Here's why Ben Bernanke killed the platinum coin, and what it means for the debt-ceiling showdown
The coin will not be minted.
At least, not in anything remotely close to 13-digit denominations. As Ezra Klein of the Washington Post reports, the Treasury and Federal Reserve have ruled out creating a trillion-dollar coin, which was a real possibility thanks to a crazy loophole, to stop us from defaulting on our obligations if the debt ceiling isn't raised. It's Congress or bust, when it comes to paying our bills on time.
This was probably the least surprising development in the history of developments. It wasn't just that the trillion-dollar coin would have been a political liability because it sounds silly -- that was the best, and only, argument against it -- but rather that it required the Fed to give up its sole control of monetary policy. The Fed would not do that. Now, the Treasury minting trillion-dollar coins sure sounds different from the Fed buying bonds, but it's not. It's just sterilized quantitative easing (QE), albeit with a platinum tint. Or, in English, it's printing money, buying stuff, and preventing this new money from increasing inflation. The Fed does this when it 1) electronically "prints" money, 2) buys bonds from banks with this new money, and 3) ties up these new bank reserves with operations like reverse repos. The Treasury does the same when it 1) mints the trillion-dollar coin, 2) uses it to pay for the government's existing obligations, and 3) the Fed sells bonds in equal measure to suck the money out.
You might wonder why the Fed would play along if the Treasury turned to coin seigniorage. Answer: the Fed has its inflation target, and it cares very much about hitting it. The Fed would be compelled to counter the Treasury's coin-minting, although, as as Greg Ip of The Economist points out, the Fed might not need to do so for quite awhile, and could resort to raising interest rates on interbank lending and reserves instead of selling long-term bonds. In either case, the Treasury would be dragging the Fed into QE it didn't want, and, as University of Oregon professor Tim Duy put it, effectively blurring the line between fiscal and monetary policy. Fed independence would be a thing of the past ... unless it killed the coin first. Which, of course, it did, as Zeke Miller of Buzzfeed reports. The platinum coin gambit depended on the Fed accepting it as legal currency for the Treasury's account, and the Fed said it would not. RIP, trillion-dollar coin.
Now, the trillion-dollar coin may be dead, but the debt ceiling is not. President Obama continues to insist he will not negotiate over it, but the administration has said it won't use either of the most likely work-arounds -- the 14th amendment or the platinum coin -- if it comes to that. That leaves the president with (at least) four more outlandish-ish options if House Republicans refuse to pay the bills they authorized, and one actual option. Here they are, from least likely to most likely.
-- The Treasury could repo Mount Rushmore to the Fed. As Karl Smith of Modeled Behavior argues, the Treasury could theoretically sell anything valuable enough, like offshore oil rights, to the Fed, and agree to buy it back later. This kind of repurchase (repo) agreement would give the Treasury cash flow if it's running so low that it can't pay the interest on our debt, but there are two big problems. First, repo agreements are not, economically-speaking, sales, but rather loans, so it would almost certainly violate the debt ceiling. And second, there's no way the Fed would do this. So there's that.
-- The Fed could send some of its bonds back to the Treasury as dividends. Printing money is a pretty good way to make money, never more so than the past few years. The Fed remits most of its profits -- $89 billion in 2012 -- to the Treasury, which kind of makes the Treasury its sole shareholder. As @IvanTheK first suggested, the Fed could advance some of these profits to the Treasury as a dividend if there wasn't enough incoming revenue to pay the interest on the debt on any given day during a debt ceiling standoff. It's an elegant solution, but, again, not one the Fed is likely to go for.
-- Use IOUs to pay our bills. If we don't hit the debt ceiling, we will immediately have to stop paying 40 percent of our bills ... unless we pay the rest with IOUs. Paul Krugman proposed something along these lines, and law professor Edward Kleinbard points out that California successfully used them during its own budget crisis in 2009. Back then, California paid people with IOUs yielding 3.75 percent that people could trade to banks for cash at a slight haircut. In other words, the banks made money off the trades. The federal government could do the same, but there are a few legal hurdles. If the IOUs pay any interest, it's hard to see how they're not debt; but if they don't pay any interest, it's hard to see how they're not money. Either would be illegal. Maybe everybody would be happy enough with this arrangement not to challenge it, like in California, but maybe not -- not to mention the awful optics of "Obama dollars".
-- Refuse to negotiate, and blame the Republicans for any economic damage. Welcome to everybody's favorite game, debt ceiling chicken! Here's how it works. Obama says there's nothing he can do to lift the debt ceiling on his own; that's it up to Republicans to pay the country's bills; and that if they don't, they will get blamed for Social Security checks not going out. It's the strategy former Treasury Secretary Robert Rubin used back in the mid-90s when then-Speaker Newt Gingrich threatened to hold the debt ceiling hostage, and it's the strategy Obama seems to be using now. As Ezra Klein points out, Obama has deliberately ruled out all of these different debt ceiling end-arounds, because he doesn't want Republicans to think they have any alternative to increasing it themselves. Now, maybe half of them really do welcome default, as Politico reports, but maybe not. That's a terrifying bunch of "maybes", but it's where we are today.
In other words, Obama is happy not to mint the coin, because he thinks minting it reduces his leverage. Now it's a psychological game of chicken, with Obama and Republicans accelerating toward the other, each convinced they cannot swerve, and when they meet in the middle, they'll set off the mother of all global market crashes.
A new anatomical understanding of how movement controls the body’s stress response system
Elite tennis players have an uncanny ability to clear their heads after making errors. They constantly move on and start fresh for the next point. They can’t afford to dwell on mistakes.
Peter Strick is not a professional tennis player. He’s a distinguished professor and chair of the department of neurobiology at the University of Pittsburgh Brain Institute. He’s the sort of person to dwell on mistakes, however small.
“My kids would tell me, dad, you ought to take up pilates. Do some yoga,” he said. “But I’d say, as far as I’m concerned, there's no scientific evidence that this is going to help me.”
Still, the meticulous skeptic espoused more of a tennis approach to dealing with stressful situations: Just teach yourself to move on. Of course there is evidence that ties practicing yoga to good health, but not the sort that convinced Strick. Studies show correlations between the two, but he needed a physiological mechanism to explain the relationship. Vague conjecture that yoga “decreases stress” wasn’t sufficient. How? Simply by distracting the mind?
Donald Trump’s campaign manager wants to destroy the left. And the GOP nominee is just the most recent vessel of convenience in his consequences-be-damned crusade.
Stephen Bannon, who recently took over as Donald Trump’s campaign manager, once gave an interview, while promoting his 2010 film, “Fire From the Heartland: the Awakening of the Conservative Woman,” where he argued that Sarah Palin, Michele Bachmann, and Ann Coulter pose an existential threat to the left.
“These women cut to the heart of the progressive narrative,” he explained. “That's one of the unintended consequences of the women's liberation movement––that, in fact, the women that would lead this country would be feminine, they would be pro-family, they would have husbands, they would love their children. They wouldn't be a bunch of dykes that came from the 7 Sisters schools."
The quote captures a key attribute of the former U.S. Navy officer, whose stints at Georgetown University, Harvard Business School, and Goldman Sachs afforded a foothold at the core of America’s elite, enabling him to launch a film career that began with a Sean Penn collaboration before segueing into polemic right-wing documentaries.
In the name of emotional well-being, college students are increasingly demanding protection from words and ideas they don’t like. Here’s why that’s disastrous for education—and mental health.
Something strange is happening at America’s colleges and universities. A movement is arising, undirected and driven largely by students, to scrub campuses clean of words, ideas, and subjects that might cause discomfort or give offense. Last December, Jeannie Suk wrote in an online article for The New Yorker about law students asking her fellow professors at Harvard not to teach rape law—or, in one case, even use the word violate (as in “that violates the law”) lest it cause students distress. In February, Laura Kipnis, a professor at Northwestern University, wrote an essay in The Chronicle of Higher Education describing a new campus politics of sexual paranoia—and was then subjected to a long investigation after students who were offended by the article and by a tweet she’d sent filed Title IX complaints against her. In June, a professor protecting himself with a pseudonym wrote an essay for Vox describing how gingerly he now has to teach. “I’m a Liberal Professor, and My Liberal Students Terrify Me,” the headline said. A number of popular comedians, including Chris Rock, have stopped performing on college campuses (see Caitlin Flanagan’s article in this month’s issue). Jerry Seinfeld and Bill Maher have publicly condemned the oversensitivity of college students, saying too many of them can’t take a joke.
The health benefits are clear. The political benefits are newly relevant.
Next time you enter an elevator, walk in and keep facing the back wall. If you stay that way, in my experience, people will laugh or ask if you’re okay. (That’s an opportunity, if you want, to say you would love for someone to define “okay.”)
Standing this way breaks unstated rules of how we’re supposed to behave in elevators. Detaching from expectations gives people an excuse to talk, to acknowledge one another’s humanity. Absent a break in the order, the expectation is silence.
(Of course, you can make a quick joke—my favorite is, if the elevator is stopping frequently, “What is this, the local train?”—and expect a modicum of laughter. But even if the joke goes over well, the rule seems to be that you can’t say it more than once in the same ride.)
The candidate’s campaign bought $55,000 worth of his newest book, Crippled America. But did they follow the law?
Sales of Donald Trump’s latest book, Crippled America, were decent, if not great—they easily beat out every other Republican candidate except for Ben Carson, according to Nielsen. But the Trump campaign found one way to boost sales: buying the books themselves.
The Daily Beast spotted in FEC filings that Team Trump purchased more than $55,000 worth of the book. (It’s been re-released in paperback with the sunnier title, Great Again.) Now, candidates buying up their own books is nothing new, but there’s a legal issue here. Campaigns can buy books in bulk assuming they don’t pay royalties, because if they do, then the campaign has effectively paid the candidate—which is against the law.
“It’s fine for a candidate’s book to be purchased by his committee, but it’s impermissible to receive royalties from the publisher,” legal expert Paul S. Ryan told the Beast. “That amounts to an illegal conversion of campaign funds to personal use. There’s a well established precedent from the FEC that funds from the campaign account can’t end up in your own pocket.”
The political commentator may be more committed to the Republican nominee’s platform than he is.
Donald Trump has just betrayed Ann Coulter. Which is a dangerous thing to do.
This week, Coulter released her new book, In Trump We Trust. As the title suggests, it’s a defense of Trump. But more than that, it’s a defense of Trumpism. Most Trump surrogates contort themselves to defend whatever The Donald says, no matter its ideological content. They’re like communist party functionaries. They get word from the ideologists on high, and regurgitate it as best they can.
Coulter is different. She’s an ideologist herself. She realized the potency of the immigration issue among conservatives before Trump did. On June 1 of last year, she released Adios America, which devotes six chapters to the subject of immigrants and rape. Two weeks later, Trump—having received an advanced copy—famously picked up the thread in his announcement speech.
City dwellers spend nearly every moment of every day awash in Wi-Fi signals. Homes, streets, businesses, and office buildings are constantly blasting wireless signals every which way for the benefit of nearby phones, tablets, laptops, wearables, and other connected paraphernalia.
When those devices connect to a router, they send requests for information—a weather forecast, the latest sports scores, a news article—and, in turn, receive that data, all over the air. As it communicates with the devices, the router is also gathering information about how its signals are traveling through the air, and whether they’re being disrupted by obstacles or interference. With that data, the router can make small adjustments to communicate more reliably with the devices it’s connected to.
The global education pioneer eases students into the classroom.
Heading into my first year of teaching in Helsinki I felt pretty nervous. One of my graduate-school professors—a former Massachusetts Teacher of the Year—had warned me that Finnish students were academically advanced, especially in math. Indeed, Finland’s students had excelled on international standardized tests like the PISA for more than a decade. But it wasn’t just those high-performing Finnish students that intimidated me. Their teachers did, too.
If I had chosen to pursue master’s-level training as an elementary-school teacher in Finland (instead of the United States), I would have applied to the small handful of teacher-training universities, where annual acceptance rates hover around 10 percent. These programs are so selective, claimed The Atlantic journalist Amanda Ripley in her book, The Smartest Kids in the World, they’re “on the order of MIT.” Furthermore, Finland’s classroom teacher-training programs require five years of coursework, practicum, and thesis writing. The Finnish version made my two-year master’s degree in elementary education, through a non-selective college in the Boston area, look quite humble.
As more women become heads of state, will the world actually change?
Margot Wallström took office as Sweden’s foreign minister in 2014, declaring she would pursue a “feminist foreign policy.” She’s now held the post for two years, and it’s still not entirely clear what she meant. While it’s true that an entire school of feminist international-relations theory has developed since the 1980s, the field remains contested, and largely untested in the realm of policy. You could surmise from Wallström’s term, as she herself stated, that a “feminist foreign policy” would promote women’s rights around the world, but what would it say, for example, about the logic of preventive war? Would it prioritize free trade and open borders, or emphasize protecting workers from competition? Would it generate a new way of dealing with unsecured nuclear material in the former Soviet Union?
Bruce Springsteen’s breakout album embodied the lost ‘70s—the tense, political, working-class rejection of an increasingly unequal society.
Forty years ago, on the eve of its official release, “Born to Run”—the song that propelled Bruce Springsteen into the rock-and-roll stratosphere—had already attracted a small cult following in the American rust belt.
At the time, Springsteen desperately needed a break. Despite vigorous promotion by Columbia Records, his first two albums, Greetings from Asbury Park, N.J. and The Wild, The Innocent, and the E Street Shuffle, had been commercial flops. Though his band spent virtually every waking hour either in the recording studio or on tour, their road earnings were barely enough to live on.
Sensing the need for a smash, in late 1974 Mike Appel, Bruce’s manager, distributed a rough cut of “Born to Run” to select disc jockeys. Within weeks, it became an underground hit. Young people flooded record stores seeking copies of the new single, which didn’t yet exist, and radio stations that hadn’t been on Appel’s small distribution list bombarded him with requests for the new album, which also didn’t exist. In Philadelphia, demand for the title track was so strong that WFIL, the city’s top-40 AM station, aired it multiple times each day. In working-class Cleveland, the DJ Kid Leo played the song religiously at 5:55 p.m. each Friday afternoon on WMMS, to “officially launch the weekend.” Set against the E Street Band’s energetic blend of horns, keyboards, guitars, and percussion, “Born to Run” was a rollicking ballad of escape, packed full of cultural references that working-class listeners recognized immediately.