way, the coin has one trillion dollars of seigniorage, i.e. profit for government, and the coin could be deposited to Federal Reserve treasury instead of issuing debt. In other words, they would be issuing new money by debasing the dollar, without generating debt in their balance sheet. It’s like issuing one trillion worth of cash, which is backed with just one worthless platinum coin. It’s not really different from just issuing debt that isn’t paid back, but this way they don’t have to raise the debt limit. This would instantly insert an additional trillion into circulation, creating a massive amount of inflation. Shenanigans like this will completely erode the trust in the value of dollar and make the dollar worth much less nearly overnight. It’s like writing a worthless check to pay your monthly mortgage payment.
This will allow Biden to continue spending money like the dollar is going out of style, which of course it is. God forbid we should actually learn to live within our means.
dmlmd · May 4, 2023 at 5:49 am
Which is why I am going to buy precious metals with a nice bonus I’m expecting this quarter. Not that there aren’t repairs around the house that will be delayed, but making my ‘pantry’ deeper while I can seems to be more important than important but not crucial repairs. If this part of a trend, what does it do to the economy, and would I then be party of accelerating the decline of the economy?
anonymous coward · May 4, 2023 at 6:31 am
I first saw this on twitter. For it’s many problems, twitter has become a great source of information – usually ugly on both sides of the aisle, but at least this way your fully informed before making any judgement. No wonder TPTB want to control what information you receive.
Don W Curton · May 4, 2023 at 7:10 am
Holy shit, according to the google of things, there’s only 2.1 trillion dollars US currently in circulation. So adding another 1 trillion will debase the existing currency by one third? (Sorry, still on first cup of coffee, but that math seems right).
So my salary would be instantly reduced, my savings would be screwed, my retirement account would become worthless, and I’d never be able to retire. The equity in my house would look better, but not necessarily be able to help me any.
That would be the death bell for our economy right there. How stupid are they? Or should we simply consider this enemy action?
Don · May 4, 2023 at 10:09 am
That would be the death bell for our economy right there.
How stupid are they? – Very stupid or very cunning?
Or should we simply consider this enemy action? Yes.
Beyond Thunderdome · May 4, 2023 at 7:51 am
There is still some value in the dollar and there is a lot of ruin left.
The CPUSA will stay on course and there won’t be any vote on it.
Normal is never coming back, survive by any means necessary.
Elrod · May 4, 2023 at 8:47 am
They obviously think we can all be made to live under bridges in cardboard boxes and become more easily managed because of it.
Which may not be the case…..
EN2 SS · May 4, 2023 at 10:01 pm
When I have nothing left to lose, everybody stands to lose something.
Anonymous · May 4, 2023 at 9:22 am
The Left’s world is full of make-believe… Make believe genders, make believe money, make believe everything.
JG · May 4, 2023 at 10:05 am
Good. Let the Federal Government default and stop paying. The reality is that only about 40-60% will shut down. In reality taxes provides more money then the government spends unless they add on spending. With the shut down they could not add on.
This is what the House has proposed in their Budget. The House is proposing caps on spending that go back to a year and put limits on increases of 1% due to paying for what is out there. Biden Admin wants no caps and all spending to be approved, but that is total inflation killer for the USA.
Steve · May 4, 2023 at 10:24 am
Maybe. If they demand the “change” in existing T-bills, rather than just putting it on credit at the Fed, that would reduce supply of bonds, raising bond prices, lowering interest rates, but for the right reasons. Rather than using bonds to steal from the private bond market, they are removing their own bonds from circulation.
The major problem is that everyone knows we are in “Katie bar the door” territory. They **could** let the bonds mature and retire them, and learn the Dave Ramsey lesson on debt. Or, more likely, a drunken sailor administration would waste it all on hookers and blow.
Now, of course, screwing the Fed in this manner is likely to result in a bunch of high government officials Epsteining themselves.
Big Ruckus D · May 4, 2023 at 1:00 pm
I see destruction of the dollar and fiscal collapse as inevitabilities anyway, those outcomes have been baked in for decades now given the trajectory. So, this cutesy $1T coin bullshit changes nothing except perhaps the timing, in pulling the denouement forward by some amount.
The USGOV will default on it’s debt (arithmetically it cannot possibly ever be paid down) and the rest of the world will then tell us to go get fucked, which they are already in the process of doing though dedollarozation. There is zero will or even desire among politicians to impose fiscal responsibility, so they won’t do it. Rather, it will be imposed on us by exogenous events and forces.
Destruction of the dollar, and the effect that will have on international trade, particularly energy and consumer goods imports, will be the wrecking ball that levels America as it has existed to this point. Tax receipts will eventually be in free fall once the economy truly tanks (in progress as I speak), thereby kneecapping the govt and mil at some point.
And that will be a good thing, because the whole rotten edifice of the present govt has to be dispensed with. Of course it will also destroy funding of the entitlement programs, and that will have… interesting effects on human behavior. Going to be a lot of resentment and anger to be aired out. Starvation especially will cause a major lashing out.
In any case, reform is not an option, destruction is the only way back to anything resembling sanity and a functional society. And that will take many years to reestablish anyway, once all the rancid shit is shoveled out of the way. It’s going to suck badly, but bring it. I’m not getting any younger and I really want an opportunity to fuck up the enemy while it is still within my physical ability to do so. Lots of punishment needs to be doled out to the truly deserving.
BobF · May 4, 2023 at 2:47 pm
If I were king for a day one of the high priorities would be to outlaw all democrats from receiving any loans — credit cards, house, car, ANYTHING where they receive something on a promise to pay. Fully justified; they have CLEARLY shown they cannot be trusted with money.
I am far far behind, but I began buying metals two weeks ago. I’m a rank amateur and am doing what my common sense is telling me to do, just a part of my prep work. Heh. The freeze dryer batch will be done in 2 hours. Regarding the metals, I’m reading as fast as I can, trying to read stuff NOT published by sellers, and that is hard to find in brief. By the time I”m smart I’ll be smart enough to recognize the faults in my “common sense.” But I’ll still be ahead of the guy across the street who ran out of beans and is burning paper money.
Olguy · May 4, 2023 at 5:59 pm
Well HELL, its that easy.
I got MINTING to do, gota go!
Divemedic · May 4, 2023 at 8:58 pm
My first thought was how hard it would be to mint my own million/billion dollar coins. If you can take a 1 ounce platinum coin and declare it to be worth a trillion, perhaps I can do something similar with fractional ounce coins.
Francis W. Porretto · May 5, 2023 at 4:30 am
Don’t be scared of the word “default.” A federal default would tear the veil off the unbounded creation of “money” — really, the monetization of debts that will never be paid. Nothing less can open the public’s eyes to what’s being done to them.
Steve · May 5, 2023 at 1:47 pm
And it wouldn’t even be “default” as we understand the term, and the demagogues use it. There’s plenty to cover the t-bills coming in. To fund the actual Article I, Section 8 powers. What there’s not plenty for is funding a military of global domination, a free-for-all welfare state, the gazillion-odd feral agencies whose purpose is to send “hither Swarms of Officers to harrass our People, and eat out their Substance.”
We’d be fine if we could get that kind of “default”.
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