Secretly, everybody loves the trillion dollar coin

Ryan J. Reilly has an interesting article up at Huffington Post.

WASHINGTON — The Obama administration was serious enough about manufacturing a high-value platinum coin to avert a congressional fight over the debt ceiling that it had its top lawyers draw up a memo laying out the legal case for such a move, The Huffington Post learned last week.

The Justice Department’s Office of Legal Counsel, which functions as a sort of law firm for the president and provides him and executive branch agencies with authoritative legal advice, formally weighed in on the platinum coin option sometime since Obama took office, according to OLC’s recent response to HuffPost’s Freedom of Information Act (FOIA) request. While the letter acknowledged the existence of memos on the platinum coin option, OLC officials determined they were “not appropriate for discretionary release.”

I am very confident the OLC said minting the trillion dollar coin is permissible. After all, this is the same crew that OKed CIA drone strikes on US citizens. Are they really going to draw the line here and say the US Mint coining lawful money is going too far? As a practical matter though, it doesn’t really matter what the OLC said. The President can overrule the OLC’s legal opinion and act accordingly. In 2011 the OLC wrote that the President had to go to Congress to get permission to use force in Libya and he overruled them (at which point, the Attorney General should have resigned, just as AG Ashcroft and Dep AG Comey threatened to resign when Bush nearly overruled an OLC opinion), but I digress. The law unambiguously gives the Secretary of the Treasury all the power he needs to mint the trillion dollar coin, its hard to write a legal opinion around that fact. What’s more I doubt the Fed would say no to the TDC until after (hoping to dodge the decision) DOJ had already told Tsy it was OK.

The end of Reilly’s piece is kind of downer…

At a press conference in October, Obama said that the legal controversy surrounding either option would make investors nervous, since the issue would likely be tied up in litigation for a long time.
“So a lot of the strategies that people have talked about, well the president can roll out a big coin, or he can resort to some other constitutional measure,” Obama said. “What people ignore is that ultimately what matters is, ‘What are the people who are buying treasury bills think?'”

Wrong and wrong. No one has standing in court to challenge the Secretary on this, not even the Federal Reserve (as I’ve written here before, ties go the Secretary). What’s more, since the alternative is debt default, why are we worried about what people buying Treasury bills think? The Fed can peg any quantity of T-bills at any price it wishes by guaranteeing primary dealers it stands ready to buy them back in the secondary market. This is how during World War II the Fed could peg the T-bill rate at 0.375% despite Tsy running deficits 20% to 30% of GDP year after year. Certainly the govt has a duty to pay its debt but it has no duty or need to entice anyone to buy its debt. That the President of the United States does not know that is a form of learned helplessness and is kind of depressing to watch.

I can’t wait to read the OLC memo once its released, I’m curious to see how they frame the issues. I certainly wasn’t contacted by the govt about this, if Philip Diehl (a former Mint Director and TsySec Chief of Staff) had any conversations with govt officials he’s comfortable sharing, the talking stick is his…

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216 Comments on "Secretly, everybody loves the trillion dollar coin"

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Guest
3 years 8 months ago

🙂 🙂 🙂 Every time the debt ceiling comes around, the platinum coin gets trotted out by the mainstream again. The President’s comment “. . . Obama said. “What people ignore is that ultimately what matters is, ‘What are the people who are buying treasury bills think?’” is also wrong for another reason. If the President had a $60 T coin minted and deposited then the Treasury wouldn’t have to offer any more “debt” for at least 15 – 25 years. If that happened we’d soon see the Street and the CEOs begging for renewed debt issuance, which the Government could generously grant on condition that they would henceforth shut their big fat traps about the ruinous effects of the public debt on “the grandchildren,” and also take out a full page Ad in the NYT, the Journal, and the FT, confessing that that their debt histrionics over the past 30 years was motivated only by their desire to privatize Social Security and undermine the rest of the social safety net as well. The Government could insist that Pete Peterson and Maya MacGuineas write the copy for the Ad.

Guest
Laura Teller
3 years 8 months ago

It’s amazing how people think we have to beg people to buy Treasuries.

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Greg
3 years 8 months ago

Agreed, epic

Additionally though they would have to confess that all their talk about rising interest rates, while framed as if this were an undesirable outcome and something they wished to avoid, was actually THE POINT of their hysteria…..to raise interest rates on their holdings. Even if the gross amount of debt issued each year were less, if interest rates were high enough they could actually get MORE income. 6% of 1 trillion is greater than 2.5% of 1.5 trillion.

Admin
3 years 8 months ago

Guys, I think you’re way overstating this “welfare for the rich” point on US govt debt. Domestic non-govt debt is about $4.25T. The vast majority of the US govt’s debt is held by foreigners and the govt itself (as well as the Fed at present). Much of the govt holdings are Social Security and the like. Of the 4.25T domestic non-govt just 360B is held by depository institutions. The rest is owned by private pensions, state and local govt pensions, insurance companies and mutual funds. The govt’s debt is most certainly not just “welfare for the rich”. To a large degree, it’s a crucial part of the avg joe’s portfolio whether it be through pension funds, money market mutual funds or Social Security.

The MMT crew has a tendency to go way overboard with this “welfare for the rich” stuff while also contradicting themselves in stating that govt NFA is the backbone of private sector “net saving”.

There’s no need for hyperbole here. I know the “rich people suck” stuff gets emotions going and rallies the base of the party to action, but the reality is that the market for US govt debt isn’t just a “rich guy” market….

Guest
3 years 8 months ago

That’s right. But it is a rich nation, rich institution, and rich guy market, and those interest payments are welfare payments for world nations, China, and Japan, and Oil powers with plenty of money. There’s no justification for providing them with “risk free” investment, when we can just create the money.

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Greg
3 years 8 months ago

I think there can be good arguments for risk free investments but risk free investments shouldn’t have a very high return and those holding them shouldn’t act as if they get some say in what the return is. They can say no and not invest in them and if no one wants them that shouldn’t be a way to dissuade the govt from spending that which has already been approved by congress.

Guest
3 years 8 months ago

“Good” arguments for the GOVERNMENT to provide risk-free investments to well-off people and well-off foreign nations? What could they be?

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Greg
3 years 8 months ago

Whether you are well off or not one should have access to a safe investment, but again the safe alternative should be very low return. People who want to take more risk for more return can but if you want secure it will be low return, and it will not change.

I don’t see the problem so much as that we are providing a safe investment for rich people as much as that we haven’t made it crystal clear to the rich people that this investment return is determined by the govt, not by them. Economists and politicians have been bamboozled (or are doing the bamboozling) into thinking that the govt must provide the interest rate that the vigilantes want. I would have hoped the last five years had proven this claim obviously false (as if the bond holders don’t want more interest now, they’ve just been graciously giving the govt cheap money) but the myth still persists.

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Philip Diehl
3 years 8 months ago

Well, to compensate for low capital gains tax rates, the carry forward provisions, all those tax deductions, and corporate welfare, I suppose.

Guest
3 years 8 months ago

How do they compensate for these things and how can giveaways to those not in need be justified when food stamps are being cut, minimum wages are not living wages, and the social safety net is the most stingy in any modern industrialized country? If the Government is going to giveaway stuff, these interests must be last, not first, in line.

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Philip Diehl
3 years 8 months ago

I was hoping my comment would be taken tongue-in-cheek. For the record, I’m a member of one of the smallest minorities in America, an endangered species really: a white, male, Protestant, 60+ Texan, liberal Democrat.

Guest
3 years 8 months ago

Whatever happened in Texas? During the 60s and 70s you were a pretty big minority.

Guest
Philip Diehl
3 years 8 months ago

Joe Firestone (LetsGetitDone) December 6, 2013 at 11:25 pm
Whatever happened in Texas? During the 60s and 70s you were a pretty big minority.

Texas was Dixiecrat for decades with the rare liberal/populist popping up as a legacy of FDR and Sam Rayburn. Most Texas Democrats were indistinguishable from Republicans on most issues. They remained in the party because it was impossible to get elected as a Republican.

The state party began a death spiral after East Texas defected in the wake of the ’64 and ’65 Acts. Then Yankee Republican hordes moved in and top-of-ballot moderate Dems who had coattails, like Lloyd Bentsen and Bill Hobby, retired. Rove and Delay administered the coup de gras. Delay gerrymandered the Dems into 20 years of exile, and Bush’s Brain laid the foundation for 20 years of total dominance of statewide offices by the GOP.

Optimists think the state will turn purple by 2016. No way. We might start winning a few statewide races by 2018, but the GOP will continue to dominate at least until 2022, after the 2020 redistributing. Even then, with the Voting Rights Act gutted, Citizens United, and GOP voter suppression, it will be a close thing.

Admin
3 years 8 months ago

I guess my point is that that $4.6T is largely made up of pension funds and other forms of savers who aren’t just “rent seeking” rich guys. We’re talking about Social Security, Federal Employees Retirement, the Military Retirement Fund, the Retiree Health Care Fund, money market mutual funds and on and on. Describing the Federal debt as “welfare for the rich” is incredibly misleading when you break down its actual owners.

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Greg
3 years 8 months ago

I dont disagree Cullen. Im in favor of a higher national debt and more secure retirement accounts. My point is that many of those screaming about the debt are interested in cutting spending only but they want higher “borrowing costs” on the spending that IS done, which will likely end up with more interest income to debt holders…… of which most of the screamers do benefit from. Sure its a pretty small amount overall, which is EXACTLY the point. Why aren’t they pointing out how small a portion it is rather than blowing it out of proportion?
Its NOT because they are concerned about seniors and average Joe savers. Are they making millions a year off it? Probably no individual is but those guaranteed interest payments form the govt represent a significant source of stability and certainty to their personal holdings or to the companies they invest in or sit on the boards of.

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Philip Diehl
3 years 8 months ago

Epic.

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Philip Diehl
3 years 8 months ago
I’ll address several points: – I have no doubt the TDC has a strong legal foundation. I wrote the law as most of you know, I know the legislative history intimately, I know how the TDC relates to the rest of coinage law, and I know the precedents. My confidence is reinforced by the fact that Laurence Tribe agrees with me and by the weakness of the opposing position which is ideological claptrap. Tribe makes the point that no one would have legal standing to challenge the TDC. – I’m convinced that the WH statements rejecting the coin reflected political and policymaking considerations not their legal analysis. The GOP had created one hell of a dilemma for themselves. If they relented, they would discredit themselves and alienate the radicals in the House and the party base. If they drove the country into default, they would make the GOP a permanent minority party. Why would Obama want to rescue them by endorsing the TDC, while giving them a cause célèbre about the alleged unconstitutionality of his action? The WH knew Boehner would eventually fold, but just in vase, I think it is likely they prepared to mint the coin at the very last minute. – The claim that minting the coin would be an unconstitutional usurpation of congressional authority over coinage has no basis in fact or law. Congress enacted legislation, signed into law by President Clinton, giving the Treausry Secretay virtually unfettered authority to mint a platinum TDC. This might have been unwise of Congress, but it eliminates any rightful claim that minting the coin would subvert the checks and balances of the Constitution. It’s also worth noting that the Constitution gives Congress very limited authority over the creation of money. It addresses coinage only–nothing about printing currency or other… Read more »
Guest
3 years 8 months ago

Also, would the House alone get standing to challenge the President on this? I don’t think so, previous Supreme Court precedents seem to require that both Houses of Congress must go the Court as a body if they want the Court to throw out a presidential interpretation of the law. They decide that way, because they don’t want to get between the two branches especially since Congress can always rectify the wording of a law if it so chooses. But if it can’t rectify the wording because the Senate and House disagree, then obviously the Congress isn’t choosing to do that. So, why should the Court even consider intervening.

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Philip Diehl
3 years 8 months ago

I recall that in 2011 a bipartisan group of House members sued the President in federal court claiming his order allowing US aircraft to support the Libyan rebels violated the war clause of the Constitution. I know there are similar examples but none immediately come to mind.

Guest
3 years 8 months ago

Did they get standing in the Supreme Court?

Guest
Philip Diehl
3 years 8 months ago

The filed in federal district court and as far as I know they were not denied standing.

Guest
beowulf
3 years 8 months ago

Yeah, the court ended up dismissing it for lack of standing.

Judge Reggie Walton ruled the lawmakers do not have standing to challenge the president’s decision to involve the American military in the conflict.
“While there may conceivably be some political benefit in suing the President and the Secretary of Defense, in light of shrinking judicial budgets, scarce judicial resources, and a heavy caseload, the Court finds it frustrating to expend time and effort adjudicating the relitigation of settled questions of law,” Walton ruled.

http://dailycaller.com/2011/10/20/judge-tosses-congressional-lawsuit-against-libya-intervention-kucinich-and-jones-hint-at-an-appeal/

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Philip Diehl
3 years 8 months ago

I stand corrected. 🙂

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beowulf
3 years 8 months ago

Its like ejecting from a plane in a Martin-Baker seat. Its foolish to pull the cord when the plane is flying straight and level but if you’re about to crash into a mountain, the smart play is punching out. If it wasn’t for this debt ceiling stupidity there’s never be a need to use the Mint to avoid default. I’d be happy if platinum coin loophole repealed at the same time as the debt ceiling.
http://www.martin-baker.com/clubs/ejection-tie-club

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Philip Diehl
3 years 8 months ago

A good trade-off. Interesting that Greg Waldon’s legislation repealing the platinum coin act hasn’t moved.

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beowulf
3 years 8 months ago

What screwed up the House is a curious fact… The obvious way to shut down an agency from doing something is to cut off its appropriations except rather amazingly there’s a govt agency that operates just fine without money from Congress, the Mint. Apparently its just easier for them to make their own.
It goes without saying who the wizard of public finance is who somehow talked Congress into approving that years ago. :o)

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Yet Another Ryan
3 years 8 months ago

TPC may not be challenged at The Supreme Court but Congressmen would have strong opinions when The President subverted their constitutional powers. Both parties in the legislature would probably support a bill to remove the loophole in the platinum coin law and could even threaten a political impeachment.
I think it is safe to assume Boehner and McConnel would have steam blowing out their ears for weeks following a TPC deposit at The Fed and rightly so. TPC is basically an admission by the executive that the constitutional system of governance has failed. Because it is technically legal doesn’t mean it is a good idea. In a hundred years from now, I’d like to think the TPC would be a watershed moment that enables people to understand how the economy really works but I’m more afraid of the lawlessness of a President that can ignore laws and look for loopholes when there isn’t an impending national security emergency. If it really is a good idea, then working within the congress and constitutional framework to change the law and make it a formal matter of policy to use platinum coins in addition to treasury notes, bills, coins and what not.

Admin
3 years 8 months ago

Smart comment Ryan. The coin is all about attempting to exercise a monopoly control over money by the executive branch. As you note, this might not go over so well. The problem is, if push comes to shove, should we be willing to exercise this power at times of potential crisis (as a default of US govt debt surely would?) I say yes. Luckily, it hasn’t come to that, but the lesser of two evils here is infringing on the checks and balances in place if it requires avoiding a financial armageddon that is the result of our own stupidity to be able to work together.

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JK
3 years 8 months ago

Cullen,

This doesn’t seem correct to me: “The coin is all about attempting to exercise a monopoly control over money by the executive branch.”

How would the executive branch have monopoly control over money? It would still be Congress that creates and passes budgets/appropriations, right? It seems more accurate to say TPC would give Congress monopoly control over money. But even that wouldn’t be true because banks would still be in the business of creating credit. Coulnd’t vertical money creation via something like TPC occur alongside a privatized banking system that creates credit? And really… is it that much different than what already exists? TPC vertical spending is essentially Deficit Spending + QE, right?

Admin
3 years 8 months ago

The budget deficit is largely endogenous. Congress doesn’t really control it as much as some might think. The trillion dollar coin means the Executive Branch doesn’t have to issue debt to spend money. It could literally just credit bank accounts as a pure money issuer rather than obtaining deposits, redistributing them and issuing bonds as it does now. So the Executive Branch could literally just mint up a $50T coin and it effectively becomes a money issuer rather than a bond issuer as it is now. You’re right that it’s wrong to say “monopoly control over money” because banks would still be the issuers of much of the money, but the coin is a power grab by the Executive Branch. I guess that’s my point. And because of this I don’t think it will ever happen. In fact, it sounds like the Fed discussed this and refused to be involved in such a move so the idea appears to have already been killed by the Fed.

Guest
3 years 8 months ago
I don’t think it’s a power grab by the Executive as much as it is a power grab on behalf of people in Congress who would like to see more expansive government “deficit spending” in relation to the deficit hawks/austerians. Let’s look at the consequences. The austerians can’t use “we’re running out of money,” “the grandchildren,” “teh debt,” and “the government is like your household” anymore as rationalizations for not spending on programs the fiscal activists would like to pass. Progressive Democrats become much stronger, because they can pass things that will be very popular with their base, while a very important tool of opposition is gone. Blue Dog Democrats would have a more difficult time adjusting, but really it helps them. because they’re no longer continuously cross-pressured by the occasional need for Democratic Party advocacy of populist measures and their own more local constituencies that want them to be fiscally responsible. In short, I think the coin would be a power bonanza for the Congressional Democratic Party, and especially its Democratic wing. That’s why Obama’s using the coin, at whatever jumbo face value, may cause impeachment in the House, along with failure to convict in the Senate. Since the coin would have worked in this way, and the President had plenty of opportunity to use it in the Summer of 2011, it makes one think that perhaps President Obama didn’t want to grab any additional power for the Democratic Party. But, instead, wanted to retain the current balance of power in Washington which advantages the Party he really belongs to: the nascent “purple” Wall Street Party which would be led by people like Bloomberg, Pete Peterson, David Walker, Bob Rubin, and a whole host of Washington, DC critters currently being supported by the media and the network “fix the… Read more »
Admin
3 years 8 months ago

True, but I think you’re over emphasizing some of these points. Conservatives won’t use the “we’re going bankrupt” (as in, “running out of money”) line. They’ll use the “we’re going bankrupt because high inflation will come” line. Which, actually has some merit to it when it comes to govt spending and the efficacy of it (though probably not as much in the USA, as it does in a lesser developed country). But be prepared for this shift because it’s coming. The debate won’t really change all that much in the coming decades. It’s just that once conservatives understand inflation as the true constraint, then they’ll pinpoint that as the potential risk and their dialogue will shift to account for this.

Also, I hate to rain on the coin parade, but it was shot down by the Federal Reserve supposedly due to political issues. So all the theorizing about the coin looks like a moot point. It ain’t gonna happen.

Guest
3 years 8 months ago

“Also, I hate to rain on the coin parade, but it was shot down by the Federal Reserve supposedly due to political issues. So all the theorizing about the coin looks like a moot point.”

I don’t believe that. I think it was shot down by the President because it was inconsistent with his Administration long drive toward “the grand bargain.” The Administration was clearly placing blame for this on the Fed, and while I’m sure the Fed raised all kinds of objections, the President could have forced the Fed’s compliance with his will if he had really wanted to mint the platinum coin in January of 2013. What could the Fed do if presented with the coin? Refuse to credit the legal tender coin? That would never happen. Of course, then he would have faced political problems, but if the coin had been large enough and he had paid back a large percentage of the debt with the proceeds, then he would have established a new political environment by now.

Admin
3 years 8 months ago

Well, it’s been confirmed that it was the Fed. So, I hate to rain on the parade twice, but sometimes when you get wet you need to run for cover. 🙂

““Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” said Treasury spokesman Anthony Coley.

But it was the Federal Reserve that killed the proposal, the official told BuzzFeed, denying a purely political rationale for the announcement, saying the independent central bank would not have credited the Treasury’s accounts for the vast sum for depositing the coin.”

http://www.buzzfeed.com/zekejmiller/the-trillion-dollar-coin-was-killed-by-the-fed

Guest
3 years 8 months ago
The date on this article is January 13, 2013. At that time, and perhaps to this day, the President was seeking a “Grand Bargain” with the Republicans. If he had used the coin, that would have blown his rationale for the GB out of the water. On the other hand, if he were seen and understood to have killed it, he would have gotten all kinds of anger and rage from the progressive blogosphere whose fund raising efforts would have been accelerated and whose anger at the President’s “cave” to the Republicans would have known no bounds. So, it was very convenient for the President to have his people put out the story that it was really the Fed who ought to be blamed for vetoing the coin. In other places, Beo has made it abundantly clear that the law specifies that in case of disputes on financial interpretations between the Fed Chair and the Treasury, the views of the Secretary shall prevail. That means that if the Fed Chair had refused to credit a platinum coin to the Mint’s account, then the President would have ground for removal of Bernanke for cause. That would have been unpleasant, of course, politically speaking. But even if Bernanke was prepared to sacrifice himself on the altar of Fed independence and disobey the clear language of the law, it would have been possible for the President to do that and get a new Fed Chairman who would credit the coin immediately confirmed. That would have required Reid’s help, of course, because he would have needed to exercise the nuclear option earlier this year. But it could have been done. And if the President had gone for the home run and minted the $60 T coin, and began to pay off the debt then… Read more »
Guest
Philip Diehl
3 years 8 months ago

Ok, according to this article Buzzfeed has a single source (what happened to multiple source reporting?) claiming the Fed killed it, and Krugman has more than one WH source saying they killed it to keep the pressure on the House. I’ll go with Krugman and his multiple sources.

Besides, Bernanke coughs up $85 billion a month in QE for several years to save the world economy but in a pinch wouldn’t recognize the seigniorage from the TDC to save the world economy?

Admin
3 years 8 months ago

Anthony Coley isn’t just any source though. He’s the Deputy Assistant Secretary of Public Affairs at the US Treasury. He’s a pretty reliable source. If he says the coin idea is dead I am inclined to believe him. But maybe I am taking them too literally….Who knows?

Guest
3 years 8 months ago

“They’ll use the “we’re going bankrupt because high inflation will come” line.”

I know that they will. But I remember the post-war period, the 60s and the early 70s. Back then liberals were always able to in the inflation vs. unemployment argument. Then the mis-diagnosed cost-push inflation of the mid and late 70s occurred and the fiscal responsibility trope was added and the inflation side became dominant. In this new context, with fiat money, I think an understanding that fiscal responsibility isn’t about budgetary deficits vs. surpluses will change the debate dynamic and then the unemployment side can win the argument until there actually is inflation. No, I think the inflation argument will be a loser for some time to come and that it will be possible to use the policy space to get to full employment, especially when people see the Government paying off the debt with PCS revenues.

Admin
3 years 8 months ago
In my view, the way to win the unemployment debate is not to discuss financial gimmicks like the coin. It’s in understanding the way a capitalist system works. Look, capitalists won’t hit full employment on their own. They will maintain a buffer of unemployed because it is in their best interests, for the sake of padding profitability, to do so. That shouldn’t be a controversial point. There’s no level of govt spending that will magically make capitalists maintain a zero involuntary unemployment environment. It ain’t happening. If you want to hit full employment then you need to communicate the fact that surivival in a monetary world requires an income and it’s immoral to leave 5% of the population without an income just because capitalists will never hire them. Do the math on that – if you have an ounce of compassion and understanding of the monetary system then you can make a real viable argument for something like a JG or guaranteed income. But I don’t think it helps to use the MMT line of argument about financing and “too many dogs, not enough bones” stuff. That’s got nothing to do with this. Full employment is a moral position. Not an economic position. If you want to get to full employment you need to drop the “price anchor” arguments, the “too many dogs” argument and all the other stuff that has nothing to do with why there’s involuntary unemployment. Portray capitalists as greedy profit hoarding people who won’t achieve full employment on their own. And then communicate to people how it’s unreasonably immoral to allow people to suffer unemployment at the expense of this system when the system, by its mere existence, requires us all to have an income. There’s your rationale for a JG. But you have to present… Read more »
Guest
3 years 8 months ago

This is exactly right, Cullen.

There are lots of problems with the JG and guaranteed income schemes. (I’m personally more in favor of the latter.) But they are attempts to address something really important: we have the moral obligation to see that every single one of our fellow citizens has the opportunity to earn a living.

Guest
3 years 8 months ago

This one’s for beo. You know “impossible” is a very strong word. The JG won’t pass without a political change involving a strong progressive majority and a willingness to use the nuclear option on the filibuster. In that kind of environment (remember 1933?), the authority and appropriations to implement a JG may well pass the Congress without any requirement for pilt projects.

Guest
JK
3 years 8 months ago

John Carney, have you changed your mind on this piece you wrote in 2011?

http://www.cnbc.com/id/43064407

Guest
beowulf
3 years 8 months ago

I second what Cullen said about running pilot programs. Obamacare could have used a few of those prior to its October launch. As it stands, the Obamacare web debacle is going to be used as exhibit A in opposition to any new govt programs for the remainder of our lives. A national Job Guarantee or guaranteed income program will be impossible to enact without first showing successful pilot projects at the local level. Federal grants to fund those is the logical next step.

Guest
3 years 8 months ago

Thanks for your help Cullen. I had no idea you were in favor of a JG or a BIG or some combination of the two based on past statements I’ve seen. That said, I appreciate your support of the JG. On the communications strategy for getting to it, I’m not sure you’re right. But I am very sympathetic to moral arguments for this like the one you just gave, and often appeal to FDR’s second Bill of Rights when I talk about it.

Guest
3 years 8 months ago

Another additional reply on this point. Mat Forstater tells me:

“I have a forthcoming article in the journal PHILOSOPHY AND SOCIAL CRITICISM, special issue in honor of Amartya Sen, that reviews the various rights and justice arguments for the JG.”

Guest
3 years 8 months ago

This is a reply to you Cullen on this thread which ran out of replies. I doubt that MMTers will abandon the dog and bones argument, or the price anchor argument. But I don’t see any problem with them deciding to cast things in moral terms. Certainly, Warren, Bill, Randy, Marshall, Stephanie, and Pavlina often use moral arguments in their work. And I frequently use moral arguments in my commentary and blogging, as does Mike Norman. So, I think many of us would be open to the moral argument you’re offering.

Admin
3 years 8 months ago
Well, here’s the thing (and trust me, I am trying to be constructive for MMTers!). I have always been open-minded to a JG of some sort. I just don’t buy faulty logic for implementing it. So, when I see MMT economists describe involuntary unemployment as the result of not enough spending to meet the private sector’s demand for “net saving” then I call BS because that’s obviously wrong to anyone who understands the nature of a capitalist system where “net saving” of NFA really has nada to do with whether capitalists will sustain zero involuntary unemployment. When I see MMT economists describe the JG as a “price anchor” when it’s really more like a price buoy I call BS. These are rather flimsy economic arguments trying to rationalize the JG. And here’s the problem with this view – you are making full employment an analytical argument. You will lose this debate 10 times out of 10 because there’s a real rational reason for the involuntary unemployment and that’s the result of capitalists doing what they do best – protect their bottom lines. You won’t beat anyone on this debate on analytical grounds because it’s going to be impossible to convince a nation full of capitalists that capitalists are wrong not to hire everyone. BUT, if you reframe the debate in a moral sense then you can’t lose because most capitalists are moral people who will sympathize. So, instead of trying to convince people that full employment is an economic debate, you make it a moral debate. And you point out a simple fact – we live in a monetary economy where having an income is a necessity. But we also utilize a capitalist system that will ALWAYS fail to provide an income for everyone involved. So how can it be… Read more »
Guest
3 years 8 months ago

Just realized — I really haven’t followed this JG much — Wouldn’t JG make government the Monopoly Supplier of Shitty Jobs? Kinda love that. God, the t-shirts…

Admin
3 years 8 months ago

Yes, that’s the biggest potential downside risk of the JG – that it just gets filled with people who become permanent “musicians” or babysitters (these are actual jobs MMTers list) collecting a living wage and govt benefits. There are downside risks to a massive govt employment program that I haven’t seen analyzed all that well by JG proponents. So it’s hard to be convinced of its efficacy without seeing a real world test run. Plus, such a program is much more viable in a highly productive nation like the USA than it is somewhere like Vietnam or India. So there’s a good deal of “exorbitant privilege” in this debate to begin with….Lots of moving parts. But again, it’s really hard to win people over with an economic argument here because the economic argument is generally pretty weak.

Guest
3 years 8 months ago

“So all the theorizing about the coin looks like a moot point.”

Okay fine, yes, it’s mutual masturbation.

And there’s something wrong with that? 😉

Really, I give some credence to the common Libertarian notion that they’re “keeping ideas floating in the hopper” in preparation for the day when they might actually become reality. And in fact we’ve seen a lot of their ideas become reality over the last three decades, after circulating for decades before that. Not a crazy notion.

Admin
3 years 8 months ago

I don’t know about “mutual masturbation”. Let’s stick to mental masturbation. Preferably several thousand miles apart from one another. 🙂

Guest
3 years 8 months ago

That is *decidedly* well-advised.

Guest
Matt Franko
3 years 8 months ago

Here’s a link to the October presser video:

http://www.c-spanvideo.org/program/RemarksonGov

31:00 mark….

I have to admit that at least he didn’t say “we’re out of money!”…

Which is probably a meaningful change in the details of his statements… perhaps evidence of some sort of significant change of thinking on his/admin’s view on public finance at the Federal level…

I guess ‘the coin’ ended up not being required, but as hard as I tend to be on these people, the President’s statements here are manifestly different… let’s see if it sticks with the admin or not going forward… iow I dont see how he can ever say “we’re out of money” again after hearing him say what he says in this interview… we’ll see time will tell … rsp,

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