minting two $1 trillion platinum coins to finance monthly coronavirus debit cards
MsMorrisine
Posts: 33,070 ✭✭✭✭✭
MsMorrisine
Posts: 33,070 ✭✭✭✭✭
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another magic money tree believer
grading fee? insured shipping?
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@MsMorrisine,
Inexplicably, the goal of the congress people, along with the ilk on wallst (jpm,etc), is not to keep people alive through this crisis, but instead is to move the markets above where they were at the highs. Giving everyone a check every month may just do that with no considerationnto inflation.
wonder what the spread on those would be?
Will this help boost the value of my Plats? If so, I might be able to buy my very own senator.
I knew it would happen.
Will it be worth more if JA slaps on the ole gold bean?
The whole worlds off its rocker, buy Gold™.
This is ridiculous.... similar to the suggestion a few years ago to mint a couple of large gold coins to wipe out the debt... Cheers, RickO
Daniel Carr already beat them to the punch. I think that I've got one of his trillion dollar coins.
They are too little & too late to the party - they should probably consider 10 or 100 trillion anyway, the way things are going.
I knew it would happen.
I think she needs more than 2 - trillion dollar coins. Figure better get a current screenshot before all the trillions in new debt starts funneling in next week:
The whole worlds off its rocker, buy Gold™.
those were plats too.
this is unnecessary idea redux
......usually the amount of PMs are greater than the FV....
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"quadrillion" is coming.
Nice
And this will be another piece of currency that will be legal for only the feds to own. Like the $100,000 bill
Collector
75 Positive BST transactions buying and selling with 45 members and counting!
instagram.com/klnumismatics
Nice, I love it! Surprised the FED didn't try to take you out.
The whole worlds off its rocker, buy Gold™.
$24+ Go Team!
The whole worlds off its rocker, buy Gold™.
Serious question.
How has massive international borrowing on an industrial scale, now even MORE intense because of the pandemic, been DEFLATIONARY?
Fossils like me say, "Yeah, but inflation will kick in to pay down all of this stuff someday. You just watch." But that someday has been astoundingly elusive in recent years, and said fossils have increasingly seemed irrelevant and the targets of derision.
Can such profligacy on an international scale in fact been irrelevant, and the inconsequential new normal?
Ravaged minds want to know.
Here's a warning parable for coin collectors...
Dear Ravaged Minds,
The massive borrowing heretofore has already been so massive that said economies can't support the debt that they already have. That's why rates already have to be kept low in order to keep the interest payments manageable for both government and business or personal loans. When business stops or turns down (like right now), defaults on loan obligations echo throughout the system, and there's a liquidity crisis right now because there isn't enough cash hanging around for 50% of the country to even make those payments...…...that's when the writedowns begin and that is deflationary. And people lose their jobs & homes in the process.
So, fearing deflation and writeoffs that would cause an earthquake in the finances of most of their constituents (and their own) portfolios, the majority of the politicians in DC always opt to solve the debt problem with more debt, i.e. Trump calls up Mnuchin and says, "Look man, I know we did this last week, but we need another $150 billion this week for the banks because they screwed up their business model and bonuses again." Mnuchin calls up Jay Powell and says, "it's a go". Voila' more imaginary money!
As the relatively small bailout for small businesses & individuals winds it's way through Congress, (more pork included in order to pass it), the banking bailout of $1.5 trillion needed exactly no approval or oversight from Congress. Interesting, eh? One standard for the banks, quite another for small business & individuals.
Way, way down on the totem pole of relevance - the taxpaper is sitting there wondering why he has to pay higher taxes and why his benefits are scaled back or cut - if he's lucky enough to even have benefits.
So, you want to know about the inflation part that the fossils inherently understand to be inevitable?
The spineless political class really, really, really fears the deflation that is happening in the real estate & stock markets right now - enough that they have absolutely no incentive or reason not to jump on larger and larger spending bills. It has almost nothing to do with the corona virus. It has to do with fear of deflation. Instinctively, they know that prolifigate spending risks a runaway inflation scenario, but they've actually started to believe their own hype, that MMT will solve any and all economic problems. They don't care. MMT works good until the food starts to run out. Or the water. Or the energy sources. MMT really doesn't work good when there's no jobs.
Let's hope that the supply chains and job markets haven't been severely destroyed while all this has been going on.
Here's where the inflation comes in. The deflationary forces are so pervasive already that just a small amount of money creation won't fix it. It has to be A LOT of new, imaginary, liquid, corruption-susceptible money - just to slow down the deflation caused by a cascade of defaults by small business and individuals. By the time they see just how much massive money creation will be required, we will have very high rates of inflation. This still won't fix the damage already done to small business & individuals' finances & long-term outlook, but it will keep the inept and corrupt bank managements in place and the banks intact.
Keep in mind that the large international banks are involved in all kinds of leveraged derivative contracts, and there are always winners & losers. When a tail risk comes to pass, the large bank on the losing end of the stick gets a bailout, and this occurs when they build-in a revenue stream based on wrong assumptions on their leveraged bets.
Pension fund managers also come to mind - typically they've assumed a 7% or 8% return when 1% is today's reality. There is a major pension fund crisis because of over-optimistic projections based on wrong assumptions, motivated by bonuses when times were good.
Problem is, once all of this "unlimited" money (in the words of Jay Powell) finally makes it onto street level, the money has been diluted 20% or 50% - as the case may be. This is when hyperinflation takes root, when people realize that the money has to be spent before it quickly loses even more of it's value, which it certainly will. This natural human response to devalued currency tends to snowball, and once the dumping of currency starts in earnest, the currency will drop even more and faster.
That's about how I understand the problem. I may be wrong.
But I don't believe that the prolifigate spending and borrowing is an inconsequential new normal. I'll go out on a limb and say that it is consequential. Let's just say that I'm glad to be growing a garden this year.
I knew it would happen.
I just THOUGHT my minds were ravaged!
Seriously: thanks for the thoughtful and detailed reply.
Here's a warning parable for coin collectors...
The country will eventually pay all of its debts.
With it's freedom and nationhood.
@jmski52 "That's about how I understand the problem. I may be wrong.
"
You are not wrong and that is a very excellent summary of what is going on.
I like this, written by Pat Shannan.
_It is the month of August; a resort town sits next to the shores of a lake. It is raining, and the little town looks totally deserted. It is in the toughest times since 1934, everybody is in debt, and everybody lives on credit; mostly from each other.
Suddenly, a rich tourist comes to town. ‘Whoo, boy!’ Everyone says to themselves when they spot his limousine. ‘How long can we keep this rich guy in town?’
The limo stops, the back door opens and the bigshot enters the only hotel. He drops a 100-dollar bill on the reception counter, and asks to inspect the rooms upstairs in order to pick one he might like.
The moment the elevator closes taking the new customer upstairs, the hotel proprietor takes the 100-dollar bill and sprints four doors down the sidewalk to pay his debt to the butcher. The butcher takes the 100-dollar bill, and runs out back to pay his debt to the pig farmer. The pig farmer takes the 100-dollar bill, and hurries to pay his debt to the supplier of his feed and fuel. The supplier of feed and fuel takes the 100-dollar bill and hurries to pay his debt to the town’s prostitute that in these hard times, gave her services on credit. The hooker runs to the hotel, and pays off her debt with the 100-dollar bill to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.
It all happened in less than 10 minutes, and the hotel proprietor promptly placed the 100-dollar bill back on the counter so that the rich tourist would not suspect anything.
And it was just in time, too, because only a moment later, the rich tourist came down after inspecting the rooms, picked up his 100-dollar bill, remarked that he did not like any of the rooms, and left town.
No one earned anything. However, the whole town was suddenly without debt, and was looking to the future with a lot of optimism_.
I forgot to say that the above story was meant to illustrate how our Federal Reserve operates.
@thisistheshow:
That’s a colorful and useful example. I believe the conclusion is that in a brewing crisis, the Fed can provide liquidity to avert a crisis with no material long term cost.
The difference between the example and reality is that gov.com just closed the hotel for spreading a virus, and the Fed swooped in with a counterfeit $100 bill to buy the hotel at a deep discount.
Now, everybody's debt is paid off, but the proceeds from all future transactions go to the Fed and the hotel operator is now out of work and out of his principal asset.
I knew it would happen.
It may eventually come down to a choice between (1) piling on more debt to fund the deficit or (2) issuing "unbacked" money to do the same. Both are potentially inflationary, but option (2) doesn't kick the can down the road by continuing to pass the debt down to future generations.
My Adolph A. Weinman signature
One interesting aspect of @thisistheshow 's story is that the debt is extinguished just as efficiently and legitimately if it starts with a counterfeit one hundred -- as long as each person along the chain accepts it as real!
Spending right along. Another 30 days another $trillion+ in the hole.
The whole worlds off its rocker, buy Gold™.
Man they just keep making these green papers they call dollars worthless. Might as well use them like pablo escobar and burn them for warmth
. We gunna be like germany soon after WW1. Burn da money burn burn
It may eventually come down to a choice between (1) piling on more debt to fund the deficit or (2) issuing "unbacked" money to do the same. Both are potentially inflationary, but option (2) doesn't kick the can down the road by continuing to pass the debt down to future generations.
Who would use the money in your 2) "unbacked" money scenario? It would start out worthless and get less than worthless even faster.
The only other 2) is to increase taxes, which is what they always do along with pumping inflation via runaway monetary creation (by piling on more debt as you mentioned).
I knew it would happen.
Moving right along, thank goodness we finally learned fiscal responsibility, I'm ready for another stimulus check. Semper Fi!
The whole worlds off its rocker, buy Gold™.
let's all jump of a bridge like everyone else.
i think we need more than 2 coins...
If unbacked fiat money is "worthless", then fiat money backed by a bond redeemable only in that same fiat money is also "worthless". How can a promise to pay in a currency that is "worthless" realistically serve as backing for the currency itself?
Although inferior to a gold-based currency, fiat money does in fact have real value. The U.S. dollar’s value derives from the fact that it is the official medium of exchange and unit of account within a large, productive and reasonably stable economy. It does not derive from the fact that $25+ trillion in U.S. government IOU’s are “backing” the nation’s currency.
The Civil War was financed with the aid of "unbacked" money, and "unbacked" U.S. notes circulated for more than a century alongside the rest of our currency with no problems. All of our current coins are "unbacked", yet they circulate every day.
My Adolph A. Weinman signature
maybe we could pay all our bills in pennies...
As the National debt went up, why did the debt per citizen go down?
If unbacked fiat money is "worthless", then fiat money backed by a bond redeemable only in that same fiat money is also "worthless". How can a promise to pay in a currency that is "worthless" realistically serve as backing for the currency itself?
Consider that creating a $trillion in order to go from $23 trillion to $24 trillion (as documented in the debt clock) is a little less than a 4.2% currency devaluation - in one fell swoop - a month or so. Consider that an additional $3 trillion in bailout/stimulus/rescue/recovery/emergency funds are already authorized to spend. Going from $24 trillion to $27 trillion - that's almost another 11% currency devaluation in addition to the 4.2% already.
We're seeing a de facto 15% currency devaluation just in a few weeks. "Worthless" is indeed a relative term. A dollar has lost what - about 97% of it's value since 1913. But, 107 years is a time frame that not many people can use as a personal yardstick for value, so it's not that relevant.
The 15% devaluation in a few weeks is actually more relevant, for more people - especially the ones now out of work and drawing "recovery" funds while looking for a lower paying job.
I knew it would happen.
Didn't really answer my question, "How can a promise to pay in a currency that is "worthless" realistically serve as backing for the currency itself?"
My Adolph A. Weinman signature
"How can a promise to pay in a currency that is "worthless" realistically serve as backing for the currency itself?"
Jim Sinclair refers to this as "management of perceptions". If the perception remains that the currency has value, the status quo will continue until that knotty issue of math supersedes the illusion that debt as money can be keyboarded indefinitely.
There is a finite point at which people, companies, municipalities and states can't pay the interest on their debt. We are at that point now, and the Fed's "solution" is to create more debt as money from thin air, again and again, in larger and larger increments. Eventually, the math fails and the system collapses. We are at that point now where the time value of money is almost zero, which implies that ALL types of capital are worth less each day.
If rates go negative, there is a finite point at which people won't be willing to put their capital at risk in a bank - which is problematic for the banking system, especially in a fractional reserve paradigm where the banks capitalize on the multiplier effect of lending money that they don't really have. This situation alters human behavior in not such a good way because the whole system relies on people being deeper and deeper in debt - which is untenable when the debt can't be serviced - and we've already reached that point.
If negative rates and universal basic income become a reality, there is a finite point at which there won't be enough food and other goods to satisfy demand because not enough actual production will be taking place because there will be absolutely no incentive to produce or to work, short of forced slavery.
In other words, there will be plenty of paper, but very little to buy at any price. That is the equivalent to having worthless currency. At that point, you can theoretically "back the currency" with more of that same currency, but it doesn't provide any sort of utility.
The short answer is that a worthless currency can't back itself. There - it's a good thing I decided to give you a brief answer.
I knew it would happen.
each FRN is redeemable in lawful money...
I'd rather "pay" seigniorage to the treasury than "borrow" from the Fed.
The difference may be more academic at this point???
My Saint Set
@ReadyFireAim said "I'd rather "pay" seigniorage to the treasury than "borrow" from the Fed. The difference may be more academic at this point???"
Yes, it's an interesting discussion point. Given the current appetite for long term low interest rate bonds, the Treasury really should consider issuing 50 or 100 year bonds...it wouldn't be much different from the $ 1 trillion coin idea.
I think we should mint 25 one trillion dollar coins, pay off the Fed & fire them.
We can then start minting treasury bills for people to use.
What are they going to do about it?....They don't have any tanks.
My Saint Set
pssst………….anyone wanna buy some 100 year Greek bonds? (I can get'em for you cheap).
I knew it would happen.
we, the people are dumb.
as a collective i guess so, but there's plenty of us here who know this recovery funding is debt suicide.
4 more days another $100B+
The whole worlds off its rocker, buy Gold™.
While you were sleeping......yawn
$26T Semper Fi!
The whole worlds off its rocker, buy Gold™.
Takes a lot of money to keep propping up your gains in real estate...