The Trillion Dollar Coin

Trillion Dollar Coin

To most the #mintthecoin idea just sounds really stupid. If we could just mint trillion dollar platinum coins any time we wanted then why not mint 16 of them and be done with the debt? Wouldn't it just make sense? The solution to our problems are right there. No need to ever worry about budget deficits. Seems almost criminal that our government has been holding out on us for so long. We for all these years have we been made to suffer and pay higher taxes? Most rational people however realize that this isn't a solution. There are so many problems with this, they are almost too numerous to name. I will name a few: I am pretty sure it doesn't align with the Constitution. Talking with my cousin +David Correia we concluded that even if the coin would be used to pay down debt, it would still be an appropriation of government funds. Only congress has that right under the Constitution. Speaking with +Tony Elam we concluded that the long term debt problem would still exist, that is if we only printed one coin to pay down debt. We are expected to run another trillion dollar deficit this year, so we would be back to a 16 trillion by the end of the year. +Peter Schiff said on his radio show that the federal reserve could not sell this coin to anyone, except back to the US government. Which is correct, no one would buy a coin worth $2000 in platinum for 1 trillion dollars. That is assuming the Federal Reserve would want to take a coin worth 1% of the value. No there is another reason the call for this call is happening.

The real reason for the call for #mintthecoin is to try and take away any leverage the republican have to try and force some fiscal sanity back into the budget. As I previously mentioned, the 99% of the public really doesn't want to pay for the current government they are receiving. How can I say that? Well I would liken it to buying any other consumer goods. People have been for a number of years clamoring for more portable computing, iPhone  iPad  and other such devices. They are happy in general to pay for them, even though they cost more. The service that comes with them cost more on a monthly basis. Where are the calls from the general public to have their taxes raised to pay the deficit spending? It doesn't exist, most of the talk revolves around figuring out how to get other people  the rich, to pay for the government everyone else wants for free. If the general populous doesn't want to pay for the government we have, and we have already taxed the rich more to "assist" in paying for the deficit. Then the last bit of the equation that hasn't been addressed is reducing spending to a more sustainable level. Even the republicans are not pushing for a balanced budget. There proposal would still run large deficits. It is not like we have had large deficits for a long time. The national debt has doubled in 8 years. So we have already tried large stimulus to prime the economy. We need to address the root causes of the deficit, even if that means as the republican want to do, which is in the long term. The #mintthecoin idea is simply to take away the leverage they have to push this forward, denial of raising the debt ceiling. Thank goodness that it is just talk and serious people will not put forth this silly idea or it would take an legitimacy that the US government has to our debtors that we will not simply return their investment into nothing by inflating it away.

Read more »

The Fiscal Cliff Deal

The congress has patched together a deal on the "Fiscal Cliff" evidently. Most people are still left scratching their heads as to what the deal actually does or doesn't do to solve the problem. I still contend that this was labeled incorrectly from the start. The real debate should have been why Washington can't live up to it's own promises. The supposed spending cuts while real, are really offset mostly by budgetary increases in spending. In other words a good portion of the so called cuts actually come from non-increases. Only in the world of politics does something like this actually make any sense. If last year i spent $1000 to maintain my car and this year I plan on spending $950, that is a $50 cut. In Washington, if i had previously anticipated spending $1050, going back to $950 is a $100 cut. A difference between a 5% and a 9.5% cut.

The spending cuts were part of a previous deal when the president asked for more spending. So he got the extra money at the time for more spending in exchange for less spending later. So now they come back and say nah never mind we want even more spending. I saw a chart that shows even adjusted for inflation that federal outlays during the Obama administration are over $10k per person. The chart only went back to 1977, but it is the highest it has been in the period from 1977 till today. It is dishonest to say that the Federal Government is not fully funded, according to any measure, the government is spending more than it ever has. The problem is they never spend money wisely, that will not change even if taxes on the rich go to 100% and 50% for the rest of us. They will always say that there is more to spend on. That is a fact that will not change. And by the way if the problem is government doesn't receive enough money to support all the wonderfully successful programs, why bother with lowering any tax rates? They need to be paid for. If we value them, we need to pay for them, all of us to one degree or another.

Another item that has been latched onto to make this sound more ominous than it really is, using a 10 year number. I have tried look up how much revenue this actually raises. The number, if when mentioned, is in 10 year terms. The real number is 36 billion per year (averaged so even less in the early years), while not anything to sneeze at is a pittance considering 2013 is projected to have a 1.1 trillion deficit. So if almost all the "extra" money the Federal Government is spending comes from borrowing who cares about a paltry 36 billion? Other than to score points in the eyes of those who are envious and hateful toward those who have been (by hard work or luck) more successful financially than them. It is easier to either knock down others or blame them for why we are not as wealthy as we would like to be rather than looking at what we can be doing to make our situation better. What you choose to do or not do with your talents, time, and energy have far greater to do with where you will be. Media and politicians thrive off emphasising that someone else has more than you do.It would be far more fruitful to consider where YOU were, what your plan is going forward, and what you can do to impact that. Rather than look for others to blame. 32 billion is a measly 3.2% of the deficit.

One part of the revenue raising is to restore the temporary decrease in SS taxes collected. Which are part of "payroll taxes" as apposed to income taxes. It is all a tax on my income, i don't care what they call it. But they do, it allows them to say stupid things like "This bill does not raise income taxes on 99% of workers in the country". The fiscal cliff deal does however raise taxes on all workers. For those worried about the budget and what we actually spend money on consider this. The 3 largest areas of growth have been defense, medicare, and medicaid. All of which have growth better than 75% over the last ten years. This is where the money is going, over 600 billion increase over 10 years in these 3 programs alone. If averaging, than the 60 billion these programs will grow already dwarfs the amount of the new revenue. I will end this post by saying I don't know how any reasonable person can conclude that the issue is with revenue. Almost no one whats to pay more, the standard of living has not moved in 10 years, and we can't extract enough from even the top 2% to get enough money to pay for the government we have. The real issue is, we can't pay for the government we have, it needs to be cut. The deficits we are running will make the eventual interest payments even higher, leaving even less money for the programs the american people need.

Read more »