Thursday, January 10, 2013

How The Trillion Dollar Platinum Coin Idea Spread

What's fascinating to me about the below story is not the specifics of how the platinum coin concept spread, but the power of the internet in rapidly disseminating news about the concept. It's Hayek's notion of second-hand dealers in ideas, on steroids.-RW 

Meet the Genius Behind the Trillion-Dollar Coin and the Plot to Breach the Debt Ceiling
By Ryan Tate

It was a December 2009 Wall Street Journal article that ultimately inspired the Georgia lawyer known online as “Beowulf” to invent the trillion-dollar coin.

The article, “Miles for Nothing,” detailed how clever travelers were buying commemorative coins from the U.S. Mint via credit cards that award frequent flier miles. The Mint would ship the coins for free and the travelers would deposit them at the bank, pay off their cards, and accumulate free miles.

More than six months later, during a wonky online discussion about the debt ceiling, Beowulf thought of the article and, egged on by fellow monetary-system obsessives, came up with his own clever plan to exploit the powers of the U.S. Mint. His idea to issue a single trillion-dollar coin to the U.S. Treasury, thus letting it avoid borrowing and bypass the debt ceiling, is now much discussed among Washington elites, including at the White House, where a spokesman Wednesday wouldn’t rule out the scheme.

It’s been a remarkable journey. The path of the trillion-dollar coin, as Beowulf described it to Wired, began with a “silly question” in a “pointless … online bull session” in the comments section of financier Warren Mosler’s blog. Anonymous supporters helped spread the concept to the comments of other economics blogs and ultimately into posts on such sites. The idea soon attracted attention from more prominent liberal economists like James Galbraith and Paul Krugman, and then from writers like Matthew Yglesias and Ezra Klein. From there it was a short hop into the center mainstream. NBC’s Chuck Todd hammered a White House spokesman about the coin possibility on Wednesday.

Read the rest here.

15 comments:

  1. “It’s an ingenious use of the law to avoid a ridiculous and irresponsible situation, in which the country would be driven to default.”

    --former U.S. Mint director Philip Diehl

    Ingenious vs. ridiculous and irresponsible.

    I'm tongue-tied.

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    Replies
    1. It's "ridiculous and irresponsible" to find yourself in a situation where default is necessary. lol

      Delete
  2. Even more revealing is the various websites and media outlets where the idea gained traction. It laid in wait since it was proposed in 2008? and has only now become a "meme".

    It shows the intellectual bankruptcy of the elite.

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  3. I still maintain that the general public does not have a clue that inflation is a purposeful government policy the purpose of which is to rob them blind. Hopefully, this desperate gasp of the inflationists with this coin will help rectify that situation.

    Is there any question now that the inflationist elite is also totalitarian? We even have self described "free market libertarian" Scott Sumner believing that the coin is a fine idea in theory but that it would look crazy to average Americans. Let's build on that perception. It may be our only hope.

    http://www.themoneyillusion.com/?p=18585

    Of course, Sumner always responds to outstanding Austrian commenter "Major_Freedom" with calm, detailed and substantive analysis.

    http://www.themoneyillusion.com/?p=17692&cpage=1#comment-205619

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  4. Don't coin just one--coin 17, pay off the national debt with some left over. Better yet, coin 4 per year and eliminate all taxes; then watch the economy take off.

    ReplyDelete
    Replies
    1. Hell, mint one for each of us. We'd never have to work again.

      Delete
    2. Good point, but why stop there?

      Once 'magic' is discovered, it would be irresponsible not to use it for the common good.

      Delete
    3. Capital idea, Tom! I wish the would!

      Delete
  5. Don't coin just one--coin 17, pay off the national debt with some left over. Better yet, coin 4 per year and eliminate all taxes; then watch the economy take off.

    ReplyDelete
  6. Tom-

    I wish. Why pay taxes if they can just print money?

    ReplyDelete
    Replies
    1. According to the ruthless and certifiably insane Modern Monetary Theory MMTers, the purpose of taxation is simply to control "inflation" and to impose a value on the government's issuance of funny money, so taxation is still quite necessary. The government can just "spend" by creating funny money as it goes along. This obviously completely solves the problem of scarcity and anyone who cannot see that is a moron. Just ask the MMTers.

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  7. University of Chicago law professor Eric Posner, son of Judge Posner, suggests that the platinum coin might be found illegal using present day legal analysis (which precludes analysis of the actual meaning of the Constitution). The language of statutes is often interpreted by courts using statements that make up the legislative history of those statutes. The purpose of the statute was clearly to provide authority to the mint to strike COMMEMORATIVE platinum coins and sell them at their bullion value plus “a reasonable profit,”

    http://www.slate.com/articles/news_and_politics/view_from_chicago/2013/01/the_platinum_coin_poses_a_risk_of_impeachment_for_president_obama.single.html

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  8. Ramanam – Beowulf believes he’s from India – posted the idea within a week to Bill Mitcell’s “billy blog” on Modern Monetary Theory. Another supporter, management consultant Joe Firestone, also wrote widely about the coin idea, crediting Beowulf.

    Ramanam today says: However most of the people try to make it look as if we are going to do something immoral.

    I told him that it is immoral etc..:

    http://tinyurl.com/bommjwh

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  9. "Acting-Man" explains the potential horror of the Platinum Coin.

    "Looking deeper, one gets an uneasy sense that this could be a game changer. We currently have the second-worst kind of monetary system, in which an irredeemable currency is borrowed into existence under the central planning of a central bank. The only system which would be worse is one in which politicians can outright create money at will.

    I have been a staunch opponent of the various hyperinflationary predictions, which are mostly based on the quantity theory of money and its specious logic that prices rise in proportion to an increase in the (debt-based) “money supply”. But this trillion-dollar coin is not borrowed into existence. Indeed, that’s the whole point. It is simply minted by the Treasury at will.

    Like the power of the One Ring in JRR Tolkien’s classic fantasy trilogy, the power to print money will be too tempting to resist. Unlimited printing (or minting with seigniorage) would be a very different process from the present scheme of borrowing. It could lead to the hyperinflation of the US dollar and its derivatives like the euro, pound, etc. This could be a process of overloading the remaining incentives for production in what’s left of our markets, such that while more and more people and assets are rendered unproductive, they are outright gifted with more and more counterfeit “money” with which to buy dwindling supplies of goods especially food and energy. This process could run away."


    http://www.acting-man.com/?p=21267#more-21267

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  10. Nice post, very helpful for us.I will come back here again & again...:)
    Also, to know more about...
    precious metals investing
    read about platinum
    the platinum group of precious metal

    ReplyDelete