Home > Main > Obscure 1996 Law gives President Obama the power to end this Recession Overnight

Obscure 1996 Law gives President Obama the power to end this Recession Overnight

November 8, 2011 Leave a comment Go to comments

Could a Coin end this recession overnight - and break the stranglehold of Wall Street?

How heroic, low level hill staffers snuck a “save the middle class” clause under the nose of the banking industry.  You – and your kids – could have job and a hefty pay increase tomorrow.

Find out why the big wigs don’t want you to know this secret information that would end this recession in a few days.

I was just another casualty of the ongoing recession that supposedly “ended” in 2009.  You’ve heard my story before from your friends:

  • My Company struggled to find any business at all
  • Pay frozen for years despite rising gas prices
  • Not enough work even to fill up an 40 hours, much less get overtime

Then the really bad news hit – I got let go due to “downsizing” at our company.

Now I wasn’t some bigwig who had a golden parachute worth millions. Nope, I had a sliver of savings and a mortgage on a house worth 30% less than what I paid for it just 6 years ago .

Frankly, I had realized it was bad out there, but until I lost my job, it really didn’t hit home.  I sent out hundreds of resumes – and got exactly 3 email responses.  I called friends, relatives – even my mother in law – and nobody knew of a single job available.

Panic Sets In

I was in a panic, because I couldn’t make next months rent.

I’d done everything right for years. I was angry –  I worked hard for so long, saved and lived within my means. I showed up for work when I was sick. I was an ideal employee.

And I was stomping mad.

Here I was, 30 days from being out on the street.  How could this happen to me – or really to anyone I know?

What was so wrong that a guy like me couldn’t find a job?

The problem was businesses just don’t have enough people who want to buy their products.  No business will hire anyone if they aren’t making money themselves.

Companies don't hire when they have high profits. They hire when they are Swamped with Demand.

I don’t blame these businessmen.  They aren’t supposed to get me a job.

When there are this many people out of work, no business will be swamped with customers 10 deep – which is when businesses really hire people.  People just don’t have the money to buy much.

I was starting to think nothing could help. I didn’t have a job – and any businessman with a brain wouldn’t hire anyone anyway.  They just didn’t have the business.

So imagine my skepticism when I was browsing the internet, and a little known blogger claimed the recession could be over in just a few days…yeah right, dude.

Go smoke your funny cigarettes and just stay out of my way – I’m on a job search.

This blogger claimed the recession could be – should be – over, because President Obama can choose to pay off our debt at any time, and cut taxes on the middle class at the same time.

As I read though their poorly written, photo-copied material, I suspected that they might be insane.   But then I looked up the laws myself – and there they were, just as they had said.

It was all true.

President Obama has the power to end this recession tomorrow – and cut taxes on the middle class.

The only thing stopping him is that he doesn’t know this law exists!     

Could we have a Massive Economic Boom?

President Obama could tell the U.S. mint to create coins that would pay off our debt and lower taxes on the middle class – which would kick off a massive economic boom.

The Trillion Dollar coin would unleash what might be the greatest economic boom in human history.

We’re coming off what’s been a huge depression for the middle class.  Unlocking their spending power for the first time in decades would cause astonishing changes – all good for people looking for jobs.

Not only that, but all this activity would cause businesses to be swamped with customers – and when businesses have customers, they hire, hire, hire.

Instead of 5 people for every job, we’d have 5 jobs for every person.

Former “Mill Rat” Stumbles across a Secret Concealed from the U.S. Public

Hi, I’m The Traders Crucible, and I’ve been studying the economy for the last 20 years.  I’ve worked with a hard hat on and a jackhammer in my hands, and I’ve traded for hedge funds in London.

I’ve seen working people lose hope year after year for decades. I grew up in Highland Indiana in the shadow of the steel mills.  My town was a steel mill town, where you were supposed to have a stable middle class life as long as you did your job.

Of course, this entire way of life was destroyed over the last 20 years.

During my career, I’ve spent most of my time looking for the economic drivers of trading profits.  To do this well, you need to become an expert in many fields – accounting, finance, mass psychology are just a few of those areas.

And yes, I’ve had the $1,500/bottle of wine or two.  ;)

But deep down, I’m a Steel Mill rat. I grew up in a lower middle class town.   I paid for college by working with a jackhammer in my hands and a hard hat on my head.

The story I told earlier isn’t my story – but I know people personally who do have that story.  We all know people with this story.

They worked hard, played by the rules – and were screwed by the system. 

Since my specialty is figuring out the way the economy really works, I thought I’d apply my expertise to figuring out the fastest way to end this recession.  In fact, most of good trading involves knowing when the economy is going to turn good or bad.

But after 20 years of studying the economy, I wasn’t really any closer to having an easy solution for our recession.

A Toxic Congress Prevents the Economic Recovery

My own analysis showed that President Obama needed to cut taxes substantially on the middle class.

This is the only segment of our economy that is large enough to create sustainable, healthy demand for U.S. businesses.

But I could not see a way that President Obama could get middle class stimulus bills passed through congress.  The political situation in congress is so poisonous, so toxic.

It doesn’t make any sense.  These people are supposed to be helping us.

But then, I ran across this seemingly crazy idea.

Not Enough Money? Are you Kidding me? We’re the richest country ever!

Everyone knows we are the richest country in the history of the world.  If this is the case, why are so many people struggling?   We have the ability to live like Roman Emperors – but there isn’t enough money to go around?

Are you kidding me?

Here is the crazy idea…

We should have the government issue a $1t coin, and pay it’s way with the coin! 

We don’t have to borrow money from China, or go begging to Wall Street for their table scraps.  The full program would:

  • Drive unemployment to 2.5%
  • Fix our roads and schools
  • Give a hefty tax cut to every person that works for a living
  • Cut the biggest taxes on small and medium businesses

Remarkably, the U.S. would probably have less debt than it does today.  The made up debt ceiling crisis? Couldn’t happen again!  The Trillion Dollar Coin solves this problem.

But you don’t have to believe me.  You can go to famous economists:

” he (the President) could – under a quirk of existing law – have turned drama to farce by minting a large platinum coin – say for a trillion dollars – and using that to buy back public debt held by the Federal Reserve, so that the debt ceiling would never have been breached. (There would have been an uproar but no other economic effect.) “

James K. Galbraith

or Yale professors of Constitutional Law:

Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

Jack Balkin, Yale Professor

This idea was vetted by the Economist as “So Crazy it just might work”, and Slate piped in “The Treasury secretary has the authority to mint certain coins of any denomination, with no need for the value of the metal to equal the value of the coin.”

What would happen is:

1. The Treasury would mint the coin, and sell it to the U.S. Federal Reserve for $1,000,000,000

2.The Fed would credit the U.S. Treasury account with $1T

3. The president could then cut Social Security taxes, knowing we can never go broke.

It’s clear that this idea would work – and solve our economic problems almost immediately

Here is  31 USC 5112(k), if you need to take a look.

31 USC 5112(k) was passed in 1996.

Look closely at the language. It’s clear some smart staffer put in a clause that would allow the government to coin all of the money it could ever need.

Not only that – if we got this coin minted and deposited, we’d no longer be under the boot heel of Wall Street banks.  We don’t need their money anymore – we’ve got our own.

In other words – we’re able to afford it, and Wall Street can’t stop us.

But President Obama doesn’t know just how powerful he is.  I don’t think President Obama even knows about this obscure law.  He doesn’t know he could end this depression -and probably sweep himself to victory in 2012 in the process.

I bet he’d listen to the Trillion Dollar coin idea then.

He could direct his Treasury Secretary to make this coin tomorrow.

But if he doesn’t know, he can’t take action on this.  It’s like asking me to speak Russian – I just don’t even know the first thing about it.

And that’s why I am writing this today.

We need to get President Obama to know about the Trillion Dollar Coin.

Let Obama know how to end this recession – The Trillion Dollar Coin and #OWS at the White House

We need to let President Obama know that he can end this second great depression with a signature on a one page document.   We need to tell him exactly what he needs to do.

Of course, we could send emails to the White House, or cranky letters to the editors of our home town newspapers.

But….How about an #OWS in front of the White House – carrying pictures of the Trillion Dollar Coin?

Do you think the mainstream media could ignore thousands of people?

All Carrying signs, telling us exactly how to end our economic problems?

Come on!  no way.  The secret would be out – and once its out, its a done deal.

Now, I guarantee this works.  We’re already seeing the impact of #OWS on the mainstream media.  The recent covers of magazines are all you need as proof for this.

But here is the greatest part of the Trillion Dollar Coin idea – it doesn’t even need to be issued to have impact! 

Once people realize we can coin our own money, without the interference of Wall Street, what’s to stop us from doing it without the coin?  Nothing!

So this is something that is guaranteed to work  - as long as people find out about the Trillion Dollar Coin.

Again – we just need an #OWS in front of the White House, and pass out a few flyers on how the Trillion Dollar Coin works.  Our economy will be fixed in a few weeks – and your friends will get jobs!

But if we dont’ act, if we just keep this secret to ourselves, well, you can imagine.  Two years from today, the economy will be even worse.

Most economic forecasts are predicting a recession.  At least in 2007-2008-2009, people had a bit of savings to fall back on.  Today – they’ve got nothing.

We already have 15% of the population of the United States on Food stamps.   52% of the unemployed arent’ getting help.

It’s bad out there. Unless we do something quickly – and something big- this economy could crash.

We need to get President Obama on board with solving our economic problems.  The way to do this is through getting the Trillion Dollar Coin minted asap, and cutting taxes on the middle class.

We’ve been lucky enough to have a detailed proposal worked out. We know what we need to do to break the banks.  We know how to get this done.

Let’s get it done!

(P.S. The easiest way to do your part is let people know about the Trillion Dollar Coin.  If you know anyone from the #OWS movement, send them here or here.)

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  1. November 8, 2011 at 1:21 pm | #1

    Hey, TC, Thanks for the hat tip. But where’s the link on the second ‘here” at the end. And also why not include the $60 T or $30 T coin proposals too. They absolutely destroy the deficit hawk ideology altogether. Also, we might need a reference to: “Don’t worry about inflation!” with a link to Scott’s post here: http://neweconomicperspectives.blogspot.com/2011/08/coin-seignorage-and-inflation.html

  2. Clonal Antibody
    November 8, 2011 at 5:04 pm | #2

    I have posted it in the Banking Discussion Group of the #OWS NYC General Assembly.

    Warren, Ellen and Michael (Hudson) have been a part of the discussion group at various times.

  3. November 8, 2011 at 6:15 pm | #4

    TC some more comments on your post:

    “1. The Treasury would mint the coin, and sell it to the U.S. Federal Reserve for $1,000,000,000

    2.The Fed would credit the U.S. Treasury account with $1T

    3. The president could then cut Social Security taxes, knowing we can never go broke.”

    Actually, I don’t think that Treasury “sells” it, in the normal sense of that term. I think the sequence is that Treasury would order the Mint to create the coin. The Mint deposits it in its Public Enterprise Fund (PEF) at the Fed. The Fed is FORCED to electronically credit the face value of the coin to the PEF, in return for it, because the coin is legal tender. This results in the PEF having $1 Trillion in electronic credits. The Treasury then has the legal authority to “sweep” the profits (the face value – the production costs) from the PEF Account into the Treasury General Account (TGA). The result is that the TGA gets nearly $1 Trillion it can spend on re-paying debt, interest, and Congressional deficit appropriations.

    Next, even though the President would then understand that we can’t go broke, he still could not cut SS taxes without Congress passing a payroll tax holiday. While the president can fill the public purse with coin seigniorage profits to his heart;s content, even up to $60 Trillion and more, as I’ve advocated in other places, he cannot spend the profits into the non-government sector, or even do revenue sharing with State Governments without Congressional appropriations for such spending. What he can do is use the money to pay off the debt subject to the limit; and also to spend whatever Congressional deficit appropriations are passed.

    TC, you also said:

    “But President Obama doesn’t know just how powerful he is. I don’t think President Obama even knows about this obscure law. He doesn’t know he could end this depression -and probably sweep himself to victory in 2012 in the process.”

    I’m not sure I agree about this. After 7 months of blogging about Proof Platinum Coin Seigniorage (PPCS), after Beowulf’s original post about it, and Jamie Galbraith, Warren Mosler, Randy Wray, Matt Yglesias, and Felix Salmon mentioning it; and after blog posts on Naked Capitalism, and Jack Balkin talking about it on CNN; the White House Staff would have to be dead not to have been conscious of it at some level.

    I don’t know exactly how information is circulated in the WH; but it’s hard for me to believe that no one mentioned this option to the President as one possible solution to the debt ceiling crisis. I suspect instead that PPCS was mentioned and that the president and/or Geithner dismissed it out of hand, because they were focused on austerity and solving the deficit problem as a way of getting the president re-elected; and they really didn’t want to hear about any solutions which suggested that there is no real deficit problem.

    Finally, I do agree that we know how to get this done, and also think it would be great to have the occupy movement waving signs about calling on the WH to fill the public purse by minting platinum coins.

    • Clonal Antibody
      November 8, 2011 at 6:32 pm | #5

      You meant $1,000,000,000,000 and not $1,000,000,000 I believe.

    • beowulf
      November 8, 2011 at 7:20 pm | #7

      The transfer of coins to the Mint to the Fed is indeed called a sale, and while the Mint is part of the Dept of Treasury (the minting power is actually delegated to the Secretary), it is a two step process from Fed to Mint PEF and from there to TGA.

      “Following publication of the Ganz article, collectors and dealers began discussing whether the Mint was indeed taking a new position on private ownership of error coins, even those pieces known to have been legitimately if mistakenly released through sales of the coins to the Federal Reserve.”
      http://www.coinworld.com/articles/u-s-mint-clarifies-ownership-of-error-coins/

    • beowulf
      November 8, 2011 at 7:24 pm | #8

      Forgot to add, Joe’s point that taxes can’t be cut nor money spent without Congress’s say-so is very important and, of course, has constrained the president an awful lot over the past year.

      • Clonal Antibody
        November 8, 2011 at 7:32 pm | #9

        Beo,

        Could you please join the NYC GA site, and comment on the thread here

        • November 8, 2011 at 10:40 pm | #10

          CA, I tried to get in there, but wasn’t able to create an account or sign in. I did read the thread. So far, no one’s made the point that the proposals for change being considered require Congress to act; but that PPCS proposals; whether for $1 T, $5 T, $15 T, $30 T, $60 T, or more, don’t require anything other than the President’s taking action.

          Nor is it true that filling the public purse through PPCS, requires spending all the PPCS profits generated. Congress would still control what is spent through its appropriation process. But what a $60 T coin would do, for example, is to create enough money to remove from political discourse that we can’t afford to do X, or Y or Z.

          So, for example, if Bernie Sanders proposed a Federal Job Guarantee Program at a decent wage w/ full fringe benefits cost adjusted for cost of living variations, plus passing HR 676, plus passing a complete infrastructure overhaul at a cost of $3 T, plus re-inventing our educational system to make it world class once again, plus passing a debt jubilee for student loans, plus providing free tuition for College from here on, plus subsidizing solar and wind energy to make it competitive with fossil fuels, etc., then no one in Congress could say that we can’t do these things because we don’t have the money. The opposition would have to give real reasons for not appropriating money to solve these problems.

          In addition, of course, minting a $60 T coin would allow the Executive to repay most of the national debt over a three year period and eventually, when the long term debt falls due, to repay all the debt subject to the limit. An finally, there would be no need to incur further debt instruments unless doing so fulfilled the interests of the 99%.

          Since I can’t get access myself I’d appreciate it if you could post this for me.

        • November 8, 2011 at 10:50 pm | #11

          CA, I was able to get in. So, please ignore that request to post for me.

  4. Clonal Antibody
    November 9, 2011 at 2:38 pm | #12

    Joseph M. Firestone (@joefirestonephd) :

    We should Get Annie Leonard to do a video on the PPCS. She just did a video on “The Story of Broke (2011) ”

    • November 9, 2011 at 9:17 pm | #13

      That would be great. How can we do that?

      • Clonal Antibody
        November 9, 2011 at 9:39 pm | #14

        I would think by engaging her in a discussion about the “Story of Broke” and how the US can never go broke, and the Civil War era law that forces US to go into debt by limiting the US notes in circulation to $300,000,000. That leads naturally into the PPCS story. The story of Stuff team can be found here

        I think you would be the appropriate person to contact that team.

  5. Clonal Antibody
    November 9, 2011 at 10:12 pm | #17

    TC :
    Clonal – you should go over to Kevin Drum’s blog and comment on his recent post.

    Which particular article? I don’t follow Kevin Drum much.

    • Clonal Antibody
      November 9, 2011 at 10:19 pm | #18

      TC :
      Clonal – you should go over to Kevin Drum’s blog and comment on his recent post.

      I presume that you are talking of the How Wall Street Turned Income Inequality Into Gold

      But with 133 comments already, it will be a bit hard to be heard. I think Drum is headed down the right track, but our prior discussion on this issue may be enlightening for him.

      • Clonal Antibody
        November 10, 2011 at 10:09 pm | #19

        See my comment at Mike Norman’s site, and then extrapolate – today the US would have been a totally different place under my scenario.

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