dagblog - Comments for "No Gimmicks"

Yeah, I saw it. That was

Michael Wolraich — Mon, 14 Jan 2013 17:25:26 +0000

Yeah, I saw it. That was pretty cool.

Unfortunately, Cheerios canceled my contract after that business with the penguins and the jello bath. Once you become a big celebrity, everyone gets all judgmental on you.

Definitely a loophole. That

Michael Maiello — Mon, 14 Jan 2013 14:05:56 +0000

In reply to I guess that the idea is that

Definitely a loophole. That 90s legislation was really just intended for the Treasury to be able to mint a few collectibles.

Did you know

ocean-kat — Mon, 14 Jan 2013 04:27:30 +0000

In reply to Thanks, Erica. Not quite

Did you know realclearpolitics linked your article? I was impressed. Anyway with all the money you're getting for plugging Honey Nut Cheerios on dagblog you can afford to write columns for free.

I'm trying to work through

Flavius — Mon, 14 Jan 2013 04:04:03 +0000

In reply to No Gimmicks

I'm trying to work through this by taking off my socks and counting on fingers and toes.

I suppose that every day there are Treasurys maturing which are paid by issuing new debt, But that wouldn't be prevented by a lack of Congressional action on the debt limit because the total debt would be unchanged by that refunding.

What would be prevented would be issuing new debt to pay the Government's bills: the soldiers pay checks, payments to Boeing or whomever for shiny new drones. That would certainly spook american industry ( and unpaid soldiers) but it wouldn't directly undermine the full faith and credit status -and therefore the price -of all other existing Treasurys.( And even some of the soldiers and contractors could be paid from the inflow of payments for taxes,duties or whatever else the Government collects for. Something tells me that Senators will miss a paycheck.Pity.)

But that would either be or be close to being a distinction without a difference since those other existing Treasurys would be affected by this evidence that USA.Co can't be counted on to behave rationally. If you were holding a 2014 Treasury which dropped in price for this reason you would be just as annoyed as if it dropped in price because some bonds came due on ,say March 1, and the Treasury said "Come back later".

It of course wouldn't last long since Congress would immediately raise the debt limit- while whining about Obama's imprudent cash management. But for what it's worth we wouldn't have technically violated the full faith and credit status of the outstanding Treasurys.

I guess I've got it.

I guess that the idea is that

Michael Wolraich — Mon, 14 Jan 2013 00:56:09 +0000

In reply to At the time the Constitution

I guess that the idea is that in the 1990s, Congress gave the Treasury the authority to issue platinum coins "with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time."

I guarantee that they did not intend to grant the Treasury authority to fiat its own currency. You could argue that it's a loophole the President could exploit, but for the reasons I've outlined, I don't see it holding up.

Thanks, Erica. Not quite

Michael Wolraich — Mon, 14 Jan 2013 00:43:49 +0000

In reply to MW, I have been so focused on

Thanks, Erica. Not quite famous yet, but I have published occasional op-eds at CNN.com since 2010. The other Michael is more successful. He actually gets paid for his columns.

No, both the colonies and the

Michael Wolraich — Mon, 14 Jan 2013 00:40:58 +0000

In reply to At the time the Constitution

No, both the colonies and the Continental Congress issued bills of credit, which were essentially fiat currencies and suffered depreciation. After the Revolution, the Constitutional Congress prohibited the states from coining money and emitting bills of credit. It granted Congress the power to "coin Money, regulate the Value thereof, and of foreign Coin." (Art. 1, Sec. 8 and 10).

At various times, Congress empowered the Treasury to issue greenbacks--most notably during the Civil War--but it always maintained strict limits on the total number bills the Treasury could put in circulation.

I don't know exactly what latitude the Treasury has when minting coins, but I'm very confident that Framers did not intend for the Executive Branch to be able to create its own fiat currency through coinage.

Again, I'm not saying that there isn't a constitutional argument to be made, but it would represent a radical deviation from precedent, and I cannot imagine that it would be easy to pull off.

MW, I have been so focused on

erica20 — Sun, 13 Jan 2013 22:38:17 +0000

In reply to Btw, did you see Krugman's

MW, I have been so focused on the gun issue stuff that I failed to realize that your suicide strategy article was posted in CNN. Wow.

Did you get famous and I didn't notice?

Congratulations!

I bet he does now.

erica20 — Sun, 13 Jan 2013 22:36:00 +0000

In reply to Of course Krug reads Dag.

I bet he does now.

At the time the Constitution

Michael Maiello — Sun, 13 Jan 2013 21:39:07 +0000

In reply to And maybe it won't work. Then

At the time the Constitution was written, all currencies were hard currencies, right? If that's the case, then it's impossible that the founders would have envisioned unlimited coinage. MMT woud certainly have been a foreign concept.