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Jan 08, 2013

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Grant

Oh baloney. Congress authorized the spending. Congress issued the coinage authority and retains the power to rescind it.

David Boyd

I don't know why we don't mint a $16 trillion dollar coin, as big as you like, and solve this debt problem altogether.

Andrew Brod

I'm not sure Salmon is correct. The president's Constitutional duty is to spend funds as directed by Congress. Therefore, the debt-ceiling gambit can be characterized as Congress telling the president to spend funds but then throwing up a roadblock to prevent him from doing it. That's worse than Congress "behaving like a bunch of utter morons." If this Constitutional characterization is valid, this is about Congress thumbing its collective nose at the Constitution.

Collards

But where would we keep a coin that size?

Bill Bush

I'm reminded of the cartoons we used to see of, I think, Easter Islanders or some such, whose money consisted of huge coin-shaped stones. Are we any less comical?

polifrog

Would it make you feel any better if we minted the same coin, divided it into eight pieces? Pieces of eight. How about 16? No?

How about 16 trillion pieces?

Why not just let the Fed handle it and give it to the banks... a lot of folks seem to think that was a great idea.

One big rock, 16 trillion little ones. Same Keynesian idiocy.

Andrew Brod

It may be idiocy, but it's not Keynesian idiocy.

liv

How about just a 2 dollar coin like Europe. I spent those like crazy never realizing how much I was actually spending because it was, a coin, not a note.

polifrog

Prime the economic pump with one giant coin or trillions of tiny ones ... essentially wealth we don't have today; pay it off with wealth tomorrow.

Prime the banks with one giant coin or trillions of tiny ones ... essentially wealth we don't have today; pay it off tomorrow.

Most definitely Keynesian idiocy.

Grant

The money's already been spent.

polifrog

... essentially wealth we don't have today

Lex

IANAL, so can someone who is please explain to me why Section 4 of the 14th Amendment doesn't render any debt ceiling unconstitutional in this context?

Dave Ribar

Poli:

It's monetarist and seigniorage idiocy, but not Keynesian idiocy.

Seigniorage existed long before Professor Keynes.

Spag

So if Congress passes a law to cut spending which is their Constitutional prerogative, and the President refuses to sign it, doesn't Congress have the right to to assign a credit limit?

If not, then in reality the President can spend whatever he wants despite the mandate that appropriations arise from the House of Representatives.

It it's politically convenient for Democrats to blame this on Congress, and but that is intellectually dishonest.
If the President won't agree to reduce spending then Congress has the right to cut his ability to do so.

Grant

For the 3rd time, Congress already made the appropriations.

Also, derrrrp.

Andrew Brod

The value of the metal in a coin doesn't have equal the coin's face value.

Spag, if the president doesn't sign a bill, it eventually becomes law anyway. What's your point?

Grant

Yeah, that: "Therefore I will mint a $20 billion coin each day until Congress raises the debt ceiling. That is just enough to make the payments Congress has required me to make."

Bill Yaner

When I was a boy, Jimmy Tanzola declared his intention to take his soccer ball inside and not let us play with it any longer. His being the only soccer ball on Coppell Dr, Tenafly, NJ , we were of course crushed.

But then Freddy Harris came out with his kick ball, that big rubbery thing kids played with in the street back then. Crisis averted and a great game ensued with all but Jimmy Tanzola whom I swear was seen peeking out his window at least once.

polifrog

Dave Ribar:

It's monetarist and seigniorage idiocy, but not Keynesian idiocy.

When is Keynesian policy not reliant on monetarist policy? In fact, there is no Keynesian policy without spending that which we do not have. Monetarist policy alleviates that problem by supplying Keynesians coin.

If your wildest Keynesian desires would be met by minting a single $15 trillion coin you would find it just as acceptable as you have found minting $15 trillion in many bills to be. Only the unlikelihood of the minting of a single coin allows you to retain the dignity of poopooing the concept despite it being no different than minting $15 trillion bills, a concept you do embrace.

Said another way:

The concept of minting of a single large denomination coin and your labeling it as idiocy brings to light the idiocy you have already embraced in having accepted the legitimacy of minting numerous small denomination coins to fund Keynesian projects.

Keynesian idiocy.

Andrew Brod

In that vein, I'm going to invent the word "Polifrog" to describe any economic policy I happen not to like. Just like Frog's use of the word "Keynesian," it'll have no particular connection to any economic theory. If I apply it to something, it just means I don't like it.

Polifrog idiocy.

Bill Yaner

And no way I'm picking him for my kickball team.

Spag

Does anyone know when Obama plan on starting his "balanced approach" to reducing the debt by cutting spending and raising taxes, or was that just campaign bullshit?

Worst person on the internet
Andrew Brod

Spag's right: It is unbalanced. Spending cuts are three times the size of new revenues.

polifrog

I don't know, Doc.

Do I bastardize Keynesian Theory? Show me an example if Keynesian Theory in action and I will show you Keynesian Theory bastardized.

It is the fact that Keynesian solutions can not be implemented that gives rise to the inconsistencies you avoid above.

Regardless, I don't think bastardizing "Polifrog" will get under the skin of as many as bastardizing "Keynesianism" does. But then "Polifrog" doesn't have the same evangelical like following either.


Grant

Keynes was an acolyte of Saul Alinsky.

bubba

"Spending cuts are three times the size of new revenues."

Hide and watch what happens going forward.

bubba

"But then 'Polifrog' doesn't have the same evangelical like following either."

"Evangelical" doesn't describe it accurately. "Cult" is more appropriate, given the amount of mysticism exercised by its adherents in order to make the numbers work. It's very similar to the way the increasingly failing Anthropogenic Global Warming cult operates.

Grant

And the Rapists Impregnate Women cult.

bubba

"And the Rapists Impregnate Women cult."

....as used to rationalize the "choice" worldview.

polifrog

What is Keynesianism without monetarist funding? -- an empty theory.

Krugman knows this.

Mint a zillion coins or five; there is no difference. For any good Keynesian if it makes government spending possible it is smart, wise, and a thing to be embraced.

Krugman on the big coin thing:

Mint that coin!


Ribar and Brod, your preacher has spoken.
Is he stupid? crazy?
Is he wrong?

My take? Keynesian idiocy.

Andrew Brod

Nope, not stupid nor crazy nor wrong.

But yes, someone's wrong.

polifrog

Brod:

But yes, someone's wrong.

Do I sense backtracking from your previous statement declaring the potential idiocy of minting a small number of high denomination coins?

Brod upthread:

It may be idiocy, but it's not Keynesian idiocy.

Hmmm.

If Krugman is not stupid, crazy, or wrong then you are.

My guess is that you, like Krugman, have seen your way to accepting another Keynesian funding mechanism.

So, by all means, embrace the crazy.

Andrew Brod

As usual, your skills of inference are off. There is no new "Keynesian funding mechanism." The only "Keynesian funding mechanism" there is right now was already created when Congress decided on tax rates and spending levels.

polifrog

Doc Brod and presumably Doc Ribar have both both snubbed the high denomination coin solution as idiocy.

Krugman disagrees with both of you as I expected any Keynesian worth their salt would. As I said to Ribar above:

If your wildest Keynesian desires would be met by minting a single $15 trillion coin you would find it just as acceptable as you have found minting $15 trillion in many bills.

Krugman has done just that.

But how is it that you find Krugman correct in his assessment that minting these mega coins is a good idea while at the same time you find the idea to be idiotic monetary policy?

Feel free to retreat to calling me stupid, crazy or "Polifrog" in response. Or if you find yourself in a creative mood feel free to change the subject.

Andrew Brod

I didn't call it idiocy, though I'll grant that Dave's comment reads as though he did.

In any case, to the degree that it is idiocy, its idiocy pales in comparison to the idiocy implied by Congress directing the president to spend money and then barring him from employing the only mechanism (borrowing) that will allow him to follow Congress's instructions. If the coin thing is idiocy, it's an idiocy forced upon the country by the irresponsibility of Congress, more specifically the GOP.

The fundamental contradiction of the debt limit was unimportant as long as it remained a kabuki exercise in which the opposition in Congress ritually denounced the administration for its profligacy and then promptly raised the debt limit. Because of course it would be crazy not to raise it. But in 2011 the GOP transformed the erstwhile ritual to an actual threat, and now what had been seen as crazy is a reality. Welcome to the modern GOP. But now that this threat is real, it has to be eliminated. I'm not saying I like the coin gambit, but at least from an economic standpoint it would work. (There appear to be some real legal and political risks, however.)

If the GOP wants to limit the debt, then let it do so by reducing spending through actual votes. This is stupid.

Do we never tire of being the world's laughing stock?

polifrog

Appreciate the real answer, Doc.

bubba

"If the GOP wants to limit the debt, then let it do so by reducing spending through actual votes."

You're right.

The House needs to cut off funding to certain bureaucratic functions of the administration. Let's start with certain aspects contained in the Patient "Protection" "Affordable" Care Act.

Jim Buie

Perhaps one of the faux conservatives on this board can explain to me his ideological shift on economics from the Nixon-Reagan-Bush-Cheney philosophy? As Dick Cheney told Treasury Secretary Paul O'Neil before firing him, "Reagan proved that deficits don't matter." O'Neil objected to the Bush tax cuts as fiscally irresponsible, and was fired for his beliefs. Where were Bubba and Spag and Polifrog during the fiscal profligacy of the Reagan & Bush years? They were silently acquiescing to Keynesian economics. But when a Democrat entered the White House, they suddenly converted to a pre-Keynesian, pre-1933 philosophy. Yes, Spag, let's talk about hypocrisy and dishonesty.

polifrog

Aside from voting periodically, until the push for ObamaCare I was entirely disengaged from politics.

Then not long after being roused by the ObamaCare foolishness I stumbled onto Ed's playground here and as quickly bumped into Brod. His willingness to engage not only rekindled but expanded dormant thoughts touched on during my Econ studies.

The point is that I was not engaged during the Bush or the Regan years.

However, when looking back I find Regan's military spending to have been a worthwhile investment as it brought a bloodless end to the Cold War. It should be noted that the nation's purse was controlled by liberal spenders during both Reagan's terms.

Bush like Reagan found himself embroiled in war. Unlike Reagan, though, Bush initially enjoyed a like minded Congress. Together they overspent but the majority of the over spending pinned to Bush came in the final two years of his second term during which time the nation's purse was controlled by Pelosi/Reid. During that time Bush's focus was still on the War on Terror and the Pelosi/Reid price for their support in that endeavor was Bush's acquiescence to their profligacy.

Faux conservative:

If by conservative you mean Republican, perhaps I am a faux Republican. I am far less a Republican than I am Tea Party or Libertarian. Furthermore I find myself becoming less Republican by the day. To the degree that I am Republican it is solely for the influence the Republican tent offers and that seems to be waning.

To think that in an election that was long recognized as divided old guard Republicans for a second time fronted a moderate against a Socialist/Marxist/Progressive offering free stuff. Dumb asses.

polifrog

Lex:

IANAL, so can someone who is please explain to me why Section 4 of the 14th Amendment doesn't render any debt ceiling unconstitutional in this context?

Let's look at the relevant portion of section 4.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Section 4 of the 14th Amendment is about Constitutionally prioritizing debt payments before buying what Ed refers to as "nice things". Thus, it is Ed's "nice things" that are on the chopping block not the debt payments assuming the debt ceiling is not raised.

And that is as it should be; we should be forced to debate whether we take on additional debt to pay for "nice things".

But liberals would have you believe that the debt ceiling increase is about covering old debt. Not true. Our revenue can currently still cover all debt payments.

The fact is all our debts including SS and those debts owed our soldiers will be paid out of our tax receipts even if the debt ceiling is not raised. It is a Constitutional mandate.

What is not covered by the 14th Amendment is all the Keynesian spending that would necessarily be slashed if we were not to raise the debt ceiling.

The increase in the debt ceiling is really about making further expansions in Keynesian based government spending possible.

Thus, the obvious fear driving Keynesian Krugman toward supporting the insanity of mega coinage.

The dude knows that our debt would not go unpaid, but rather, his Keynesian dreams would go unfunded if the debt ceiling is not raised.... all due to the 14th Amendment.

Jim Buie

Polifrog: "Until the push for ObamaCare I was entirely disengaged from politics."

Thanks for informing us that your sense of history, depth and perspective go back exactly three years. May I suggest that your views, then, are extremely naive, reflecting a very shallow understanding of politics? So you have no opinion on Cheney's declaration that "Reagan proved deficits don't matter." Suddenly in the last two years, you've woken up from your slumber and decided that deficits are everything, and that Obama is a socialist/marxist demon driving the country to ruin.

Never mind that presidents and Congresses for the last 80 years -- both Republican as well as Democratic -- have engaged in the same Keynesian philosophy on spending as Obama.

So, instead of the narcissistic belief (of many) that history only began "when I was born," for you history only began three years ago when you started paying attention. No need to know what came before.

Kim

Nixon? EPA, OSHA, China, affirmitive action,...

Roch

"perhaps I am a faux Republican" -- Polifrog

$10 says you are not even registered to vote.

Worst person on the internet

Are people here (other than Andy)trying to make the case that spiraling debt doesn't matter, or are we just trying to say "your guys did it too"? If it's the latter, I understand from a human nature standpoint, but none of that refutes any of the concerns Poli and many others have about this biggest of bubbles, which so many of you love to warn about and blame things on. Deride his honesty about his depth of historical knowledge as ignorance if you wish, but does it really matter, as far as what's happening now, with no end in sight, going forward? Our kids won't give a shit.

Grant

"spiraling debt doesn't matter"

How does refusing to pay the credit card bill make one serious about reducing debt?

Andrew Brod

I am not making, nor have I ever made, the case that spiraling debt doesn't matter.

Moreover, it's not spiraling.

Andrew Brod

Good point, Grant. Congress already decided that the deficit this year would be a certain amount. Now they're threatening to force the president to violate his Constitutional responsibility to follow Congress's directions on spending.

This is stupid. And when faced with utter stupidity and recklessness, one might have to take extreme measures. This coin thing certainly qualifies.

Worst person on the internet

OK, prof, I stand corrected. It's not spiraling. I have this stupid tendency to make generalizations about things that have happened and are continuing to happen , when I should be focusing on a theoretical 1.4 trillion dollar reduction that some guy named Richard Kogan says Congress SHOULD pursue. No wonder you grin all the time. You love to joke about numbers.

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