The only thing we have to fear is fear of the trillion-dollar coin itself.
It is the single most important comment in the history of Internet comments. Probably.
Back in the summer of 2011, as House Republicans threatened to force us to default on our obligations, a commenter on Cullen Roche's blog, Pragmatic Capitalism, suggested an inventive way around the debt ceiling: a trillion-dollar coin.
Ah, the debt ceiling. It's the ludicrous credit limit Congress has given itself, which could force us into default. Here's why it makes no sense. Imagine you were a high-earner living beyond your means, and your credit card company came to you offering to pay you to expand your line of credit -- but you said no! You've made a resolution not to increase your total debt anymore, no matter how attractive the offer. That's a fine resolution, but, remember, you're still living beyond your means. Uh-oh. You still have all your old bills to pay, but now you don't have the money to pay them all. Pretty soon, your credit card notices you're not paying all your bills, and jack up your interest rate. This is the worst personal-finance plan ever, and it's what House Republicans are saying they'll do to the economy by holding the debt limit hostage to their demand for deep spending cuts.
Enter the trillion-dollar coin. It sounds nuts. But there's a loophole that actually lets the Treasury create coins in whatever value it wants, even $1 trillion. It's all straightforward enough. The Treasury would create one of these coins, deposit it at the Federal Reserve, and use the new money in its account to pay our bills if the debt ceiling isn't increased. This has gone from being just another wacky idea in the world of internet comments to something that's getting taken seriously due, in large part, to the efforts of Joe Weisenthal of Business Insider and Josh Barro of Bloomberg View to promote it. (Which you can follow on Twitter at #MintTheCoin). Their logic is that as silly as the trillion-dollar coin sounds, the debt ceiling is far sillier -- and much more destructive.
As this terrifying report from the Bipartisan Policy Center shows, the consequences of going over the debt ceiling are unthinkable and unpredictable. At best, it will mean immediate 40 percent austerity; at worst, it will mean an outright default on our debt. Both are bad enough that a legal gimmick like the trillion dollar coin sounds sane in comparison, if it comes to that. At least that's what Representative Jerry Nadler, Paul Krugman, and, as of pixel time, over 6,000 other patriotic Americans think.
But maybe you're not convinced yet. Alright, here is EVERYTHING you need to know about the trillion-dollar coin, and why it might just be the crazy solution Washington deserves and needs.
What's this nonsense I've been hearing about a trillion-dollar coin? It's got to be some kind of elaborate --
Stop. It's no joke. At least no more than voluntarily defaulting on our obligations by refusing to lift the debt ceiling would be. It sounds like something out of the Simpsons, but thanks to a crazy technicality the Treasury really can create a trillion-dollar coin, which would let us keep paying our bills if the debt ceiling isn't raised. It's an absurd solution to an absurd problem, but a solution nonetheless. As they say, when in Washington....
No, I'm pretty sure this is from the Simpsons.
Almost. That was a $1 trillion bill, which Fidel Castro tricked out of Monty Burns, but this is real life, so it has to be a $1 trillion coin. A platinum coin, to be exact.
I'm almost afraid to ask, but why does it need to be a coin? And why platinum?
We don't make the loopholes. We just find them. The Treasury can't print money on its own, because the money supply is supposed to be the strict purview of the Federal Reserve ... but that might not be quite so strict after all, thanks to a coin-sized exception. Congress passed a law in 1997, later amended in 2000, that gives the Secretary of the Treasury the authority to mint platinum coins, and only platinum coins, in whatever denomination and quantity he or she wants. That could be $100, or $1,000, or ... $1 trillion.
Did Congress decide life wasn't imitating Bond films enough? What were they possibly thinking?
The idea was Treasury would only use this authority for collectible coins, while making a little money for the government in the process. But the law is vague. It only says the Treasury can mint platinum coins in any denomination it wants. So, to infinity and beyond!
Okay. So the Treasury can mint a trillion-dollar coin because of a law that lets it mint commemorative coins in whatever denomination it chooses, right? Doesn't this violate the spirit of the law?
Maybe. But remember, part of the point of creating these commemorative coins was to increase government revenue. As former Congressman and author of the original bill Mike Castle told Dylan Matthews of the Washington Post, the intent was to use the government's seigniorage power to very modestly reduce the deficit. Seigniorage is the delightfully literal concept of making money by making money. It's the difference between the cost of creating currency, and the value you assign to that currency -- in other words, the "profit" governments get from minting money. The trillion-dollar coin is seigniorage just like commemorative coins are seigniorage -- well, except that the trillion-dollar coin is a whole, whole lot more of it. Even if you don't find this terribly convincing, it doesn't really matter. The plain text of the law, not its intent, is what matters. And that means the trillion-dollar coin is almost certainly legal.
"Almost certainly legal" is good enough for me, but what if it isn't for everybody else? Would it survive a court challenge?
I just want to say one word to you. Just one word. Standing. It's far from clear anybody would have the legal standing to challenge the trillion-dollar coin in court. That would at least require a joint resolution of Congress, which isn't happening, or an investor who can show that not defaulting on our obligations caused them injury. Even if such an investor exists, say somebody who took credit default swaps (CDS) out on Treasury bonds, they'd be going up against a good bit of precedent. Call it FDR's revenge. When he took office in 1933, FDR faced the singular economic challenge of reversing the massive deflation of the previous four years. Falling wages and prices had increased real debt burdens, and set off a wave of mass bankruptcy. FDR turned this around when he devalued the dollar by taking us off the gold standard, but one problem remained: the gold clauses. These clauses gave creditors the option of getting back in either dollars or gold, with the latter being particularly appealing after its price soared almost 60 percent. But increasing inflation doesn't help debtors if their debts increase in equal measure, so Congress passed a joint resolution that voided all gold clauses in all contracts.
Bondholders were understandably upset about having to get paid back in cheaper dollars, sued, and lost. In a series of cases, the Supreme Court ruled that Congress could indeed nullify the gold clauses in private contracts under its power to regulate money, and that Treasury bondholders could not seek redress. As far as precedents go, this suggests the trillion dollar coin should be legal even if it changes the value of private contracts, like CDS, under the power to regulate money. And that's assuming CDS holders even have standing. They might not. As UCLA law professor Jonathan Zasloff explained to me, investors betting on a U.S. default are betting on something that's unconstitutional under the 14th amendment, and you probably can't base a contract off something that's illegal.
Okay, so this might be legal, but --
If you're still not convinced, just ask Representative Greg Walden, a Republican from Oregon, who's so convinced it's legal that he introduced a bill to close the platinum coin loophole.
FINE. It's legal. But there's still one thing I don't understand. Would we need to come up with $1 trillion worth of platinum to mint our $1 trillion platinum coin?
Repeat after me: seigniorage, seigniorage, seigniorage. Oh, and seigniorage. The entire point of the trillion-dollar coin is it gives us money to pay our bills if the debt ceiling isn't raised. But it won't give us any money if we spend an equal amount creating it. Basically, we want to take the smallest amount of platinum we can find and scribble "$1 trillion" on it. If you think this sounds nutty, ask yourself whether your $100 bill is made from $100 worth of cotton.
So why not just mint 16 of these $1 trillion coins and retire the entire national debt, smart guy? Or, even better, create a single $16 trillion coin -- scratch that, make it $100 trillion!
Now that's just crazy talk. Let me be clear: Nobody wants to use platinum coins to eliminate the debt. As Paul Krugman points out, there's a limit to how much seigniorage a government can extract before hyperinflation sets in, and that's certainly far less than $1 trillion, let alone $16 trillion. The trillion-dollar coin is just a technical fix to the technical problem of the debt ceiling. Remember, not lifting the debt ceiling doesn't prevent borrowing for new spending. It prevents borrowing for spending Congress has already appropriated. The Treasury can get around this by minting the trillion dollar coin, depositing it at the Fed, and paying the bills we've previously promised to pay -- and nothing more. It's about not defaulting on our debts, rather than paying them down.
Can we cut this short? I need to run out and buy some canned food and gold bars to prep for the coming hyperinflation. A trillion dollar coin is only two orders of magnitude away from us matching Zimbabwe for monetary ignominy.
Take a deep breath before you do something rash, like buying overpriced gold coins from Glenn Beck's buddies. As Joe Weisenthal of Business Insider points out, the biggest fallacy about the trillion-dollar coin is that it will be massively inflationary. It won't be. If the government quickly spent $1 trillion, that might be inflationary. But the coin wouldn't pay for new spending. It would pay for old spending -- spending already authorized by Congress that we can't pay for because of a ridiculous self-imposed limit on government borrowing, the debt ceiling. The total amount of spending in the economy would stay the same.
Now, inflation might go up in the long-term if the Fed doesn't intervene. That's because the composition of spending will have changed -- more currency, less borrowing -- even though the amount has not. If the monetary base stays permanently larger, inflation should eventually increase -- which is why the Fed will intervene. It has its inflation target, and it cares very much about hitting it. The Fed can do this if it "sterilizes" the trillion-dollar coin by selling bond in an equal amount, vacuuming up just as much money as the trillion dollar coin injects. Inflation, whipped.
Let me see if I've got this right. The Treasury mints money and pays for stuff with it, and the Fed sells bonds to offset this new money? This sounds kind of like ...
Monetary policy! It's just a particularly convoluted way of doing sterilized quantitative easing (QE). Okay, let's translate this into English. QE is plenty misunderstood, but it's actually simple enough. It's about printing money and buying stuff. More specifically, the Fed prints money and uses it to buy bonds from banks, which increases the reserves banks hold. In sterilized QE, the Fed uses operations like reverse repos -- don't worry, it's not important -- to prevent these new bank reserves from getting lent out. Putting it all together, the Fed 1) prints money, 2) buys stuff, and 3) sucks out as much money as it prints. This should sound familiar. It's exactly how the trillion-dollar coin would work, with the Treasury just replacing the Fed in the first two steps. To simplify a bit, the Treasury would 1) mint the trillion dollar coin, 2) use it to pay for already approved obligations, and 3) have the Fed would suck out as much money as the Treasury mints. It's sterilized QE through the platinum looking-glass.
It seems like a really bad idea to let the executive usurp control of monetary policy from the Fed. Isn't this a frightful precedent?
Yes and no. The consequences could be terrible if trillion-dollar coins become a regular part of policymaking, but monetary-policy-by-executive isn't exactly unprecedented. As former Treasury official and Western Kentucky professor David Beckworth points out, FDR grabbed the reins of monetary policy when he took the U.S. off the gold standard in 1933 and announced he wanted prices to return to their pre-Depression level. Obama could theoretically use platinum coins to do the same, perhaps targeting nominal GDP instead. But the danger, as Ryan Avent of The Economist points out, is if this extraordinary measure became ordinary, or if markets merely feared it might. Treasury bonds might lose some of their safe haven luster and send interest rates up if investors began to anticipate a new normal of higher inflation due to period coin seigniorage.
Hmmm. I'm feeling generous, so I'll concede two points. First, the trillion dollar coin is legal, and second, the economics of it make sense. But that doesn't mean it wouldn't be a political trainwreck.
Indeed. Cardiff Garcia of FT Alphaville makes the rather persuasive case that Democrats shouldn't use the trillion dollar coin as a negotiating tactic to increase their leverage in the debt ceiling talks, since House Republicans would welcome Obama embracing such a ludicrous-sounding ploy -- making a debt ceiling breach more likely. But it does make sense as a form of insurance against the economic carnage a protracted debt ceiling breach would entail.
Okay, serious question time. What if somebody stole the trillion dollar coin?
Good luck getting change for it. Or finding a bank that will accept it as a deposit. It would only turn out to be worth the platinum it was minted on -- which, hopefully, should not be very much.
Even more serious question time. Who should we put on the trillion dollar coin?
There are lots of good options here. Paul Krugman has suggested John Boehner, which has a certain poetic justice to it, but Ron Paul or a banana are good options too.
Last question. You don't seriously think this is a good idea, do you? If ever there was something that tells the world we're a banana republic, it's --
Choosing to default on our obligations. There is nothing crazier than that. If it it's a choice between defaulting on our obligations, and minting a trillion-dollar coin, I say mint the coin. In an ideal world, Obama would end the platinum coin loophole in return for the House GOP forever ending the debt ceiling, as Josh Barro proposed, but I'll settle for anything that involves us paying our bills as we promised.
The only thing we have to fear is fear of the trillion-dollar coin itself.
Sanders’s youth movement is powered by the energy of the new campus left. What does it believe?
RINDGE, New Hampshire—Twenty-three minutes into his typically rambling, hourlong stump speech in the arena here, at a private liberal-arts college on the Massachusetts border—after he had decried the Koch brothers and the prescription-drug companies, after he had accused Wall Street of bribing its way to deregulation, after he had called out the corporate media and the political establishment—Bernie Sanders turned to the bleachers behind him, which were filled with college students waving blue signs and chanting his name.
A sly, unusual smile crossed his face. “I feel like a rock-n-roll star!” he exclaimed, taking off his jacket and tossing it to a startled youth behind him. He pantomimed tearing off his sweater, too, prompting a fresh chant of “Ber-nie! Ber-nie!” Then he grinned sheepishly. “All right, nothing else is coming off,” he said, and continued to the next topic—the sins of Wal-Mart.
The number of American teens who excel at advanced math has surged. Why?
On a sultry evening last July, a tall, soft-spoken 17-year-old named David Stoner and nearly 600 other math whizzes from all over the world sat huddled in small groups around wicker bistro tables, talking in low voices and obsessively refreshing the browsers on their laptops. The air in the cavernous lobby of the Lotus Hotel Pang Suan Kaew in Chiang Mai, Thailand, was humid, recalls Stoner, whose light South Carolina accent warms his carefully chosen words. The tension in the room made it seem especially heavy, like the atmosphere at a high-stakes poker tournament.
Stoner and five teammates were representing the United States in the 56th International Mathematical Olympiad. They figured they’d done pretty well over the two days of competition. God knows, they’d trained hard. Stoner, like his teammates, had endured a grueling regime for more than a year—practicing tricky problems over breakfast before school and taking on more problems late into the evening after he completed the homework for his college-level math classes. Sometimes, he sketched out proofs on the large dry-erase board his dad had installed in his bedroom. Most nights, he put himself to sleep reading books like New Problems in Euclidean Geometry and An Introduction to Diophantine Equations.
Black poverty is fundamentally distinct from white poverty—and so cannot be addressed without grappling with racism.
There have been a number of useful entries in the weeks since Senator Bernie Sanders declared himself against reparations. Perhaps the most clarifying comes from Cedric Johnson in a piece entitled, “An Open Letter To Ta-Nehisi Coates And The Liberals Who Love Him.” Johnson’s essay offers those of us interested in the problem of white supremacy and the question of economic class the chance to tease out how, and where, these two problems intersect. In Johnson’s rendition, racism, in and of itself, holds limited explanatory power when looking at the socio-economic problems which beset African Americans. “We continue to reach for old modes of analysis in the face of a changed world,” writes Johnson. “One where blackness is still derogated but anti-black racism is not the principal determinant of material conditions and economic mobility for many African Americans.”
Most people in the U.S. believe their country is going to hell. But they’re wrong. What a three-year journey by single-engine plane reveals about reinvention and renewal.
When news broke late last year of a mass shooting in San Bernardino, California, most people in the rest of the country, and even the state, probably had to search a map to figure out where the city was. I knew exactly, having grown up in the next-door town of Redlands (where the two killers lived) and having, by chance, spent a long period earlier in the year meeting and interviewing people in the unglamorous “Inland Empire” of Southern California as part of an ongoing project of reporting across America.
Some of what my wife, Deb, and I heard in San Bernardino before the shootings closely matched the picture that the nonstop news coverage presented afterward: San Bernardino as a poor, troubled town that sadly managed to combine nearly every destructive economic, political, and social trend of the country as a whole. San Bernardino went into bankruptcy in 2012 and was only beginning to emerge at the time of the shootings. Crime is high, household income is low, the downtown is nearly abandoned in the daytime and dangerous at night, and unemployment and welfare rates are persistently the worst in the state.
Facebook suffers a blow from regulators in India, proving that the fight for an open web is more than an abstraction.
The web may be lovely, dark, and deep, but most of us don’t actually venture very far into it.
Back in 2013, Nielsen reported Americans visited an average of 90 different domains per person each month. That’s a startlingly low number—equivalent to about three domains each day—and one that crept down over the years, even as people spend more and more time online overall. I suspect the average person visits even fewer domains today, as tech giants like Facebook, Amazon, and Google increasingly design interfaces—walled gardens of engagement and advertising—aimed at discouraging their users from visiting other sites.
That’s part of what’s so interesting about the recent decision by officials in India to block what’s called “zero-rating” or “sponsored data”—the practice of exempting certain kinds of Internet use from counting toward a person’s data plan. The move effectively bans a Facebook program called Free Basics, a suite of lightweight versions of popular sites—including, of course, Facebook—that don’t eat up data the way visiting other mobile sites does. The idea is to give people an affordable way to get online, but it has long been criticized by advocates for net neutrality as a way of giving an unfair advantage to certain websites.
For decades the Man of Steel has failed to find his groove, thanks to a continual misunderstanding of his strengths.
Superman should be invincible. Since his car-smashing debut in 1938, he’s starred in at least one regular monthly comic, three blockbuster films, and four television shows. His crest is recognized across the globe, his supporting cast is legendary, and anybody even vaguely familiar with comics can recount the broad strokes of his origin. (The writer Grant Morrison accomplished it in eight words: “Doomed Planet. Desperate Scientists. Last Hope. Kindly Couple.”) He’s the first of the superheroes, a genre that’s grown into a modern mass-media juggernaut.
And yet, for a character who gains his power from the light of the sun, Superman is curiously eclipsed by other heroes. According to numbers provided by Diamond Distributors, the long-running Superman comic sold only 55,000 copies a month in 2015, down from around 70,000 in 2010—a mediocre showing even for the famously anemic comic-book market. That’s significantly less than his colleague Batman, who last year moved issues at a comparatively brisk 150,000 a month. Mass media hasn’t been much kinder: The longest-running Superman television show, 2001’s Smallville, kept him out of his iconic suit for a decade. Superman Returns recouped its budget at the box office, but proved mostly forgettable.2013’s Man of Steel drew sharp criticism from critics and audiences alike for its bleak tone and rampaging finale. Trailers for the sequel, Batman v Superman: Dawn of Justice, have shifted the focus (and top billing) to the Dark Knight. Worst of all, conventional wisdom puts the blame on Superman himself. He’s boring, people say; he’s unrelatable, nothing like the Marvel characters dominating the sales charts and the box office. More than anything, he seems embarrassing. Look at him. Truth? Justice? He wears his underwear on the outside.
The Daily Show correspondent’s new weekly TBS series, Full Frontal, made a stellar debut Monday.
For all the talk of Trevor Noah’s middling tenure thus far at The Daily Show, people probably need to stop worrying about Jon Stewart’s legacy. That showitself might be floundering, but Stewart’s legacy is still felt across late night, from Stephen Colbert to Larry Wilmoreto John Oliver at HBO. And: Samantha Bee, whose barnstorming debut of her new weekly TBS show Full Frontal on Monday was an acidly funny half-hour that had none of the shakiness typically associated with a new late-night show.
Full Frontal’s format is less cozy than many a talk show—Bee stands for the entire ride—and it makes her Daily Show-style segments feel all the more blistering. She’s dispensed with the padding that makes most late-night shows interminable, like musical guests, or sit-down interviews with someone shilling a book. Like John Oliver’s Last Week Tonight, the show is running weekly, to give her and her writers time to focus on well-researched bits and remote pieces. If Monday night’s premiere was anything to go by, that’s a great idea—Bee ripped into three long, topical, planned-out pieces with the kind of furious, witty aplomb we haven’t seen enough of on television since Jon Stewart rode out into the sunset.
Many are familiar with the challenges faced by working moms, but the troubles of women with aging parents are unseen and widely ignored.
For America’s working moms, there is pretty much an endless stream of resources to guide and comfort them on how to tell the boss they’re pregnant, how to find a private place to pump at work, how to negotiate flex time, how to split the chores at home, and whether or not to display pictures of their kids at the office. They can read all day and all night about the many stresses of working motherhood including pregnancy discrimination, the wage gap, the mommy wars, leaning in, and opting out. But for America’s working daughters, there is little to help them navigate between their careers and the needs of their aging parents.
There are currently 44 million unpaid eldercare providers in the United States according to the U.S. Census Bureau and the majority are women. And yet there are very few support programs, formal or informal, in place to support these family caregivers, many of whom are struggling at work and at home. Working daughters often find they need to switch to a less demanding job, take time off, or quit work altogether in order to make time for their caregiving duties. As a result, they suffer loss of wages and risk losing job-related benefits such as health insurance, retirement savings, and Social Security benefits. In fact, a study from MetLife and the National Alliance for Caregiving calculated women lose an average $324,044 in compensation due to caregiving.