It is argued that the way around the “debt ceiling” argument is for the government to mint $1 trillion platinum coins and deposit them with the Federal Reserve. This would then reduce the “national debt” by $1 trillion for each coin minted.
The problem people have with this is people just don’t understand what money -IS-.
Money Is Created Not Mined Or “Raised”
I hope everyone reading this understands where banks get the money they loan out from. The answer is they “create” it. They are not loaning out deposits. They create the money out of thin air. If you don’t believe this, go look it up and come back when you understand it.
Like banks, the US CREATES money; it doesn’t get money from taxes or borrowing. The US does not round up gold to trade for armies anymore. The government doesn’t have to “borrow” money or get it by taxing. It just doesn’t. It creates it.
Our “money” says right on it that it is “legal tender for all debts public and private.” It doesn’t say you can trade it in for gold or something, it says it IS the money.
The US govt “appropriates” spending. Money is CREATED to use as the intermediary – the token – of that appropriation. The money the government spends minus the money it taxes bak is the amount of money in circulation. (Think about what “paying off the debt” would mean – it would require taking $30 trillion out of circulation.) Stephanie Kelton does a good job explaining all this in her book about Modern Monetary Theory (MMT).
Republicans Understand Money
Republicans understand money and know that Democrats and the public do not. This is why they ALWAYS use deficit spending and then beat Democrats over the head for “borrowing.” They do this so they can deliver things to the public and keep Democrats from doing the same. They do this every time, and Democrats respond by being “responsible” and imposing austerity on the public.
MMT and Inflation
One last important point. MMT does NOT say we can just print all the money we need. It explains that our govt needs to analyze spending for inflationary effect BEFORE spending. Like how China built tens of thousands of miles of HS rail – they ramped up steel plants etc first. What we do now is superstition – don’t spend “too much” or you “might trigger” inflation. And then you “fight” inflation by putting people out of work.
So Why Can’t Leaders Admit This?
Thinking about WHY Biden and Yellen and all Republicans and Wall Street types maintain this illusion that it would be “irresponsible” to mint the coin or get rid of the “debt limit.” It seems that maintaining the public’s “kitchen table” misunderstanding that the US gets money from taxes and borrows the rest, is the underpinning of the neoliberal order.
If the powers-that-be ever admitted that the US creates money through appropriation, and can control inflation by planning, (and therefore give everyone a job with good pay,) that would undercut the ideology that “markets” are superior to public planning, that capital is better at allocating resources than the public.
The website We CAN Have Nice Things explains MMT and links to many sources, articles, videos, etc.