Friday, January 11, 2013

On The Nature Of Money

So Senate Dems are worried about the politics of the coin - though they wouldn't fight it - and Republicans have started referring to it as the magic coin.

It probably will be bad politics, because lots of people don't understand money and the reporters who do will pretend not to understand.

Creating money from nothing is what the Fed does all of the time. Reporters aren't mystified by that. The Fed has statutory authority to do that. So does the Treasury, though the Treasury can't just push a button and add a zero to the end of their bank balance like the Fed can. They have to mint a platinum coin.