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4:38 pm - 01/13/2013

Paul Krugman chastises Jon Stewart for mocking the platinum coin

jon-stewart-coin-620x270

Economist and New York Times columnist Paul Krugman slammed Jon Stewart for his segment on the platinum coin, saying that “Obviously neither he nor his staff did even five minutes of looking at the financial blogs.”

In an ABC News web exclusive, Krugman said: “It is a funny thing. But you want to be funny from a point of view of understanding what the issues are. There’s a reason we’ve gotten to this place.” He added: “Obviously neither he nor his staff did even five minutes of looking at the financial blogs which have been talking about this. Lots of people think it’s a bad idea. Lots of people think it’s a good idea. But it’s not just, ‘Oh, those idiots.’
 
(OP's Note: Vid won't embed, here's a link)

http://abcnews.go.com/ThisWeek/video/week-web-extra-paul-krugman-18202593

Krugman was answering a question about a recent blog post where he called Jon Stewart “lazy” for mocking the coin idea. “In this case, however, it’s obvious that nobody at TDS spent even a few minutes researching the topic. It was just yuk-yuk-yuk they’re talking about a trillion-dollar con hahaha,” Krugman wrote. “Hey, if we want this kind of intellectual laziness, we can just tune in to Fox.”

In the segment in question, from Thursday, Stewart says: “I’m not an economist, but if we’re just going to make shit up, I’d say go big or go home. How about a $20 trillion coin



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swt_lil_gal 13th-Jan-2013 10:27 pm (UTC)
Am I on the right track in thinking that the idea of this coin is to count on the fact that the government will indeed bring in 1 trillion in revenue and cuts so it just speeds the process of lowering the deficit along by depositing it now? #stumped
surrenderface 13th-Jan-2013 10:45 pm (UTC)
Essentially it would help delay having to come up with a solid solution to the debt ceiling. The government is really close to the debt ceiling, which is $16.4 trillion, so the plan was minting this coin, depositing it with the Federal Reserve and then paying bills with it. So when you don't think Congress is going to do anything worthwhile to either raise the ceiling or anything else so it would have at least bought more time by bypassing them. Right now they pretty much have a month, and from what I read yesterday it's a no go on the coin now.
swt_lil_gal 13th-Jan-2013 10:51 pm (UTC)
Thanks for the response! Where is the money for the coin coming from though? Isn't it very problematic to introduce money from no where into the economy system as it will cause inflation? I've been following this whole fiscal fiasco for two months and it's nuts- Congress needs to get their shit together
surrenderface 13th-Jan-2013 11:06 pm (UTC)
The Treasury would sell the coin to the Federal Reserve for $1 trillion, so it's not really creating money *technically* but yes, the introduction of new money just to help pay things off leads to inflation. In this case, it would be unlikely to occur immediately, but in the future. The sale of the coin would lead to an increase in reserves held by banks, and in the future when interest rates would be higher, the Fed would have to somehow sell back that trillion dollars in order to avoid a sharp increase in inflation. A lot of economists claim it wouldn't have any effect on inflation, that if the Fed just keeps control of the interest rates there wouldn't be a problem.
swt_lil_gal 13th-Jan-2013 11:24 pm (UTC)
Ahhh, finally! My mind grapes thank you!
ecrivais 13th-Jan-2013 11:01 pm (UTC)
wouldn't that cause some inflation tho
surrenderface 13th-Jan-2013 11:07 pm (UTC)
I will copy and paste what I said above but lmk if you need any other clarification, I will try my best. This stuff is my favorite kind of thing so I hope I can help.

The Treasury would sell the coin to the Federal Reserve for $1 trillion, so it's not really creating money *technically* but yes, the introduction of new money just to help pay things off leads to inflation. In this case, it would be unlikely to occur immediately, but in the future. The sale of the coin would lead to an increase in reserves held by banks, and in the future when interest rates would be higher, the Fed would have to somehow sell back that trillion dollars in order to avoid a sharp increase in inflation. A lot of economists claim it wouldn't have any effect on inflation, that if the Fed just keeps control of the interest rates there wouldn't be a problem.
ecrivais 13th-Jan-2013 11:12 pm (UTC)
ah ok. I only took one economics class and we didn't go over inflation too much but I wasn't sure how much inflation a $1 trillion dollar coin would cause.

OT kind of but $1 trillion doesn't sound like much until you think it's 1000 billion which is 1 million million.

gd.
surrenderface 13th-Jan-2013 11:15 pm (UTC)
if they straight up tried to just release it into circulation it'd definitely cause problems, but the Treasury sells the Fed coins all the time just in much smaller quantities. I definitely would have been curious to see what happened but the political implications are definitely worse.

so with you there like have you ever seen this: http://www.pagetutor.com/trillion/index.html with visuals it's even crazier
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