Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

I'd rather have a leash shoved up my ***... http://www.nytimes.com/2013/01/07/b...racelet-meant-to-build-loyalty-and-sales.html

Sooner or later, the government will probably turn to this for money...

 

[unofan]

If it's fiat money then it's debt and generally you can't post debt from one issuer to serve as collateral for new debt from the same issuer. So Nadler was absurd and the response was absurd. Both equally so. One absurdity was obvious to everyone while the other absurdity was only obvious to people who know how to reason logically.

If you disagree, then lend me $100, then I'll give you an IOU for $100 and ask you to lend me another $100 using that IOU as collateral for the second loan.

Fiat currency is not debt. The ability to print money is also one thing that distinguishes govt debt from household debt. How can you claim to be knowledgable about economics and not get these econ 101 concepts?

 

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

I'll solve the tax problem with a simple, one sentence law that even conservatives can get behind.

No state shall get back from the Feds more than it pays in taxes.

Do we have a deal?

I have a much better idea than that!

Why involve the federal government at all?

It doesn't collect the taxes to begin with and doesn't spend the money to begin with. That way, you get the same result as you propose yet don't have to pay any salaries or employee benefits to employees of the federal government!

100% of the money stays in the states where it started! Isn't that where you ended up as well?

I like my version much better.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

I have a much better idea than that!

Why involve the federal government at all?

It doesn't collect the taxes to begin with and doesn't spend the money to begin with. That way, you get the same result as you propose yet don't have to pay any salaries or employee benefits to employees of the federal government!

100% of the money stays in the states where it started! Isn't that where you ended up as well?

I like my version much better.

Brings us back to the Articles of Confederation. We've tried this, and it didn't work.

 

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Fiat currency is not debt. The ability to print money is also one thing that distinguishes govt debt from household debt. How can you claim to be knowledgable about economics and not get these econ 101 concepts?

Fiat money is only worth what you can exchange it for. It has no intrinsic value whatsoever.

You cannot post fiat money as collateral for government debt. In math I am talking about if A = B and B = C then A = C while you seem to be trying to deny that relationship is true.

also, have you ever actually read what's printed on a dollar bill (or on $5, $10, $20, $50, $100)?

"This note is legal tender for all debts public and private."

So, who am I going to believe, you or my own eyes?

Fiat money can be tendered for debt, it says so right on its face. You cannot use one form of debt to collateralize another form of new debt from the same debtor.

No one said there would be no math in this thread.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

So, who am I going to believe, you or my own eyes?

I'm almost tempted to make some overtly-religious smart remark here, but I won't...

 

[unofan]

Fiat money is only worth what you can exchange it for. You cannot post fiat money as collateral for government debt.

also, have you ever actually read what's printed on a dollar bill (or on $5, $10, $20, $50, $100)?

"This note is legal tender for all debts public and private."

So, who am I going to believe, you or my own eyes?

Oh good lord...that says you can pay debts with it, not that it is debt itself.

What the fark do you think the government pays you when you cash in a savings bond or t-bill? Bits of silver?

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Oh good lord...that says you can pay debts with it, not that it is debt itself.

What the fark do you think the government pays you when you cash in a savings bond or t-bill? Bits of silver?

Meow mix. What else?

 

[joecct]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Fiat money is only worth what you can exchange it for. It has no intrinsic value whatsoever.

You cannot post fiat money as collateral for government debt. In math I am talking about if A = B and B = C then A = C while you seem to be trying to deny that relationship is true.

also, have you ever actually read what's printed on a dollar bill (or on $5, $10, $20, $50, $100)?

"This note is legal tender for all debts public and private."

So, who am I going to believe, you or my own eyes?

Fiat money can be tendered for debt, it says so right on its face. You cannot use one form of debt to collateralize another form of new debt from the same debtor.

No one said there would be no math in this thread.

I thought fiat money was money backed by nothing other than a promise it was good.

 

[unofan]

I thought fiat money was money backed by nothing other than a promise it was good.

Essentially. A dollar is worth a dollar because we all agree it's worth a dollar.

If the treasury mints a trillion dollar coin, it'll be worth a trillion because the govt says so. It doesn't have to have a trillion in metal to be accepted as a trillion dollar coin any more than a $100 bill.

 

[Bill]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

I thought fiat money was money backed by nothing other than a promise it was good.

Definition:
http://www.investopedia.com/terms/f/fiatmoney.asp#axzz2HZto2iro

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Essentially. A dollar is worth a dollar because we all agree it's worth a dollar.

If the treasury mints a trillion dollar coin, it'll be worth a trillion because the govt says so. It doesn't have to have a trillion in metal to be accepted as a trillion dollar coin any more than a $100 bill.

The difference between the coin and the paper is that you can melt down the coins and get the accepted value in base materials. I'm not suggesting doing this because of legality issues, but you could seriously take rolls of nickels, melt them down, and get even more money than you had before.

 

[unofan]

The difference between the coin and the paper is that you can melt down the coins and get the accepted value in base materials. I'm not suggesting doing this because of legality issues, but you could seriously take rolls of nickels, melt them down, and get even more money than you had before.

Right, but that's not inherently so. I believe everything from the dime on up is worth more as a coin than as scrap metal. At least until you hit the silver and gold bullion.

Point being, a trillion dollar coin could be minted from a couple hundred dollars worth of platinum. Why fishy somehow thinks this coin would be debt is beyond me. I'm not saying it's a fantastic idea, but it is possible.

 

[FreshFish]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Right, but that's not inherently so. I believe everything from the dime on up is worth more as a coin than as scrap metal. At least until you hit the silver and gold bullion.

Point being, a trillion dollar coin could be minted from a couple hundred dollars worth of platinum. Why fishy somehow thinks this coin would be debt is beyond me. I'm not saying it's a fantastic idea, but it is possible.

If you think this is such a good idea, why don't we just mint 16 $1 trillion coins and use them to pay off the national debt in its entirety.

I never once said that the coin itself would be debt. I merely said that you could not issue a $1 trillion coin and then use it as collateral for new government borrowing. I thought as an attorney you understood precise definitions and technicalities.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Right, but that's not inherently so. I believe everything from the dime on up is worth more as a coin than as scrap metal. At least until you hit the silver and gold bullion.

Point being, a trillion dollar coin could be minted from a couple hundred dollars worth of platinum. Why fishy somehow thinks this coin would be debt is beyond me. I'm not saying it's a fantastic idea, but it is possible.

Hence why I used the example of a nickel. I believe, based upon current market price, the metal of one nickel is about $0.0625. The silver dollar (Eisenhower one) may also be in a similar predicament.

 

[unofan]

If you think this is such a good idea, why don't we just mint 16 $1 trillion coins and use them to pay off the national debt in its entirety.

I never once said that the coin itself would be debt. I merely said that you could not issue a $1 trillion coin and then use it as collateral for new government borrowing. I thought as an attorney you understood precise definitions and technicalities.

Good lord you're dense. I never said it was a good idea, though it might arguably be better than shutting down the government over a legislative hissy fit. It depends on how bad the resulting inflation would be compared to a double dip recession.

And you still don't get how this would work, do you? The gov't mints the coin and deposits it with the fed. It now has a trillion dollars to play with. It uses that trillion to continue paying its bills and meeting its obligations just like you would if you deposited cash at a bank. It isn't that hard of a concept to grasp.

Finally:

If it's fiat money then it's debt

Sure looks like you calling the coin debt to me.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Good lord you're dense. I never said it was a good idea, though it might arguably be better than shutting down the government over a legislative hissy fit. It depends on how bad the resulting inflation would be compared to a double dip recession.

And you still don't get how this would work, do you? The gov't mints the coin and deposits it with the fed. It now has a trillion dollars to play with. It uses that trillion to continue paying its bills and meeting its obligations just like you would if you deposited cash at a bank. It isn't that hard of a concept to grasp.

Finally:


Sure looks like you calling the coin debt to me.

I don't think we can really call coins "fiat money", or at least most of them anyway. They don't have to be "backed by a metal" because they ARE a metal. It just so happens that in 1913, an agreement was put into place between the US Treasury and the Federal Reserve to exchange between constitutionally-mandated coin (I-8-5) and paper money, and that in 1971 (that or thereabout), the Federal Reserve merely stated that they would no longer determine the fair market value of gold and silver, nor would they conduct said transaction.

That having been typed, I don't foresee the government issuing a trillion dollar coin made of platinum unless they use approximately a trillion dollars worth of platinum. Otherwise, you'd see the price of platinum spike, especially seeing as how it is so easy to "counterfeit" a coin, as all you need is a mold and the appropriate metal combination.

 

[St. Clown]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

I don't think we can really call coins "fiat money", or at least most of them anyway. They don't have to be "backed by a metal" because they ARE a metal. It just so happens that in 1913, an agreement was put into place between the US Treasury and the Federal Reserve to exchange between constitutionally-mandated coin (I-8-5) and paper money, and that in 1971 (that or thereabout), the Federal Reserve merely stated that they would no longer determine the fair market value of gold and silver, nor would they conduct said transaction.

That having been typed, I don't foresee the government issuing a trillion dollar coin made of platinum unless they use approximately a trillion dollars worth of platinum. Otherwise, you'd see the price of platinum spike, especially seeing as how it is so easy to "counterfeit" a coin, as all you need is a mold and the appropriate metal combination.

Coins are still fiat because the government dictates the value of the coin. The fact that the metal in the coin has some value is irrelevant. The metals comprising a quarter might have a value of $0.01, or $0.30 - it doesn't matter. The currency value of the coin is still $0.25. To destroy it is illegal, regardless of its scrap value, and therefore the value of the coin is only what the government dictates.

 

[unofan]

I don't think we can really call coins "fiat money", or at least most of them anyway. They don't have to be "backed by a metal" because they ARE a metal. It just so happens that in 1913, an agreement was put into place between the US Treasury and the Federal Reserve to exchange between constitutionally-mandated coin (I-8-5) and paper money, and that in 1971 (that or thereabout), the Federal Reserve merely stated that they would no longer determine the fair market value of gold and silver, nor would they conduct said transaction.

That having been typed, I don't foresee the government issuing a trillion dollar coin made of platinum unless they use approximately a trillion dollars worth of platinum. Otherwise, you'd see the price of platinum spike, especially seeing as how it is so easy to "counterfeit" a coin, as all you need is a mold and the appropriate metal combination.

How would minting a trillion dollar coin affect the price of platinum? The coin's minted value would be independent of its intrinsic value, that's the entire point of minting coins. It would not mean that all platinum is forever valued that way.

Also, presuming it's a one-off event, I don't think counterfeiting is an issue. Its not like banks would see trillion dollar coins for deposit and believe joe blow somehow earned it from the gov't.

But maybe you see lots of $100,000 bills floating around that you believe are genuine. I hear those are great for counterfeiters.

 

[FlagDUDE08]

Re: Strands in the Tapestry: the Business, Economics, and Tax Policy Thread

Coins are still fiat because the government dictates the value of the coin. The fact that the metal in the coin has some value is irrelevant. The metals comprising a quarter might have a value of $0.01, or $0.30 - it doesn't matter. The currency value of the coin is still $0.25. To destroy it is illegal, regardless of its scrap value, and therefore the value of the coin is only what the government dictates.

Just because destruction is illegal (makes me wonder about those machines you see in service areas along the highway where you can take a penny and turn it into something commemorative) doesn't mean that it doesn't happen. The government understands this. They also understand that as much as "counterfeiting" coins is illegal, it still happens. Therefore, in order to account for a crime wave to make it less desirable, they need to make the coins be worth about the value of the metal used to make them.