This seems like quite the assertion. Anyone want to explain how minting $1 trillion will definitely not have any impact on inflation?
Treasury trades the coin to the Fed for existing bonds the Fed already owns.
Treasury extinguishes the bonds.
Fed's balance sheet is unchanged, minus a trillion of bonds, plus a trillion of coin.
Treasury's balance sheet is unchanged.
Zero new money in circulation.
The coin doesn't go into circulation, it just lets the member banks of the Federal Reserve have an asset (dollars) to borrow against and fund their current operations. This does have an impact on inflation, but it's not the same as dumping USD one trillion in bills into general circulation.
It's not going to enter the monetary supply, it's more of a loophole to avoid debt ceilings.
Now whether avoiding debt ceilings has an impact on inflation is up for debate (my vote is that it will, but I also don't like the debt ceiling in the first place)
And the harm is already done on that front.
This is relatively low impact compared to other shenanigans.
To summarize -- Congress has authorized a certain amount of spending, but they have also passed a law limiting the amount of money that the Treasury department can borrow. So ... how is the executive supposed to pay the bills?
tl;dr: Creating the trillion dollar coin does not commit to any spending not already authorized by Congress.
If there is in engineered way to create no spending limits for congress that congress will not spend 100% of that is moronically naive
If they make a 10 Trillion coin, congress will pass a spending measure to spend all 10 Trillion
to believe other wise is to be ignorant of history to a level that I don't believe is fathomable
This gimmick WILL CAUSE INFLATION. you can bank on that.
I think someone called it a trilemma -- Congress has passed a rock-paper-scissors law, and left no legal action that can be taken by the executive. Except that there's a loophole that they can mint the coin. Congress can close that loophole if they want! But right now it exists.
If Congress wants to control spending they should control spending, not force the executive branch to choose which law to break because they are in contradiction.
This seems to be the premise of a lot of later conclusions you're making, but it's basically wrong: Congress can print money at will. The debt ceiling is not the reason we don't do that. Reputation and inflation mostly are.
No Congress can not, the Federal Reserve can, which is not under the authority of congress at all really.
Congress can spend money, and Congress can Mint Coins (i.e this story) but it can not create federal reserve notes
If it spends more money than it take in from taxes it must issue Treasury bills that is has to sell to someone, Today almost no one wants to buy US Debt because congress is irresponsible like a child with a AMEX Black card.
So the only entity willing to buy US debt is the Federal Reserve who does so by money printing aka inflation of US Currency aka a tax on responsible people in society
They damn well can. There's nothing stopping congress from dissolving the federal reserve tomorrow if they'd like, other than the general dysfunction of congress that's spurred this whole discussion.
if that were the case why not just make a 1000 Trillion Coin, and pay off all the debt for all of time
Because we both know that yes that money will enter the money supply, just not directly.
The reason this distinction matters is that the President has the authority to create the trillion dollar coin, but does not have the authority to spend it. All he can do is grant permission to another authority to borrow against that coin, it's that other authority (the Federal Reserve) that would in turn affect inflation.
The argument is that since the Federal Reserve is going to end up doing that anyways, one way or another, that this trillion dollar coin itself really isn't the cause of any inflation to begin with; it's basically nothing more than a formality.
Sure, but it's going to do it through the borrowing/lending we presume will be allowed by congress (raising the debt ceiling) eventually anyways.
This just allows that to happen regardless.
This (to me) is not so much a financial tool as a political bludgeon to work around that fact that the US congress is essentially useless at the moment.
I still don't think it's a good idea, but bad ideas start seeming like good ideas if the people making the rules are utterly useless (see: congress).