One of Shakespeare’s most famous lines is from Henry VI. The pretenders to the throne are plotting and a character named Dick the Butcher says, “The first thing we do, let’s kill all the lawyers”. The line has been interpreted many ways within the context of the play, but most people remember it at face value. In order to get anything done, you must first get rid of the hairsplitters, gainsayers and schemers that have always defined the legal profession. It is a lovely thought.
Like all humor, it is funny because it contains a kernel of truth. Lawyers, given enough time, can fashion an argument for or against anything. You see this in the recurring debate about the trillion dollar coin. This is the claim that the executive can get around Congressional spending and borrowing limits by minting a trillion dollar coin. The mint would strike a coin whose value would result in one trillion in seigniorage . This is the difference between the value of the coin and its cost.
The wiki page on this topic is both amusing and informative. Normal people would naturally assume that the government cannot invent out of thin air a trillion dollar coin, but the lawyers have found a way. At least they have found a legal justification for conjuring such a coin. The mechanics of how this would work are a bit sketchy, but lawyers never let practical reality get in the way of a good idea. We will be hearing lots from them during the coming debt ceiling debate.
The basic argument here is that the mint has the legal right to sell bullion coins, circulating coins and numismatic items. That means they can take gold and make a gold coin and sell it. They can also make collectors items and sell those. They can also buy and sell circulating coins at a profit. Since the mint is charged with striking circulating coins for the Treasury, they also make a profit from this. These sales pay for mint operations and profits go to the Treasury.
The claim here is the mint could create a trillion dollar coin that has the cost of the materials and the labor to make it. Since these are tiny, relative to the face value of the coin, the seigniorage would be roughly one trillion dollars. This would then be handed over to the Treasury to spend on government. Congress is cut out of the process, as they do not control the mint. That also means the Treasury could bypass the debt limit as they would have a trillion dollars.
If this sounds insane, you are in luck. It is insane. When the mint strikes a novelty item for collectors, they actually sell it to collectors. They price the item based on estimated demand and the cost of production. Like any business they are seeking to make a profit from these sales. The reason buyers are willing to pay more for a novelty item than the value of its base metal is they think it will fetch more on the secondary market because of its limited production run.
Another way to think of it is the trading card makers. They will create a special limited edition run of cards. They use the same paper and the same images as other cards, but these cards are limited in number. Maybe they have a special imprint or these days a holographic stamp on them. Collectors will pay a premium for these cards on the assumption that they will be worth more in the future. Of course, card collectors also buy for their own collections.
Who will pay a trillion dollars for a coin? The answer is no one. Markets can only work if there are buyers and sellers. Who would be the trillion dollar buyer? The only plausible buyer is the Federal Reserve. To do this they can liquidate assets from their balance sheet in the open market, then use the proceeds to buy the coin. There are two problems with this idea. One is the banks would be taking a trillion dollars out of the economy and flooding the market with various assets.
The other problem is the central bank could not plausibly list this new coin as an asset as the coin has a market value of zero. Again, a thing is worth what someone will pay for it and in the case of a coin with one possible customer, the value of the coin must by definition drop to zero when the customer acquires it. In effect, the Fed will have handed the mint a trillion dollars for nothing and the mint would then turn that trillion over to the Treasury as a profit.
There is an old joke that goes something like this. A rich man is traveling in Europe and finds himself in a small town. He needs a place to stay, so he goes to the one inn and asks for a room for the night. He slaps down a thousand euros and tells the innkeeper that he wants the best room he has to offer. The innkeeper takes the money and tells the man that he can take any room he likes. The man goes upstairs to look at the rooms and the innkeeper leaves to see the grocer.
You see, the innkeeper owed the grocer a thousand euros so he wanted to pay him off before the grocer cut him off. The grocer is happy to be paid. He takes the money and immediately heads off to his landlord to whom he owes back rent. He pays off the landlord with the one thousand euros. The landlord, who has a taste for prostitutes, takes the money and pays off the madam. The madam then heads off to the innkeeper to pay him for the use of his rooms.
Meanwhile, the traveler comes back down and tells the innkeeper that he does not find any of the rooms satisfactory and demands his money back. The innkeeper is happy to refund him the one thousand euros, as he just got them from the madam. The traveler leaves, but everyone in the town has been made whole. The innkeeper paid his debt to the grocer, the grocer paid his landlord and the landlord paid the madam, who then paid off the innkeeper.
The joke is the economy works just fine as long as the money keeps flowing and there is always some new money from outside to prime the pumps. As soon as we run short of outsiders with the extra cash, the system locks up. This is what the trillion dollar coin idea amounts to in the end. The Fed artificially increases the balances of member banks so they can buy assets from the Fed. Those banks then become the man looking for a room in that old gag.
The coming debt limit drama and the inevitable howling from the crazies about the need to get around this problem with crackpot ideas like the trillion dollar coin mask a much deeper problem. Washington famously said, “The last official act of any government is to loot the treasury.” That is what these debt limit fights are about when you examine them without the lawyers present. It is just a debate about how best to continue looting the treasury before it all comes crashing down.
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Karl Denninger pointed to the “out” for this as CONgress can later just set the tax rates for such accrued interest to 100%.
If any of you are interested in deflating the debt, you can send some bucks to RIP Medical Debt. They buy medical debt at a 100:1 discount, and then forgive it. Gone, dusted. So far they have forgiven 8 billion dollars of debt.
I have this image in my mind of a diversity hire at Treasury taking a break from surfing porn, grabbing the coin and buying a bag of chips from the vending machine.
Its the pickle factory thing. Once they do it, its all downhill at 10 meters per second per second. The next guy fixes his 2 trillion dollar deficit with two coins, the next one needs five 10 trillion dollar coins, then the next guys needs a 500 million-trillion coin because welcome to Weimar.
[…] ZMan isn’t buying it. […]
I guess my question is what does the GAE balance sheet look like? What are the assets worth: Aircraft Carriers, Bridges and roads, Federal Land and mineral rights, Buildings, Name recognition (haha). Back in the 80s, the idea was that the deficit doesn’t matter because the Federal government doesn’t have a capital budget, everything it does is expensed. Is there anything to that?
To be fair, this sounds more like a finance/accountant guy trick than a lawyer trick. The Bard needs an update.
Nah, that is ABSOLUTELY a “fintech” investment banker idea.
“The traveler leaves, but everyone in the town has been made whole.”
Everybody was “whole” before the guy arrived.
They each had an offsetting asset and liability.
Bingo. A smart man would look at that situation and realize that the rich guy (who may have a large nose and a small hat) is superfluous. If that innkeep sat down with his grocer, the landlord, and the whoremistress, he could propose to forgive her debt to him in exchange for her forgiving the landlord’s debt to her, the landlord forgiving the grocer’s debt, and the grocer forgiving the innkeep’s debt. Everyone would be whole and no outsider would be necessary.
Only in Clown World does the rich outsider serve any purpose.
You have clearly never negotiated a multiparty settlement deal. The idea you would “just” do any such thing is amusing.
You know, way back in the 18th Century the French had a bad habit of cooking up crazy schemes in an attempt to “pay” the insane debts they kept cooking up. Eventually it all failed, and a thousand year old regime was violently overthrown. Now we don’t need guillotines as we have plenty of brick walls, firearms, and trillions of rounds of ammunition. I pray to the Lord I get to live long enough to see the executions live streamed. Who knows, I may get to be one of those who can claim the privilege of pulling the trigger. All… Read more »
“To do this they can liquidate assets from their balance sheet in the open market, then use the proceeds to buy the coin. There are two problems with this idea. One is the banks would be taking a trillion dollars out of the economy and flooding the market with various assets.”
The reason the Feds balance sheet is the size it is is because they bought all the shit no-one else wanted.
There are no buyers at anywhere near face value, for the first $1 Billion and it goes down exponentially from there.
GAE is not as constrained in its efforts to prop up its currency as the historical examples to which it is often compared, because GAE has power that those historical examples didn’t have. It has, can, and will come up with “outside the box” ways to support the currency, ways which people thinking in textbook economic terms don’t imagine. As it did half a century ago with the petrodollar. As it did 3 years ago by forcing much of the world to buy GAE jabs with GAE currency. As it will shortly do in the future in other ways, I… Read more »
Jerome Powell is the man of the day. The man of the hour. The man of the second. If Jerome Powell holds the line, and avoids any & all forms of assassination [physical, character, or other], then we will live to see “Interesting Times”, as the Chinese call them. You will know it’s the beginning of The End when Jerome Powell is discovered to have had classified documents in his barn. PRO-TIP: During inflationary times, you will want to have previously invested in real physical tangible stuff [such as match-grade @mmunition in your favorite ca1iber]. Whereas prepare for deflationary times… Read more »
PRO-TIP: During inflationary times, you will want to have previously invested in real physical tangible stuff [such as match-grade @mmunition in your favorite ca1iber].
ProPro tip: you will want to have invested in these leveraged at least 5 to 1 at 2.9 per cent interest.
Is there really a difference between the treasury creating a trillion Dollar coin out of thin air and the Fed printing a trillion Dollars out of thin air? The banking system gets to print money out of thin air, lend it to you at interest and if you fail to pay it back with interest on time, they get to take possession of what you bought with the money. Pretty good work if you can get it. Making this scheme even more beneficial to the banking system, there is simply not enough money for all the interest and principle to… Read more »
I say the mint goes both ways with this.
Make a $1T coin AND make some commemorative once’s to sell to Fox News watchers, preferably with John McCain’s face on them. This could cover some of the “seigniorage.”
Forgive the typo. Damn iPhone.
The trillion dollar coin idea (lie) is now in its fourth round of circulation in D.C. With each round of puff pieces and AOC types spouting off, it gets more followers, especially among the younger crowd. I don’t blame the younger crowd, they’ve never seen a functioning economy before as you would have to remember the 20th Century. If they think it’s all rigged anyway, and it is, then why not jump on what appears to be a great idea. The biggest danger with this idea (even bigger than sending tanks to Ukraine) is that its purely inflationary money. It’s… Read more »
But doesn’t the mint/treasury plan on paying the money back and removing the coin from “circulation” and melting it?
It’s a one way street on this. The crack addict will not go back to “just a bump of coke.”
Trillion dollar coin? Fantastical. Rather, sell Treasuries at fantastical interest rates. Create a new Treasury note with say a $10,000 value and an interest rate of 100%!. By law, the face value is considered/constrained under the current budget limit, but the interest rate is *not* so constrained, nor added to the current budget limit. The notes are put to auction. Folks will bid up the price for such notes to far above face value. This is similar to the commemorative coin example. The difference goes to the Treasury and may be spent as Congress dictates. Of course that just kicks… Read more »
Karl Denninger pointed to the “out” for this as CONgress can later just set the tax rates for such accrued interest to 100%.
I’m comfortable with math but economics often confuses me. I have always been fascinated and perplexed by the old joke about the travelling rich guy.
What is the lesson to be learned from the old joke?
Is it a contrived case that illuminates little or does it get at an important truth about economics?
They way I understand it, and granted, it may be entirely wrong, is that though everyone has been made whole, there has been massive deflation. Because all of those debts were someone else’ assets.
But it does illustrate a point. There are liars, damned liars and economists.
All these lettered economists allegedly possessing expertise were screaming in the first half of 08 there would be no recession in 2008. But it turns out the “great recession” started in q4 2007. We were already in the “great” recession and few of the economists even noticed it.
Probably not the intended lesson, but I got the lesson that enabling liquidity in the market can solve many problems. In this case the traveler accidentally made an interest free 1000 loan to the innkeeper and it enabled everyone to get out of a money problem. Without the random accident everyone would had been illiquid and the innkeeper would had been cut out of groceries, the grocer out of a home, and the landlord out of his vice LOL (apparently we need sinners to keep the economy going). After the money disappears everyone is happy. The fundamental problem before the… Read more »
A slightly different view. We have two potential roads we can travel going forward. The first is muddle-through another faux Federal shutdown that eventually results in the RINOs caving in and giving Brandon all the money he desires. This is the slow road into the ditch, and has been our fate for over half a century. The second is to mint dozens of trillion dollar coins, flood the country with endless fiat currency (give everyone $5 million, not just blacks and illegals in California), initiate hyper-inflation in the moment, and nosedive into collapse overnight. This results in an immediate and… Read more »
The Jugular Option is by far the best. It puts a stop to TGR. It also solves the feminization problem. All of those HR scolds, “journalists”, … … can go pick lettuce and strawberries. Americans First they will cry!!
It isn’t going to happen – not by choice. We can dream.
I hear, Let the Good Times Roll by The Cars.
For the moment let’s leave aside the sheer absurdity of the Trillion Dollar Coin idea. There is just one minor problem with the idea. Unless I’m wrong and I’m pretty sure I’m not, the Executive has absolutely no power in deciding what coins can be issued. The power to create money and regulate the value thereof is explicitly delegated to Congress by the Constitution. Absent enabling legislation, the Mint can’t get a wild hair up its ass and re-issue a trillion dollar coin — or bring back the half cent.
It could be worse, Ben: you could try to explain this to my son’s who are studying American history and the Constitution.
Junior Mow: “But dad, the Constitution says that Congress is empowered to mint coins…”
Me: “The Constitution says a lot of things. Now go and fieldstrip & clean the firearms again.”
Constitution?
We ain’t got no Constitution;
I don’t have to show you no Constitution!
Good luck dumping a trillion dollars worth treasuries onto the bond market. But I’m sure we won’t have to worry about it. Congress always finds a way to keep the money flowing. That said, the debt issue is getting closer. The world simply has too much debt. Global debt to GDP is oddly almost identical to US debt to GDP at ~270% and that figure doesn’t include bank debt, just corporate, household and govt debt. Total global debt was ~200% before the Great Financial Crisis. That alone would be scary, but if you look at the composition of the debt,… Read more »
Pretty sure everyone knows the current system is going down. Once the looting is done, they’ll try to implement CBDC’s.
After the collapse they aren’t going to have enough cheap, stable energy or skilled technical labor to implement squat.
CBDC won’t change the amount of debt. We’re trapped. The world is trapped. It can’t pay down the debt or you collapse the system. Credit must grow. Historically, there’s one way out for governments: Financial repression. Let inflation run hot while holding interest rates well below inflation until the debt to GDP is back down to manageable numbers. In fact, that’s what we had in 2021 and 2022 and, in fact, it works. US govt debt to GDP fell. But that plan caused a serious political backlash. Voters really hate inflation. So, financial repression looks great on a spreadsheet, but… Read more »
CBDC’s are about control, complete control. It would/could be a “solution” to the extent that what you spend this “money” on and when you spend it is controlled. Of course, there is the Black Market to content with that will arise, but such an alternative exchange mechanism has any number of problems in a global/national economy such as we are used to.
I’m betting it is too attractive to our statist masters to be ignored.
We have a pretty good analogy to the CBDC situation. Which is various third world countries with severe currency controls and rationing. Result? Massive black market, cartels rivaling the government, everyone on barter when they can, or other outside currencies with value. In the Eastern Bloc everyone was so consumed with just getting the basics, standing in line for hours, reselling what they could, that skilled engineers spent most of their time raising chickens instead of working on rockets. Now we are copying that method of organizing society. You can’t push on a string. Political repression works up to a… Read more »
Exactly, they are champin’ at the bit to institute CBDC for this very reason. They’re on the hunt for any potential source of resistance to their wished-for tyranny, and they think this’ll do the trick. In actuality this will only accelerate the disaggregation of societies and will exacerbate the collapse which will just not be denied. The collapse will not be able to be quarantined to one nation, or a manageable set of nations, but will be the real pandemic, a contagion of unimaginable scale. But Our Leaders are, at this point, concerned only with saving their own necks –… Read more »
“The only way out of this problem is that interest rates have to stay below inflation. I there is another way which I have spelled out in greater detail elsewhere. Rather than keeping interest rates artificially low, we could add a government-supplied multiplier to payrolls, like a reverse income tax. A similar multiplier could be added to savings accounts. This would be a triple whammy insofar as it would 1) Incentivize both employment and savings; 2) Turbocharge competitiveness by forcing employers to bid for labor; and 3) Kick off a wage/price spiral that would monetize outstanding debt, but do so… Read more »
“Second, sovereign debt is the end of the line. The govt can backstop households or corporations in a crisis, but no one backstops govts.” That is why its the everything bubble. That is what 2008 was. To save the TBTF banks the government essentially took their bad debts, valued them at 100 cents on the dollar and has been sitting on them ever since while printing money to repair the balance sheets of the TBTF banks. The only increase in spending since 2008 has come from .gov and to some extent state govs. Now do you understand why cities have… Read more »
Now think about this: Our entire system is based on price. If we’ve done everything in our power to distort price (or trust, but in a super commodified society like we live in money is essentially trust, which in my opinion we’ve done since 2008), what aren’t the “elites” not willing to lie about?
Banks became extremely conservative after the GFC. It was a near-death experience for them, after all. People say that we’ve been in an era of cheap money, but that’s only partially true. It’s been an era of cheap money for safe borrowers. Lower quality borrowers have been starved for money because the banks won’t lend to them. Banks have cut back on the credit flowing through the private system so govts picked up the slack to keep everything moving forward. And the banks were happy to lend to govts because they’re the safest of all customers. But now the govts… Read more »
If you can’t service your debts under your own power and your only option for existing is .gov bailouts, when .gov says jump you say how high! This is why go woke and go broke is such bullshit. They don’t need customers anymore if .gov just bails them out whenever they need it. And its why they all push the woke bullshit, because if they don’t the spiggot will be shut off. That is why woke began in the schools, they need .gov money. No freedom until money has freedom.
Corporate welfare is no different then the kind everyone here rails about. They all become dependent on .gov
You are correct about the TBTF banks, but what about the regional banks that stepped in to fill that gap? You think they’ll get bailed out or will they get sucked into the blackhole that is TBTF/.gov in the end?
.”Lower quality borrowers have been starved for money because the banks won’t lend to them.”
That’s nonsense.
The markets are awash with sub-prime debt.
That’s not the kind of debt that I’m talking about.
Regarding the European traveler joke: Ordinarily speaking, these kind of circular payment arrangements should not give rise to much perplexity. In any economy with sufficient sophistication of its payment methods, a system of debits and credits continuously circulates in opposite directions, with a bank or some such institution acting as a clearing house, which would have levelled those debts as soon as they arose. In fact, the European traveler and his wad aren’t even necessary. The innkeeper simply could have kited himself a $1000 check with precisely the same effect. What this proves is that in ordinary circumstances, the economy… Read more »
There is a certain old fashioned charm in your advice. Get out of debt. But in infationary times and/or a debt liquidation (note! with the proviso that the debt in question is unsecured) the rational behavior for all players is to be as deep in hock as possible. Also, to the extet possible avoid being a creditor denominated in dollars. As long as the game continues, especially in rising inflation, one’s debt becomes cheaper in real terms. Come a default, the debt may become uncollectable if unsecured.
I’m in no hurry to pay off my student loans.
If one takes into account the cost to each and every consumer of the debt he maintains, and removes such—as in saving in order to make such a purchase in cash (exclude certain items, but not entirely, like housing) his standard of living would greatly improve. There’s a reason why money lenders have been despised throughout history. They are parasites living off of and weakening their hosts.
That assumes you are getting a COLA wrt income, rather than taking it up the cola.
Excellent analysis and recommendations. The debts were non interest bearing and non inflationary and self liquidating when the clearing mechanism was applied. Personally, I try to use cash all the time when it is at all practical. Cheers and best, etc.
Spend your fiat money on ammo — while you still can. It’ll be priceless when you really need it.
Shh— prices have come down lol.
They’ll “fix” this the same way they always do. Raise the debt ceiling and print more money. The vale of the dollar goes down a little bit more, everyone is a little poorer, inflation is the stealth tax that if managed carefully no one notices (until suddenly you can’t buy a house, or a car, or save enough for retirement).
It’s all so tiresome.
Yep. Republican congresscritters were shrieking about the debt ceiling in 1994 when the debt was $4 trillion and change. Now it’s $31 trillion. If there’s one thing I’ve learned in the past 30 years, it is that the annual debt ceiling hysteria is a dog-and-pony show intended to snooker the rube voters on both sides of the aisle. The debt always goes up, the debt limit always goes up. The circus clowns need to get paid, ya know. It all ends with a whimper, not a bang. Zimbabwe printed a trillion-dollar note, yet Mugabe clung to power for thirty years… Read more »
Yes, indeed. However Zimbabwe ran on the currency of the Euro and Dollar. Trillion dollar notes were the currency of rubes. Now, the new regime is attempting to change that by issuing new Zimbabwean (yet again) currency backed by gold. It should be interesting to see if they can pull this off given the level of intellect of their leadership.
Mugabe introduced the $100 trillion note in the 29th year of his 37 year reign. Shortly thereafter, Zimbabwe abandoned the Zimbabwean dollar for the US dollar.
The wheelbarrow full of cash phase started three years earlier. I’m not sure exactly when the one trillion dollar note came, but I’m guessing around this time. It was not at the beginning of the Mugabe era.
The necessity of regime change in Russia for the GAE comes into play with the story about the movement of money.The dollar needs new places to go and what better place than resource rich Russia.
With the BRICS possibly getting their act together this possibly slams the door on unlimited dollar expansion.
We have built a system that must expand to survive, thus we stack up white men like cord wood in the Ukraine seeking new markets for the dollar.
Green eyeshade imperialism was the United States’ second greatest contribution to the world, with Maya Angelous the first, being Clown World and all that.
Now that Europe has been locked down as a permanent energy market, the GAE can keep the lights on another five or six years.
Europe is being destroyed to prop up the USD, yet the Euros seem largely oblivious to this fact.
One wonders how loud the screeching will get for total cancellation of student loan debt during all this. And it’s not that bad an idea, taken in isolation — since the Feds are on the hook for most of them, writing them off might be a way to start rebalancing the sheets, clearing off some of the deadwood. Those loans will never be repaid, because they can’t be repaid. Why not write them off, in some kind of mark-to-market type of maneuver? (Since that actually seems like a sensible idea, one of two things must be true: Either I’m misunderstanding… Read more »
I’m remembering the resistance to debt forgiveness (of which I was a part, having been a good debt slave). Another possibility: it would introduce the idea that you can simply tear up a bad/predatory contract.
That’s probably the real reason. Well, that and the fact that writing off student loan debt as unrepayable would force even the dumbasses out there to question if going to college is really worth it… and that simply won’t do. Without their fancy college degrees, how could the Juggalos prove they’re better than the rest of us? No no, everyone must go to college, no matter what. It’s the American Way.
Biden had some personal opposition to the student loan forgiveness that helped hold the whole thing up as well. It was leaked he didn’t like forgiving all the debt of people with graduate degrees who were making well into six figures. That was why they compromised on the $10k per person. A few Republicans at least made the argument any debt forgiveness should be done on the backs of the colleges. Even worse is all the money being poured into HBCUs by both the Trump and Biden Administrations. Recently, Bethune-Cookman tried to hire former Ravens safety Ed Reed to coach… Read more »
‘If there’s a task that must be done,
Don’t turn your tail and run,
Don’t pout. Don’t sob.
Just do a half assed job!
If you cut every corner it’s really not so bad.
Everybody does it, even Mom and Dad.
If nobody sees you nobody gets mad.
It’s the American way!”
— The Simpsons (Mary Poppins spoof)
Government backed student loan debt has already been forgiven. If you haven’t made a payment on a loan for 3 years, then you are not going to pay it back.
Does this mean one can just stop paying off the loan? Weather the calls for three years, then be scott-free? Asking for a friend
The best argument against a student debt jubilee is the moral hazard it will create. Universities and banks will immediately rush in with new schemes, because after all, the debt will be forgiven eventually. The only way to prevent it is to eliminate the loan programs when the loans are forgiven. That or restructure these programs in such a way that the schools are on the hook for a portion of the debt, which is probably more difficult than killing the loan schemes. I think the bigger issue with the scheme is that it is not popular. The point of… Read more »
That’s what has always been so odd about student debt forgiveness. It’s very unpopular, but the Dems keep pushing for it and won’t let it die.
I think this is an example of their insularity. Their consultants sell these ideas to them as popular and they have no way of knowing, since they live in a bubble. The consultants arrange some public events with students who cheer and the pols think it is a winner, when in reality most people think it is a terrible idea. Amnesty is another example. The consultants sell this to the GOP as a way to both get the issue off the table and a way to win over new voters. It turns out that their donors are not all that… Read more »
Yeah, at first, I thought that it might be one of those issues that’s extremely popular with a segment of voters and only mildly unpopular with the rest, i.e., you win the vote of the former but the latter group while unhappy doesn’t change their vote one way or the other.
But I’m not sure that they think that deeply anymore. It’s just a popular issue in their circles so they push for it. And if some flyover rubes hate the idea, even better.
Both these ideas are wildly popular. With the Professional Managerial Class (who form the knightly/priest caste for the great lords) and the great lords: Bezos, Gates, Soros etc. What people like and think literally do not matter. Elections are fortified, and hence can never ever be lost. The Security Services are paid off, and fully Professional Managerial Class. Just like She-Hulk, Velma, Rings of Power, Willow, these policies are massively popular with THOSE WHO MATTER and those who don’t quite literally don’t matter. There is no limit, stop, or brake on any policy that is unpopular with the people if… Read more »
That’s just it, though: Unpopular with whom?
The eternal adolescent activists who are still in college, either as administrators or because they’re working on their third degree, think it’s a great idea. Those are the only “people” The Regime cares about. Sure, it’s unpopular with us Dirt People… but because of that, they might well do it just for the lulz. All I’m saying is, it wouldn’t be the worst thing in the world as a quick(-ish) fix(-ish) to the current crisis.
Exactly, moral hazard. The Universities are big power centers with clout. You can restructure the system for sure. That’s what was done years ago for “for profit” trade school loans. The “not for profit” universities were exempted. There is simply too much money to be made (for universities) handing out worthless, faux degrees. In the case of “for profits”, the case was made that they took advantage of poor minorities. Bad! However, a university education was for the benefit of such minorities. Good! And here we are today—at least twice the number of people attending university than can make use… Read more »
The easiest way to deal with the student loan problem is to do two things. First make all new student loans subject to already existing bankruptcy laws. Second, retroactively declare all previous student loans as interest-free. With this, all payments made to student loans are applied to the principal and all overpayments are refunded. Any principal left on any remaining loans needs repaid, but interest can’t accrue. This solves the moral hazard problem, minimizes problems to lenders, and sidesteps most opposition from colleges and universities.
“I think the bigger issue with the scheme is that it is not popular. The point of this sort of thing is to buy favor with the people, but the people seem to find the idea unfair and dishonest. It is possible to think the college finance scheme is a racket that exploits the middle-class and also think loan forgiveness is immoral and unfair.”
Yes. You ARE in touch with the common man. The only person I know in favor of it is my one stupid kid who decided to get his masters before his first job.
“One wonders”
I also wonder
Kind of off topic, but I still think an interesting one. South Dakota Governor Kristi Noem is outraged both her and her family’s personal data was leaked from the White House visitor’s log. Prank phone calls are getting made spoofing her personal cell number and their social security numbers are also out in the open. This happened to over 2,000 visitors, but Noem has been the most vocal about it. My question is, was this incompetence, malice, or some combination of the two? Between this and the pathetic effort to identify the Supreme Court leaker, these are more signs of… Read more »
my thought was to use chat.gpt ?
ps, on a lighter note, Nevada is floating the idea of allowing illegals to become police officers. What could possibly go wrong-
Such would be against the law, would it not? The papers given the ones that seek refugee status, I believe do not have work priv’s either.
A person in the immigration system can get a work permit after half a year. The immigration system is so backed up, this is a guarantee.
Is the US the only empire ever to have used debtor status to its advantage?
Honk honk welcome to clown world.
The conservatives of yore would say that Government spending is the root problem. The financing decision is just a question of timing – pay now or pay later – as Milton Friedman explained. It would appear this view is obsolete. Uncle Milton would have predicted the dollar to collapse under the weight of all this money printing. Don’t hold your breath waiting. There are trillions upon trillions of dollar-denominated foreign debt outstanding, mega-trillions of dollar derivatives and no credible competition for the dollar yet (yet being the operative word). This world-wide hyper-financialization creates a lot of demand for dollars. If… Read more »
Sorry, but when I overthrow the gubbimint and take over, the teachers and university profs die first. Then the journalists…
Ahhhh. It’s so relaxing to think about, as I admire my canned rations, stacked silver coins and ingots, and strop my bayonet…
Rest assured… we will get down to the lawyers eventually…
You can kill lawyers by some simple restructuring of law, such as loser pays.
They would just invoke bankruptcy, showing their empty out-turned pockets as proof.
Removing price-based customer choice from the education and medical markets has really dented the wallets of college administrators and insurance bureaucrats.
Minting that trillion dollar coin might be delayed by all the controversy surrounding whose face gets stamped on it. Sure, non-white, but black or asian? Hindu or hispanic? Certainly not male, but female or nonbinary? And how do we show xhe is handicapped… oops, I mean: differently abled? We’re going to need more lawyers.
Hilarious and true. “Queer as a trillion dollar coin,” it will be whispered.
As an aside, I’m looking forward to the first federal holiday centered around perversion, likely part of a compromise struck by Republican senators in response to a tranny uprising. “The Democrats are the real transphobes,” they will explain as they fund the addition of Rachel Levine to Rushmore.
I nominate Epstein for the trillion dollar coin.
In Latin, emboss it “This currency didn’t kill itself”.
They could solve this problem by embracing Hindu iconography, with the Great God of POC/Diversity portrayed with one head each for the different aspects of POCdom and Diversity.
No white head, of course.
Mike Obama is the choice that covers all the bases.
There are apparently around a third more lawyers in this country than MDs. The legal statutes etc., are so massive, intricate nuanced and convoluted, it’s just insane. I think it’s been mentioned somewhere that on any given day, a person may be technically breaking multiple laws without being aware of it. Leave to a liar to figure out some bulls*** loophole to either get a conviction or acquittal. Along with everything else associated with the government, virtually all the “laws”, statutes and tax codes need to be done away with and start again from scratch. The law profession is a… Read more »
> Leave to a liar to figure out some bulls*** loophole to either get a conviction or acquittal. The law matters less now than the jury and the DA. The J6 people are finding out that the “jury of their peers” will rubber stamp any conviction against people they don’t like. The DA can basically get anyone to plea a sentence by trumping enough charges at him. Even after this they use scumbag tactics. One of my old coworkers, definitely on the autism spectrum, went to jail for six months for literally just hugging his step-daughter: – The step-daughter felt… Read more »
The Fifth Amendment and Sixth Amendments exist for a reason. Never, ever say anything to any government official without a lawyer.
Well, a slight adjustment. You can say to them, and should, “I refuse to answer any questions without the presence of my attorney”. “Please refrain from asking any more questions.” And the old saw, “I do not consent to any search of my person or possessions”
Here, after such a demand, that sets the stage for Court pleadings and such concerning self incrimination. Most folk simply can not keep their mouths shut and they convict themselves.
The book Three Felonies A Day details how invasive and out of control the laws have become at the federal level.
That is very much a feature, rather than a bug, for those in power.
it works well on the front end, arresting and charging, which gets them the bigger figures for a larger budget but not so well on the back end, tracking and follow up. It’s like trying to pour 20 gallons of water into a 5 gallon jug, spillover and mess everywhere. But who cares as long as they get their raises and pensions.
Why just one trillion?
Why not real money like six trillion, or better yet thirty-three trillion?
Because six or 12 or 33 trillion is a RIDICULOUS number, Howard, come on! Be serious.
Everett Dirksen said, “…a billion here and a billion there and pretty soon we are talking real money…”. Ah, to be living back in those halcyon days of fiscal conservatism…
There needs to be a denomination for “infinity” next.
Heh!
One hundred trillion dollaaaarrrrrs!
The old French franc was replaced by the new French franc in 1960 at a 100:1 exchange ratio. This was done under Charles De Daulle to “restore prestige” to the currency.
In Casino Royale, James Bond preferred to gamble with the old franc because it made him feel richer.
I wonder if the U.S. will try to pull off something similar soon.
Gotta have prestige.
Isn’t that what is at work with CDBC?
When the Fed issues debt, at some point the debt has got to be financed by real assets. When the market knows that the debt won’t be repaid and refuses to finance the debt with real assets, fiat dollars flood the market and prices for goods and services rise in tune with the Cantillon effect. The Fed, as everyone knows, operates a Ponzi scheme. What puzzles me is how it keeps going. If the world is holding dollar denominated debt that the world knows will be repaid pennies on the dollar, if they’re lucky, how does the world finance its… Read more »
> What puzzles me is how it keeps going. If the world is holding dollar denominated debt that the world knows will be repaid pennies on the dollar, if they’re lucky, how does the world finance its own investment and consumption? For a while, China took the debt because they needed us to sell their goods to, that quickly might be coming to an end. For other countries, I wouldn’t be surprised if there was some bullying going on behind the scenes. You would hate to see your country have a color revolution if you didn’t take some of this… Read more »
I think the US is pushing Germany to send the Leopards to enable them to develop a narrative that preserves the mythos of the Abrams so they can position them for massive foreign sales regardless of what happens to the Leopards.
Whether the Lima, OH plant can still produce them in quantity is another question entirely.
What is quantity? One a day? In WWII we made 50K+ Shermans in three years, plus a lot of other, heavier tanks.
My opinion is that the MIC is terrified that the Abrams will do poorly in a real war. It’s almost a 40 year old platform that has never gone against a peer army in a hot war so they maybe have a right to be worried. You can make plausible sounding excuses for Bradleys and the like but not the MBT.
Well, it looks like the batshit crazies have won. Abrams are going to the Ukraine. Our betters are compulsive gamblers who are going to double down until the world is in flames. I hope they’re happy with what they get.
Also, I nominate Zelinsky for the trillion dollar coin. No other person is more fitted for it than him.
The US wants to drive the final nail into the coffin of any future German/Russian financial and economic relations. The Germans know this, seem to understand that their national viability is a stake, and are trying to resist, but in the context of Merkel’s admission of the duplicity of the Minsk Accords, with the intention being that they would by means of their non-enforcement buy time for the Ukrainian armed forces to be massively upgraded, that ship has already sailed. Similarly for France, with Hollande saying the same thing, but they are sending weaponry to the UkroNazis in sign of… Read more »
Because treasuries are dollars, and you have to have dollars to trade and, most importantly, to buy energy and food. When the world economy has problems, dollars become very scarce. Those treasuries are a lifeline. Yes, other countries want to hold their reserves in something besides depreciating treasuries, but those other assets – gold, stocks, real estate, whatever – need to be able to be sold for dollars quickly and easily in a crisis. Do you trust that they will be able to be sold? Maybe, maybe not. But you do know 100% that those treasuries can turned into dollars.… Read more »
Under-appreciated comment. 99% of the financial and economic discussion here, including OP, is just incorrect.
Bonds are the most liquid, flexible collateral. Say it slowly with me: collateral. Then look up offshore dollars to see what’s really going on.
“bouillon coins”
Given the context of the article, this is a most apposite typo. Might as well mint a trillion dollar can of soup!
While we are at typos…
seniorage vs Seigniorage
Seigniorage : Modern meaning – the difference in cost of producing a coin vs its face value.
Old french seigneuriage : The right of the lord ( seigneur) to mint money
Whoops! Saved the wrong copy. That is a great typo. Not as good as “gorilla war” versus “guerilla war” but that is an impossibly high bar.
Yeah, my sail foam’s autocorrect is always tripping me up.
At first I thought he meant billon, i.e.., the coins of low silver content.
“The other problem is the central bank could not plausibly list this new coin as an asset as the coin has a market value of zero. Again, a thing is worth what someone will pay for it and in the case of a coin with one possible customer, the value of the coin must by definition drop to zero when the customer acquires it.” Not necessarily. What you are proposing is a “mark to market” valuation but the government can circumvent that as part of the financial alchemy it employs. The “quantitative easing” that the US government has employed for… Read more »
The looting of the treasury reminds me of Henry and Tommy burning the Tiki bar in Goodfellas. “When you can’t borrow another buck from the bank or buy another case of booze, you bust the joint out. You light a match.” That’s what are ruling class is doing to us. Also with the billions and billions sent to the Ukraine, which like in the Bamboo Lounge are being sold out the back door. The “debt ceiling” is like everything in DC, just more political theater for the rubes to lap up on the nightly newscasts. Just like sequestration. The endless… Read more »
seniorage??????
Oh what fun we’d have with a 6 gorillion coin
That way lies Zimbabwe. But be patient, be patient — the US is getting there.
You could google it but really, it’s explained in the post above.