Mostly because calling it a ‘friedman’ is just a bit too obscure to be proper black humor; calling it a ‘keynes’ actually maligns a guy who would be freaking out over what Obama’s done to his economic policy*; and calling it a ‘fiat’ will cause people to confuse it with the car**.
Anyway, basic details here (H/T Jim Geraghty): if you’re not familiar with what’s going on, essentially there’s a movement among the innumerate wing of the left-pundit class to have the President ‘pay’ for the debt ceiling by having the Treasury mint a platinum coin or coins (that last bit is usually carefully not emphasized) of one trillion dollars apiece. The government deposits the coins, they use the money to pay their bills…
…and then we have to deal with the sudden influx, and I mean sudden, of money that’s equal to a significant fraction of our existing money supply. I’m not an economist in any way, shape, or form: but even I know where inflation comes from: it comes from too many dollars chasing not enough goods. Suddenly creating a trillion dollars doesn’t create a trillion dollars’ worth of actual wealth – and ‘wealth’ is the nebulous, non-quantifiable thing that backstops a country’s fiat money. When the Federal Reserve announced that it was going to increase the money supply by $40 billion a month (which will do in two and a half months what the supporters of the trillion dollar coin want to do in an afternoon) people worried about inflation. How do you think a sudden shock devaluation is going to impact the economy?
Moe Lane (crosspost)
PS: I have had it pointed out to me that the supposed intent of this scheme by its backers is not to put more money into the system, but to magically reduce the debt, thus allowing the government to borrow another trillion dollars without hitting the debt ceiling. Yeeees, and it was the intent of Prohibition to curb public drunkenness, not create, support, and foster an organized crime network that persists to this day. The truth is, until the government stops deficit spending, a scheme like this will have the practical result of yanking another trillion dollars out of the luminiferous aether*** and throwing it into the economy. I’m not the government; I’m not obligated to pretend that our politicians will voluntarily pay back the debt that we’re racking up.
*As I understand it, John Maynard Keynes always insisted that the government should save up the money in good times that it spends in bad ones. Oddly, politicians don’t like to do that one.
**Admittedly, you could argue that calling it a gresham is even more obscure, but at least this way we can quote ‘bad money drives out good’ at people and hope that somebody will get the message.
***Yes, I know that such a thing does not actually exist. That’s part of my point.
“innumerate wing” – you say that as if there is a corresponding, math-savvy wing of the left-pundit class.
http://youtu.be/bEZB4taSEoA …
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A set greater than null …
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Mew
My thought exactly.
I notice that they never mention using said trillion dollar coins to pay of the debt. If they even suggested doing that they would be laughed off the stage because no country would accept such a coin at face value, they’d accept it as bullion and then come back to this country and demand the Government reimburse them a trillion dollars to buy the coins back. A no-win all the way around. The whole idea is farcical. Zero Hedge the other day went over how much more platinum you’d need to recover to make an actual coin worth 1 trillion dollars, you’d need 1100 times all the platinum that’s ever been dug up since the dawn of time, Good luck with That.
Guess we’re going to have to refine us some asteroids. Too bad we don’t actually have a space-based mining industry…or a space-based anything, really.
The whole 16 tons of platinum that humans have mined doesn’t even get you to 100,000,000, it’s only about 79 million, sorry D’s.
They could always say they’ll mint it from mithril or unobtanium. That will provide the plan with the proper sense of fantasy from beginning to end.
Frank J suggested that we could cheap out and just mint a couple of half-trillion dollar electrum coins.
The only people stupider than the ones “in charge” in Washington D.C. are the ones that put them in charge…………
We could try scanning passing asteroids to see if we can discover what their composed of and grab the first large chunk of platinum that goes by, personally I’d be looking for gemstones such stones would be worth far more than terrestrial stones on the market. Oh right the Government no longer has a space program. But private industry does. Oops?
Keynes’ biggest bugaboos were deflation and inflation.
His entire shtick was trying to rein in the business cycle without mucking about with the money supply. (Which he regarded with the horror only someone who experienced the Wiemar Republic and the worldwide Great Depression can muster.)
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My working hypothesis is that Obama’s economic policy was yet another “green energy” boondoggle.
They violated Keynes’ corpse with a magnet, wrapped his coffin in copper wire, and then systematically implemented everything he warned against doing, all while loudly touting their “Keynesianism”.
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(Not that I have any great love for Keynes. But I like to trash him honestly.)
I’ve got to take issue with your statements about prohibition.
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Many of the criminal conspiracies predated prohibition, and many of them had motivations involving the alcohol trade predating prohibition.
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Due to a combination of government intervention, population movement, economic factors, technological changes and market forces, the alcohol industry in America ended up in a position where a great deal of manufacturing capacity, beer, and salons chasing relatively few drinkers and drunks. It was in a state of hyper competitive shaking out, which, cp, would have eventually resulted in decrease in supply to match sustainable demand. (I deeply regret using the word ‘sustainable’, which I loathe.) So desperate was the situation that some suppliers opted to use crime and criminal conspiracy to gain what little competitive advantage they could. This environment bred both alcohol related criminal conspiracies, often with ties to the Democrat party, and the anti-Saloon movement. Also motivating the Anti-Saloon Movement were concerns that all were equally vulnerable to alcoholism (now known to be false), concerns over marketing to children (because supply exceeded demand), and concerns over the criminal behavior associated with certain saloons and distributors.
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To understand big alcohol’s reputation at the time, think about what the left thinks about big oil, and has thought about big tobacco. Except that there were actual documented cases of associated rape, murder, prostitution, drug trafficking and so forth to fuel the concerns.
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Blah, blah, blah, wet versus dry politics of the late nineteenth century. I think acat’s been exposed to some of my rants on the subject. I’m very short on sleep, sorry for the incoherence of this ranting.
No worries, man.
It is a hobby horse of mine that I sometimes drag personal baggage into. Also, it is relevant to my pet narrative of the Democratic Party being wicked, picking the wrong side of disputes, and engaging in revisionist history.
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I don’t mind being obnoxious and offensive, but I prefer to have some idea when, and to be able to choose. I was especially concerned as this is somewhat of a new venue for me.
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My apologies to Democrats and the Democratic Party for incorrectly using the phrase ‘Democrat Party’.
I support the coin, because I want to bring down this kleptocracy we have going on in DC right now.
Fun things to do in response to this.
Step one: Do some homework on the currencies of Zimbabwe and the Weimar Republic. Write vital stats down on paper so that they can be used as a reference during step two.
Step two: Look up some relevant details in that new reference on the history and collectible value of printed currency over at the book store.
Step three: Write up a piece praising inflationary printing of money from the perspective of the collectibles market.