The $5 Trillion Coin

[Lief 🗽]

i'm sure the markets would just love the idea of a 5t coin

I'm sure the markets would just love a second, even worse recession.

which is exactly what a 5t coin would give us. 

Please Elaborate.

if I have to elaborate, then there is no need to explain it.  but if you need an example, try it yourself:  get some cement and make yourself a concrete round coin stating that it is worth $100k and walk down to your local BMW dealer and try to buy a 7 series with it.

Oh, I forgot that the United States has the authority of a dude who wants to buy a car.

If the treasury says the coin is worth $5 trillion, the coin is worth $5 trillion.

[Swing low, sweet chariot. Comin' for to carry me home.]

If the treasury says the coin is worth $5 trillion, the coin is worth $5 trillion.

yeah, but if they do that then a dollar on July 30th 2011 would be worth about 50 cents on August 3rd 2011.

[J. J.]

i'm sure the markets would just love the idea of a 5t coin

I'm sure the markets would just love a second, even worse recession.

which is exactly what a 5t coin would give us. 

Please Elaborate.

if I have to elaborate, then there is no need to explain it.  but if you need an example, try it yourself:  get some cement and make yourself a concrete round coin stating that it is worth $100k and walk down to your local BMW dealer and try to buy a 7 series with it.

Oh, I forgot that the United States has the authority of a dude who wants to buy a car.

If the treasury says the coin is worth $5 trillion, the coin is worth $5 trillion.

And the markets say the collective US currency is worth $5 trillion less.  Understand this, the government is not making the decisions on this.  The market is.

[Swing low, sweet chariot. Comin' for to carry me home.]

And the markets say the collective US currency is worth $5 trillion less.  Understand this, the government is not making the decisions on this.  The market is.

correct.  it would be QE3, but this time it would be $5T, and the dollar would crash against the other currencies and oil would spike anywhere from $30-50 dollars a barrel and gold would hit $3000/ounce overnight.

[King]

I'm not a post reporter, jmfcst, you don't have to limit your attacks on me to your sig.

One question: what exactly does being a multi-decader entail?

Second question: you do know we haven't been on the gold standard for decades and that monetary policy doesn't work that way, correct?

[Torie]

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Really?  What is the limit at present? 

The limit is on the amount of United States Notes issued directly by the Treasury as opposed to Federal Reserve Notes.

The limit is $300,000,000 and they were last issued in 1971 so they are rarely seen in circulation.  (Altho I did get a $5 US Note in change last year and have kept it.)  The designs are similar to those of Federal Reserve Notes, with the most noticeable difference being that instead of a green seal, they have a red seal.  (Silver Certificates had blue seals, Gold Certificates had yellow seals and brown seals were on National Bank Notes and Federal Reserve Bank Notes.  The difference between Federal Reserve Bank Notes and Federal Reserve Notes was that the FRBN were backed by only one of the twelve Federal Reserve Banks)

Actually, there is a portion of the amount that has been authorized but not currently issued, so there is a small pittance that could be made available by printing new ones. Indeed, since the only denomination limit is that they must be at least $1, they could print a single note for the outstanding authorization and deposit it in a Federal Reserve Bank if they needed to.

Personally, I think they should authorize the issuance of additional U.S. Notes anyway, but not as money intended for general circulation.  Issues of commemorative paper money would be a way for the U.S. Treasury to make a modest profit.  Why should the Mint and the USPS be the only makers of collectibles?

Curious, since the treasury has in effect printed over a trillion in the past year or so with fiat currency used to buy back treasuries.  I guess this law focuses on physical currency. That is not even vaguely relevant. It is IOU's on balance sheets backed up by the full full faith and credit of the US, called in this instance something other than treasuries.

[The Mikado]

No one would ever buy a treasury bond again.

[○∙◄☻¥tπ[╪AV┼cVê└]

If the treasury promised that this was only being used to effective increase the debt ceiling by $X, what would be the downside?

Of course, Obama is too right-wing to agree to something this obvious.

[opebo]

...$5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt.

What inflation?  How could there be any inflation under this scenario, because all you would be doing would be disappearing debt that is held by the Fed, which already has no effect on the 'real' economy?

Its a brilliant idea, and should be implemented immediately.

[J. J.]

...$5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt.

What inflation?  How could there be any inflation under this scenario, because all you would be doing would be disappearing debt that is held by the Fed, which already has no effect on the 'real' economy?

Its a brilliant idea, and should be implemented immediately.

1.  The value of the money in circulation drops.  It is like a pie cut into 5 pieces.  If you cut it into it into 8 pieces, each piece is smaller.

2.  I'll be happy to take any gold off you hand that you have left over at January 3, 2011 prices.