The $1T coin idea you may have heard of is being mocked by conservatives. I, too, think it is a terrible idea, but not for the same reasons conservatives typically give.
Let me propose a better, yet similar, idea.
In order to meet our budget, the government is spending north of $1T more than it brings in in revenue. Right now, we’re borrowing that money from lenders, one of whom is this corporation you might have heard of called the Federal Reserve. Rather than mint currency and deposit it in the Fed, we should, instead, stop borrowing the money altogether. Let’s just print what we need.
Now, people are going to scream that that is inflationary. It’s too late. What the Federal Reserve is doing by financing our debt is inflationary. They’re already printing cash in absurd amounts and sending it off to DC. The difference between us printing it for ourselves and us printing it for the Federal Reserve is that when we do it for ourselves, we don’t enslave our children, grandchildren, and great-great-great grandchildren to debt. The money is ours.
If we do print too much money and cause inflation, then it’s a problem we deal with right now. Once the deficit matches the growth of the economy, inflation disappears. On the other hand, if we don’t print enough money, then we may see deflation, which is a horrible beast far more devastating than inflation, but the solution is, once again, simple and immediate, with no long-lasting effects.
How much should the deficit be? I propose it should be about the change in the real, non-governmental GDP. That is, if our economy grows from $15T to $16T in 2013, then we print $1T in new currency to keep inflation and deflation away. If we’re not too certain, then we can print a little extra, maybe $1.2T, so that we definitely won’t hit deflation. Think of it: this is free money, money that we owe no one for, money that must be printed and put into circulation anyway so that the people have a stable currency they can trust and use for everyday transactions.
We can, today, write a law preventing the Federal Reserve from printing another red cent using our country’s name. Let them make their own money, and see if anyone wants to use it, like any other bank. We can print all of the money our economy needs with our own name and faith and credit, and we can use the surplus that needs to be printed to keep our economy growing for whatever we like.
Some will argue that the Fed serves an important purpose by preventing bank collapses and keeping the economy stable. I say they have a terrible track record, and we are better off leaving that responsibility with congress than the Fed.
If President Obama chooses to print that $1T coin, then I hope he doesn’t stop there, and pulls an Andrew Jackson and takes on the banks and wins by keeping the power to print money to the federal government alone. If he were to exercise his dictatorial presidential powers to do something like that, I would call him a hero.