BY FRANK HILL
Reprinted from Telemachus.com
Senate Democrats and President Barack Obama and others on the national scene and in Washington are giving serious consideration to issuing a $1 trillion coin in the event that the debt ceiling becomes a major point of contention in the next several weeks with House Republicans.
Which it will. You can count on that.
Seriously. A group of 4 US Senators in the World’s Greatest Deliberative Body sent a letter to President Obama today basically saying they have ‘got your back, Mr. President!’ to do ‘anything possible’ to avoid any discussion on spending cuts in advance of the next debt ceiling debacle.
‘Doing anything possible’ presumably includes issuing this cockamamie $1 trillion coin. Since it is in the news, people in the know must be talking about it and leaking it to the press, right?
We have zero expectation that President Obama will take the lead as President to reduce overall levels of spending one iota over the next 4 years. He just doesn’t have it within his psyche and political philosophical makeup to see where any reduced concentration of power and spending from Washington is a ‘negative’ thing.
You didn’t see too many battles over the debt ceiling from 1998-2001, didja? You know why? Because we were paying down debt at the rate of several hundred billion per year with surplus revenues a booming economy was generating after the Republicans in Congress negotiated a deal with Erskine Bowles of the Clinton White House to hold spending down to about 2% annual growth.
What is almost sad and funny (if it were not true) is that the whole idea of a $1 trillion coin came off a website that some guy known as ‘Beowulf’ wrote as a joke one day in 2009. Here’s the story, read it for yourself: $1 Trillion Coin.
‘Amy, what should I do about war?’
‘I wonder where the Widow Hen is?’
This would be like President Jimmy Carter getting advice on nuclear disarmament from his 10-year old daughter, Amy in the White House.
Worse, it would be like recently-named ‘Father of the Year’ (Chelsea is 32 for Goshsakes and married!) Bill Clinton getting advice on being ‘politically correct’ from Foghorn Leghorn. Or…well, you can make up any absurd comparison you want.
This is so comical that it should be a cartoon. What happens if the Treasury Secretary somehow uses the coin to buy a Coke or something? How about if he is walking to Metro one day and it falls out of his pocket through the grate down into the Metro? Or tips his cab driver in Washington with it…what then?
This doesn’t ‘create more debt’. This would ‘create more money’, out of thin air. Just like the Fed has done for the past 4 years each and every time they have ‘expanded the Fed balance sheet’ and bought more non-performing mortgages and loans from distressed Americans and banks.
Which, now that we are mentioning it, is just as scary as issuing this crazy $1 trillion coin, isn’t it?
Everyone knows what happens when you ‘create more money’, don’t you? Right. Inflation, the most wicked and dangerous weapon against older and lower-income and poor people the world has ever known.
In 1978 when we got out of college, America was about to head into one of the worst inflationary upwards spirals in our modern history. 21% annual inflation around 1980/81. We took a course in business school called ‘inflation-accounting’ if you can believe that where everyone had to learn how to account for the almost 1%/month increase in supplies and materials that went in to making any product back then.
Inflation is just plain bad, no matter how you cut it.
Lycurgus, the first king of Sparta, wanted to take the aristocracy and pecking order out of the utopia that he wanted to see, the Spartan nation. He confiscated the gold and silver coinage of all of his subjects and replaced it with iron. No doubt he doubled the amount of iron coins in circulation anytime he had to pay off debts for a recent war or two he incurred. That is the tried-and-true way rulers in the past have resorted to pay for the debt they have built up when they have spent way above what they take in in tax revenues.
Just talking about the $1 trillion coin in public shows how clownish our elected leaders have become. Tell them to stop and quit voting for them.
Editor’s Note: Frank Hill is the Director of the Institute for the Public Trust in Charlotte, NC. He is former chief of staff to Congressman Alex McMillan of NC and also served on the staffs of former U.S. Senator Elizabeth Dole and the House Budget Committee.