By day, he’s a 39-year-old lawyer in Atlanta.Also by day — like many other bored attorneys — he haunts policy blogs and starts bullshit sessions with like-minded professionals about problems ailing the country.
It was in one such forum that the lawyer — online handle “beowulf” (he asked us not to publish his real name for fear of upsetting clients) — conceived the idea that now has one at least one GOP congressman racing to stop it: minting a $1 trillion coin to skirt the debt ceiling.
You can read the full details about the evolution of beowulf’s idea at Wired and Talking Points Memo — it basically started with a discussion on Warren Mosler’s modern monetary theory blog about the profit opportunities for the government from minting coins.
But beowulf — who describes his political views as right-leaning — has a message for Rep. Walden: your time would be better spent focusing on paying the bills you’ve already incurred.
“To think that the debt limit will reduce the deficit is like thinking a restaurant tab will help you lose weight,” beowulf told us by phone Friday. “It’s unfair. You’re hurting people who relied on the U.S. to pay their bills.”
To review: beowulf found a clause in the U.S code that allows the Treasury to mint unlimited amounts of platinum coinage. In theory the Treasury could mint one platinum coin with a $1 trillion denomination, deposit it at the Federal Reserve, and keep the U.S. beneath the debt ceiling.
Beowulf is under no illusion that the idea is likely to happen.
But he is frustrated by the lack of intelligence surrounding the debt ceiling debate.
“The U.S. doesn’t have a debt problem,” he says. “We have these artificial crises, but when there’s really a problem, the country doesn’t worry about the debt. During World War II, the debt hit 120 per cent of GDP…But when the wolf’s not at the door, people try to push their own deficit agenda — it’s ‘the debt’s too big’ when Republicans are in power, and ‘taxes are too low,’ for Democrats.”
He observes that borrowing remains the cheapest tool at the government’s disposal for paying its bills. Interest on 3-month Treasury bills is less than one tenth of one per cent the interest the Treasury would have to pay to banks holding reserves.
“The credit of the U.S. is so good, the government can borrow for less than rate of inflation,” he says. “People are paying the government to watch their money for them.”
Beowulf chalks up his discovery to trying to apply his world — law — to economics. Too often, thinking about how to solve a problem in the realm of one results in ignoring limitations posed by the other.
“It’s a technical issue, it’s not a political issue,” he says. “The democrats are cheerleading now, Republicans are not … But if Romney had won, the Democrats would be out there saying it’s a right-wing plot right.”
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