Comments on: The game theory of #mintthecoin

By: lnardozi

lnardozi — Sat, 12 Jan 2013 01:50:15 +0000

Frankly, I don’t understand. How is minting a coin any different from having some private bank enter the number 1 trillion into a computer and then using that number to buy T-Bills (which are themselves electronic) from a primary dealer? If you’re entering numbers in a computer in the first place, what does interest matter? ZIRP is assured into infinity so who cares what the interest cost is? All the coin idea does is prevent banks from collecting interest on that portion of the debt. It doesn’t reduce the debt – it wouldn’t even reduce the deficit since you KNOW they’re going to spend whatever they “coin”.

By: thispaceforsale

thispaceforsale — Thu, 10 Jan 2013 17:22:45 +0000

Searching for solutions to resolve self-imposed imaginary concepts (the debt ceiling) is akin to congress debating the morality of radical negative one.
The optics matter, the framing matters, the branding matters, or, on some level, none of it matters, and whether congress decides to raise the debt ceiling or not, the entire thing is a thought experiment because the systemic flaws are rampant, unending and solutions or problems now are simply additional data points to continue dancing with.

By: Chris08

Chris08 — Wed, 09 Jan 2013 22:04:39 +0000

A Latinist might confirm to me whether the motto on the reverse should not be FACTIO THEAE (Party of Tea) with THEA in the genitive rather than as I have it. Must be correct of course.

By: Chris08

Chris08 — Wed, 09 Jan 2013 21:56:34 +0000

HUFFINGTON POST is running a “design the coin contest.” Much fun. I would suggest putting an image of Grover Norquist on the face of the coin and $100,000,000,000.000 or ONE HUNDRED TRILLION DOLLARS on the reverse with FACTIO THEA below. After all they were the cause of the coin and there is no use not making it big enough to outlast the Tea Party.

By: ottorock

ottorock — Wed, 09 Jan 2013 20:25:53 +0000

If they mint the damn coin they should make sure there are clear heads and tails sides. Obama might find that useful at some point.

By: rb6

rb6 — Wed, 09 Jan 2013 19:52:13 +0000

Felix says wrt “mint the coin”:

As I say, it’s a Flying Spaghetti Monster thing — it’s a ticklish thought experiment, nothing more. Many media organizations are having a lot of fun with it, and that’s their right. But, especially in this case, it’s important not to mistake media coverage for reality.

rb6 remembers when this statement would have applied to threatening to default on the country’s debt. But notice that Felix isn’t saying that anymore, he now thinks that negotiating with Congress not to send the U.S. into default is the new normal, not only that, but the right thing to do.

I have absolutely no hesitation in recommending that Obama refuse to negotiate and if and when the time comes, mint the coin and challenge the House to do what it wants. Holding the FFC of the U.S. hostage to a bunch of crazy people is a bullshit strategy for the U.S. and it shouldn’t be pursued if there is ANY ANY ANY other option, however apparently ridiculous.

By: klhoughton

klhoughton — Wed, 09 Jan 2013 19:40:53 +0000

What absinthe and ScottFree Said. If you REALLY want to create a Game Theory matrix it goes roughly like this (with formatting):

Top row: Same: [ ], Dont, Do

Congress, Hold budget hostage, Have to negotiate
President Break law (if held hostage), Obey law

Note that a proper envisioning of the “Game Theory” notes that, without “mint the coin,” there is a Free Option for Congress–require monies to be spent, but refuse to authorize those monies.

Think of Mint the Coin as the price of the option, since a true market has no risk-free arbitrage.

Would we all prefer to end up in the upper right (negotiated agreement)? Possibly–even probably. (Definitely if we are only talking about the debt ceiling–then the Pareto-optimal result is what Joe and Josh have always advocated: eliminate the debt ceiling and the “trillion-dollar commemorative coin” option in the same bill. Probably–though not definitely so–if the bill is laden with other things.)

By: Chris08

Chris08 — Wed, 09 Jan 2013 19:21:56 +0000

When you are dealing with crazies, it sometimes is necessary to be a bit crazy yourself. They should understand. Hence I would suggest minting the coin NOW and getting it done. Why stall? Economist Krugman is for it and so is the man who wrote the law governing the coin. Lawrence Tribe of Harvard declares it perfectly legal. Doing it now would remove the nagging uncertainty that is bad for the economy and the market. And it would give us a longer time to enjoy watching the Tea Party screeching and screaming and running about like chickens, etc., etc.

By: absinthe

absinthe — Wed, 09 Jan 2013 19:16:08 +0000

I hate to nitpick, but as ScottFree points out this isn’t game theory. You just created a list of the WH’s 4 contingent strategies (in matrix form). The real 2-player payoff matrix should have those 4 in one dimension with Congress’s strategies in the other dimension. (And, you know, some analysis of the equilibria.)

By: 3oosion

3oosion — Wed, 09 Jan 2013 19:13:07 +0000

Obama has repeatedly said he won’t negotiate the debt ceiling. To back down destroys his credibility.

The message to the public is “The Republicans refuse to pay for the things they’ve bought. Not paying our debts risks economic calamity here and around the globe. Therefore, I’ve ordered the government to continue to pay it’s bills. Paying for Social Security, Medicare, the national defense and other vital functions is the right thing to do. I have no right to pay for things not authorized by congress, but I must pay the nation’s bills.”

He would only issue the coin as a last resort. What’s the alternative – violating the debt ceiling law or violating the budget impoundment law (which mandates the president spend as appropriated by congress).

By: ScottFree

ScottFree — Wed, 09 Jan 2013 18:14:24 +0000

Minting the coin is always on option as is negotiating. Speak softly and carry a big stick. In game theory players can move from box to box. You have spelled out what you thing the President’s game options are. What is Boehner’s? Where is the payoff matrix? If the Republican’s in the House promise not to force us into a default the Obama can promise not to mint. A very shallow piece of analysis this.