- May 12, 2014
- Reaction score
- Political Leaning
When the principle on Fed held treasuries is paid money goes out of existence.
....and then the Fed just buys more debt, putting themselves in exactly the same position as they were before the bond matured. With a coin, they wouldn't need to bother. Anyway, money doesn't disappear from the economy when Fed-held bonds mature, it just disappears from Treasury's account at the Fed, while the Fed's balance sheet shrinks.
The Coin is no more permanent than treasuries; If they wanted to, or needed to, Treasury could buy it back from the Fed, with more treasuries. As long as the debt ceiling wasn't standing in their way.
Not so with a 1 trillion dollar coin, and who is to say what the Fed would do with such a coin, they may buy anything with it.
There's nothing the Fed can buy except debt instruments and other such assets to hold against their liabilities. Who would take a $1 trillion coin - that doesn't pay interest - in payment, anyway?
C'mon. This works on all levels. Get on board.