Trillion dollar coins

Apparently, the US Treasury, though they don't have the authority to print money, do have the authority to mint whatever denomination of coins they want, in platinum.  The law was designed to allow the treasury to issue collectible coins, but that law clearly states that those coins are legal tender. The reason we can't just print money to solve the debt problem outside of this weird scenario is that the federal government doesn't actually print money, the Federal Reserve does.  The Federal Reserve isn't a branch of the US government, it's a private bank that prints money, which it then lends to the government at interest, which the government then distributes into the economy.[1. There are a lot of economic premises in this post that I don't really understand.  One of them is the fact that all the money that the US has is created paired with an identical debt, but the debt accrues interest while the money doesn't.  It seems like this guarantees that debt will never, ever be settled entirely -- which is probably a good thing, because complex mutual debt is a good way to stop people murdering each other -- but it still seems like a weird system.]

The Debt Ceiling, the thing we hear almost constantly debated lately, is the number Congress says is the most that the President is allowed to borrow in a term.  If the government needs to spend more money than they have, and the Debt Ceiling prevents them from borrowing new money to pay off old money[2. I'm certain it must be better to owe lots of money to the Fed than to default on loans to other countries.], the US government defaults on its loans, which could be really, really bad for us.

So if we buy loads of debt back from the Fed, we can borrow as much as we need from them and keep everything running smoothly.

Apparently there are no good economic or legal reasons this wouldn't work.  I'm having trouble finding sources that can explain why, because it seems catastrophically irresponsible to me, but I guess all the commentators agree that it wouldn't damage the economy and isn't against the law.

On the other hand, I agree with all the reasons Felix Salmon at Reuters offers that printing a platinum coin would be psychotic on the political level.

Granted, my opinion is formed based on a bunch of late-night googling, so I'm not exactly a well-informed expert.

Still, a lot of people seem weirdly serious.  I first heard of this when I was scrolling through the Daily Kos, which actually has a petition asking President Obama to order the minting of the coin.  There's also a petition on We the People, at about 7 thousand out of 25 thousand necessary signatures to demand a response from the Obama adminsitration.

One of the first articles I saw when I started googling, Trillion dollar coin: The new nuclear option, by Aaron Blake, described the coin like this:

Just as with reforming the filibuster, the trillion-dollar coin idea presents all kinds of potential unintended consequences, including opening the door to other practices that have thus far been off the table. And while that would benefit the Democrats in this particular instance, there will be a day when the roles are reversed (the filibuster being case-in-point).

“It isn’t just a nuclear option, it is opening up the Book of Revelation,” GOP consultant Dan Hazelwood said of the trillion dollar coin. “Laws, Constitution and common sense merely cease to exist.”

And regardless of whether you think it’s a good idea, the trillion dollar coin would undoubtedly further poison the political well of a federal government whose well is already downright toxic.

At this point in our political climate, I don't feel like the trillion dollar coin is an entirely implausible event.  I do think, however, that if we mint it, we are even closer than I would have guessed to the end of America as established by the founding fathers around the time of the American Revolution.

Which, I mean, good riddance.  This is a country founded upon the central value "We don't want to pay our taxes."  As a world power,[3. Which we probably wouldn't be anymore, anyway.] we can do better.

"The People's Bailout"

I've seen this mentioned a few times, but I've only just gotten around to checking out what it is, via Cory Doctorow on Boing Boing.  It turns out, you can buy up outstanding debts -- this is what debt collectors do (I guess the idea is the original company figures they aren't getting paid, so they cut their losses selling the debt at a massive discount).  Those debt collectors, in David Rees's words, "hound debtors to their grave trying to collect." The People's Bailout is a variety show that's taking place this November in New York, raising money from the Rolling Jubilee, buys debt just like debt collectors, for pennies on the dollar.  That's it.  The debt collectors have a second step, extracting the money from suffering people.  The Rolling Jubilee just buys it up and abolishes it.  The debt goes away, forever.

They explain in a youtube video:

It's my understanding that the economic system we work in requires ever-expanding debt -- money is made, loaned to the government at interest, the government loans it to the people at interest, and the people loan it to each other at interest, and to cover all that accruing interest, we have to print more money...

It seems to me like there has to be some point where we just accept that not all the debts are getting paid -- and this seems like an awesome way to do it.  We can dial back the impact of debt on people's lives, and if we can bring down the costs that get those people into debt in the first place (cheaper education, available food, housing and healthcare, etc.) we can keep the civilization we seem all to want, without creating a self-destructing underclass (and, by extension, a self-destructing civilization.)

These people are on my list for potential future charity debt listings.  I'm looking forward to seeing where this goes.

Charity Debt: The Wikimedia Foundation

I'm a few days late on picking a charity this month, partly because I forgot that, after Halloween, a new month started, and partly because the biggest issue that's been weighing on my mind is the election.  I'd love to give a contribution to the Obama campaign, but it's kind of pointless to promise to donate money sometime in the indeterminate future to help a campaign that will be over tomorrow.  For a similar reason, I'm not donating to Hurricane Sandy relief, although I do have the Red Cross, or other emergency relief organizations, in mind for a future pick. I picked the Wikimedia Foundation for this month, the people behind Wikipedia, partly because I've meant to donate to them for a long time now.  I think that Wikipedia is one of humankind's great achievements -- on a sort of second-tier, alongside stuff like the scientific journal or public education, but not on level with the printing press or the internet.  I get a lot of use out of Wikipedia, and it's important to me.

I also picked them because the organization I was going to donate to, PublicKnowledge.org, doesn't show up on Charity Navigator -- instead, when you search for them, one of the results is the Wikimedia Foundation, which has 4 out of 4 stars.  Public Knowledge has been open in a tab on my computer for about two weeks, I keep meaning to look into them.  I still plan on investigating further, but the fact that they aren't on Charity Navigator kind of sketches me out.

As usual, I won't be able to make this donation for a while.  (I've got a lot to get through before this one comes up in line.)  If you want the list, click here.  And, here's a video of Jimmy Wales at TED talking about Wikipedia.