Platinum Coin Seigniorage Is Starting to Get Mainstream Coverage

Joe Firestone notes that we are starting to see coverage in the media of the trillion dollar platinum coin:

Did the MSM’s new wave of commentaries on platinum coin seigniorage (PCS) miss the really big story about it? Of course, I think it did, and I’ll continue my review of the MSM commentaries with the efforts of Chris Hayes at MSNBC, substituting as host on the Rachel Maddow show (12/05 at 9:20 PM); and John Carney at CNBC (12/06 at 11:54 AM). This is my second review post on this subject.

Platinum Coin Seigniorage is the idea that the US Treasury can use its right to print coins or arbitrary value, (the Federal Reserve has this power with regard to paper and electronic currency) which can then be used to pay down the debt by depositing at the Federal Reserve.

I think that this is a good thing, and so does Firestone, but he takes issue with a couple of points made by Hayes and Carney.

First, he objects to their characterization that such an action is unlikely to happen. I disagree.

I understand his point, that the legal and economic barriers to doing this are not great, but the psychological and political barriers, particularly for two people as wedded to economic and financial orthodoxy as Barack Obama and Timothy Geithner does make the possibility that this strategy would be implemented to be vanishingly small.

The area where I disagree is his argument that using the coin won't cause inflation.

While it is clear that if the coins are used exclusively to retire debt held by the Fed will not have much inflationary effect, Federal Reserve held Treasury Bonds are basically an accounting trick.

That being said, if you start retiring other debt, that money has to go somewhere, and if the trillions parked in US government securities need to find another place to park, one could expect these funds to slosh around and this would have an inflationary effect.

My more significant area of disagreement is his assumption that inflation is a bad thing, which is why he argues against the potential inflationary impacts.

I do not think that inflation right now is a bad thing. Given that we have a significant debt overhang, and inflation serves to devalue debt, favoring the debtor over the creditor, I think that inflation is a good thing.

In a very real way, we are in a position very similar to that at the end of the 1800s, when William Jennings Bryan gave his "Cross of Gold" speech.

Seigniorage is today's free silver, and much like free silver, it is not a likely to be implemented, except as a bargaining strategy.

Thanks Merkel

Not only is Angela Merkel's hard money policies impoverishing much of the Euro Zone, which might cause the currency zone to break up, but it looks like it's going to lead to the dissolution of Spain:

The center-right Catalan nationalist bloc CiU and the Catalan Republican Left (ERC) on Wednesday reached an agreement to call for a referendum on independence for Catalonia within two years.

The deal paves the way for Artur Mas to remain premier of the region. The CiU emerged as the biggest party in regional elections held last month but fell short of the absolute majority it was seeking. ERC was the second most voted party. The two sides still have to agree on the budget for next year. The accord on the referendum states that it must be held before the end of 2014 but does not give a specific date.

In a parallel development, the CiU, the ERC and other Catalan parties — with the exception of the local branch of the ruling Popular Party — reached an agreement not to implement the reform of the education system put forward by Education Minister José Ignacio Wert, which restores Castilian Spanish to the same level in the classroom as co-official regional languages such as Basque or Catalan.

The accord says the parties will adhere to the Catalan Education Law, which promotes immersion in the Catalan language. The parties described Wert’s proposals as “unacceptable” as they “prevent linguistic immersion by segregating pupils on the basis of language.”

Seriously, the pain caucus in the Euro Zone (Angela is their most senior member) is laying waste to everything that they touch.

Pelosi Draws a Line in the Sand

If you can count, and make an educated guess as to how many Republican Congresscritters are batsh%$ insane teabaggers, it's pretty clear that a greater proportion of Democrats in the House have to vote for a budget/tax proposal.

Well, Nancy Pelosi just made it clear that the votes aren't there if the measure includes an increase in the Medicare eligibility age:

House Minority Leader Nancy Pelosi (D-Calif.) on Thursday escalated her opposition to hiking Medicare's eligibility age, warning Republican leaders that it's a non-starter as part of the lame-duck fiscal talks.

"Don't even think about raising the Medicare age," she said during her weekly press briefing in the Capitol. "We are not throwing America's seniors over the cliff to give a tax cut to the wealthiest people in America. We have clarity on that."

Nancy Pelosi is not trying to convince Boehner or McConnell not to cut entitlements, she's offering a shot across Obama's bow.

Even the Teabagger back benchers understand the politics of trying to pass cuts to Social Security and Medicare without any Democratic votes is political suicide, so even if Obama cuts a deal with the Republicans, they cannot afford to vote for it alone.

Best Comment on Over the Top Christmas Decorations Ever

Link

It's Jobless Thursday!!!

343K initial claims, one of the lowest levels this year, implying the effect of Super Storm Sandy is fading.

The 4-Week moving average, which is still showing effects of Sandy, fell as well, as did continuing and extended benefits.

Good news.

Wanker of the Day

Dana Milbank.

Dude, if you are that sad about Lieberman's exit to Connecticut, go with him.

The DoJ Admits that the Banksters are too Big to Prosecute

We don't need no water let the Motherf#$%er Burn Burn Motherf#$%er Burn

Case in point, HSBC, which was literally laundering drug cartel money.

It will not be criminally prosecuted because it is too big to fail:

State and federal authorities decided against indicting HSBC in a money-laundering case over concerns that criminal charges could jeopardize one of the world's largest banks and ultimately destabilize the global financial system.

Instead, HSBC announced on Tuesday that it had agreed to a record $1.92 billion settlement with authorities. The bank, which is based in Britain, faces accusations that it transferred billions of dollars for nations like Iran and enabled Mexican drug cartels to move money illegally through its American subsidiaries.

While the settlement with HSBC is a major victory for the government, the case raises questions about whether certain financial institutions, having grown so large and interconnected, are too big to indict. Four years after the failure of Lehman Brothers nearly toppled the financial system, regulators are still wary that a single institution could undermine the recovery of the industry and the economy.

But the threat of criminal prosecution acts as a powerful deterrent. If authorities signal such actions are remote for big banks, the threat could lose its sting.

Behind the scenes, authorities debated for months the advantages and perils of a criminal indictment against HSBC.

Some prosecutors at the Justice Department's criminal division and the Manhattan district attorney's office wanted the bank to plead guilty to violations of the federal Bank Secrecy Act, according to the officials with direct knowledge of the matter, who spoke on the condition of anonymity. The law requires financial institutions to report any cash transaction of $10,000 or more and to bring any dubious activity to the attention of regulators.

Given the extent of the evidence against HSBC, some prosecutors saw the charge as a healthy compromise between a settlement and a harsher money-laundering indictment. While the charge would most likely tarnish the bank's reputation, some officials argued that it would not set off a series of devastating consequences.

A money-laundering indictment, or a guilty plea over such charges, would essentially be a death sentence for the bank. Such actions could cut off the bank from certain investors like pension funds and ultimately cost it its charter to operate in the United States, officials said.

Seriously. Burn, motherf%$#er burn.

If there is no rule of law, the banks don't matter.

H/t Matt Stoller.