Trillion Dollar Coin and the Bataan Death March

I wanted to come out of retirement (started studying military history and may blog on it some day) long enough to make a point about today’s Tsy announcement that neither Tsy nor the Fed was interested in the trillion dollar coin.

Treasury: We won’t mint a platinum coin to sidestep the debt ceiling

To throw away the high ground in a fight; to climb in the water to fight the shark is just irrational when you can stay in a boat and throw sticks of dynamite. It reminded me of General MacArthur dooming American troops to being starved out of Bataan by the Japanese Army by him neglecting to secure his food depots.

“One depot alone, at Cabanatuan on the central Luzon plain, held fifty million bushels of rice—enough to feed U.S. and Filipino troops for over four years.”

American Caesar: Douglas MacArthur 1880 – 1964

However, its also possible that the New York Fed has a Manhattan Project or two up its sleeve. Time will tell.
Ben Bernanke and the Trillion Dollar Gift

Don’t take consol in your fears

UPDATE: Tsy blaming the Fed for not issuing the TDC is weak, like blaming your dog for you not going out for a walk this evening. The Federal Reserve Act’s dispute resolution procedure could have been designed by a Saudi marriage counselor.
“Wherever any power vested by this chapter in the Board of Governors of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, such powers shall be exercised subject to the supervision and control of the Secretary.”
http://www.law.cornell.edu/uscode/text/12/246

About

View all posts by
Guest
Kris Smith
3 years 3 months ago

It’s precisely the right strategy in my view. Obama needs to lead the Republican leadership in the House and Senate to believe that no one is going to pull their chestnuts out of the fire if they fail to increase the debt ceiling. Otherwise they have every incentive to cling to a hard right position and try to force his hand.

Guest
3 years 3 months ago
If you read the Administration’s statement at face value, it makes perfect sense in terms of President Obama’s political incentives (given that they do not understand how money works). By ruling out the trillion dollar coin, the 14th amendment, and any other work-arounds that might come up, the Obama administration is pursuing a deliberate strategy – the strategy known popularly as burning one’s bridges” (or boats). Obama is following in the well-worn footsteps of Cortés, who sank his ships upon arrival in Mexico, the ancient Chinese general Xiang Yu, who ordered his troops to destroy their boats and supplies before the battle of Julu (“break the kettles and sink the boats”!), and the ancient Romans, who routinely burned their boats or bridges as a deliberate tactic. By burning ones bridges, ones own “troops” become committed to victory – because they know that with no way out, the only options are victory or death. Just as importantly, the enemy “troops” get the same message – with the effect of making them more likely to flee, since they know they face a determined opponent. So platinum coin seignorage is an ingenious idea that would have solved the technical problem of the debt ceiling, but the Obama administration is not interested in solving technical problems. Thus, if momentum should build up behind another way around the debt ceiling that the administration has not yet explicitly ruled out, such as issuing scrip, the Obama administration will rule that out as well. The administration realizes at this point that these self-induced crises are going to keep recurring unless something is done to cause them to stop re-occuring. From the administration’s perspective, even if the debt ceiling were to be outright abolished, and thus seemingly solved forever, that would not change this calculation. Until the House… Read more »
Guest
3 years 3 months ago

On the Romans burning their boats: The game theorist’s way of expressing that idea is (I think) to say that the way to win a game of chicken is to throw your steering wheel out the window. First.

Guest
Nathanael
3 years 3 months ago

Of course the actual way to win a game of chicken is to get out of the car and leave it on autopilot, but not tell the other side. I know that’s cheating, but it sure does win.

What’s the analogy? The analogy would be to mint the coins without bothering to mention it to the Republicans in advance.

Guest
Cesar
3 years 3 months ago

LOL, funny post; and a worryingly accurate analogy of some of the government nonsense that has gone on.

Guest
3 years 3 months ago

Well, that was quick! But good! Btw, isn’t the Chair of the Fed mandated by law to accept the interpretation of the Treasury Secretary on legal matters like the validity of a deposit of a Platinum Coin? If not I want the Treasury to shift its account to Bank Of north Dakota. -:)

Guest
Clonal Antibody
3 years 3 months ago

However, my fear is that it will become the Bataan Death March for a substantial number of Americans. Very likely, the O administration and the “Crazy Majority” of the GOP will come to a mutually agreeable path to Austerity – and Austerity is going to doom a substantial portion of the US population to enter long term poverty.

Admin
3 years 3 months ago

Check out that post about the impact of the debt ceiling. This might be the next thing out of MR to make a splash. Nobody has quantified just how bad this would be, except me and comstock partners.

Guest
Clonal Antibody
3 years 3 months ago

Did you update your post with the impact of the declining Tax revenues?

Admin
3 years 3 months ago

I have not had time to figure out the math, and frankly, I don’t think I will be able to do it anytime soon.

can you do it? I can send you the exact math from Kash Mansori.

Guest
Clonal Antibody
3 years 3 months ago

Sure send it over I will look at it.

wpDiscuz