Hat tip: Mises Blog
Let me add Cumberland Advisors' Bob Eisenbeis sensible remark on such outrageous proposition:
a tongue-in-cheek proposal that was getting traction in DC was that the Treasury (and thus the Administration) could solve its funding problems by simply exploiting a loophole in the law that would permit the Treasury to mint a trillion-dollar platinum coin, deposit it in the Treasury’s account with the Fed, and write checks on that account to cover operating costs. Shame on us that we are even talking about the possibility, and even Paul Krugman has weighed in on the issue. To mint the coin would be to print money, and we know from history that printing money doesn’t solve a debt problem. The Spanish found that out when they scoured the world for gold. The more of it you have in circulation, the less valuable it becomes. The Germans found it out during the Weimar Republic, and the Argentineans found it out in the latter half of last century. Krugman claims it isn’t printing money because the Fed would offset Treasury spending, which would put new money in the hands of the public, with asset purchases. But he is wrong, since he is assuming behavior by another governmental entity to offset the Treasury’s spending and hasn’t apparently looked recently at the Fed’s exploded balance sheet. As the result of its quantitative easing programs, there are no offsetting transactions and wouldn’t likely be such transactions. [italics added]
When experts resort to surrealistic ideas as space aliens and platinum coins as solutions to economic fragility, you know how debauched, not only the economic spectrum has been, but importantly, the public's moral standings by virtue of its popularity.
As the great Ludwig von Mises warned, (bold mine)
There are still teachers who tell their students that “an economy can lift itself by its own bootstraps” and that “we can spend our way into prosperity.” But the Keynesian miracle fails to materialize; the stones do not turn into bread...There is no use in arguing with people who are driven by “an almost religious fervor” and believe that their master “had the Revelation.” It is one of the tasks of economics to analyze carefully each of the inflationist plans, those of Keynes and Gesell no less than those of their innumerable predecessors from John Law down to Major Douglas. Yet, no one should expect that any logical argument or any experience could ever shake the almost religious fervor of those who believe in salvation through spending and credit expansion.
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