Thread: TrillionDollar Coin Reveals the Monetary System in Death Throes

Thursday, January 10, 2013

Trillion Dollar Coin Reveals the Monetary System in Death Throes

Eric Blair

I’m thrilled that the trillion dollar coin idea is being taken seriously by the establishment. Not because I think it is a viable solution to the national debt, necessarily, but because it shows just how close our monetary system is to reform.

First, for those not familiar with the trillion dollar coin; the idea is that the U.S. Treasury can coin any monetary value they want for whatever purpose they choose.

In this case the idea has been floated to Obama to avert the mandatory raising of the debt ceiling by coining a trillion dollar coin. In other words, Obama can use the coin to pay off a trillion in debt to allow an increase in federal spending without Congress’ approval.



Magic Trillion Dollar Coin May Be Used To Pay Off The National Debt - YouTube


Some economists argue that it is essentially creating more money out of thin air and thus will cause inflation. Other economists claim that since no new money is being put into circulation, no inflation will result. So who’s right?

They’re both right to a certain degree. Inflation occurs when there’s an expansion in the supply of money. The two best examples of how this works are the housing bubble and the college tuition bubble (and soon-to-be healthcare bubble).

In both these cases unnatural (not free market) amounts of money were injected directly into those sectors of the economy and the result was massive inflation. Put another way, there was a rapid expansion in the supply of money to those industries.

Housing Bubble: With restrictions loosened on the banks and the government guaranteeing loans, incredible amounts of easy subprime money flooded the real estate market in the mid-1990s resulting in an unprecedented increase in property prices until the bubble popped in 2007.

College Tuition Bubble: Since the US government took over student loans from the free market and made them readily available to any warm body who desired to go to college, the price of tuition exploded compared to the general rate of inflation due to new but previously nonexistent “demand”.

But, you may ask, the Fed has been printing incredible amounts of money including trillions in bailouts, so why haven’t we seen runaway inflation in the overall economy?

New 1oz Silver Coin

The answer is that that money never reached the real economy. It was just absorbed by toxic paper and used to scrub the books at the banks. Sure, some of that money crept into the economy (mostly in the form of banker bonuses) and some inflation has occurred from the bailouts.

This is the concept behind why the trillion dollar coin will not cause inflation; because it will simply be absorbed by the government’s toxic debt and not enter the real economy. However, the purpose of the coin is to allow the government to increase spending by a larger margin than they previously would be permitted, thus eventually resulting in inflation when that new money is spent.

In summary, bailouts of debt do not cause inflation by themselves; spending of new money into the real economy causes inflation. That is why they can’t directly bailout the people without causing massive inflation.

Supporters of big government spending like Paul Krugman hail the coin as a creative way to “solve” the debt ceiling problem. Meanwhile, deficit and inflation hawks call the idea stupid and point to inflation.

Interestingly, during the last debt ceiling debate, leading inflation hawk Ron Paul proposed a similarly creative solution that received far less attention. Paul suggested that the Federal Reserve just write off their nearly $2-trillion part of the national debt that they hold. Paul stated that since the Fed is our central bank we essentially owe the money to ourselves.



Ron Paul: Rescind America's Fictitious $1.6 Trillion Debt to the Federal Reserve - YouTube


Funny, I don’t remember any Austrian economists calling Paul’s idea stupid even though it accomplished the exact same thing that the trillion dollar coin does. In truth Paul’s idea was more about revealing the Ponzi nature of the monetary system and the true nature of the Fed than as an actual solution.

Both cases of the coin or a Fed write-off reveal the fraudulent nature of the so-called debt crisis or even the urgency in having to raise taxes. If these tools exist, why do we need to pay taxes at all? That is an important question Michael Snyder addressed in a recent article.

The point is that our monetary system in relation to government spending is so broken that fringe ideas like the trillion dollar coin are actually being taken seriously. It represents a signpost of approaching monetary reform.

Yet the motivation is to allow even more government spending, which is in just as much need of reform as the monetary system. We can’t fix one without the other.

Most of all, the trillion dollar coin represents an opportunity for the public to learn how phony the entire system is; that crises aren’t really crises at all, and that austerity is unnecessary enslavement.

When that sinks in people may begin to wonder why the monetary system works the way it does and what it could be replaced with.

Activist Post: Trillion Dollar Coin Reveals the Monetary System in Death Throes

Wednesday, 16 January 2013 10:55

Obama’s Trillion-Dollar Coin Exposes Federal Reserve Scam

Written by Alex Newman

Amid an ongoing debate over raising the debt ceiling and Congress’ seeming inability to rein in wild deficit spending, some proponents of even bigger government proposed the minting of a $1-trillion platinum coin to get around stubborn lawmakers seeking budget cuts. Seriously. Originally, the Obama administration refused to rule it out when asked by reporters, leaving analysts to speculate about whether or not they would really do it.

Then, suddenly, the privately owned Federal Reserve put its foot down and killed the scheme. In a joint statement issued with the U.S. Treasury, the central banking cartel, which holds a virtual monopoly on currency production, said no way. The Fed would not accept such a coin even if the federal government were to mint it. While never mentioned in the mainstream media, the implications of the whole episode are enormous.

The idea of a trillion-dollar coin, of course, has been widely ridiculed and criticized, with analysts saying it sounded like something a certain Zimbabwean despot who flooded his country with $100-trillion Zimbabwe notes might try. Other commentators slammed the proposal as an unprecedented power grab by an out-of-control executive branch that needs to be urgently restrained — sooner rather than later — before it does any further damage to the nation and its government’s remaining credibility.

Even segments of the establishment media mocked the scheme. “In a town that specializes in stupid ideas, this one reached a new level of stupid,” wrote Washington Post opinion writer Marc Thiessen. “Think about it: If the president could really create a trillion dollars out of the ether simply by minting a single $1 trillion coin, why would we stop at one? We could mint 17 of these puppies and eliminate the national debt! Heck, we could mint 18 and have a trillion-dollar surplus!”

Then the scheme died. With a brief statement issued over the weekend, the Fed and the Treasury instantly quashed the hopes of some Democrat lawmakers and Keynesian “economists” such as Paul Krugman that Obama would actually mint the coin. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” said Treasury spokesman Anthony Coley.

While the formal statement was issued by the Fed and Treasury, the latter of which is actually part of the government, the order to kill the platinum coin came down directly from the shareholder-owned central bank, according to news reports citing a senior administration official. An article in BuzzFeed, a relatively new media service started by the co-founder of the Huffington Post, said the central bank would have simply refused to credit the Treasury’s account.

Amid the cacophony of giggles and outrage over the coin plan, however, one liberty-minded blogger identified the real question Americans should be concerned with in this ordeal: How can the privately owned central banking cartel misnamed the “Federal Reserve” conjure infinite amounts of currency into existence out of thin air and charge interest on it, all while telling the elected government that it is not allowed to do the same? Why can the Fed create trillions of dollars to shower on its banker cronies worldwide but the government must either tax or borrow?

The issues strike at the heart of most of America’s current economic problems. “If the Federal Reserve had allowed Obama to print up a debt-free trillion dollar coin, that would have set a very dangerous precedent for the Fed,” explained The Economic Collapse blog, which covers financial and economic news from a generally pessimistic perspective. “The American people would have realized that the federal government can actually create debt-free money whenever it wants and that it does not actually have to borrow money from anyone.”

Creating debt-free money, of course, would put an end to the current usurious system in which the Fed banking cartel creates debt-based currency that must be repaid with interest — even when borrowed by the federal government. Serious economists generally reject the idea of letting politicians print their own fiat currency out of nothing without restraint, and it would hardly be an ideal solution. However, it would put an end to the scam of perpetual debt that is literally impossible to repay without borrowing even more phantom currency from the monopolist banking cartel masquerading as a federal agency.

“That is something that the Fed probably would have moved heaven and earth to keep from happening,” Economic Collapse blogger “Michael” continued. “But now we won't ever know how far the Fed would really be willing to go to keep their monopoly over money creation, because Obama has no plans to challenge this latest ruling from ‘the real boss’ of our financial system.” In past controversies surrounding the Fed, when Congress came close to forcing an audit of its books, for example, the central bank hired a high-powered lobbyist and won the battle.

The article in question, entitled "The Federal Reserve Shows Barack Obama Who The Real Boss Is," goes on to explain how the central bank works. “The debt-based Federal Reserve system is a way to systematically steal the wealth of the United States, and it is happening right in front of our eyes, but very few people actually understand it well enough to complain about it,” the writer concluded, echoing the concerns of countless economists and pundits who understand the existing monetary system.

Other analysts also pointed a finger at the Fed during discussions on the platinum coin, though none as directly as the Economic Collapse blog. Fellow Bill Frezza with the free market-oriented Competitive Enterprise Institute, for instance, did mention the central bank, but he also seized on the $1-trillion coin debate to blast the bipartisan political class and its destructive spending habits.

“Daring them to do it would have been the perfect tool to demonstrate that the emperor has no clothes,” Frezza noted in a piece published by Real Clear Politics, referring to minting the Obama coin. “Any American who is not terrified of the mess created by the Federal Reserve, the Too-Big-to-Fail banks, Washington’s insatiable spending binge, and the unprecedented money printing intended to keep the illusion alive that this can continue forever is, quite simply, impervious to facts and reason.”

The idea of producing such a huge-denomination coin without relying on the Fed or Congress was originally floated years ago, based on a provision in a 1997 appropriation bill giving the Treasury power to mint platinum coins. With the looming showdown over the debt ceiling, however — Republicans are seeking spending cuts in exchange for allowing the administration to borrow more money, but Obama is supposedly not willing to negotiate — the half-baked $1-trillion coin gained powerful new backers. Then the Fed nixed the whole plot with a single public statement.

Of course, there are plenty of other lessons to be learned from the whole brouhaha about Obama’s magic coin — Washington is completely out of control, the executive branch has usurped wildly unconstitutional powers, the value of fiat dollars can be inflated away by policymakers at will, and much more. The most important element of the saga by far, however, is what it reveals about the Federal Reserve cartel and the fraudulent monetary system that will eventually destroy the economy if not addressed.

If nothing else, the trillion-dollar coin scam should serve as a wake-up call to the American people and the world — and especially the U.S. government’s creditors. The Obama administration, Congress, and the central banking cartel are going off the rails, becoming increasingly delusional as the economic tsunami that is now widely anticipated comes ever closer. Once it hits, or preferably before, it will finally be time to reform the absurd monetary system that is essentially bankrupting America and its people. Until then, the bipartisan charade in Washington will almost certainly continue, trillion-dollar coin or not.


Alex Newman is a correspondent for The New American, covering economics, politics, and more. He can be reached at anewman@thenewamerican.com This email address is being protected from spambots. You need JavaScript enabled to view it.

Related articles:

Fed Manipulations in the Crosshairs
Congress Debates the Federal Reserve: Reform or Abolish?
Fed Audit: Trillions For Foreign Banks, Conflicts of Interest
U.S. Fed Bailout of Euro Prompts New Push for Audit & Sound Money
Waking up to a World Currency
Fed Plotting to Monitor Critics, Tailor Propaganda
The Emerging Global Fed
Fed Showered Money On Foreign Banks
Led by Rep. Ron Paul, Congress Explores Sound Money
Gold Standard Arguments Being Promoted Again




Obama’s Trillion-Dollar Coin Exposes Federal Reserve Scam

Step Aside Trillion Dollar Coin, Here Comes The Trillion Dollar Bill

Submitted by Tyler Durden on 09/23/2013 16:32 -0400


With just over a week left until a potential government shutdown, especially since the House just passed a stopgap funding measure which included an Obamacare defunding measure and which is dead in the Senate, the issue of a government shutdown with no counterproposal on the table is suddenly concerning to investors, as can be seen in the following Bloomberg chart comparing articles mentioning "government shutdown" vs "debt ceiling."



However, it should be the other way around: while Congress may gamble with the debt ceiling until the 11th hour and 59th minute, as it knows it can always punt to Bernanke and "Mr Chair(wo)man will get to work", it will hardly jeopardize paying itself a salary for a terrific job well done.

So as we await for the inevitable announcement when the government will promptly resume paying itself, we are far more interested in how long it will take until the debt ceiling fight takes front and center space, and the now annual tradition launched by a handful of monetary misfits, namely the pitching of the idiotic platinum trollin' trillion dollar coin idea, even though the Fed and Treasury took an unprecedented step and publicly told said misfits to kill the idea before they lose any more of what little credibility they had left by filling the internet with their vacuous stupidity.

Sadly, since US fiscal and monetary policy en masse has become just that, vacuous stupidity, we wish to introduce our own piece of monetary ridiculousness: the trillion dollar bill.

It is not made out of platinum - in fact Charmin' one-ply will do - but the good news is that the Treasury would merely have to issue a trillion dollar bond to net out the Fed's balance sheet upon its monetization (and the last thing Congress has problems with is authorizing the spending ludicrous amount of money). After all, under the auspices of the Magic Money Tree theory of money, infinite government debt is simply a manifestation of infinite wealth for the private sector, and as such it is a win-win for everyone.

So without further ado, here is the solution to all of America's debt problems: the Trillion Dollar Bill.



h/t @mrneutr0n


http://www.zerohedge.com/news/2013-0...on-dollar-bill