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Thread: Can Trillion Dollar Coins Save the Economy?

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by fredmertzz View Post
    I would assume the 'real investors' such as international governments, individuals and corporations would not be the ones being paid in dollars, not uncirculated coins. The write off/payoff would be for debt currently held by the government/The Fed -

    The question is due to the fact that the money that this debt has created is already in circulation. Would forgiving that debt/paying off that debt really add money to circulation? I just don't see how it could cause inflation.

    I'm playing devil's advocate here because I am against this policy move as a moral issue.
    I'm not an economist and only have a crude understanding of how the economy works as a whole. I believe the debt incurred is not necessarily represented by currency though theoretically it should be. It exist in the form of bonds, which is a form of currency holding immediate value. But if there's a "run" on the bond market, then their value begins to plummet.

    If people become convinced that our government will end up printing money (coin) to cover intractable deficits, they will see inflation in the future and so will try to get rid of dollars today, driving up the prices of goods, services, and eventually wages across the entire economy. This would amount to a "run" on the dollar. As with a bank run, we would not be able to tell ahead of time when such an event would occur. But our economy will be primed for it as long as our fiscal trajectory is unsustainable.

    Needless to say, such a run would unleash financial chaos and renewed recession. It would yield stagflation, not the inflation-fueled boomlet that some economists hope for. And there would be essentially nothing the Federal Reserve could do to stop it.
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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Khayembii Communique View Post
    All economists support "monetary manipulation and fiscal policy manipulation to change the macro-economic outlook of the economy". That's the entire point of government economic policy. Even conservative economists who argue for lower taxes are advocating for a fiscal policy that "change[s] the macro-economic outlook of the economy."

    Keynesians would oppose this because, as other posters have said, it is basically defaulting on the national debt. Keynesians, as well as myself who agrees with them on many things, realize that paying down the debt in the short- or mid-term would not only be pointless but disastrous to the US economy. There is nothing wrong with maintaining a national debt, or with deficit spending per se.

    More specifically, worrying about deficit spending or the national debt right now, or in the short-term, when we are still trying to recover from the recession, is counterproductive. Keynesians advocate counter-cyclical policy, meaning that deficit reduction and tax increases should occur in boom times, while an expansionary policy should be pursued in a contractionary economic environment (i.e. deficit spending right now).
    The public debt has been on the rise - a rather dramatic rise - since the early 1980's. That's 30 years now. If we're talking no reason to pay the debt down in the short term when should that kick in? I mean, are we talking geologic time scales here?

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by lpast View Post
    Know what man...republicans when they are in power call for the exact same thing...the debt limit has risen with every republican president...its not just a democrat thing.
    Republicans were calling for the issue of a trillion dollar platninum coin when they were in power? Can you provid a link to that?

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Lutherf View Post
    The public debt has been on the rise - a rather dramatic rise - since the early 1980's. That's 30 years now. If we're talking no reason to pay the debt down in the short term when should that kick in? I mean, are we talking geologic time scales here?
    Adjusted for inflation, the national debt fell under Clinton, though not significantly.

    I see no reason to "pay the debt down" at any time, provided that I am assuming by this you mean actually pay it off or pay it down significantly. Why would we need to?
    "I do not claim that every incident in the history of empire can be explained in directly economic terms. Economic interests are filtered through a political process, policies are implemented by a complex state apparatus, and the whole system generates its own momentum."

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    Re: Can Trillion Dollar Coins Save the Economy?

    Even better, print a quadrillion dollar coin and we will be in the green again.
    - There was never a good war, or a bad peace.
    - Idealistically, everything should work as you planed it to. Realistically, it depends on how idealistic you are as to the measure of success.
    - Better to be a pessimist before, and an optimist afterwords.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Khayembii Communique View Post
    Adjusted for inflation, the national debt fell under Clinton, though not significantly.

    I see no reason to "pay the debt down" at any time, provided that I am assuming by this you mean actually pay it off or pay it down significantly. Why would we need to?
    I don't mean "pay it off". We're talking 16+ Trillion dollars so paying it off isn't going to happen any time soon....unless we inflate the hell out of the dollar.

    We need to start paying the debt down to show both ourselves and the rest of the people we want to invest in this country that we can manage ourselves financially. The key to a fiat currency is confidence and if that confidence erodes we are totally screwed.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Lutherf View Post
    I don't mean "pay it off". We're talking 16+ Trillion dollars so paying it off isn't going to happen any time soon....unless we inflate the hell out of the dollar.

    We need to start paying the debt down to show both ourselves and the rest of the people we want to invest in this country that we can manage ourselves financially. The key to a fiat currency is confidence and if that confidence erodes we are totally screwed.
    The gov needs to do both reduce spending and increase taxes but at a nominal pace. Only then will the markets be convinced that we're seriously addressing our debt and credit problem. Another trend that needs to be understood is that the people likely to spend the most retail wise and boost the economic growth need access to the cash to do that, otherwise more jobs and better salaries. If that doesn't happen we will be locked into a slow to no growth pattern indefinitely.
    Einstein, "science without religion is lame, religion without science is blind."

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by grip View Post
    The gov needs to do both reduce spending and increase taxes but at a nominal pace. Only then will the markets be convinced that we're seriously addressing our debt and credit problem. Another trend that needs to be understood is that the people likely to spend the most retail wise and boost the economic growth need access to the cash to do that, otherwise more jobs and better salaries. If that doesn't happen we will be locked into a slow to no growth pattern indefinitely.
    I would agree but only with the caveat that the spending cuts happen first. We need to show that we have a fiscally viable plan to get things under control before we raise taxes specifically for the purpose of paying the debt down. Furthermore, once we get ourselves into a positive cash flow situation we need to make sure that any excess revenues collected go to paying down the debt first. Doing so simply saves us interest.

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by Lutherf View Post
    I would agree but only with the caveat that the spending cuts happen first. We need to show that we have a fiscally viable plan to get things under control before we raise taxes specifically for the purpose of paying the debt down. Furthermore, once we get ourselves into a positive cash flow situation we need to make sure that any excess revenues collected go to paying down the debt first. Doing so simply saves us interest.
    I would agree with this except some of the biggest cuts shouldn't be directed at those with the least ability to shoulder the burden. That's not only unpalatable but it's also not fair to let the shrewdest in society benefit the most. I think the gov has always over taxed, especially businesses and should reduce in size as a way to cut spending. I hear all the time how much gov wastes but nothing ever gets done to reduce size and waste.
    Einstein, "science without religion is lame, religion without science is blind."

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    Re: Can Trillion Dollar Coins Save the Economy?

    Quote Originally Posted by buck View Post
    Republicans were calling for the issue of a trillion dollar platninum coin when they were in power? Can you provid a link to that?

    Thats not what I was saying...I was saying republican potus raised the debt ceilings.. and I cant remember in my 65 y rs a more obsructing house ever....so the coin thing isnt as unreasonable as it would be if we didnt have such unreal partisan teapartiers just obstucting anything they can

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