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Written by Jim Jordal   
Thursday, 14 March 2013

THE TRILLION DOLLAR COIN

By Jim Jordal

 For among my people are found wicked men: they watch, as fowlers lie in wait; they set a trap, they catch men. As a cage is full of birds, so are their houses full of deceit: therefore they are become great, and grew rich. They are grew fat, they shine: yes, they overpass in deeds of wickedness; they don't plead the cause, the cause of the fatherless, that they may prosper; and the right of the needy they don't judge.

Jeremiah 5:26-29, WEB

Economist Paul Krugman recently proposed, tongue-in-cheek of course, that President Obama order the minting of a trillion dollar platinum coin. This coin could be sent to the Federal Reserve in return for an equal entry in the government’s checking account. This act would happen should Congress refuse to raise the current debt ceiling before March 1. After that date the U.S. will technically be in default and unable to pay its creditors, resulting in global shock and a serious rise in the cost of borrowing in the U.S.

The loop hole here is that the President is legally allowed to mint platinum coins in any amount to encourage commemorative coin sales.

It’s interesting that people are now finally beginning to realize that we need not remain at the mercy of flint-eyed minions on Wall Street for our prosperity. While the $1 trillion coin is a joke, the principle of just printing needed money is not. Right now when tax receipts fall short of expenditures there are several major options available. Increasing taxes is one, but that cannot be accomplished quickly. Cutting programs is another, but that has serious consequences at the ballot box. So borrowing is the option most often used because it is quick and safe, at least in the short run. Government borrows by issuing bonds which it then sends to the Fed in return for entries into the government checking account. Voila! New money, but only if we are willing to add to the federal debt and pay interest to the Fed or the bankers, trust funds, and private investors to which it sells the bonds.

With the increasing complexity of American society and the avalanche of discoveries, inventions, and problems comes the need for more money. Problems seem to increase much more rapidly than our ability to deal with them does, so expenditures outstrip available resources. For example, one cyber criminal can steal more with a few computer strokes than a thousand old-time bank robbers could with guns. The same is true in the health care field. Every time we see a new life-saving discovery we face the need for more funds to both protect the public against misuse of the discovery and to disseminate it where needed. More complexity equals the need for more money, and it never ends.

Our Constitution (Article 1, Section 8, Clause 5) gives Congress power to coin money, [and] regulate the value thereof. This power was surrendered to the Federal Reserve System in 1913 when the Fed was created to provide a managed money supply able to avoid the unstable economic conditions brought on by the virtually unchecked operations of thousands of private banks. Unstable currency inflates when times are good and shrinks when times are bad, thereby doing the exact opposite of what is needed. The idea of the Fed was that they would "lean against the prevailing economic winds," as one Fed chair detailed his duty, in order to level out the supply of money and prevent rampant booms followed by severe economic crashes.

Simply stated, government could legally issue its own debt free money with no deficit financing and no additions to the national debt. The supply of money would not be under control of international bankers whose major bias is avoiding inflation, even though that often means rather tight control of money creation. Money would be issued as needed to facilitate commerce and the public welfare. It would be flexible to meet changing market conditions, and would be managed by computers hopefully programmed by people committed only to the public good.

But every time someone speaks of breaking out of the financial box of acceptable practices, the specter of hyperinflation arises. Yes, there is such a thing and it is very serious. However, it generally occurs when a society is beset by other serious problems like war, revolution, or massive debt, and is tempted to simply print money to take care of the problem. That is not the case in the U.S. today.

Biblical Jubilee (Lev. 25) speaks to this issue. It forbids oppression of debtors by moneyed interests devoted to transferring wealth from the people up the pyramid to the few at the top. The current continuing economic problems faced by the U.S. ought to be indicative of this situation. We need biblical Jubilee, and we need it now!