a way to solve the debt crisis

[rdking647]

i heard this earlier. It was tongue in cheek but if the GOP want to act like children heres a way to solve the debt crisis.

whats to stop the treasury from minting a 1 trillion dollar coin and selling it to the fed . the treasury gets 1T in new money to prevent a default. they can continue to spend without issuing new debt.
the fed gets an asset worth 1T so they dont show any paper losses.
AFAIK its perfectly legal (i havent really researched it)
and it would make boners head explode...

[drm604]

1. If they could do that we wouldn't even need a credit rating.

We'd never have to borrow.

[rdking647]

2. well normally you wouldnt want to just issue new money

that would cause inflation but in this case its kind of a crisis

[drm604]

3. I was being tongue in cheek.

But, if you think about it, lending money in a fractional reserve system increases the money supply anyway, but that doesn't always lead to inflation.

Why not just create money to increase the supply when the economy needs it, then destroy it, through taxation, when it's necessary to reign in the supply.

Why is it necessary for a sovereign government to borrow?

(I'm not sure that I even buy my own arguments here, just throwing it out for discussion.)