Friday, July 22, 2011

Alternet article about coin seigniorage

Joshua Holland of Alternet has written an article about coin seignorage and the debt ceiling charade.

from the article: "The escape hatch nobody at the Washington Post or the New York Times is talking about is called coin seignorage. It's based on Title 31 of the U.S. code, which authorizes Treasury Secretary Tim Geithner to “mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

Let us hope the idea gains traction. Also, a prayer to the patron saint of lost causes may not hurt!

May the Sacred Heart of Jesus be adored, glorified, loved and preserved now and forever. Sacred Heart of Jesus have mercy on us, Saint Jude worker of Miracles, pray for us, Saint Jude helper and keeper of the hopeless, pray for us,

Thank you Saint Jude

9 comments:

Mike Norman said...

That must have been the prayer that Hank Paulson uttered during the Lehman crisis. In his book he said he went home and "prayed" because he didn't know what to do. Master of the Universe.

Crake said...

Mike, what it your opinion of the Fall 2008 crisis? Do you think the daisy chain of counterparty failures in contracts would have caused a liquidity crisis shutdown?

I tend to think it would have because I was in risk management in power trading during the power market blow-ups in the Summer of 1998. The whole industry was almost brought down by a fairy small regional power trader group going under overnight and the direct ramification to financial and physically settled contracts instantly spread through daisy chains of contracts to the entire industry in a few days, where counterparty after counterparty could not settle. Intra-month power prices spiked to unbelievable levels (10X to 20X in a matter of hours and back down and back up) and then power trading firms quickly tried using all kinds of technicalities to get out of contracts, some legitimate but still lawyer-ball category and others just grasping for straws crazy.

What I experienced was a crisis mainly centered initially on physical settlement but it quickly spread to financial contracts because of the huge underlying price spikes on which the derivatives were based. So, I assume financial markets would have played-out the same way?

Tyler F said...

Good, looks like a thread to ask this question. I haven't gotten a response at another site.

What book, books or web accessible articles would folks suggest for the best understanding of and insight into the Great Financial Crisis?

beowulf said...

"What book, books or web accessible articles would folks suggest for the best understanding of and insight into the Great Financial Crisis?"

Check out the Levy Institute's site, their publications section has all sorts of fairly awesome papers (Randy Wray's work in particular).
http://www.levyinstitute.org/publications/

Tyler F said...

Thank you.

Tom Hickey said...

Yves Smith recommends George Cooper, The Origin of the Financial Crisis (Harriman House, 2008).

The must-read stuff is everything about this by Williem K.(Bill) Black. Lots of blogs and interviews out there. He documents the fraud, top down, that is at the bottom of it and that no one is talking about, let alone doing anything about.

Bob said...

Remember the late Paul Harvey radio host of "The Rest of the Story".
I recall he had on page 3 of his report many years ago that a grandfather had an 86,0000.00 coin collectors penny in his life long collection. His 5 year old grandson got into the collection and took this penny and put it in a gum machine!!

What would happen if Geithners grandson did this with the trillion dollar platinum penny.
Seriously though gold and silver have the same problems that fiat currency has. How do you spend it?, how do you value it, how do you purchase it. Simple you convert it to fiat currency. Actually precious metals market is worse than the real estate MBS and CDS markets. Remember how there is no performance bonds like the futures markets in the shadow banking CDS markets? Many holders of the same contract of insurance, and when it comes time to anti up, black monday crash in the CDS market. Silver markets recently had a near miss, when silver went to 50.00. Margin increases saved the market, I refer you to the CME Howard Simons article "Silver and the Margin of Safety". At this moment I challenge anyone one of the super edmucated nobel lureate's to tell me how the counter party risk is evaluated and controlled in the bullion and silver bars market? I wonder how many people hold the same piece of paper on each bar? At least with fiat currency you know where the buck stops literally. I trade in the silver etf, and as Howard said in this article the exchange and market was saved at the expense of someone on the wrong side who was taking too much risk. Please tell the 2,000 bank lobbyists this and the co-opted tea baggers.

Currency has to be liquid and gold is not. Currency has to be transparent and gold is not. Go and try to sell your gold. Who's scale you gonna use to make sure the weight is correct? Etc Etc. gold is a shadow market just like the CDS market IMO. Oh another thing you better buy a gun to make sure no one takes your gold. Thats progress, bury it under the mattress.

beowulf said...
This comment has been removed by the author.
Clonal said...

Joe's Salmon, Ygelsias article was also just published at the Global Economic Intersection

So the word is slowly getting out.