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It’s printing money. Same scenario that leads to ultra inflation. The sort where a wheelbarrow is more valuable then the money it holds. Sure this time it may

It’s printing money. Same scenario that leads to ultra inflation. The sort where a wheelbarrow is more valuable then the money it holds. Sure this time it may used as an accounting trick. But it also frees government to spend recklessly until current money is worthless.

dragonwriter 5y ago
> It’s printing money Substantively, its not when its used to redeem Fed-held government debt. The money creation involved happened when the Fed created money to buy the debt (and, lo and behold, did not produce ultrainflation); interaction between two hands of the money-issuing government isn't substantively “money creation”, its accounting gimnicks with a platinum token. > Sure this time it may used as an accounting trick. But it also frees government to spend recklessly until current money is worthless. No, the law authorizing it already frees government to do that (and, more generally, the Constitutional power of creating money.) There are procedural constraints, like the budget and the Constitutional assignment of power over it, which prevent the executive willy-nilly spending such money having minted it (unlike, say, the Fed’s money creating powers, where it can spend all the money it creates fairly freely, which is how it bought the debt it now holds.) This is really a non-issue; its one of the clearly-legal routes around the stupid, contradictory (with mandated spending in the budget), counterproductive, and probably constitutionally null at least insofar as it purports to constrain later-mandated spending, and possibly more generally, debt ceiling without openly defying it. A less legally clear method is just to treat it as the complete legal nullity it may be and ignore it completely. In many ways, I think that's the best option, but effectively “mint the coin” is no different in substance.

dragonwriter 5y ago

> It’s printing money Substantively, its not when its used to redeem Fed-held government debt. The money creation involved happened when the Fed created money to buy the debt (and, lo and behold, did not produce ultrainflation); interaction between two hands of the money-issuing government isn't substantively “money creation”, its accounting gimnicks with a platinum token. > Sure this time it may used as an accounting trick. But it also frees government to spend recklessly until current money is worthless. No, the law authorizing it already frees government to do that (and, more generally, the Constitutional power of creating money.) There are procedural constraints, like the budget and the Constitutional assignment of power over it, which prevent the executive willy-nilly spending such money having minted it (unlike, say, the Fed’s money creating powers, where it can spend all the money it creates fairly freely, which is how it bought the debt it now holds.) This is really a non-issue; its one of the clearly-legal routes around the stupid, contradictory (with mandated spending in the budget), counterproductive, and probably constitutionally null at least insofar as it purports to constrain later-mandated spending, and possibly more generally, debt ceiling without openly defying it. A less legally clear method is just to treat it as the complete legal nullity it may be and ignore it completely. In many ways, I think that's the best option, but effectively “mint the coin” is no different in substance.