Have you heard the latest news on the fake debt-ceiling fight?
The Senate has approved a measure to kick the can down the road a couple of months. So, the “fight” will continue!
The $480 billion increase raises the debt limit to $28.9 trillion, but that’s only going to last until Dec. 3. That means we have time for more political theater.
It’s silly because there’s a 100 percent chance that the debt ceiling is going to be raised.
Meanwhile, Treasury Secretary Janet Yellen wants to just get rid of the debt ceiling altogether. That would really be more honest. The whole concept is just a dog and pony show. This is what you get when you have a government completely untethered from any constitutional limits. The feds literally think they can do whatever they want
And they do.
Or course, that costs a lot of money. The intended constitutional system with federal powers “few and defined” (as James Madison described the system in Federalist #45) would never spend $6 trillion in a single year. But the constitutional system has been flipped on its head. Today’s federal government exercises “numerous and indefinite” powers that were intended to remain to with the states and the people.
So, they are going to keep borrowing and spending until the entire Ponzi scheme collapses.
And it really is a Ponzi scheme. I don’t think saying that is hyperbole. If you think about it, the whole debt ceiling debate reveals a dirty little secret. If they don’t raise the borrowing limit, the government may have to default on its debt. So, what they’re saying is if we can’t sucker more people into lending us money, the people who already lent us money aren’t going to get paid back. We need new borrowing to pay for the old borrowing. This is the definition of a Ponzi scheme.
But apparently, all of this is unnecessary. The solution has been there all along. They just have to mint a $1 trillion coin.
I’m not kidding. This is a serious proposal being pushed by “serious” people.
The idea is that the U.S. Treasury could just mint a trillion-dollar platinum coin, deposit it at the Fed, and viola – debt problem solved. The U.S. wouldn’t have to borrow any more money. It would instantly have $1 trillion at its disposal.
I’m not really certain why it needs to be a platinum coin though. I mean, they could just write $1 trillion on a napkin with a green crayon and it would be just as legitimate. But I guess they have to do some things to maintain the illusion of propriety.
This goes to show how smart people can be really dumb.
You do realize this is dumb, right?
This is a monetary disaster waiting to happen. It would put inflation on hyperdrive. It’s really no different than what they did in Zimbabwe. We know how that worked.
But we’re dealing with smart people here and they’ll tell you “this is different.” They’ll offer all kinds of plausible reasons it will work. They’ll talk about the dollar being the reserve currency. They show you some convincing-looking accounting tautologies. They’ll babble and spin and suddenly you’ll be thinking, “Hell yeah! A $1 trillion coin! That’s the ticket.”
Supposedly, they can keep this from being inflationary by just dribbling the new money out as they need it. But this is the federal government we’re talking about here. Do you really think politicians will be restrained with $1 trillion in the bank? And when they blow through that, we can just mint another one of those puppies. So, they won’t dribble. It would create an even bigger cascade of spending.
Of course, the reality is we’re already doing this. The Fed just creates money out of thin air every day, but the process is more indirect than minting a coin.
This is what you get when you have an entire school of economics that disconnects money from stuff. That’s the real problem here. The government could create a $50 trillion coin. But it can’t create stuff.
We’ve been snowed into thinking money makes the economy go, but ultimately it comes down to stuff.
And the Treasury can’t create stuff out of thin air. Uncle Sam can’t mint cars and food and clothing and commodities and oil and all of the other actual stuff we need. What happens when you create more money without creating more stuff? You get rising prices. That’s where we are today. We are seeing this play out. But again, we have people who exercise zero self-reflection. They are coming up with dumb ways to solve problems they created in the first place.
Anyway, I’m hungry. I’m a little short on cash, so I think I’ll take a post-it note and write $10 on it. I’ll give it to the folks over at McDonald’s. I mean, if the government can do it, why can’t I? I’ll let you know how it goes.
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