The coin seignorage idea has really caught on – not just in the blogosphere, but in the mainstream media as well. You have Brad DeLong, Matt Yglesias, Tyler Cowen and a lot of others talking up ‘The Coin’. In the mainstream media, the Economist, CNN, The New Republic and many others.
Just so you know what I am talking about, the idea is an end-run around the debt ceiling and it works like this:
- The Treasury mints a $1 trillion coin, or whatever amount is desired.
- The Treasury deposits the coin into the Treasury’s account at the Fed.
- The Treasury buys back bonds
- The retirement of bonds is an asset swap, no different from QE2
- The increase in reserve balances is not inflationary, as Credit Easing 1.0, QE 1.0, and QE 2.0 already have shown.
- These operations by the Treasury create no new net financial assets for the non-government sector
- The debt ceiling crisis is averted
Here’s what Ryan Avent of the Economist says about The Coin:
As the date on which Treasury runs flat out of money grows nearer, various harebrained ideas to workaround the statutory limit on borrowing and keep paying the bills have been getting more attention. This one, one of my favourites, seems like it just might work
Those MMTers are not so crazy after all.
Since this is Friday, I decided to have a little fun and started a #trilliondollarcoin meme as an ode to The Coin. My tweeps are an inventive bunch and they came up with some killer movie titles with the #trilliondollarcoin meme. Here are some of the best:
- "All the President’s Coin"
- “A Few Good Coins"
- "League of Extraordinary Coins”
- “Harry Potter and the magical coin”
- “The Unbearable Lightness of the Coin”
- “Gone with the Coin”
- “Coin Kong”
- “Citizen Coin”
Here’s what I got
- “It’s a Wonderful Coin”
- “One Coin Flew Over the Cuckoo’s Nest”
- "The Manchurian Coin"
- “Eternal Sunshine of the Spotless Coin”
- “"The Silence of the Coins”
There’s a lot more where that came from. In honor of The Coin, I suggest the following blog name changes:
- Barry Ritholtz: The Big Coin
- Yves Smith: Naked Coin
- Brad DeLong: Grasping Coins with Both Hands
- Paul Krugman: Conscience of the Coin
- Scott Sumner: The Coin Illusion
- Paul Kedrosky: Infectious Coinage
Long live The Coin!
Do you have any coinage to contribute?
P.S. – My favourite movie suggestion was “My Big Fat Greek Coin”. That takes care of two crises at once!