CNN is running a story on the various ways the White House could circumvent the debt ceiling issue.  One of the options they mention is the platinum coin idea started by Beowulf:

“Are there other ways for the president to raise money besides borrowing?

Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time.

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.”

Of course, none of this matters because the President has already stated publicly that he won’t even use the 14th Amendment.  In my opinion, that makes it highly unlikely that he would even consider another option.  That means the Republicans are almost guaranteed to get something for nothing here….



Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Chad M

    Really an embarrassment here by congress and the President. Sadly the people keep voting the same bozo’s in so the game can continue. Strict term limits for Congressmen, 2 terms same as the president should get rid a lot of the lifers and change the way politics run. Of course that would require them to vote for term limits which would not pass…

  • Different Chris

    Well said.

    Ever read Vince Flynn’s “Term Limits” not exactly topical here but a great piece of fiction.

  • Gerald P

    When ‘push comes to shove’, the Prez will be able to change his mind and use the 14th. Remember Lincoln refused freeing the slaves in the Civil war until he could change, and was tactically able to undermine the Confederacy.


    One more prop on mainstream media..and I’ll put 5 on it that in the coming month I’ll be on the 405(for those not from’s a legal cement waterboarding torture they call a freeway)and I’ll see a bumper sticker that reads…

    GOT MMT…….or better yet…..WWCRD…..What Would Cullen Roche Do

  • Different Chris

    Can I come work for you?

  • Coolidge Low

    Off topic………… MMT’s leech infested water.

  • Cullen Roche

    JKH nails him on this. SS can’t seem to overcome his many misconceptions. Can’t teach an old dog new tricks….

  • Craig H

    I’ve thought the same thing too Chad, then I also think if we take the experienced lawmakers out of DC the only people left with experience will be the lobbyists, who will be more than happy to help all the rookie congressmen learn the ropes.
    Cullen, I stumbled upon this site in Oct. 2008 and I really appreciate what you’re doing and the overall level of civility and debate you promote. Thank you.


    Sorry- I would love to hire you but in I am the CEO. We did have 15,000 employees but with the balance sheet recession going on the only way for us to hit our 1/4 wall street estimates was to lay everyone off but the CFO and head of HR. I have 5,000,000 RSU/LTI/PSU grant options and in order to pay for my 5 beach homes we will be laying off the CFO come the 3rd quarter…then I’ll let the head of HR go…just in time for me to hit my targets and excercise my options and receive my bonus.

    We could bring the 85 billion in cash oversees and save some jobs as well as hire you..but come on..with tax rates of 30% that doesn’t make any CENT$


    I hope I never lose my way down a dark alley in JKH hood. His MMT hand is strong. For fear of his MMT Pimp hand I dare not go into JKH hood after dark.

  • gf

    As long as the Nazi party gets away with blackmail they will continue to use it.

  • Pvk22000

    How do you draw that conclusion? Freshmen TEA partiers are the drivers of this absurdity.

  • studentee

    the future is JUMBO COINS

  • F. Beard

    Why waste the metal? As long as a “One Trillion Dollars” will fit on it, it is big enough.

  • arsjr

    Why are the Republicans risking our nation’s economic future, deepening the recession, and perpetuating a national crisis over an outdated law? Why are the Republicans doing this to America? What do they get out of this?

  • CFS

    California has term limits, look at how that is helping us… Believe me, it is not the answer and a lot of people that were for term limits are now changing their mind.

    What we may need is a more educated society that can vote proactively instead of re-actively. Democracy is the best system because it is the only one that provides for a system to get rid of bad politicians – elections, it does not ensure that good politicians are elected though, cause no system can ensure that. One could guess (and I am not even sure it’d work) that a more educated society will elect better people for government.

  • b_b

    They think they will get the Whitehouse

  • William Carr



    One Party Rule.

  • arsjr

    If the United States behaves as a currency user, then one get the results of a currency user. We have become Greece. Why are the Republicans’ doing this to the country? Does anyone have a copy of the playbook?

  • beowulf

    Speaking of pimp hand, there’s this great story (some say fictitious) about Tim Pawlenty that’s so awesome he should put a dramatic recreation in his campaign ads.
    To pick it up in medias res:

    Paw puts his beer down and walks over and grabs that pimp by his knife hand, and that pimp jerked back and turned around and said “Man, I cut you, I got a knife.” Paw, man, he doesn’t move, he just says “F–k you and f–k your knife” in that Minnesota accent. That pimp starts to jab at him, then Paw just reaches out and slaps him in the face.

  • Different Chris

    I strongly reassert my previous request!

  • JWG

    Oh, those evil Republicans. Perhaps they have realized that the Treasury market doesn’t fund federal spending and that it is a reserve drain mechanism; that taxes don’t fund federal spending; that Social Security and Medicare “trust funds” make those payments bulletproof for the next few years at least; that intragovernmental balances are not debt; and that forcing Obama’s hand on his mindless and reckless spend-a-thon is a way to force policy choices and perhaps direct federal spending into productive endeavors rather than throwing it away on ridiculous bureaucracies and consumption by the idle masses. Ron Paul might have been educating them on these fine points.

    America is still living well off of the Hoover Dam and the TVA and the national parks and the roads that FDR built, and we would all be better off today if Glass Steagall had never been repealed. The $880 billion stimulus of 2008 could have changed America for generations in a new New Deal; instead it went up the bureaucracy and mindless consumption chimney so adored by Obama, and now he realizes his mistake and needs another blank check. Aggregate demand is a meaningless concept without the real economy to satisfy it. Ask the African living on a dollar a day how much unsatisfied demand there is in Africa (almost infinite)and if the unrestrained creation of national currency does anything for him (it makes him poorer).

    MMT works because it gives you the tools to see what is real and what is just rhetoric, misplaced gold standard analysis or outright buffoonery or lying when it comes to monetary and banking functions. However, without a productive economy and capital investment (i.e., a real economy) money is just an artifact and aggregate demand is a meaningless concept. Financialization and mindless and directionless federal spending to satisfy amorphous aggregate demand or sectoral balances without a thought to the real economy are not good policies.

  • pebird

    I think we already have that, the Republicrats.

  • El Banker

    I am thankful for this website TPC. JWG your comments add great insight to this post. Beowulf that article link is hilarious, I’d vote for’Paw’!

    I’m tired of all this superficial stuff i see on TV and all the misconceptions I hear at work, about USA debt. This along with a couple of other sites that i trade/research on and that is it for me.

    There has to be a more organized approach to informing others close to us about this BS they are being told everyday.

    Oh, and to the ‘troll’ that keeps posting his antiMMT links, be more original about trying to create traffic on your artificial blogs.

    Man, I’m always telling kids to come here and learn!!
    Keep up the good work!

  • Andrew P

    Obama is not going to do the platinum coin thing because it doesn’t help him get reelected. It is a way of evading the debt ceiling, but does nothing for the next fight which is 2012 appropriations. Making the issue go away does not help Obama. No. Obama has a political need to make the Republicans lose and to make sure that everyone sees that they have lost. No one votes for losers. This means that Obama has to get his way which means he must have meaningful tax increases as part of a deal.

    Obama may also be very timid about things he does not understand (like possibly irrational currency trader’s reaction to Pt coinage wrecking his reelection), but he does understand political confrontation.

  • Different Chris

    That might be the funniest thing I’ve ever read.

  • El Viejo

    Problem in CA is too many referendums. (emphasis on ‘dum’)

  • first

    Jefferson Davis was the President of the Confederate states not Lincoln How could he have free the slave?

  • first

    The Problem is that this one vote every four years was originally never intended to gives them so much power. It was to protect us from the exact opposite of what is what is happening to day.

  • KB


    Where is the panic? Debt ceiling crisis not resolved, Spain possible downgrade, terrible GDP revisions, weak economics….. and???? SPX down 3 points (went positive as I was finishing the post)????? This is outright pathetic! Everybody, their mothers, and their pet hamsters are betting all their capital on absolutely certain relief rally after undoubtedly guaranteed all problem resolution over weekend. They do not even want to wait for market close to go long, they go long now to leave for LI at noon…
    Your hypothesis failed. The market action would be interesting next week.

  • Oroboros

    “Of course, none of this matters because the President has already stated publicly that he won’t even use the 14th Amendment. In my opinion, that makes it highly unlikely that he would even consider another option. That means the Republicans are almost guaranteed to get something for nothing here…”

    Yves Smith makes the case that this is EXACTLY the plan, with Obama’s implicit consent. As in: “Only the Republican Nixon can go to communist China”, “Only the Democrat Clinton can pass welfare reform”, and “Only the ‘Democrat’ Obama can cut entitlements”. I have to admit, given the evidence, it fits. The rabbit hole goes deeper than I thought.

    BTW, she also talks about the platinum coin idea.

  • Leverage

    Great comment.

    MMT is useful because it renders macro irrelevant: it’s all about micro. It’s how and where is money invested, spend, etc. Otherwise is just flooding the market with paper disguising real economic supply shortages or demand leakages.

  • first

    Great post JWG
    “without a productive economy and capital investment money is just an artifact and aggregate demand is a meaningless concept. Financialization and mindless and directionless federal spending to satisfy amorphous aggregate demand or sectoral balances without a thought to the real economy are not good policies.”

    The nature of the present irrational “mindless and direction-less federal spending” is nothing new but its the size of it. This spending first and borrow (or call it what you like) or tax later system is broken. The fact that it is the way it works does not make it right. It leads to unaccountability and the result are clear as can be.

  • MJJP

    I think it is pretty clear that after almost 250 years the experiment that is the US has failed. It doesn’t work any longer. Even Great Britain is doing a better job in my opinion of changing bad govts when needed. I would rather see people appointed by a hiring committee similar to a corporation and let them do the job they were hired for. If they fail to meet goals fire them and find someone else. Putting people in positions of power based on charisma and money is bound to fail.

  • Ron T

    Obama won’t do the coin thing.

    Dan Kervick over at said it best (let me repost):

    Well, this is all academically interesting. But in my humble opinion, there is zero chance of the coin gambit actually happening. Obama wants to go down as the centrist Democrat who forced his party to swallow big entitlement cuts. He doesn’t want to go down as the guy who got around borrowing limits by manufacturing money.

  • BleakoEcobomics

    Because the U.S. Federal Government never recognized the sovereignty of the Confederacy?

  • Genius Nitwit

    There is nothing modern about MMTers idea since we have to refer back to 10th century AD in China during Song Dynasty.

  • first

    10th century AD in China during Song Dynasty was simply more obvious with less control.

  • Genius Nitwit

    I do agree with First.
    MMTs is still an ideology; a transition from a long history of monetary theory. But it looks like we’re back to 10th century all over again…

  • Leverage

    But the principles of MMT are as old as money, even if not formalized on a theory. Mesopotamian empires, Egyptians, Romans, etc. did use it already. It was used too on Europe in the early Middle Age until gold rised.

  • james

    ron paul is right they will raise the debt limit but we will still default (through inflation).

  • Somnolento

    Really? The U.S. has failed? I’m not a flag toting jingoist, but the U.S. is a pretty fantastic place to live, and has been for a good while. In the long history of the world, where has there been a more rapid increase in the quality of life for the average citizen? Where has there been a truly eclectic populace that, until recently, opened its arms to the rest of the world? Granted, we’re still humans, and the U.S. has lots of problems, but blanket assertions like “The U.S. has failed” are lazy, and ill informed.

  • Somnolento

    Prove it.

  • james

    I don’t have to the future will.

  • Genius Nitwit

    Before, Bills of Credit and today it’s Debt Bill. Before, Paper Fiat currency and today is US Notes (greenbacks). And before, it’s Fiat Money and today is MMT. It’s the Government monetary policy of “check and balance” failed us today.

  • first

    “Cognitive dissonance”

  • F. Beard

    But it looks like we’re back to 10th century all over again… Genius Nitwit

    We should go back even further and take seriously the hint in Matthew 22:16-22 of separate government and private money supplies.

  • Genius Nitwit

    “Cognitive dissonance” I thought that’s what the government is having right now on the Debt Bill.

  • MamMoTh

    I like the movie ideas based on the platinum coins as suggested by The Economist. Maybe Beowulf and Joe should sell the rights to use their idea.


    Your hired! You are now the head of HR. Your persistance is infectious.


    BEOWUlF- hiliarious…BTW- good stuff and color on this site. Your posts are insightfull.

  • Havard

    Zimbabwe implemented a similar solution to great success.

  • first

    Why does The United States have a debt ceiling in the first place ?
    If the size of the economy was to doubles in 20 years and even if the accumulated deficit represented a smaller percentage of GDP it is most likely that the total debt would be much larger is size than it is to day.

    If a limit needs to be placed would a accumulated deficit ratio limit to GDP not make more sense?

  • first

    Think big.
    At this stage why not: A trillion Dollar Plastic Coin with Donald Trump’s picture on it.

  • Geoff

    Ah, the ubiquitous Zimbabwe retort. I’ll let Mr. Roche present his excellent piece on the subject. No sense in reinventing the wheel. Sorry I can’t find the link myself.

  • Somnolento

    How exactly is that going to work?

  • first

    Don’t worry we know, the US dollar has taken over as the currency of reference now Zimbabwe.

  • Different Chris

    From :

    “The Case of Zimbabwe

    The other often cited case of hyperinflation is Zimbabwe. This is another extraordinary circumstance. To call these events “rare” and “severe” is a vast understatement. Zimbabwe is an utter economic catastrophe. GDP has declined 40% since 2000, unemployment has risen as high as 95% and hyperininflation has ravaged the country. The issue is far more complex than I have the time or space to deal with here, but in essence, Zimbabwe has proven a highly inefficient and corrupt nation for several decades. This was another case of fragile emotional state due to rampant government corruption, regime change, productive collapse, foreign denominated debts and an eventual collapse in the tax system. The Mugabe government is one of the most controversial in the world and has proven to be financially incompetent. A former government minister of Rhodesia, Denis Walker nicely summed up the environment in Zimbabwe in 1989:

    “Zimbabwe’s government, already morally bankrupt, will decline towards economic collapse.”

    Like Melchior before him, he was proven correct. But unlike Germany’s war torn economy the Zimbabwean economy is a sad story of centuries of racist regimes followed by incompetent leadership. The situation in Zimbabwe has largely arisen from the controversial land reallocations which sliced up their largest export and domestic form of productivity into the hands of the agriculturally incompetent. As internal production of food collapsed the government was forced to rely on the kindness of strangers. The Grecian “beggar thy neighbor” policy began as Zimbabwe started to rely on foreign imports of food. Unemployment increased, civil unrest increased and the government lost control of its internal finances and the currency ultimately collapsed as the citizenry voted “no confidence” in the government currency. Allow me to repeat what I said above:

    “Severe (and unusual) exogenous circumstances lay the groundwork for the hyperinflation to begin, severe (and unusual) exogenous circumstances initiate the cycle, severe government ineptitude furthers the hyperinflation, severe public mistrust exacerbates it and government ultimately completes the cycle when they desperately crank the presses in an attempt to flood the market with an unwanted currency. What’s important to note here is that the printing press exacerbates and ends the cycle rather than actually initiate it. What lays the groundwork for the hyperinflation is severe exogenous forces or a highly unusual environment that government responds to ineffectively or inappropriately.””

    Just had this convo with someone yesterday and got him to read that paper. Great stuff.

  • Different Chris

    I believe but I am not certain it is a (wholly uncessary) hold over from the Gold Standard.

  • Geoff


  • F. Beard

    How exactly is that going to work? Somnolento

    By tracking down and repealing every government law, regulation and tax that prevents, hinders or penalizes the use of private monies for private debts. The government has no legitimate need to force that its money be used for private debts.

  • Different Chris

    Zimbabwe did not do this, this would not be inflationary, even economists who don’t agree with MMT recognize that these kinds of transactions (and like QE) are NOT inflationary.

  • first
  • Geoff

    FYI, the platinum coin idea is so yesterday. The new idea is QE 0, as presented by Mr. Mosler. The Fed simply commits to purchasing all Treasury securities at par at maturity.

  • Different Chris


  • Jonnyblaze

    This is one of the most insightful things I’ve read on the whole issue. If only we could literally cut out thousands of pages of media coverage and replace it with this paragraph!

    On the point about the real economy, Catherine Austin Fitts has hypothesized that part of America’s real problem is that in aggregate we have a negative return on investment. See the links below:

    She wrote this back in 2003, but one interesting excerpt that has served prophetic:

    “…the American Tapeworm model is to simply finance the federal deficit through warfare, currency exports, Treasury and federal credit borrowing and cutbacks in domestic “discretionary” spending. The resulting state and local deficits will then be financed with state and local tax and user fee increases, cutbacks, employee layoffs and increased borrowing. This will then place local municipalities and local leadership in a highly vulnerable position — one that will allow them to be persuaded with bogus but high-minded sounding arguments to further cut resources. Then, to “preserve bond ratings and the rights of creditors,” our leaders can be persuaded to sell our water, natural resources and infrastructure assets at significant discounts of their true value to global investors…It shifts equity wealth to a few in a manner that shrinks total wealth. It is the next step of the negative return on investment economy perpetuated by syndicates like the investors, banks, attorneys and senior managers.”

    Operational mechanics notwithstanding, I think she pretty much nails it!

  • Somnolento

    You’re asking for pure chaos if that were to happen. As Cullen says in Understanding the Modern Monetary System: “There is arguably, nothing more important to government stability than maintaining the value and faith in the nation’s currency.”

  • F. Beard

    You’re asking for pure chaos if that were to happen. Somnolento

    Not so. Most people would continue to use fiat for private debts unless government mismanagement of it gave them a significant incentive to do otherwise.

    As Cullen says in Understanding the Modern Monetary System: “There is arguably, nothing more important to government stability than maintaining the value and faith in the nation’s currency.” Somnolento

    Which is one reason to allow private currencies; to give the government a strong incentive to use its fiat wisely. Example: Bailing out the banks would be an obvious no-no. It’s called “checks and balances” – a long and honorable US tradition.

  • Dimm
  • Different Chris

    I can’t figure if that’s a good thing or a bad thing.

    It’s obviously good that the group of minds who came up with the idea are getting Krugman-esque exposure.

    But for the actually idea, a lot of those on the right will reject it as inflationary without even understanding it when they see “Paul Krugman” and see that its “printing money”

  • Dimm

    I think you nicely summarize the current problems we are facing.

    It does not matter if an idea is good or bad, but who is behind it. That unnecessary confrontation renders the government useless.

    Same story with Obama/Romney care. Etc.

    The only conclusion is that the goal is no second term for Obama at any cost. The outcome will be calculated to meet that goal.

  • Willy2

    The platinum coin is just a mirage. In an attempt to kick the can down the road once more. It’s increasing liquidity in the system, to keep the prolifigate spending of the US government in one piece, for the time being. But it will make the coming deflation in the US more severe.

  • Havard

    Inflation is a general increase in prices and a fall in the purchasing power of money, and is not just determined by government spend.

    As far as I can see, there is no mechanism to prevent the coin serving as collateral or otherwise entring circulation – apart from the denomination.

    So, the US dollar will fall accordingly in the FX markets.

    Probably more than accordingly, because it sends a signal that the dollar is worthless, meaning the value of 1 USD = 0 (enter any currency here). This signal is there independently of there being a mechanism to prevent the coin from entering circulation either directly or indirectly through creative financial engineering.

    As the value of the USD approaches 0 in the FX markets, the cost of goods imported into the US will approach infinity USD.
    As the cost of imported goods approaches infinity USD, the cost of US manufactured goods with foreign parts will also approach infinity USD (infinity plus something is still infinity).

    When the cost of goods reaches infinity, I would say inflation is present.

    The solution to this problem is simple:
    Print coins to cover the debt, and then start using the Mexican Peso. You will then sacrifice monetary policy for debt control.

    Similar solutions have been done by other countries with irresponsible leaders. Ecuador, for example, use the USD as legal tender.

  • beowulf

    Thanks for the kind words. That was originally a comment at Steve’s sailer site (he asked readers if they knew anything at all memorable about the guy), anyway a couple weeks ago he linked to a news story about Pawlenty’s flatlining campaign– Steve’s headline was awesome, “Time to show off that pimp’s knife, T-Paw”.
    Good advice is good advice. :o)

  • http://none russell dee

    The platinum coinage idea sounds like the perfect idea because there is no confusion about whether or not it is legal whereas the 14th amendment idea is uncertain. I think the president should take a close look at this coinage idea but I do not know if he is being told about the idea. Someone needs to get the idea to the present without talking about the coinage idea at the same time because the coinage idea is a much better idea so you don’t want the coinage idea lumped together with the more iffy idea of a 14th amendment solution. The coinage idea sounds like the perfect idea because the president would not have to risk breaking any law to use this solution. I hope someone out there can get this platinum coinage idea into the hands of the president without talking about the 14th amendment at the same time. The platinum coinage idea is such a good idea it should be run by the president without talking about any other idea(s).

  • beowulf

    Riddle me this… Even with “private currencies”, you’d still have county property taxes, stat sales tax and of course Federal income taxes (among others).
    Since taxes will still be owed in US Dollars, the value of any private currency will be set, ultimately by its exchange rate for dollar tax payments.

    Will each level of govt set its own dollar exchange rate (for each private currency) or would the Federal Reserve handle all internal currency exchanges? Since I’m ure “let’s not pay taxes” won’t fly,then Uncle Sam is going to tell you what your money is worth anyway, so why not just stick with dollars?

  • Somnolento

    How does any of the above prove that the dollar is worthless?

  • Somnolento

    If you have any you want to get rid of, I can send you my address, or bank acct number for a wire. I’ll be glad to take them off your hands for you.

  • beowulf

    As far as I can see, there is no mechanism to prevent the coin serving as collateral or otherwise entering circulation – apart from the denomination.
    So, the US dollar will fall accordingly in the FX markets.

    So you mean China will FINALLY stop propping up the Yuan and we can do something about our trade deficit’s $600 billion demand leakage? That’s a great point, thanks for bringing it up.

  • F. Beard

    Even with “private currencies”, you’d still have county property taxes, stat sales tax and of course Federal income taxes (among others). beowulf

    Yes, but not the capital gains tax because that would defeat the purpose of private currencies.

    Since taxes will still be owed in US Dollars, the value of any private currency will be set, ultimately by its exchange rate for dollar tax payments. beowulf

    Only if tax increases kept up with depreciation of the government’s money. Otherwise, the ability to pay taxes with private money would appreciate since government money would become cheaper. The progressive income tax might be an exception but government would have to explicitly raise taxes which is usually not a popular thing to do.

    Will each level of govt set its own dollar exchange rate (for each private currency) or would the Federal Reserve handle all internal currency exchanges? beowulf

    Neither. Government money would have to be bought on the free market from those who had it – government workers, the military, SS receipients, etc. – with either goods and services or private monies.

    Since I’m ure “let’s not pay taxes” won’t fly,then Uncle Sam is going to tell you what your money is worth anyway, so why not just stick with dollars? beowulf

    The point of private currencies is to abolish the “stealth inflation tax”. Explicit taxes would remain except for the capital gains tax. Uncle Sam would be wise to abolish the “stealth inflation tax” . Otherwise, the gold bugs have their own plans to do so – disastrous ones.

  • Different Chris


    He takes SO much crap from his readers too.

  • F. Beard

    I like Joe W. too.

  • JWG

    What the 14th Amendment will do is provide a legal basis for Treasury holders to argue that they should receive priority in payment by the USA before anyone else with claims against the US government is paid, in the event the USA “runs out of money”, which it of course cannot do in 2011. It’s a gold standard and Civil War artifact that means little today. It does not give the President appropriations or borrowing power; that belongs to Congress. Lawyers aren’t offering this as a solution; it’s the lay people who think that the Constitution is somehow self executing.

    The Platinum coin idea is going viral because it “works” legally and logically, just like MMT “works”. Hats off to Beowulf and the others who floated the idea. However, there are many other simple approaches, such as cancellation of federal intragovernmental balances treated as “debt” even though there is no “creditor” or “debtor”. Ron Paul pointed this out early in the process, but of course the media ignored him. The USA is a single, unitary enterprise that cannot really owe itself money, but its accounting methodology is so warped that even the Fed and Treasury don’t always see their own folly. The media talking heads are almost all ignorant fools who parrot whatever their prejudices dictate or their masters write for them.

    This whole “debt crisis” is a charade to avoid confronting the reality that MMT presents to the world: that the Dollar is a fiat currency that can be created at will in infinite amounts and that is detached from any mooring other than the massive productive capacity of the USA, the psychological faith that such capacity engenders and the diligence of its people and their political leadership. Default isn’t the risk; inflation is the risk. That core MMT message is really getting through; I am seeing it and reading it in the mainstream media. That is why the markets so far are fairly stable; if the GDP and employment figures hadn’t been so horrible recently the markets would be up during the “debt crisis”.

    The idea that the Treasury market funds the government is a contrivance to support faith in the currency. Treasury instruments function as a frame of reference and a political restraint on unlimited emission of dollars (as well as their true role as reserve drain function as TPC points out), but the reference and restraint functions are not substantive in nature. The Treasury market doesn’t “fund” anything, as TPC points out.

    TPC is changing the debate and starting to win, slowly but surely, by educating the world as to the operational realities of fiscal, monetary and banking functions in the USA. The truth eventually wins in the Internet age because on the Web there are no barriers to entry and all ideas and arguments are tested by the collective consciousness. MMTers should welcome their toughest substantive critics (I am thinking of CP here; not trolls) because their cross examination exposes flaws in reasoning by MMT proponents and allows them to be remedied. The USA urgently needs honest and intelligent debate about its direction and unless you have the truth at hand debate is pointless.

  • John Carney

    In my defense, I got the idea from chatting with Joe and hadn’t realized it originated with the MMT crowd. Of course, now that I think about it, it makes sense that it did. I’ll be sure to credit you guys in the future.

  • Dan

    But John, you essentially make a joke of it in your July 27 column. You write:

    Before you answer that, let’s acknowledge that the creation of an extra trillion dollars would be highly inflationary. It would probably be a terrible idea. Our creditors would object that we were blatantly monetizing our debt, committing the moral equivalent of defaulting on the debt. Basically, cheating them.

    Why do you ask your readers to acknowledge something like this when it’s not true. You are not reporting news–you are just promoting platitudes and calling it journalism.

  • first

    Yes, thats it. The US was originally designed to be an allegiance of states. “State country”.

  • Peter Fairley

    Minting a platinum coin could create as much panic as liquidity. People are already suspicious that our banking system is a Ponzi scheme.

    CNN is so bad lately that being quoted on CNN is not an honor.

    over and over CNN boasts about how they ‘go beyond borders’…

    it’s like a mental disease.

  • James

    It seems some in the MSM finally get MSM, am I right? The platinum coin proposal got coverage on our most popular news programme here in New Zealand recently too, though I still think they don’t get it. Still goin’ on about how the U.S. won’t be able to pay its bills.

    “The debt ceiling places a limit on how much debt the Treasury Department may issue. It does not say anything about spending and does not prohibit the government from spending in excess of its revenue.

    In other words, on Aug. 3 there’s no legal reason why the Obama administration cannot go right on spending exactly as if the debt ceiling did not exist. Because the debt ceiling is a limitation on borrowing and not on spending.”

  • James

    I meant, MSM finally get MMT…

  • Cullen Roche

    Not a big deal John. I appreciate you reaching out though.

  • Geoff

    Havard, it is not inflationary because no new financial assets are created. It would simply be an asset swap (coin for bonds). The key to understanding MMT as far as I’m concerned is to understand Net Financial Assets (NFA’s). Total (gross) financial assets can be issued by the private sector or govt (leaving out the foreign sector for simplicity). Since every financial asset has a corresponding liability, you have to subtract those assets issued by the private sector to get NFA’s. You are left with only those financial assets issued by the govt. Therefore, NFA’s are basically govt liabilities. The govt has to increase their liabilities (i.e. deficit spend) for the private sector to save.

  • dash

    The fundamental problem is that Congress lacks the leadership necessary to bring federal spending under control. Too many special interest groups and government contractors that are fed by the federal trough. The President is a no-show to the party because he lacks the intelligence to even communicate a plan…he spent his load on healthcare and we have seen how that has reduced the cost of medical care!

  • F. Beard

    Even wasteful Federal Government spending cannot be safely cut because the population needs the funds to pay off its debt.

    Then why not just take the bull by the horns and directly bailout the entire population, including savers?

    Because to do so would tacitly admit that the whole debt-money scheme is crooked?

    Cognitive dissonance?

    Must the debt-money scheme be saved at all costs including Great Depression II and World War III?

  • Mpath

    TPC, I will start off with I know nothing about MMT and the way it works. So this is a question. For every action there is a reaction. The action to solve the debt crisis is to print a 1-5-14 trillion dollar coin and we are now out of debt, from what I am getting from this. What is the reaction from printing a 1-5-14 trillion dollar coin?

    To me, it is the exact same thing as printing that amount of money out of thin air and just paying the debt, just in a way that is within our constitutional laws. Si I would believe minting a 1-5-14 trillion coin is going to have the same reaction as just printing that money.

    The dollar will get crushed and most likely free fall through the all time lows. Oil and every commodity will sky rocket once again and we will still not see inflation because of how they are measuring inflation.

    Real Estate will not budge (just a numbers game with supply/demand)-wages will not increase because businesses will be fighting lower margins because of the higher commodity prices and unemployment will remain at high levels. To me, it sounds like we would be on the same path we have been in, which is stagflation.

    Basically, by minting a 2 trillion dollar coin, we have just created another credit card to pay off the interest we are paying on all of the other credit cards we have maxed out. I guess I just don’t understand the point, as the reaction should be the same as just printing the money out of thin air. It will be a band aid to pay the bills now, but we are in the same situation as we were. Not enough money coming in and too much money going out.

    If I am 100% off base on this, please excuse my ignorance about the MMT thing. G-

  • F. Beard

    What you are missing, if I understand correctly, is that US currency and US Treasury Bonds are both forms of money with the only difference being that one pays interest and the other does not. So to swap US currency for US Treasury Bonds does nothing except to save the US interest payments and to circumvent the debt ceiling.

  • first

    As JWG post mentioned above” “without a productive economy and capital investment money is just an artifact and aggregate demand is a meaningless concept”

    We learn that Government contractor overcharged Pentagon for supplies, including $900 for a $7 switch,” The same goes on big time every single day in the health care sector. Billions and Billions in ridiculous over-billing. Every one who is a doctor or works in the medical industry and works in an hospital is aware of this.

    Thats is the where there need to be a stop to this scandalous miscalculation of funds so that prices are negotiated to a real market standards and that Government can refocus this waste in to real investments and productivity.

  • Mark

    Good discussions on this board. But so far all seem to miss the underlying causative factors of this crisis.

    Special Interests (Financial Elite) have this nation by the balls. They have formed a very powerful aristocracy that is continuing to concentrate all wealth.

    Those here who blame any one party completely miss the point of this power struggle.

    But careful the Elite must be. If they don’t funnel sufficient funds to the masses then look out.

    Lobbying by ANYONE must be stopped – completely. I don’t care if it is by unions, bankers or charitable organizations. It has totally undermined the democratic process.

  • JWG

    TPC, your brief analysis above of QE2 indicates that your view with respect to asset swaps of QE not being inflationary has been modified, because of marketplace reaction to QE2; i.e., the psychology of investors. This reaction to QE2 was a herding into hard assets such as petroleum, metals and other commodities, which you referred to as a “portfolio adjustment” that produced cost push inflation, pressured manufacturing margins and consumer spending, and harmed the real economy.

    If MMT incorporates an equation to reflect the impact of monetary operations on market psychology, then the madness of crowds will get its due from MMT and MMT’s predictive capacity will become even better than it already is. I hope you do an article on this, because knowing if and when a loss of faith will trigger high velocity and a market stampede into hard assets will be worth its weight in gold (literally as well as figuratively).

    A commentator on another site said that MMT did not consider real world factors related to modern “currency valuation”, and I think he meant that MMT was purely mechanistic in its analysis and did not consider market psychology and human reactions to monetary operations. This critique reflects my own concern as to the madness of crowds, and “portfolio adjustment” could be a euphemism for “stampede”.

    There is sentiment in this thread (and on almost all non-MMT sites) that the platinum coin concept if actually executed might trigger a stampede into hard assets and high velocity (even though from a pure MMT perspective, it shouldn’t). That is well worth its own discussion.

  • Jay

    Ultimately, printing to pay off the debt is just an act of desperation. It would be an admission by the governement that the government has a habit of flushing money down the toilet. The money it “initially borrowed or spent into existence” wasn’t spent wisely, and, as a result, productivity didn’t grow to the point that the government could take in enough revenue to keep the debt under control. Printing just proves that the government flushes money down the toilet. As I said in my comment on the other post, there isn’t anything new about the idea that the government could print (or mint coins) to pay off the debt. Schiff has been talking about this happening for years. This is the exact reason he buys gold and foreign equities and gets out of US dollars.

  • F. Beard

    Ultimately, printing to pay off the debt is just an act of desperation. Jay

    1) The US Government should have never borrowed in the first place.

    2) Since our money supply IS debt (currently) then if taxes were used to pay off the debt we would have NO money supply.

    3) Since all new debt ultimately had to be bought with new money from previous debt then the population has already paid an inflation tax when the new money was created.

    4) How else then should a debt-based money supply be paid off except with debt-free money?

    Paying off debt with seigniorage is not an act of desperation but an act of logical moral necessity.

  • first

    There is always an instigator behind the madness of crowds.

  • first

    “if taxes were used to pay off the debt we would have NO money supply.”
    So. if you have Government saving bonds are you saying that the money would not be return to you and would it not be part of the money new supply?

  • first

    “We know that QE2 did not boost aggregate demand, but we do know that it caused major portfolio adjustments”

    No matter how large the reserve when banks do not lend money there is no boost in aggregate demand but what is stopping banks from investing excess reserve and distorting the markets and commodity prices?

  • Dan

    Jay: Schiff buys foreign equities because of his belief in “decoupling” that he announced several years ago and has turned out to be a bad prediction. Thus he buys foreign equities simply because he’s a bad investor. US dollars have been doing very well. His recommendation to buy gold has been a good prediction, but he’s one of hundreds of thousands of voices that have been saying the same thing for years. But for Schiff, the recommendation is based on his misunderstanding of monetary policy and he of course won’t know when to sell because he holds if for doctrinaire reasons, not good investment reasons.

  • F. Beard

    So. if you have Government saving bonds are you saying that the money would not be return to you and would it not be part of the money new supply? first

    Good point. However, in the case of US debt to the Fed the money would disappear. In the case of US debt to the banks, the money would move to excess reserves and effectively out of circulation. And as you point out, in the case of non-bank debt holders, some of the population including foreigners would have all the remaining money.

    So technically, you are correct; some people would still have money.

    Still, I would like the MMT folks, as a hypothetical, to outline step-by-step the consequences of paying off the US national debt with taxation by running continual US budget surpluses. It would be very ugly, imo.

  • voice of sanity

    You are really “different” Chris. I have read this book,and,unlike you, do not believe that resorting to violence will in any way solve this or any other problem. Killing people?? That ought to grow the economy, right Chris??

  • first

    F. Beard

    “in the case of US debt to the Fed the money would disappear”
    Agreed on that its a liability to them self.
    May as well simply print 3% of the the damn money instead of all this circus where so much get diluted and mis-allocated.

    Note: I did not suggest taxation it was just a observation.

  • REN

    F.B., you know that I respectfully disagree with you on the private money economy. We know from the past, particularly from England, that p rivate money systems get co-opted by money manipulators.

    The following is the best scenario for a politicial structure. And the assumptions are that money=law, which is a truism:

    1) There are Four branches of government: Treasury, Judicial, Executive,Legislative.

    The new Treasury is surrounded by Consititutional law. That way populism cannot pervert it over time. Additionally the Senate should have the 17’th ammendment repealed, so it cannot try to pervert the new treasury withh populism. The Law will govern the behavior of the new Treasury. In this way debt free U.S. dollars can be issued in accordance with the needs of the economy.

    2) The private bankers become 100 percent reserve. The money supply has become lawful, and thefore doesn’t need counterparties and insurance, like derivitives and AIG and other gamesmen. No more leverage, and no more balloning and busting of the money supply. Also, credit masters loose their money creation privledges, so the pressure for the isms goes away. Communism, Feudalism, and Statism all grow out of the credit money defect. Allowing private control of the money supply will perpetuate the isms. This cannot be allowed.

    3) To further put the money power privledge in its box, then Georgist ideas like the rent value of property taxation need to happen. We know that plutocrats get their power by vectoring usury back into land. Today our new neo feudalism is bankers creating ever more credit money, thus inflating housing, thus making more credit,etc. This is false economics which shows up as numbers on a banker ledger that is constantly increasing, but it is not real goods and services. It is empty calories that do nothing for the real economy. Over time, a higher and higher percentage of your output goes to servicing debt. Fiscal policy and monetary policy are flip sides of the same coin, they are both based in the LAW.

    Stop taxing productive labor, and start taxing the rent value of the land. Even in a 100 reserve world, this would be required.

    Our government belongs to us. This is the promis of our founding. That we got it slightly wrong is because Jefferson wasn’t at the constitutional convention in the final weeks, when they discussed money. Franklin was too old, and Thomas Paine was in France. Therefore, the remainder of the founders were confused and left a back door for Statism to sneak in. The credit money power given to our private economy has created a new Feudal Statism that is on the march.

    Even if we have a full private money system, it still needs to come under full control of some law. Who makes those laws? Money at its root gets its authority under law and consent of the people. Money solves contracts and settles debts. It is the law, and once that is understood then it is clear that the private sector would have to make a new government to control the private creation of money.

    If private monies are backed by something other than the law, like gold. Then that is a perversion of the truth. We tried that in the past, and it didn’t work out so well. A fully advanced society with an advanced legal system can have an advanced fiat money system that serves our needs. Going back to full private monies is a step backward.

  • F. Beard

    Going back to full private monies is a step backward. REN

    I have never advocated that.

    What I do advocate is the allowance of private money supplies IN ADDITION to fiat. Then, if the government did not properly manage its fiat, the population could escape the resulting inflation OR DEFLATION by using private currencies for private debts.

    Fiat is the ONLY ethical money form for government debts but requiring it for private debts is UNETHICAL.

    In practice, even if private monies were allowed, most people would choose to use fiat for private debts too so long that fiat was properly managed. So what is the harm in allowing private monies?

    As for fractional reserve banking, an outright ban might be too severe but certainly ALL government privilege for it such as a lender of last resort should be abolished and all illiquidity immediately punished with bankruptcy.

  • Different Chris

    I said no such thing, I clearly stated that it is fiction and that I enjoyed the story, nothing more. Have you ever enjoyed a piece of fiction (movie, book, story of any kind) where something happened that you did not agree with (like.. oh, when there’s a villan)? I hope so, otherwise your life must be very dull.

    I do believe that the individual in that piece of fiction that conducts acts of violence is stopped by the end of the story…..

    I simply wanted to say I enjoyed reading that piece of fiction.

    ‘Different Chris’ came about when there were was another ‘chris’ already commenting on a thread here, simply to prevent confusion.

  • Different Chris

    And I fully understand the ‘voice’ part of your moniker (though not the rest of it) if you so readily put words in someone else’s mouth.

  • REN

    We’ve discussed the inefficiency you add to the economy. When government spends it’s fiat, it has to be converted. Remember, in a true Federal system, we own the government. We, in effect, would be saddling ourselves with inefficiency.

    Government wants to consume from the private sector, and the private sector wants its credit backed up by the government. It is a recipe for disaster, but the fix is not private money supplies. It is law, and advanced law at that. It requires an understanding of what money is, and that in turn predicates a certain output.

    An example: Nixon goes off of the gold standard in 1971 or so. Then U.S. government deficit spends into its foreign bases and war machines. Those dollars it deficit spent, seem to come bouncing back as T-Bills. This was unexpected. But, in effect, the deficit spent money pays for free military bases and foreign influence. Some foreigners want those dollars to buy oil, especially after the 1973 deal with the Saudi’s. What a deal, now we have 80 overseas bases and a military industrial complex, paid for with debased fiat.

    So, here is a case, where the government itself spends its own fiat extra-legally. Rather than properly funding the war through Congress, it manipulates the money supply instead. Both the Government AND the private sector need to come under control of the Law.

    Competing monies; gold standards; separate currency paths for government/private, are all flawed theories to my mind, and history and reality support this contention.

    The selfish beast that is a human will find a way to pervert any system for his rent seeking. It has to be understood that money at its root is Law, and good laws better be in place. This is a central condition of mankind, which led to marxism, fascism and all the rest. We need to get it right, and we have an advanced enough legal system now for money to evolve.

    Private monies will end up becoming credit based, and that would be a serious problem. We would revert backwards toward feudalism. Private unelected individuals cannot be given the money power. Although, we are marching toward feudalism with our current bankster economies, it makes my case. Our current reality is credit money has perverted our government.

    Credit money, or the ability of private individuals to create credit is the central problem, and then improperly constrained government is the next problem. Separate private monies that some how magically constrain the government won’t happen. Instead private money power will grow illegally and gain improper influence.

  • F. Beard

    Here is another major reason to allow private monies. Your solution eliminates fractional reserves but does nothing about usury. The allowance of non-usury based private currencies such as common stock would allow us to leave usury behind forever.

    Think about it. The elimination of fractional reserves might easily cause interest rates to soar and hinder economic growth. That’s where private currencies could fill the gap. And why would anyone accept a private currency unless it was backed by genuine goods and services OR was an equity share of the corporation that issued it?

    Thus private currencies are a way to allow optimum economic growth while at the same time broadening the base of capitalism.

    Fractional reserves are crooked but nonetheless a brilliant invention – asset backed money. Common stock as money is also asset back but is completely ethical since every money recipient is by definition a co-owner of the corporation that issued the money.

  • Common Sense

    If Dems honestly believe that they represent the will of the majority of Americans, WHY OH WHY don’t they want to debate the debt ceiling issue again just BEFORE the November election? The Repubs aren’t afraid to use this as a election issue. Think about it, Dems.. you campaign on doing the RIGHT THING for most Americans, and you win the House, Senate, and the Presidency.. AGAIN! This seems like a no-brainer..unless Dems know Americans won’t support a policy of spend, duck, and cover. Dems.. I beg you.. use this as a 2012 campaign issue and take back the government like you did in 2008 :)

  • REN

    F.B. Yes, I agree the usury is a problem. It is based on an original fiction at the beginning of money. We used to trade a chicken or some wheat, or something organic, and expect to get paid back with some of the offspring. For example, if I loaned you a chicken, I expected eggs back. But, money is not organic, it cannot really grow. To make something inorganic grow, like money, is a central problem. To add insult to injury, the usury curve is an exponential function.

    But, there is no reason why a 100 percent reserve system has to have exponential monies at its base. The differential in pay back is between the creditor and the saver. The private banker in this system is simply a go between, who earns a fee for their service. The creditor and saver can have some sort of deal for the extra monies paid back. I would recommend a simple interest that does not compound exponentially. The fatal flaw need to be accounted for.

    In the end, the extra money that enters the supply to cover the interest is something any system will have to contend with. If not, other people are going bankrupt to supply the usury the system needs.

    Therefore some small rate of inflation is inevitable. And the only way to control that properly is through law based money.

    The tax code will tax away the improper accumulation of rents. Monetary policy and fiscal policy are not independent.

  • F. Beard

    Nice comment about the problem of usury. But whereas you would seek to regulate it, I have the sneaky suspicion that usury requires government privilege to even survive to any significant extent.

    The usurers and government have a long historical association but why should that continue today when money is better understood? The government certainly has no need to borrow money since it can create money itself debt-free. As for the private sector, why should only usury based forms of money be allowed? Is that not government privilege for usury?

  • REN

    FB, Yes, the private sector merely needs some sort of mechanism to exchange their output. But, if I loan you my money, I have some expectation of something in return. So, the notion of usury, and the pressure to make inorganic money grow, is at the root of the idea of money. Even private monies, like stocks or bonds will demand something more in payment.

    Hitler’s MEFO bills were targeted at industry, but they ended up circulating like money. They promised payment in interest when they were turned in. Interestingly, they were just issued into the economy and people used them. In large measure, they were why the German miracle happened. So, this both supports your ideas for bills/bonds circulating as money, and supports my contention that you can issue fiat that the people will use.

    Eventually, you always default back to the notion that money is something that people need to trade their output, and it needs to have legal backing. The question then is “who performs that function?” If it is private money, usury will certainly still be part of the equation.

    The only time we don’t get inflation and money seems stable, is when real goods and output are expanding. More goods and output are matched by increasing money supply, so it seems as if the money is stable. Even credit money can appear to be good in the right circumstances. The best way to have the virtuous position of increasing goods and services with the same labor, is to let money serve as a store of value and allow the economy to properly prices things. All the shenanigans of government, and of private credit masters, mean that our current system is gamed to the max. Labor gets screwed, and that is something we both agree on, I’m sure.

    My issue is that the private sector cannot hold the money power, and the government can only hold the money power if it is closely watched by the private sector and the law. There needs to be balance of forces and legal penalties, so the people and their output are protected.

  • REN

    Hmmm. My last post didn’t make it. So, I’ll make another quick comment.

    Even with a pure private sector money system, there will be expectations of inorganic growth. The person doing the loaning, will want something back in return for his money. The debtor doing the borrowing will have to agree to terms with the creditor. In a law based system, those terms are already spelled out in advance, so all money contracts can be more easily enforced. Usury is a function of money unfortunately.

    In a virtuous cycle of ever inccreasing output for a given amount of labor, even credit money looks good. Under these conditions where output is constantly increasing, the money supply can constantly increase and mask the ill effects of usury.

    The best thing we can do is make sure that money is a store of value and a means of exchange, and that it doesn’t get manipulated to the detriment of the people. The manipulation is usually by miss defining what money is, and by adjusting the law to rent seek. The FIRE sector is a good example of that mechanism in action.

  • F. Beard

    Under these conditions where output is constantly increasing, the money supply can constantly increase and mask the ill effects of usury. REN

    According to Karl Denninger, the debt will normally compound faster than the real economy grows thus necessitating recurrent recessions, the so-called “business cycle”.

    But suppose that usury was completely outlawed. Could we still have a modern economy? The answer is yes – by using common stock as money:

    1. Common stock as money requires no borrowing or lending; assets and labor are simply bought with new stock issue. The commandment against usury between countrymen (Deuteronomy 23:19-20) is thus obeyed.
    2. Wealth is shared at the same time it is consolidated for purposes of economies of scale. This broadens the base of those with a stake in free market capitalism.
    3. All price inflation is born by the owners of the corporation since by definition they become owners upon accepting the corporation’s money, common stock. There are thus no innocent bystanders, an important moral and social stability feature.
    4. Common stock as money requires no gold but could easily accommodate it for dealing with primitives. However, as today, much of the assets of the corporation would be performing assets not non-performing ones such as gold is.
    5. The holders of the money are by definition owners of the corporation and may vote on new money (stock) issues. On one hand, the money holders might not wish to risk deflating the value of their stock. OTOH, perhaps they see an investment opportunity that justifies the risk. Notice the issue of new money is not artificially constrained as the case is with gold as money yet price inflation is not likely either.
    6. Fractional reserves are not needed as is almost always the case with gold based monies. Common stock is thus a non-fraudulent form of money.
    7. Without lending or fractional reserves, deflation is not a risk.
    8. Common stock is a true store of wealth since a healthy corporation is always adopting to the needs of society.

  • F. Beard

    Not that I think you are a gold bug, mind you.

  • REN

    Hitler issued MEFO bills, which were also called Federer money. They were based on the Greenbacks, since Federer followed that movement in the latter half of the 19’th century.

    When the MEFO bills were issued they were targeted at industry. The central government wanted X amount of labor for each bill. This is how they built out the autobahn and built out industry without gold. Germany went from being debt slaves to being the richest country in Europe by 1938.

    MEFO bills did promise to pay some interest when they were turned in. I’m not sure of the mechanism, but the bank’s did not hoard them. Therefore they circulated as money.

    So, it was fairly low inflation. I think we will need to experiment with new forms of money in order to keep the usury problem in check.

    Common stock is an interesting idea. People can still trade it as a form of money. This could exist simultaneously in a 100% reserve world. The idea is to not disenfranchise people from their labor and output.

    Usury is usally defined as excess interest. I define it as growth of something that should not grow. Money should be inorganic, but people will demand something for their savings in return, usually more money. Very low rates of inflation could be tolerated, and still have money serve as a store of value.

    The common stock idea has the company growth as the return, but that is “off the book” so to speak, and doesn’t demand that the money grow. Once simply owns the growth of the company as a ledger entry.

    When the stock is traded, it might get converted to money at that point, and then more money may be demanded.

  • F. Beard

    The common stock idea has the company growth as the return, but that is “off the book” so to speak, and doesn’t demand that the money grow. Once simply owns the growth of the company as a ledger entry. REN

    You got it. There is no requirement that the money supply (quantity of common stock) grow but nonetheless the money holders (stock owners) could vote to increase it if they saw a good investment opportunity.

    When the stock is traded, it might get converted to money at that point, and then more money may be demanded. REN

    If the common stock was directly exchangeable for goods and services provided by the corporation that issued it then there would be no need at all for conventional money for private debts. Of course tax money would still be needed but it could be bought on the open market from those who had it – government workers, government contractors, the military, SS recipients, etc but not, for ethical reasons, directly from the government.