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PoliGAF 2013 |OT1| Never mind, Wheeeeeeeeeeeeeeee

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H

Hop

That girl in the bunny hat
el retorno said:
I don't think it'd go on for very long to have any real effect. It would force congress' hand pretty fast IMO
Click to expand...

....I'm not sure what you're referring to here. I'm talking about comparing the effects of $1 trillion of bonds being issued (the debt ceiling is raised like normal) vs. those bonds not being issued (The Coin is used instead).
 
P

pigeon

Banned
Charron said:
....I'm not sure what you're referring to here. I'm talking about comparing the effects of $1 trillion of bonds being issued (the debt ceiling is raised like normal) vs. those bonds not being issued (The Coin is used instead).
Click to expand...

I'm confident they would issue those bonds when the ceiling gets raised, and if they make that intention clear, then there won't be any inflationary effects, because inflation is more about expectations than anything else, so everybody will just behave the way that they would if there were already bonds issued because they assume it's going to happen.
 
H

Hop

That girl in the bunny hat
pigeon said:
I'm confident they would issue those bonds when the ceiling gets raised, and if they make that intention clear, then there won't be any inflationary effects, because inflation is more about expectations than anything else, so everybody will just behave the way that they would if there were already bonds issued because they assume it's going to happen.
Click to expand...

So instead of raising the ceiling to Current + X now, then (Current + X) + Y later, they'd do the coin trick now and jump right to Current + X + Y later, and it'll all have been pointless on the whole?
 
T

thefro

Member
Charron said:
So instead of raising the ceiling to Current + X now, then (Current + X) + Y later, they'd do the coin trick now and jump right to Current + X + Y later, and it'll all have been pointless on the whole?
Click to expand...

Basically. They talked about having $50 million dollar coins, and then melting them down and replacing them with bonds once the debt ceiling is raised.
 
H

Hop

That girl in the bunny hat
thefro said:
Basically. They talked about having $50 million dollar coins, and then melting them down and replacing them with bonds once the debt ceiling is raised.
Click to expand...

Ok, got it then.

...still think they shouldn't melt them down, just give 'em to dignitaries or something as a lark. No one's gonna cash the fucking things anyway.
 
B

Black Mamba

Member
Charron said:
Since we're on the topic, just want to make sure I understand the inflationary and other repercussions.

The Coin would effectively be instead of bonds, correct? With bonds, you'd have $1 trillion of bond buying (deflationary; that money's taken from the supply) for $1 trillion plus interest of redemption (inflationary). So, long-term, bonds are inflationary by their interest rate, but they're deflationary short-term.
Click to expand...

Short term, buying bonds is more likely inflationary. First, it's just a shifting of money - there is no creation or removal (in outcome). But it's inflationary at times, especially now, because you're taking money from people who weren't using it or might use it abroad to use it right now. So the money supply is unchanged but the "effective" money supply (what I term money that is actually moving around) is increased).

With The Coin, those bonds don't have to exist, meaning that $1 trillion doesn't leave the money supply (inflationary). The spending the bonds are meant to fund happens anyway, so there's no change in that whole sense. But this also means the later interest never gets paid out, because the bonds it comes from never existed (deflationary). So there is a deflationary effect overall, but a short-term inflation as money isn't given to the government.
Click to expand...

Also inflationary short term because some money used for bonds will be put into the market from another angle.

Interest is neither inflationary or deflationary as we borrow to pay that interest, which is against just a shift of who has to money not an increase/decrease. Again, could be a slight increase depending on where those lenders would have done otherwise.

Now, that money staying in the money supply means it can be used on other things. Instead of being shoved into the government, it can be shoved into private business. I would expect mostly by way of investing, stocks, and other various "rich people money-fucking-with", which isn't very helpful, I admit. But even if it just means banks and brokerages hiring more, there would be a multiplier effect. And if that, in aggregate, ends up larger than the interest payments from the bonds, then The Coin would have a stimulative effect. It'd raise GDP. Right? Am I misinterpreting something or is The Coin actually a good idea for non-rich-assholes?
Click to expand...

If investing was worthwhile, treasury bonds wouldn't have such low interest rates right now. So most of that money not being used to buy bonds probably won't be reinserted into the economy in any useful manner.


The coin most likely will have a marginal effect from a stimulus perspective. Now, in a time where the economy is doing decent or well, it might stimulate much better.
 
B

B-Dubs

No Scrubs
In case any of you haven't seen it in the other thread:

8DC5g.jpg
Click to expand...
 
empty vessel

empty vessel

Member
Charron said:
Since we're on the topic, just want to make sure I understand the inflationary and other repercussions.

The Coin would effectively be instead of bonds, correct? With bonds, you'd have $1 trillion of bond buying (deflationary; that money's taken from the supply) for $1 trillion plus interest of redemption (inflationary). So, long-term, bonds are inflationary by their interest rate, but they're deflationary short-term.

With The Coin, those bonds don't have to exist, meaning that $1 trillion doesn't leave the money supply (inflationary). The spending the bonds are meant to fund happens anyway, so there's no change in that whole sense. But this also means the later interest never gets paid out, because the bonds it comes from never existed (deflationary). So there is a deflationary effect overall, but a short-term inflation as money isn't given to the government.

Now, that money staying in the money supply means it can be used on other things. Instead of being shoved into the government, it can be shoved into private business. I would expect mostly by way of investing, stocks, and other various "rich people money-fucking-with", which isn't very helpful, I admit. But even if it just means banks and brokerages hiring more, there would be a multiplier effect. And if that, in aggregate, ends up larger than the interest payments from the bonds, then The Coin would have a stimulative effect. It'd raise GDP. Right? Am I misinterpreting something or is The Coin actually a good idea for non-rich-assholes?
Click to expand...

Yes, but with one caveat. The money that the government takes out of the economy when it sells bonds is not very deflationary because it is money that has been marked by the bond purchaser as money he desires to save. Money that is being hoarded, e.g., in a savings account, is not money that is being spent on goods and services, so it does not add to aggregate demand.

Basically, the Treasury takes in some amount of money via tax receipts for the current year that it deposits in its account with the Fed. The Congress, however, has decided that the Treasury is to spend X amount of dollars above that amount for the current year. The Treasury has the legal authority to mint coins and sell bonds (let's say 10 year bonds) to "raise" the additional revenue above its tax receipts. If it sells bonds to raise X, then the Treasury net spends X+Y into the economy over ten years to accomplish the current year's spending. If it mints a coin, the Treasury only net spends X into the economy over ten years to accomplish the current year's spending.

See: Why Does Uncle Sam Borrow?

PhoenixDark said:
Minting a 1T coin would probably be bad news for dems in 2014, assuming the economy continues to grow slowly.
Click to expand...

Probably. They should mint a few more and grow the economy faster, then.

(Actually, the Treasury can't spend more than Congress says, so that's a no-go. But people should really remember that what we are talking about here is how the Treasury spends what Congress has required it to spend. We are not talking about how much the Treasury should spend.)
 
empty vessel

empty vessel

Member
empty vessel said:
Probably. They should mint a few more and grow the economy faster, then.

(Actually, the Treasury can't spend more than Congress says, so that's a no-go. But people should really remember that what we are talking about here is how the Treasury spends what Congress has required it to spend. We are not talking about how much the Treasury should spend.)
Click to expand...

Actually, to clarify. The Treasury could go ahead and mint many more coins and deposit them with the Fed. It simply couldn't spend on its account until Congress authorized further spending. But what that would accomplish is a demonstration that the government is not financially constrained. Congress's budget would be determined based on what is best for the society and economy, not on artificial constraints it delusionally imagines exist on the government's capacity to spend money.
 
J

jamesinclair

Banned
Ladies and gentlemen, behold one of the dumbest policy proposals of the century.

Governor Bob McDonnell, the republican from Virginia has a problem. Gas tax isnt making enough. His roads fund is broke. Hes borrowing everywhere. Enormous shortfalls....

Virginia's gas tax is also one of the lowest in the nation. It brings in less money per gallon of gas, adjusted for inflation, than anytime in history, and is less than half in real dollars what it was in 1933. That's why a lot of Virginia legislators are calling for real action on transportation this year.
Click to expand...

How to solve this issue?


Proposal:
Eliminate the gas tax.
Raise the sales tax.....but continue to exclude gas from sales tax, making road use free
......except for electric ca users. They must pay $100. Just because.
Oh and diesel, that stays.

Possibly the most regressive proposal of all time.

Ride the bus? Congrats, you now pay more for food! Drive 100 miles a day in your BMW? Enjoy your new tax cut!

The state would then collect no money at all on people buying gas, even though it collects money from people buying most anything else. It even has a sales tax on groceries, unlike DC and Maryland. This means you would pay something for buying grapes and ginger but not gasoline.
Click to expand...

Driving through the state, tearing up the roads? No cost to you!

Does it even solve the funding issue?

But wait, isn't McDonnell's plan a transportation funding plan? McDonnell would then raise the sales tax by 0.8 cents on the dollar. This would bring in $183 million a year by 2018, but less now. Meanwhile, many people say the state needs about $1 billion a year for transportation. Fairfax County alone says they need $300 million a year. The Washington Post calls the revenue from this plan "paltry."
Click to expand...


Its clear to me that every republican failed math class and did not take logic class.

http://greatergreaterwashington.org...sane-transportation-plan-no-gas-tax/#comments
 
S

speculawyer

Member
mckmas8808 said:
This Trillion dollar coin talk is the dumbest thing ever!!! And why are respected people actually talking about it like it should be a real thought?
Click to expand...

It is quite silly. But it is merely a tactic to deal with a Congress that approves spending but then doesn't want to pay for the spending after the money has already been spent.

It is only used to take away debt ceiling circus. Continuing deficits would remain as a serious issue that needs to be dealt with.

If Congress doesn't like deficit spending then they should either have let all the Bush tax cuts expire or begin slashing spending. The refused to do either but instead want everything to fall apart.
 
E

ezrarh

Member
I'm at the point where I hope the administration does the most supposedly ridiculous thing they can legally do. It's not like the Republican Congress is going to let anything meaningful pass. I say bring on the trillion dollar coin.
 
I

ISOM

Member
I think the trillion dollar coin makes more sense than challenging the 14th amendment. The latter is opening a huge can of worms.
 
B

Black Mamba

Member
After they go past the debt ceiling, instead of printing a coin Obama should declare the GOP a terrorist organization. He should follow up by arresting Boehner, McConnell, Cantor, Ryan, and a few others and ship them off to Guantanamo.

Fox News can then proclaim to be right all along.



Just for the lulz.
 
N

NullPointer

Member
I like the trillion dollar coin idea if only because it reinforces the notion that money is just a consensual hallucination and that there is no damn spoon.
 
C

Chumly

Member
I don't know why the coin is a crazy idea. The alternative is we have the GOP actively taking the economy hostage and openly bragging about it. I don't see why letting economic terrorists win is a better idea than minting a trillion dollar coin.
 
P

pigeon

Banned
Chumly said:
I don't know why the coin is a crazy idea. The alternative is we have the GOP actively taking the economy hostage and openly bragging about it. I don't see why letting economic terrorists win is a better idea than minting a trillion dollar coin.
Click to expand...

Right. I mean, let's be honest. It is a crazy idea. A week or two ago everybody would've been saying it but all the media excitement about the coin means that now everybody loves it. It's still a totally insane thing to do. It's just not any more insane than anything else governments usually do, and better than the insane alternatives.
 
D

DarkFlow

Banned
So just now on my way back home, I drove by the post office. Standing outside, people had a giant sign saying "pull over, Dump Obama!" Then a booth with Obama's picture and "IMPEACH HIM!" on it. Why does the post office let this happen, it's Govt property right? This is in San Diego btw.
 
B

Black Mamba

Member
pigeon said:
Right. I mean, let's be honest. It is a crazy idea. A week or two ago everybody would've been saying it but all the media excitement about the coin means that now everybody loves it. It's still a totally insane thing to do. It's just not any more insane than anything else governments usually do, and better than the insane alternatives.
Click to expand...

There's one other alternative I've been thinking about.


Okay, we all know the Fed owns a lot of treasury bonds. That's how it does most of its open market operations. It buys these bonds by printing cash (on a computer screen) to inject money into the economy. Their recent batch has them buying mortgages, but the Federal Reserve owns a lot of our gov't debt.

The way it works is the Federal Reserve gets paid by the gov't the interest per the bond like any other bond holder. But here's the catch - The Federal Reserve takes that money, pays its operating expenses (salary, rent, etc) and returns all the unused cash right back to the Treasury (hence it's basically money the gov't owes itself and actually prints to pay it off).

Roughly 95% of all the cash the treasury pays the Federal Reserve is returned.


Why can't Obama sign an executive order requiring the Federal Reserve to waive say 90% of the debt it is owed for 2013? Would this be outside his power?

If he can do this, it would drive down our debt number without raising the debt ceiling. Literally. I mean, a huge chunk of our debt isn't even real, and 95% of the Fed owned bonds are in this realm. Let's just waive them til the debt ceiling is raised.

think of the optics too! It will LOWER the debt we owe!
 
P

PhoenixDark

Banned
jamesinclair said:
Ladies and gentlemen, behold one of the dumbest policy proposals of the century.

Governor Bob McDonnell, the republican from Virginia has a problem. Gas tax isnt making enough. His roads fund is broke. Hes borrowing everywhere. Enormous shortfalls....



How to solve this issue?


Proposal:
Eliminate the gas tax.
Raise the sales tax.....but continue to exclude gas from sales tax, making road use free
......except for electric ca users. They must pay $100. Just because.
Oh and diesel, that stays.

Possibly the most regressive proposal of all time.

Ride the bus? Congrats, you now pay more for food! Drive 100 miles a day in your BMW? Enjoy your new tax cut!



Driving through the state, tearing up the roads? No cost to you!

Does it even solve the funding issue?




Its clear to me that every republican failed math class and did not take logic class.

http://greatergreaterwashington.org...sane-transportation-plan-no-gas-tax/#comments
Click to expand...

I don't think they failed anything - they simply don't care. McDonnell's term will be up soon, the next governor will have to deal with the shortfall - likely by (you guessed it) gutting services. Meanwhile in the summer of 2015 when gas prices once again increase due to high demand, McDonnell will be on Fox discussing how he lowered gas prices in his state by eliminating the gas tax, prepping for a presidential run.
 
S

speculawyer

Member
jamesinclair said:
Ladies and gentlemen, behold one of the dumbest policy proposals of the century.
Governor Bob McDonnell, the republican from Virginia has a problem. Gas tax isnt making enough. His roads fund is broke. Hes borrowing everywhere. Enormous shortfalls....

How to solve this issue?

Proposal:
Eliminate the gas tax.
Raise the sales tax.....but continue to exclude gas from sales tax, making road use free
......except for electric ca users. They must pay $100. Just because.
Oh and diesel, that stays.

Possibly the most regressive proposal of all time.

Ride the bus? Congrats, you now pay more for food! Drive 100 miles a day in your BMW? Enjoy your new tax cut!
Click to expand...
Governor ultrasound's political career needs to end soon and permanently. That is the dumbest shit I've ever heard.

And I'm fine with the $100/year electric car fee. They should help pay for road repair. But the gas tax should be INCREASED not eliminated.

PhoenixDark said:
I don't think they failed anything - they simply don't care. McDonnell's term will be up soon, the next governor will have to deal with the shortfall - likely by (you guessed it) gutting services. Meanwhile in the summer of 2015 when gas prices once again increase due to high demand, McDonnell will be on Fox discussing how he lowered gas prices in his state by eliminating the gas tax, prepping for a presidential run.
Click to expand...
He can try that but people are just not that stupid. And the whole ultrasound thing ended his presidential chances.

images
 
A

Atlagev

Member
DarkFlow said:
So just now on my way back home, I drove by the post office. Standing outside, people had a giant sign saying "pull over, Dump Obama!" Then a booth with Obama's picture and "IMPEACH HIM!" on it. Why does the post office let this happen, it's Govt property right? This is in San Diego btw.
Click to expand...

Were they LaRouche people? I've seen them twice here in the Bay Area at post offices as well, both in extremely liberal places.

As for why the government lets them, well, it's freedom of speech. Didn't do me any harm. Just walked right by them.

In fact, I think it's *better* if the government lets it do them on their property. ("Obama is like Hitler! Let me tell you why on federally-owned land how much of a free-speech suppressing fascist he is!")
 
P

Pickles the Firecat

Banned
DarkFlow said:
So just now on my way back home, I drove by the post office. Standing outside, people had a giant sign saying "pull over, Dump Obama!" Then a booth with Obama's picture and "IMPEACH HIM!" on it. Why does the post office let this happen, it's Govt property right? This is in San Diego btw.
Click to expand...

What area? I'd love to swing by and see this.
 
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