Should the US Treasury mint a Trillion-dollar coin?

  On 1/14/2013 at 1:29 AM, zkreso said:

There's actually two questions bundled up in this whole thing.

 

1. Does the US government need to pay its debts at all?

Debt is an agreement between two parties (in general, not necessarily the political parties). So the answer depends on what the other party says. Just like when i give you hundred dollars today with the agreement that you give me 105 back in a year. (We both agree) lets say i'd win the lottery around september this year. I may be thinking "who the hell gives a shit about the crappy loan" and I'll tell you to forget about our agreement we had. That's when you don't need to pay your debt.

So the question should be: with which instances does the us governments have made agreements on loans. What kinds of agreements are those? And how is the us government able to meet those agreements?

Btw, what congress is saying is: we made an agreement to put money in, say, social security, but we can stop that agreement. No more money is needed for social security. So the people who'd need that money are basically screwed if the government indeed cancels that agreement.

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2. Should the US government pay its debts with money they get from

a) Reducing government spending

b) Increasing taxes

or

c) Issuing more money (analogous to the coin idea)

This balancing the budget debate is more an accountancy issue than anything else. And it's held with respect to the external debtors of the us. The mire balanced the budget is, the more trustworthy the us is to its external debtors. And the more it could loan against lower interest rates.

Again, this coin wont be made to actually pay someone, but to balance the budget.

If you want to know why they haven't done so already, well that has got to do with inflation on one side. And the other even more silly answer is, the fed is already doing it by making interest free loans with whoever borrow money from the fed. If you crave for justice, you could try to borrow money from the fed. But they wouldn't give you one because of the inflation argument.

The irony behind the surface of this discussion is that the value of all the hard cash on which an economy is based, depends on trust. It's not necessarily about materials or resources, but trust. Ron Paul might tell you otherwise. But i'd make an agreement with you about that 100 dollars if i trust you that you would keep your agreement. Whether or not there exists any gold in that world doesn't really matter. It did at one point in history. But since that point, people have learned to make more kinds of (immaterial) value. Sounds like magic until you understand it's all based on agreements and trust between people. And that was the same in the gold standard age. So in that way, that gold standard is as arbitrary as any standard. It might feel like a game. But the game suddenly becomes real if there isn't any trust. See Greece, for instance.

  On 1/14/2013 at 6:05 AM, ghOsty said:

 

Also on a more serious note, if some other nation were to mint themselves a similar platinum coin of equal size and weight would it too be worth a trillion dollars?

That's basically what Greece would do if they got out of the EU. Whether that would help entirely depends on whether the instances making agreements with Greece go with the story.

The other part of the discussion is why the EU wouldn't make a trillion euros coin and give that to Greece? The answer lies in the following questions:

What would happen to the vale of the euro in the international markets?

What would other european countries do with their debt? If they also go for the greece option, the value of the euro would be even more at stake.

The underlying game here is that Germany/ Merkel needs to keep on playing the game it does (her reluctance is basically a safety measure wrt the international markets). The amount of indecision the combined eu leaders have, is an actual problem, btw. But that's another story.

  On 1/14/2013 at 6:05 AM, ghOsty said:

So if one were to forge one of these said platinum coins could one become a trillionaire overnight?

 

Also on a more serious note, if some other nation were to mint themselves a similar platinum coin of equal size and weight would it too be worth a trillion dollars?

no dude, because ours would say 'in god we trust' on it

it's not about trusts

it's about who you trust

ok, lemme try to rephrase again my problem with this...seriously, Its hard to properly say what Im having issues with here.

Ok, trust is what allows the United States to pay (or not pay) its debts and creat currency like this.

The only way this fails is if the United States collapses, but if that happens, the trust is ruined. But if the US has collapsed, who owes the money? Doesn't that mean the trust factor is worthless?

Do empires not collapse?

goddamnit I still don't think ive explained myself properly.

What happens when you order an album online, but it doesn't arrive in the mail and when you mail the online shop it doesn't respond (and after a while you hear from so and so that it doesn't exist anymore)? Who owes you the money/album? The company which doesn't exist anymore? The insurance company with which you have paid off this risk? And does this mean the trust factor is worthless?

Perhaps I don't understand you. But it in the end it seems like a very practical problem, which might be complicated by the notion of "value". Maybe this is the question you really want to ask: if trust is such an important factor for the economy, than what the hell is actual value of material things like gold, etc?

A start to search for an answer might be to think about the way people can buy a house, even though they don't have the actual money on their bankaccounts. I can image you'd have the same issues with that, even though it's a fairly normal and accepted way for people to buy a house. In a way, this is what the US does when it spends all the money it wants to spend. The US buys metaphorical houses.

Post note: when the US collapses, the trust factor has indeed become worthless. And this is essentially (by definition?) what a financial crisis is. A financial crisis is what happens when trust has become worthless.

goDel, thanks for trying to give the 'reasonable status quo' explanation, haha.

  On 1/14/2013 at 8:11 PM, goDel said:

What happens when you order an album online, but it doesn't arrive in the mail and when you mail the online shop it doesn't respond (and after a while you hear from so and so that it doesn't exist anymore)? Who owes you the money/album? The company which doesn't exist anymore? The insurance company with which you have paid off this risk? And does this mean the trust factor is worthless?

This scenario rests on the idea that your money has value - the very thing that this trillion dollar coin is calling into question (in the public mind, apparently).

This stupid coin goes way beyond just "don't you trust the lender?" and into "did the lender just publicly say he doesn't have it, but he'll make more out of thin air? Why would he say that... out loud?"

I'm having the same problem as smetty - we can talk about trust all we want, but in the end, it isn't the theory behind the trust that matters - it's the thing itself, and clearly for many of us, trust in the government's idea of value and debt is eroding. Why will other nations keep trusting us if we are just magically balancing our checkbooks with giant loopholes?

It just doesn't add up

and what happens when this trillion is gone? It probably won't take too long to get to this point again

  On 1/15/2013 at 12:28 AM, luke viia said:

goDel, thanks for trying to give the 'reasonable status quo' explanation, haha.

 

  On 1/14/2013 at 8:11 PM, goDel said:

What happens when you order an album online, but it doesn't arrive in the mail and when you mail the online shop it doesn't respond (and after a while you hear from so and so that it doesn't exist anymore)? Who owes you the money/album? The company which doesn't exist anymore? The insurance company with which you have paid off this risk? And does this mean the trust factor is worthless?

 

This scenario rests on the idea that your money has value - the very thing that this trillion dollar coin is calling into question (in the public mind, apparently).

Let me explain my point a bit further, since that ^ was a pretty terrible job of it.

Basically - if you want to buy a CD, and what is described above happens, the trust factor is not worthless, because trust in the currency used still exists, presumably. In the $1,000,000,000,000 coin scenario however, it's not so simple. Now trust in the currency itself is what is called into question, not trust in the individual trades made with the currency.

There is a profound difference, and it seems troubling. If the Fed just "receives" $1,000,000,000,000 and there is literally NOTHING to back it up except trust, the question is, trust in what? People can buy houses on loan because there's a dollar that means something and the lenders can place their faith in the fact that the currency itself is trustworthy. This is basically shoving into everyones faces that our currency doesn't mean anything. If someone can literally just create $1,000,000,000,000 and "save our economy," I'm even MORE pissed at the fact that I'm getting $12* every time I spend an entire hour working for someone else. In those terms, we're all being royally, royally fucked, and it's no wonder this stupid coin is irritating everyone so bad.

yuk.

*My hourly wage = 0.00000000012% of the coin being minted out of nothing. If I worked 10,000 untaxed hours, I could earn a maximum of 0.00000012% of the coin.

Good points. I don't want to be overly dramatic but if this is the 'solution' to our economic problems, then we are royally fucked.

bloomberg basically hit all the "well duh" kind of points that I was on about:

http://www.bloomberg.com/news/2013-01-14/economics-is-platinum-what-the-trillion-dollar-coin-teaches-us.html

and apparently both the white house and the federal reserve said 'Fuck no' to the $1,000,000,000,000 coin. Who knows what our wacky government will cook up next!

  On 1/15/2013 at 12:51 AM, luke viia said:

  On 1/15/2013 at 12:28 AM, luke viia said:

goDel, thanks for trying to give the 'reasonable status quo' explanation, haha.

 

  On 1/14/2013 at 8:11 PM, goDel said:

What happens when you order an album online, but it doesn't arrive in the mail and when you mail the online shop it doesn't respond (and after a while you hear from so and so that it doesn't exist anymore)? Who owes you the money/album? The company which doesn't exist anymore? The insurance company with which you have paid off this risk? And does this mean the trust factor is worthless?

 

This scenario rests on the idea that your money has value - the very thing that this trillion dollar coin is calling into question (in the public mind, apparently).

 

Let me explain my point a bit further, since that ^ was a pretty terrible job of it.

 

Basically - if you want to buy a CD, and what is described above happens, the trust factor is not worthless, because trust in the currency used still exists, presumably. In the $1,000,000,000,000 coin scenario however, it's not so simple. Now trust in the currency itself is what is called into question, not trust in the individual trades made with the currency.

 

There is a profound difference, and it seems troubling. If the Fed just "receives" $1,000,000,000,000 and there is literally NOTHING to back it up except trust, the question is, trust in what? People can buy houses on loan because there's a dollar that means something and the lenders can place their faith in the fact that the currency itself is trustworthy. This is basically shoving into everyones faces that our currency doesn't mean anything. If someone can literally just create $1,000,000,000,000 and "save our economy," I'm even MORE pissed at the fact that I'm getting $12* every time I spend an entire hour working for someone else. In those terms, we're all being royally, royally fucked, and it's no wonder this stupid coin is irritating everyone so bad.

 

yuk.

 

 

*My hourly wage = 0.00000000012% of the coin being minted out of nothing. If I worked 10,000 untaxed hours, I could earn a maximum of 0.00000012% of the coin.

thank you so much, you worded it so much better

  On 1/15/2013 at 4:24 AM, Smettingham Rutherford IV said:

  On 1/15/2013 at 12:51 AM, luke viia said:

  On 1/15/2013 at 12:28 AM, luke viia said:

goDel, thanks for trying to give the 'reasonable status quo' explanation, haha.

 

  On 1/14/2013 at 8:11 PM, goDel said:

What happens when you order an album online, but it doesn't arrive in the mail and when you mail the online shop it doesn't respond (and after a while you hear from so and so that it doesn't exist anymore)? Who owes you the money/album? The company which doesn't exist anymore? The insurance company with which you have paid off this risk? And does this mean the trust factor is worthless?

 

This scenario rests on the idea that your money has value - the very thing that this trillion dollar coin is calling into question (in the public mind, apparently).

 

Let me explain my point a bit further, since that ^ was a pretty terrible job of it.

 

Basically - if you want to buy a CD, and what is described above happens, the trust factor is not worthless, because trust in the currency used still exists, presumably. In the $1,000,000,000,000 coin scenario however, it's not so simple. Now trust in the currency itself is what is called into question, not trust in the individual trades made with the currency.

 

There is a profound difference, and it seems troubling. If the Fed just "receives" $1,000,000,000,000 and there is literally NOTHING to back it up except trust, the question is, trust in what? People can buy houses on loan because there's a dollar that means something and the lenders can place their faith in the fact that the currency itself is trustworthy. This is basically shoving into everyones faces that our currency doesn't mean anything. If someone can literally just create $1,000,000,000,000 and "save our economy," I'm even MORE pissed at the fact that I'm getting $12* every time I spend an entire hour working for someone else. In those terms, we're all being royally, royally fucked, and it's no wonder this stupid coin is irritating everyone so bad.

 

yuk.

 

 

*My hourly wage = 0.00000000012% of the coin being minted out of nothing. If I worked 10,000 untaxed hours, I could earn a maximum of 0.00000012% of the coin.

 

 

thank you so much, you worded it so much better

Well put Luke, I think that's exactly what bothers me about it, and I couldn't have said it better

Why would the US government print that coin ? What's the point ? You can't enter a drugstore and buy a bag of candies with that coin. Or a boat. Or plane. Or a nuclear plant. I suppose nobody would have enough cash to pay you back. So it has no practical value as a monetary symbol, but it must be a strong social / "theaterical" symbol. Which one ?

And I don't get why people in his thread get upset at this for mere materialistic reasons ("I hope the coin will be big"). Yeah of course you could seal something very precious and very "value-dense" in this coin, say anti-matter but that would ruin the purpose of the coin which is to create money out of nothing (or almost nothing).

A few years ago, Cantona (Eric, the footballer) started a (failed) movement whose purpose was to get cash out of the banks in order to make pressure on them. Few people followed, but if every client of said banks came to ask for their cash, they would have received something like twenty euros each at best.

Conclusion : money is even more volatile than a one trillion platinum coin. It's mostly series of bits sleeping in the guts of a few computers.

And just a random thought that has been on my mind lately.

I've recently received a pair of curtains as a gift. They are made-to-measure and are meant to fit a (roughly) 2x3 window. It's "double layer" curtains, ie one opaque curtain and a sexy-lady semi-transparent curtain. Price : 500€. I think one third of the price pays the lady (old and not-sexy) who assembled the pieces of fabric.

Anyway, even if it's the market price, I can't help but think is fucking expansive for what it's worth. Imagine some mad god locked you up in an out-of-space out-of-time minecraft-like world and asked you to craft either a pair of curtains (500 euros) or a Raspberry Pi computer (25 euros) in order to get free. What would you choose ? Huh ? You'd choose to build the curtains of course.

My point is that even-though money is a kind of meta-layer to barter useful for measuring/setting the exchange value of goods at a given time, it can't measure how complex a good is to product from scratch. And it's somehow weird.

Also the other day I came to the supermarket to buy toilet paper, and there was shit on the pack.

The "point" (if you want to call it that) was/is to stave off the US governments' default on its debts by minting a huge amount of money - by using a sort of legal loophole (our law doesn't mention anything about platinum coins...). The government is not allowed to just arbitrarily mint gold, silver, copper, or paper money, but platinum isn't mentioned. There's a legal statement somewhere in something that says the US Secretary of the Treasury can mint coins himself from time to time, and somehow a half-baked plan was hatched to mint a platinum coin to "save us" from our own debt. I'm sure you can already tell why some of us in this thread have been facepalming so hard and wondering if we're just missing something, but that really does seem to be the gist of it.

"there was shit on the pack."

This is the most alarming thing in the entire thread.

Actual shit on the wrapping. When I put it back on the rack, I told the absolutely-not-alpha 60 yo man that was next to me to be careful. (he was about to choose the same kind of toilet paper). He said : "Oh, shit happens".

For sure, this wimpy guy would have collaborated with the nazis back in the 40s, passively accepting anything.

Since then, I check everything for shit at my local "Walmart". What has been smelt cannot be unsmelt.

  On 1/15/2013 at 12:51 AM, luke viia said:

Basically - if you want to buy a CD, and what is described above happens, the trust factor is not worthless, because trust in the currency used still exists, presumably. In the $1,000,000,000,000 coin scenario however, it's not so simple. Now trust in the currency itself is what is called into question, not trust in the individual trades made with the currency.

So to be clear, even though you may personally disagree this would be a solution to the current problem, do you see the priciples if how and why it actually could work. ( just like it may fail as well, btw. But the even more silly thing is that from the perspective of the current government, the congress is being even more silly than the entire idea of making a trillion dollar coin. )

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There is a profound difference, and it seems troubling. If the Fed just "receives" $1,000,000,000,000 and there is literally NOTHING to back it up except trust, the question is, trust in what? People can buy houses on loan because there's a dollar that means something and the lenders can place their faith in the fact that the currency itself is trustworthy. This is basically shoving into everyones faces that our currency doesn't mean anything. If someone can literally just create $1,000,000,000,000 and "save our economy," I'm even MORE pissed at the fact that I'm getting $12* every time I spend an entire hour working for someone else. In those terms, we're all being royally, royally fucked, and it's no wonder this stupid coin is irritating everyone so bad.

In the case of the government it's an entire nation!

Put bluntly, what you've just said is that you trust the value of a house and the people making the agreement more, than the value of an entire nation (amongst which are all houses for instance). I agree that trust is arbitrary, but from a purely economic perspective it's close to impossible to have more trust in some people and a single house, instead of say all the people and all the houses within a nation combined. Why? Because of statistics combined with the notion that a nation can outlive people indefinitely.

Lol @ the beshatted toilet paper

One of the few occasions that shit happens at roughly the right place. XD

  On 1/14/2013 at 7:36 AM, ghOsty said:

To add to that, why couldn't a financially troubled country like Greece or some other make a coin to raise themselves out of financial trouble or poverty? I assume it's because it would flip the whole world economy on it's head and render it pointless,

because greece doesn't control it's own monetary policy. what currency are you operating under the impression that greece uses?

  On 1/15/2013 at 12:51 AM, luke viia said:

  On 1/15/2013 at 12:28 AM, luke viia said:

I'm even MORE pissed at the fact that I'm getting $12* every time I spend an entire hour working for someone else. In those terms, we're all being royally, royally fucked, and it's no wonder this stupid coin is irritating everyone so bad.

  On 1/15/2013 at 12:28 AM, luke viia said:

  On 1/15/2013 at 12:28 AM, luke viia said:

you're aware much of this country is built on small business and people taking matters into their own hands. why rely on working for someone else

elusive, I don't want to start and own a business at this point in my life. I'll probably be moving across the country in a year or two, after finishing college. I'm not sure what you're trying to suggest anyway... becoming an entrepreneur is not a solution to the issue of millions of people working for poor hourly wages.

goDel -

  On 1/15/2013 at 7:32 AM, goDel said:

  On 1/15/2013 at 12:51 AM, luke viia said:

Basically - if you want to buy a CD, and what is described above happens, the trust factor is not worthless, because trust in the currency used still exists, presumably. In the $1,000,000,000,000 coin scenario however, it's not so simple. Now trust in the currency itself is what is called into question, not trust in the individual trades made with the currency.

True. It's not so simple and it puts the trust in the currency itself into question. But the funny, and real!, thing is that it still COULD be an actual solution to the problem. If chosen, it's not 100% guaranteed safe, but it could work. And the point that is actually a possible solution that could work, is apparently still some bridge too far for you guys, I feel.

So to be clear, even though you may personally disagree this would be a solution to the current problem, do you see the priciples if how and why it actually could work. ( just like it may fail as well, btw. But the even more silly thing is that from the perspective of the current government, the congress is being even more silly than the entire idea of making a trillion dollar coin. )

  Quote

There is a profound difference, and it seems troubling. If the Fed just "receives" $1,000,000,000,000 and there is literally NOTHING to back it up except trust, the question is, trust in what? People can buy houses on loan because there's a dollar that means something and the lenders can place their faith in the fact that the currency itself is trustworthy. This is basically shoving into everyones faces that our currency doesn't mean anything. If someone can literally just create $1,000,000,000,000 and "save our economy," I'm even MORE pissed at the fact that I'm getting $12* every time I spend an entire hour working for someone else. In those terms, we're all being royally, royally fucked, and it's no wonder this stupid coin is irritating everyone so bad.

I disagree. There's actually not much different to the 1T coin and the 'money' with which people buy a new house (accept for the rare cases people have the entire sum of money and pay cash. What happens when a person has reached a financial agreement with a bank to buy a house? The money used in the exchange is not much more than numbers on a computer screen. The only difference is the thing which makes that the money actually count for money. In the case of someone buying a house, it's the combination of the actual house (which has an obvious value) and the credibility of the person(s) who made the financial agreement. (On a side note: the current crisis can be seen as a consequence of not correctly taking into account the credibility of the people behind the agreement)
In the case of the government it's an entire nation!

Put bluntly, what you've just said is that you trust the value of a house and the people making the agreement more, than the value of an entire nation (amongst which are all houses for instance). I agree that trust is arbitrary, but from a purely economic perspective it's close to impossible to have more trust in some people and a single house, instead of say all the people and all the houses within a nation combined. Why? Because of statistics combined with the notion that a nation can outlive people indefinitely.

 

Thanks for the response. Can we maybe move away from the housing analogy, though? I don't feel that it's appropriate for the concerns we're discussing. There is a huge amount of difference between the idea of minting $1,000,000,000,000.00 out of thin air and buying a house on credit. Credit requires a currency system to back it up, but doesn't actually alter the currency system in any way. As I see it, creating this coin to 'eliminate debt' is very different - it's akin to owning a business, having employees, guaranteeing them wages, and then, upon not having the wages you promised them, suggesting that you will just create more wealth spontaneously by hand-waving while standing in the room with your angry employees. Now let's talk about trust - why would the employees trust you if you do this as a "solution" to owing them money? How could they trust such a tactic? Bring it back to government scale, and adding the fact that we're already all sharing a fiat fairyland illusion that's keeping us all 'wealthy,' and can you see why this idea seems like a bad one? It's one thing to mint money to have money to give out (what the country has always done by necessity), but minting money to pay yourself back? WTF?

Here's why I want to move away from the housing analogy, or maybe, this will actually just highlight my problem with the whole scenario in the first place:

"What happens when a person has reached a financial agreement with a bank to buy a house? The money used in the exchange is not much more than numbers on a computer screen. The only difference is the thing which makes that the money actually count for money"

When a person defaults, their credit is harmed, big time. The 'money' in the transaction goes away with a poof, indeed, but there is a severe repercussion on the individual that didn't see their end of the bargain through. The government's situation is clearly different, because the claim here is that by minting a coin as some kind of alternative to defaulting, their (our) credit won't be harmed. I don't follow this magical economic logic. Credit on paper might not be harmed, but the concept of credit relies on trust (as we've talked about), and there is nothing trustworthy about bailing yourself out by simply declaring you're suddenly more valuable than when you woke up that morning.

That bloomberg article really cleared most of my questions up for me, so at this point I'm just trying to articulate my distaste for the whole thing. Yes, I see how it could work in theory. The only thing this idea had going for it, IMO, was that it avoids the government defaulting. There are other ways to do that, and I'm damn glad the government decided not to use a legally dubious series of platinum coins to try to get itself out of trouble. I think Obama said something along the lines of this coin being an admittance to the world of our complete incompetence to govern ourselves, and he's right IMO.

i mean i understand GoDel's point that macroeconomic systems operate on this superhuman logic (or lack there of), so I understand why this coin would actually seem like a viable solution.

Im just having a problem with the fact that there is an economic system that people have poured over in critiques, set up political boundaries, financial savings systems and so on over economic arguments...This situation seems to show that in the end the rules don't exist whatsoever once you reach a certain level of sovereignty.

If nothing is applicable or reasonable the system shouldn't exist, right? I understand why it exists and how it has existed up to this point, but how can this be justified via any other argument than because this increasingly nebulous conception that we call a nation wills it into being?

  On 1/15/2013 at 6:13 PM, elusive4 said:

  On 1/14/2013 at 7:36 AM, ghOsty said:

To add to that, why couldn't a financially troubled country like Greece or some other make a coin to raise themselves out of financial trouble or poverty? I assume it's because it would flip the whole world economy on it's head and render it pointless,

because greece doesn't control it's own monetary policy. what currency are you operating under the impression that greece uses?

I just threw Greece in there because I know they had economic troubles, the point of the question wasn't specifically about the Greece issue, but more-so asking why if we are able to seemingly create money out of thin air to solve our problems, why another financially troubled country wouldn't be able to do so, especially if said country would also benefit from doing so?

  On 1/15/2013 at 7:43 PM, luke viia said:

it's akin to owning a business, having employees, guaranteeing them wages, and then, upon not having the wages you promised them, suggesting that you will just create more wealth spontaneously by hand-waving while standing in the room with your angry employees. Now let's talk about trust - why would the employees trust you if you do this as a "solution" to owing them money? How could they trust such a tactic? Bring it back to government scale, and adding the fact that we're already all sharing a fiat fairyland illusion that's keeping us all 'wealthy,' and can you see why this idea seems like a bad one? It's one thing to mint money to have money to give out (what the country has always done by necessity), but minting money to pay yourself back? WTF?

The employees would trust this magical gesture, iff by the end of the month some number is added to their bank-accounts. (And that's why I thought the house-buying analogy is similar, btw). The same could happen when a 1T coin is pressed. One of the problems with the debt ceiling is for the government to pay it's bills to all the people working for the government. So by simply lifting the ceiling (or pressing the 1T), the government could pay its employees. It's a legal issue in the sense that congress should support it and all, but other than that, why not lift the debt ceiling?

What you're seeing btw, is a huge negotiation over the backs of a lot of people. A negotiation on how the manage a country and spend money. Personally, I think it's clear this problem should be solved. But the way is just immoral. Either way, it does more harm than it does good. If only for the ease for congress to break with earlier made obligations. The real problem is not the coin. A problem may not even be the economy. The real current problem is politics.

Anyways, I get the impression that although you may not completely agree with, you're getting a better picture of how/what/why. Even though this economy might still seem very alien. The 'joke' actually is that this alien economy is man-made. There is no absolute science involved similar to that in physics. If you take away people, you immediately take away the economy. There's no natural principles (directly) involved. It's our game, so to speak. If you tell people it's june, and most of them believe it, well, guess what: it's june! No matter the amount of snow in the streets. I'd agree there's quite an amount of creativity involved. And if that creativity has bad intentions behind it, you'll see stuff happening like in those Enron days. But that doesn't necessarily mean the game is bad or anything. The only notion someone may have to stretch a little bit, is the notion of value (or future returns).

And to make things even more complicated, the best things in life are free.

  On 1/16/2013 at 3:21 AM, wabby said:

And to make things even more complicated, the best things in life are free.

Yeah but, Cash Rules Everything Around Me

  On 1/15/2013 at 7:43 PM, luke viia said:

When a person defaults, their credit is harmed, big time. The 'money' in the transaction goes away with a poof, indeed, but there is a severe repercussion on the individual that didn't see their end of the bargain through. The government's situation is clearly different, because the claim here is that by minting a coin as some kind of alternative to defaulting, their (our) credit won't be harmed. I don't follow this magical economic logic. Credit on paper might not be harmed, but the concept of credit relies on trust (as we've talked about), and there is nothing trustworthy about bailing yourself out by simply declaring you're suddenly more valuable than when you woke up that morning.

Seems like you're thinking of money as an asset of the govt. when it's actually a liability?

Take a look at how cash is booked at the federal reserve:

http://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab9

Vhy, could you elaborate a bit more? You're probably right -- that is how I always tend to think of money on some level, though I have come to understand that for the money creator, nothing is as it seems ... at any rate that link isn't really clearing things up for me, lol.

  On 1/15/2013 at 8:45 PM, goDel said:

  On 1/15/2013 at 7:43 PM, luke viia said:

it's akin to owning a business, having employees, guaranteeing them wages, and then, upon not having the wages you promised them, suggesting that you will just create more wealth spontaneously by hand-waving while standing in the room with your angry employees. Now let's talk about trust - why would the employees trust you if you do this as a "solution" to owing them money? How could they trust such a tactic? Bring it back to government scale, and adding the fact that we're already all sharing a fiat fairyland illusion that's keeping us all 'wealthy,' and can you see why this idea seems like a bad one? It's one thing to mint money to have money to give out (what the country has always done by necessity), but minting money to pay yourself back? WTF?

 

The employees would trust this magical gesture, iff by the end of the month some number is added to their bank-accounts. (And that's why I thought the house-buying analogy is similar, btw). The same could happen when a 1T coin is pressed. One of the problems with the debt ceiling is for the government to pay it's bills to all the people working for the government. So by simply lifting the ceiling (or pressing the 1T), the government could pay its employees. It's a legal issue in the sense that congress should support it and all, but other than that, why not lift the debt ceiling?

 

What you're seeing btw, is a huge negotiation over the backs of a lot of people. A negotiation on how the manage a country and spend money. Personally, I think it's clear this problem should be solved. But the way is just immoral. Either way, it does more harm than it does good. If only for the ease for congress to break with earlier made obligations. The real problem is not the coin. A problem may not even be the economy. The real current problem is politics.

 

Anyways, I get the impression that although you may not completely agree with, you're getting a better picture of how/what/why. Even though this economy might still seem very alien. The 'joke' actually is that this alien economy is man-made. There is no absolute science involved similar to that in physics. If you take away people, you immediately take away the economy. There's no natural principles (directly) involved. It's our game, so to speak. If you tell people it's june, and most of them believe it, well, guess what: it's june! No matter the amount of snow in the streets. I'd agree there's quite an amount of creativity involved. And if that creativity has bad intentions behind it, you'll see stuff happening like in those Enron days. But that doesn't necessarily mean the game is bad or anything. The only notion someone may have to stretch a little bit, is the notion of value (or future returns).

Good post, and yeah I am getting a slightly better picture of the workings behind this shared fantasy. Not really enjoying what I'm finding out, of course, but thanks for trying to lay it all out as the current system sees it. And I agree that the root problem is politics right now, but to be honest, I think money within American politics is the root of the root. =P