Wednesday, January 9, 2013

Author of the Trillion Dollar Coin Law Responds

One trillion dollars!

The author of the Trillion Dollar Coin Law responds:

I’m the former Mint director and Treasury chief of staff who, with Rep. Mike Castle, wrote the platinum coin law and produced the original coin authorized by the law. Therefore, I’m in a unique position to address some confusion I’ve seen in the media about the $1 trillion platinum coin proposal.
* In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary’s authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8). What is unusual in this case is that the law gives the Secretary discretion regarding all specifications of the coin, including denominations.
* The accounting treatment of the coin is identical to the treatment of all other coins. The Mint strikes the coin, ships it to the Fed, books $1 trillion, and transfers $1 trillion to the treasury’s general fund where it is available to finance government operations just like with proceeds of bond sales or additional tax revenues. The same applies for a quarter dollar.
* Once the debt limit is raised, the Fed ships the coin back to the Mint, the accounting treatment is reversed, and the coin is melted. The coin would never be “issued” or circulated and bonds would not be needed to back the coin.
* There are no negative macroeconomic effects. This works just like additional tax revenue or borrowing under a higher debt limit. In fact, when the debt limit is raised, Treasury would sell more bonds, the $1 trillion dollars would be taken off the books, and the coin would be melted.
* This does not raise the debt limit so it can’t be characterized as circumventing congressional authority over the debt limit. Rather, it delays when the debt limit is reached.
* This preserves congressional authority over the debt limit in a way that reliance on the 14th Amendment would not. It also avoids the protracted court battles the 14th Amendment option would entail and avoids another confrontation with the Roberts Court.
* Any court challenge is likely to be quickly dismissed since (1) authority to mint the coin is firmly rooted in law that itself is grounded in the expressed constitutional powers of Congress, (2) Treasury has routinely exercised this authority since the birth of the republic, and (3) the accounting treatment of the coin is entirely routine.
* Yes, this is an unintended consequence of the platinum coin bill, but how many other pieces of legislation have had unintended consequences? Most, I’d guess.
Philip N. Diehl
35th Director
United States Mint

There are some major problems with his response. He says "Once the debt limit is raised, the Fed ships the coin back to the Mint, the accounting treatment is reversed, and the coin is melted". Why in the name of reason would 'We the People' want to do that? 

The Federal Reserve in an effort to bailout out the the Banks that crashed the world economy with their massive greed and criminal behaviors, lent them $24 trillion by some estimates at nearly zero interest. Paying off the national debt with trillion dollar coins at the rate of 1 or 2 a quarter would hardly be inflationary in comparison. The national debt right now is the 4th largest item in the Federal Budget after Medicare, SS, and Defense. Currently it consumes 6% of the budget or roughly $225 billion a year. That would go a long way in fixing SS or rebuilding our infrastructure.

Federal Reserve not so Federal after all.

Naturally all the Wall Street and Federal Reserve crooks are crying foul, sensing their scam is about to come to an end. Some have gone as far as to suggest that uncle Ben refuse to take the coin, as if he could. The constitution gives the Treasury the right to create money, not the Federal Reserve. Once again Article 1 Section 8 says: 
"To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures", the Federal Reserve wasn't even created until 1913.
The Federal Reserve isn't part of the Federal Gov, it's a private bank.  In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that: "The Reserve Banks are not federal instrumentalities for purposes of the FTCA [the Federal Tort Claims Act], but are independent, privately owned and locally controlled corporations."

Bottom Line:

The best solution would be to nationalize the Federal Reserve Banks, but until then this is the next best response.

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