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In reply to the discussion: The trillion dollar coin is not about "printing away the debt". [View all]FarCenter
(19,429 posts)7. But the government has to spend the trillion dollars
The trillion dollars are needed in order to continue deficit spending once the debt ceiling is reached. In effect, the government is minting a trillion dollar coin and making change for currency that it can spend at the Federal reserve.
The trillion dollar coin is deposited into Treasury's account at the Fed, adding a trillion to the Treasury's account. Then the Treasury writes checks. The Fed cashes the checks and deducts them from the Treasury's account.
Checks written by Treasury to pay Government bills do not return to Treasury. They go the the Fed where they are cashed.
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The Fed doesn't need to sell bonds at all in order for the Treasury to spend the deposited coin
FarCenter
Jan 2013
#16
The Fed is actually buying bonds every month in order to implement quantitative easing
FarCenter
Jan 2013
#19
That's the point -- the Fed can sell bonds without raising the ceiling. Read Krugman again.
DanTex
Jan 2013
#25
It's a legal and economic hack, and an effective one, which is why the right-wing's going apeshit.
backscatter712
Jan 2013
#10
Well, it's not "free money". Eventually it has to be payed back, just like real debt.
DanTex
Jan 2013
#13
So it's an accounting trick that temporarily allows us to appear to have more money
hughee99
Jan 2013
#14
No. It's an accounting trick that allows us to borrow money without issuing more bonds.
DanTex
Jan 2013
#15
Umm, yeah, all fiat money is created out of nothing. We're not on the gold standard any more.
DanTex
Jan 2013
#22
That doesn't happen if the Treasury uses the coin(s) only to retire existing debt.
Jim Lane
Jan 2013
#27