RUSH: Jeff in Maplewood, New Jersey, Open Line Friday. Great to have you here, sir. Hello.
CALLER: Hi. Mega dittos from the .0005% of callers that get through here.
RUSH: (laughing) Thank you, sir.
CALLER: I just want to bring up, you were talking earlier about Ali Velshi talking about how the American people finally get the debt and understand the debt.
RUSH: Isn’t it a beautiful thing, isn’t it a beautiful thing, they finally understand it.
CALLER: Yeah, and you did a tongue-in-cheek piece on it with the Entertainment Tonight clips and that was very nice, but I want to point out they have nothing on some of our representatives. I cite Mr. Jerrold Nadler of New York who’s a graduate of Columbia, Fordham law school, and they’re proposing that in order to solve our debt problem — actually, the debt limit problem, that we issue trillion-dollar platinum coins and deposit them in the Treasury. I know this sounds like some sort of joke or something —
RUSH: Wait, wait wit, Jarrold Nadler you’re talking about here?
CALLER: Well, he’s one of them. But this is actually a real story. In fact, I’ve been on hold for a while now and I was Googling around. It’s actually on the Drudge website now, but it’s been floated around for a while. It was actually proposed by some idiot law professor up at Yale —
RUSH: A trillion-dollar platinum — but Ali Velshi says that the debt limit doesn’t have anything to do with spending, so why do we need to do anything?
CALLER: Well, at some point the Treasury does have to write a check, and right now the only way they can do that is the Treasury department has a checking account at the Federal Reserve —
RUSH: Yeah. (crosstalk)
CALLER: — the mother of all toasters when they make deposits and stuff, but they —
RUSH: You get the money from the ChiComs.
CALLER: Yeah. Well, they basically only get money in two ways: The receipts from tax revenues or when they sell normally bonds and T notes and things like that.
RUSH: Right, right.
CALLER: Well, the problem is we can’t issue any more T notes or bonds or whatever until Congress or if Congress —
RUSH: But we can sell trillion-dollar platinum coins?
CALLER: I don’t believe it’s legal. I do have a legal background, but I don’t believe it’s legal, but the way it works is there’s a —
RUSH: Hang on. Hang on. I gotta take a break here and I’m really interested. I know it’s on Drudge. I didn’t click on that link. I haven’t read it so you are going to be informing me and everybody else about this.
RUSH: Okay, we’re back and I got Jeff here in Maplewood, New Jersey. Jeff, I clicked on the link, and here’s what I got. This is what I see. In a nutshell, there are limits on how much paper money the US can circulate, and there are rules that govern coinage, gold, silver, and copper, but the Treasury has broad discretion when it comes to coins made from platinum. There aren’t very many restrictions there. So, the idea would be that the US Mint would create a bunch of these trillion-dollar platinum coins that Obama would order deposited at the Fed, who would then put the coins in the Treasury so they could pay all their bills to avoid a default. Is that pretty much how you understand it?
CALLER: That’s probably 99% accurate. I would just add one thing. You sort of disappoint me, Rush. I mean, it disappoints me, I thought I was gonna be able to teach the great one something, and here in 30 seconds during a commercial break you were able to get up to speed on that. That’s very impressive. But the one thing I would add is the statute that they’re using there, the whole point of the platinum coins was not that the Treasury could mint any old number of platinum coins for regular use, in other words, walk around with a bunch of platinum coins in your pocket. The idea was that you could mint certain special commemorative coins and things like that, but they never specifically in the statute stated that it was strictly for commemorative purposes. So now some smart alecks have come along and said, “Oh, well, okay, we’ll print up a few trillion-dollar platinum coins.” I don’t know why they stopped at two trillion. Why not go for a full $16 trillion while you’re at it.
RUSH: Yeah, just wipe out all the debt.
CALLER: That’s what I mean.
RUSH: Print enough coins and say that they’re worth $16 trillion and be done with it.
CALLER: Yeah, I know, and of course there wouldn’t be $16 trillion worth of platinum in it. There would be like a dollar’s worth of platinum or whatever, and the idea is simply that when they deposit it at the Fed that creates — a little accounting lingo here — but it creates an asset on the Fed side of the books and on the liability side, the Treasury gets a trillion dollars worth of checking account money to play around with to write out checks. The reason I don’t think it’s legal is the part that you mentioned first. By law, the Federal Reserve controls how much coins and currency can be put into circulation, not the Treasury. And this would in effect, if there was a coin put into circulation, which they say they wouldn’t do, it would be bypassing that law. And if, on the other hand, the Fed’s just gonna hold onto it for now until whenever, then it becomes sort of a de facto IOU. It’s basically what they’re issuing now, and only Congress can issue the IOUs, the bonds —
RUSH: You know whose idea this was?
CALLER: The first I heard it was a law professor up at Yale. They have some wacky law professor —
RUSH: Yeah, it was our old buddy Jim Pethokoukis at the American Enterprise Institute who heard it from somebody else. Now, he’s a smart guy, Pethokoukis is a smart guy. This is above my pay grade. This all sounds like phony baloney plastic banana, good-time rock ‘n’ roll to me.
CALLER: It is, a hundred percent. I pointed out the legal thing. Monetarily it’s a disaster because you’re basically increasing the money supply by a trillion or two trillion, however many coins you print up, with no possibility of ever contracting the money supply.
RUSH: Why would anybody believe these coins are worth a trillion dollars? You know, money’s only worth what people believe it’s worth. You’re looking at —
CALLER: Well, the theory is that it’s not gonna be in circulation. It’s just gonna be sitting in the —
RUSH: But as I hear this, none of this is real. This is smoke and mirrors.
CALLER: It is.
RUSH: This is not even dealing with the problem.
CALLER: But the problem is that there are real people out there, our representatives. I’m in New Jersey. I get to hear that idiot Nadler speak periodically, and I shouldn’t say idiot, trying to be kinder, gentler to some of our people. The people that don’t quite understand economics, and I hear Mr. Nadler speak periodically, and he’s behind this, he’s talking about it. There are people, as I said, I’ve heard law professors say, “Oh, this is a great idea.” And trust me, a lot of lawyers don’t understand economics.
RUSH: Yeah, well, let me tell you, there’s another law professor at Georgetown who’s suggesting that the fix for American politics is to give up on the Constitution.
CALLER: Yeah, yeah, I read that.
RUSH: Let me tell you something. We got enough lawyers gumming up enough of the works as it is without them getting involved in this stuff.
CALLER: I know.
RUSH: But, I mean, this is absurd. We just don’t have the money to be spending the way we are. That’s all it boils down to. And everything that tries to patch that is — unless you come up with the money, you haven’t fixed the problem.
CALLER: Well, yeah, this is totally phony. And that’s what’s so sad. That’s why I called. I first heard it hit national prominence yesterday on the Neil Cavuto show. Prior to that I just figured, oh, it’s a bunch of wacky law professors, you know, floating this idea. You know, just one of those things to keep ’em busy. But there are serious people talking about this, and it’s economic idiocy. It’s legal idiocy —
RUSH: It doesn’t impress me. There’s serious people talking about a lot of stuff and they’re dead wrong. The fact that they’re serious doesn’t impress me. It scares me, actually.
CALLER: Yeah, well, it scares me because click on one of those links and if you go to the Huffington Post or something and click on what people comment, they’ll say, “Oh, that sounds like a good idea to get around what the Republicans are doing.”
RUSH: Oh, the hell with that. Why don’t we just use Bitcoin, to hell with printing up a whole new platinum coin here. Just use Bitcoin, which is the currency on the Internet.
CALLER: Yeah, why go to the trouble of having to get platinum? Why don’t we just use, I don’t know, bubble gum coins or whatever.
RUSH: I don’t know. Anyway, look, I appreciate the call. I enjoy discussing this esoteric stuff that just illustrates above all else how baseless all these fixes are. And that’s really what they do. We’re $16 trillion in debt. We’re heading in another four years for 20, minimum, $20 trillion dollars in debt, and nobody’s doing anything about it. We’re just coming up with ways to get away with it. We’re trying to kick the can down the road so that people who are alive today will not be when this has to be dealt with. Pure and simple. I appreciate the call. Thanks very much.
RUSH: Boris in Queens. I’ve got 45 seconds you’ve been holding and I wanted to get to you. Hi.
CALLER: Thank you so much, Rush. Happy New Year to you and all the listeners of your great show.
RUSH: Thank you.
CALLER: It’s an honor to be on your program.
RUSH: Thank you.
CALLER: I’m calling about the $16.5 trillion debt. There are only two ways to address the deficit. One is to have the GDP grow at an average rate of five or higher, 5% or higher for the next 20 years, which is virtually impossible under the current socialistic administration. The other one is to inflate the hell out of dollar about 50%, and then you effectively have $8 trillion worth of debt, not 16. They’re already preparing the American public. There’s a CIA report circulated that Chinese are gonna try to attack the US dollar, that the attack is imminent. Obama wanted to go over the cliff. That would help him to blame the Republicans, not Chinese, but that’s what they’re doing.
RUSH: Well, he’s right. We can’t grow at 5% for 20 years, but we can inflate to get rid of some of this debt. That’s gonna be the biggest tax increase low-information voters (laughing) have ever seen if that happens.