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United States

Submission + - Seigniorage Hack to Prevent Debt Limit Crisis ( 4

UltraOne writes: With the US Senate voting to table the Boehner debt limit bill, the US is only a few days away from running out of cash to pay for all its obligations. Slate reported on a fascinating legal hack, described by blogger 'bewulf' back in January 2011. Seigniorage is the extra value added when government mints a coin with a face value greater than the value of the precious metal contained in the coin. The statute governing the minting of coins contains a section (31 USC 3112(k) ) that authorizes the Secretary of the Treasury to mint and issue platinum coins in any denomination or quantity. To keep the government from running out of money, Timothy Geithner could order 5 One Trillion Dollar platinum coins struck and deposited at the Federal Reserve. The money could then be used to fund Federal Government operations (blog post contains legal details).
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Seigniorage Hack to Prevent Debt Limit Crisis

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  • Problem is, a country's currency is just like a company's stock. Dilute the currency faster than the economy grows and the value of the currency (and thus what can be bought with it) generally falls.

    You think making a late payment would scare foreign investors in US treasuries? See what devaluing the currency will do for foreign investors not just of US treasuries but -all- public and private investments managed in US dollars.

    Mint some trillion dollar coins. Cute. But far more devastating to our economy tha

    • Euro bonds? problems there.
      Japan? not good.
      Corporate? well, that is tbills and some extra.
      Stocks, well, volatile due to all the catastrophes

      Gold? record highs, can not eat it..

      There is NO credible plan b

      • Plan B is don't spend money you don't have. The Federal government has enough money under the existing debt ceiling to make its debt payments, make payroll, keep the social security checks coming and cover operational national security issues. When push comes to shove, everything else is optional.

  • We have to stop spending money we don't have. Either we do it ourselves or it will be imposed upon us by those that refuse to loan us cheap money.

The world is coming to an end--save your buffers!