Wikipedia:Reference desk/Archives/Humanities/2012 June 23

Welcome to the Wikipedia Humanities Reference Desk Archives
The page you are currently viewing is an archive page. While you can leave answers for any questions shown below, please ask new questions on one of the current reference desk pages.

June 23

Platinum U.S. coins

31 USC § 5112(k) gives the Administration the discretion to mint platinum coins. Suppose they wanted to do so without inflating the currency. Is there a derivative instrument capable of locking in the low interest on Treasury securities? 71.212.226.91 (talk) 08:37, 23 June 2012 (UTC)

I'm not sure what "Inflating the currency" means in this context. If any such coins were minted, presumably their nominal currency value would be set far below their bullion value (as is the case for the gold "American eagle" coins today), and consequently they would never be circulated at face value... AnonMoos (talk) 11:13, 23 June 2012 (UTC)

P.S. According to article American Platinum Eagle, such coins already exist... AnonMoos (talk) 11:18, 23 June 2012 (UTC)

Indeed, the current proof is designed "to insure domestic tranquility." But this year, we get to provide for the common defense. 71.212.226.91 (talk) 20:03, 23 June 2012 (UTC)

I don't understand the question. What does locking in low bond yields have to do with minting new coins? --Tango (talk) 11:16, 23 June 2012 (UTC)

It is very important to keep inflation low. That can be accomplished by investing part of the signorage proceeds in the broad stock market. 71.212.226.91 (talk) 20:03, 23 June 2012 (UTC)

I think this is an offshoot of a theory I've seen in the WashPost that because the law doesn't specify the denomination of platinum coins, you could get around the debt limit by minting a $1 trillion platinum coin and selling it to the Federal Reserve. It doesn't work because as the Federal Reserve only places orders for coin to satisfy demand from its customers, no one is going to order a $1 trillion coin.--Wehwalt (talk) 13:40, 23 June 2012 (UTC)

Are there any such restrictions on selling the Fed expiring options to purchase such coins? 71.212.226.91 (talk) 17:55, 23 June 2012 (UTC)

Yes, I assumed that was the context. I don't know if it would work or not (it would probably require the cooperation of the Federal Reserve), but either way I don't know what the connection is to low treasury bond yields. --Tango (talk) 15:56, 23 June 2012 (UTC)

Okay, so please let's explore the region from $1 to $1 trillion. Suppose one coin were minted for every homeless child in the U.S., and the proceeds were used to pay for infrastructure, or universal health care, or paying down the national debt. Or all three. Is there a way to raise enough money over the value of the platinum that money velocity would increase without prices increasing above the rate of inflation? What if we wanted to do all that and lock in the low interest rates available to the Treasury today? 71.212.226.91 (talk) 17:37, 23 June 2012 (UTC)

Fiat currencies are based on the fact that the material in the money is worth less than the raw material needed to make that money and the labour going into making that money. If you have a gold currency (or any other currency based on precious metals/materials), it doesn't matter whether you use actual coins - the value of the money is in the gold, so a gold nugget or a gold necklace would be worth exactly the same as the coin (given that the amount of actual gold in the coin and/or nugget and/or necklace (and/or other gold item) is the same). With fiat currency, that isn't the case. I would assume that printing a $100 bill costs roughly the same as $1 bill. The economic yield of producing the $100 is greater than producing a $1 bill, since the money you end up with is worth a lot more. The same would be the case of the $1 trillon coin. According to XE Currency Converter, one ounce of platinum costs a bit less than $1,450. So, if you make a pure 1 oz. platinum coin with a nominal value of $1 trillion, the amount of money created is far higher than the value of the raw material needed. However, it doesn't seem to me to be a very sustainable idea for increasing the money flow, as it supposes that there is some institution out there willing to swap a $1 trillion coin(!) for $1 trillion cash in small, used, unmarked bank notes. The Fed might do it, but it might see this as overstepping the boundaries between itself and the government, as the Fed is the Central bank and should be independent of government-fiddling. V85 (talk) 18:51, 23 June 2012 (UTC)

So let's say Obama and Geithner call Bernanke and say, "Look, Congress has been deadlocked with filibusters and they've been telling me to spend but not authorizing the funds, and now they want to limit the debt ceiling again. Why don't you announce that we're going to be minting one platinum coin for each homeless child in the U.S., and I want you to auction some of them off the next time you go to sell securities to find out whether the market will pay for them. Auction off ten of them, and we'll use the proceeds to pay for infrastructure, universal health care, education, and the broad stock market to recoup our investment. To get things started, I want you to buy an option to purchase more of those coins. If you will do that, we will declare a state of emergency in health care for each of the 1.6 million homeless children." Why wouldn't that work? 71.212.226.91 (talk) 19:16, 23 June 2012 (UTC)

There is little doubt that the platinum coin - only one need be minted - would be a valid workaround of the debt limit BS. And that is what was intended by those who wrote this law in the mid-90s. Has little to do with bond yields, other than removing this arbitrary and arguably unconstitutional restriction. (See Balkin's article cited above) The idea is that the coin be minted by the Treasury, given some arbitrary, huge face value, and then traded to the Fed, which is legally bound to accept it (to answer V85 & Wehwalt) and deposit the proceeds in the Treasury General Account. Could be sold to the private sector, which certainly would buy it at (approximate) face value, because it could be used to settle debts to the US government at face value. Again, contrary to the OP, and to answer Tango, it has little to do with bond yields, except that the increased government spending without 1-1 matching with bond issuance would tend to lower bond yields, interest rates. And little to do with inflation, and less with investment in the stock market. At these times of high unemployment, low inflation and low interest rates, financial fragility & the prospect of debt-deflation & depression are the dangers. To the extent it allowed increased government spending, it would effectively lower unemployment and print real wealth into existence by standard Keynesian means in our modern demand-constrained economy. It's just a workaround for the artificial debt limit, that can present the President with two contradictory commands coming from Congress. Everything else would go on as usual. There is no essential difference from playing this game with a $10 trillion platinum coin and raising the debt limit by $10 trillion.John Z (talk) 21:29, 23 June 2012 (UTC)

It would cause an increase in inflation, since it increases the money supply. As you say, there is no difference between that and issuing another $10tn of debt - both increase the money supply by $10tn. --Tango (talk) 21:58, 23 June 2012 (UTC)

Increasing the money supply is not the same as increasing inflation, as we have seen recently. Treasury bond rates are at an all time low, with real (inflation adjusted) interest lower than -1% at present because of slow government growth[1][2] during a period of repeated bailouts and stimulus amounting to multiple trillions. The way to prevent new fiat money from causing inflation is to make sure the proceeds are used in part for broad stock market investments which outperform interest over time. It could very well be a breach of fiduciary duty to fail to lock in negative real interest rates. To do so, over a period of ten years would be very easy, because most Treasury debt is shorter term and remarkably fungible. This would benefit the US and other countries trying to get lower rates for their government bonds. Global production would grow to keep goods in abundant supply, preventing inflation. 71.212.226.91 (talk) 23:28, 23 June 2012 (UTC)

If cash is expanded while velocity is increased it shouldn't cause inflation. Well except for international markets viewing it as debasement and tanking the USD. Fifelfoo (talk) 22:05, 23 June 2012 (UTC)

Would that occur if the coins were auctioned? 71.212.226.91 (talk) 22:30, 23 June 2012 (UTC)

why would the market purchase fiat currency below its specie value when it can buy freely trade able USD? Fifelfoo (talk) 22:35, 23 June 2012 (UTC)

Why wouldn't they? It sounds like a perfect deal! I'd gladly give you $10 if you give me $50 back, makes me $40. :-P If you could buy a trillion dollars for only three billions - why wouldn't you? The question, rather, is why would the government mint a trillion dollar coin, if all it got in return was 3 billion? Given that the coin was legal tender, issuing it, regardless of how little money it got in return, would still increase the money supply by however much the face value of the coin was. V85 (talk) 22:55, 23 June 2012 (UTC)

Depending on the structure $10 => $50 is a bond or a discount. What we're talking about is you giving me $1,000,000,000,000 and me giving you $1. Fifelfoo (talk) 23:05, 23 June 2012 (UTC)

And why wouldn't you take that deal? Seems easier than stealing candy from a baby? V85 (talk) 23:13, 23 June 2012 (UTC)

Yes, V85, that's right on the increase in the money supply & in answer to Fifelfoo- once it is put somehow into the real economy, once the Treasury spends the money in its account, however it gets there. Inflation depends on the interaction of the real economy of goods and services & finance. Whether new government spending is price-inflationary (the standard modern meaning) depends on how the money is spent, and how the economy reacts to the spending. If it is spent on blowing up your own stores of commodities, it will be highly inflationary. If it is spent rationally, it need not be inflationary. If it is spent more rationally than usual government spending, particularly in a depression, it could be disinflationary. As I said, there is no essential difference between this & raising the debt limit. (Depending on how it's done, there could be marginal, not very meaningful changes in today's low interest rates.) So we have real world tests. US deficits, the base money supply, however construed, have skyrocketed following the GFC because of automatic stabilizers like Food Stamps and the various stimulus programs, inadequate and mistargetted as they are. No real inflation because of this, no international collapse of the value of the US dollar due to international markets viewing it as debasement. The ever-continuing crises caused by the Euro's wacky, ignorant design, may very well tank the Euro (it already has against the Swiss Franc, necessitating Swiss CB intervention) against the infinitely safer, "debased" (NOT) US dollar.John Z (talk) 23:19, 23 June 2012 (UTC)

John Z, you acknowledge that market reaction to any increase or decrease in money supply is politicised, rather than a sum of rational agent reactions, therefore any money supply movement can result in inflationary pressure. If so, then we ought to take market rationality at its hard monetarist ideological value, rather than at the actuality of its use simply for class warfare purposes. And monetarist ideology links money supply to inflation. Proposing that there's a binding alternate rationality to an irrational (ie: politicised) market is ridiculous. Fifelfoo (talk) 23:36, 24 June 2012 (UTC)

Most everyone links money supply to inflation, but other factors include production and demand. 71.212.226.91 (talk) 01:08, 25 June 2012 (UTC)

Yes. I am not sure what Fifelfoo is trying to say. Too narrow definitions of money supply will lead to nonsense, e.g. monetarism, though, and his second sentence appears to be a non sequitur. I was just saying that there is a government sector and private "market" sector in an economy. Inflation depends on both. The economic actions of the government are certainly binding, rational or not, and the idea that one cannot have an idea of rationality applicable to them is amazing. In particular, states worldwide from the mid-40s to the mid-70s "rationally" aimed at and more or less achieved full employment, during the "Keynesian" era, due to increased academic, popular and governmental understanding of economics after the Great Depression, and produced the greatest period of worldwide prosperity ever. The abandonment of this rational goal, partly caused by declining academic, & more important, popular understanding of economics since then, has led to much inferior results, by any measure except the relative wealth & power of the wealthy & powerful. At times like now, there is no reason to think that increased government spending, spent around as sensibly as the US stimulus programs, will be significantly inflationary. The stock market doesn't really have all that much directly to do with it, but production and demand, as you say above, certainly does.

Returning to the original question, the Big Coin is and was intended as just a workaround of the debt limit, because it doesn't count toward it. The Treasury bonds that the Treasury auctions off every week are really just the same as the Big Coin, except that they count toward the debt limit. And it also doesn't really matter all that much whether the Fed or the private sector buys the bonds or the Big Coin. What matters is that (the face value, roughly) of the bonds or the coin land up in the Treasury General Account, and most important, that the TGA is depleted as the dollars are spent into the US dollar economy.John Z (talk) 04:30, 25 June 2012 (UTC)

They will just end up hoarded unless this is fixed. 71.212.226.91 (talk) 05:30, 25 June 2012 (UTC)

Its rather obvious that IP71.212 and John Z are making a Keynesian analysis of money supply without dealing with the development of the key externality that lead the capitalist class back to vindictive monetarism: the growth of working class power under Keynesianism. Monetarism represents a return of the bourgeoisie to class consciousness in a way unseen since the Manchester School or the Gilded age. Common analyses of Keynesianism's implementation in politics point to the immediate threats of competing capitals and the Soviet Union as motivators for the adoption of reduced returns and the acceptance of limited industrial militance. There's no external motivator to require that; and I don't see why "bigger cages, longer chains" is a viable motto to recruit the working class to a Keynesian solution. Fifelfoo (talk) 05:50, 25 June 2012 (UTC)

Discharging debt is just one chain which the shrewd voter can cast off if they correctly solve the set of economic equations describing reality. 71.212.226.91 (talk) 20:29, 25 June 2012 (UTC)

71.212.226.91, Yes of course much will end up hoarded (an easily remediable "bad") - or much better used in discharging the chains of debt, as you say. Hard to get the second without some of the first. Predicting deflationary hoarding contradicts worrying about inflationary impacts. Whatever happens, however government spending is reasonably increased, say a trillion more a year, there just isn't much prospect of demand-driven inflation. The Fed & the Treasury together can completely determine all interest rates on US debt, as they did during WWII, until the 1951 Accord, so just ordinary bond sales and purchases would be enough to lock in low rates, no need for exotic derivatives. Worrying about the private sector is putting the cart before the government-issued horse. Worrying about the stock market is doing it twice.

Fifelfoo, yes, of course I am making a "Keynesian" analysis. There are many things I didn't deal with, because the answers are supposed to be vaguely relevant to the question, and I already went far afield. A major aspect of the current dark age of economics is forgetting how banking and finance work, in particular how government finance works, which is why this question was interesting. The difference between Keynes & Marx (or even the Old-Keynesians) & later quackery like monetarism & modern Mainstream economics is that K & M etc were genuinely interested in the workings of economies, and made real advances, and said things which are uh, true. While the latter are just soporific, incoherent babble, performance art, with no application to or intent to apply to reality, that are used as political weaponry. Whatever had intellectual value, was true in them, was long ago incorporated into, aufgehoben into Marx's, Keynes', Lerner's etc theories. The bourgeoisie didn't really adopt reduced returns during the Keynesian era, it is more that the working class has been bamboozled into adopting reduced returns since then, and this of course has represented and caused further major economic destruction. The designed decline in popular understanding is even more serious than the academic dark age. Since then, elites have worked hard to become relatively bigger, parasitic fish in an absolutely smaller, slower growing pond. One threat to this is the rise of some developing economies, China foremost, which have had superior economic performance by not engaging in such national self-destruction. I was not interested in mottoes to recruit anyone.John Z (talk) 01:20, 26 June 2012 (UTC)

(Thanks, this has been a valuable discussion for me, and particularly reaffirming of the continuing value of Keynsianism / Post-Keynsian economic's attempt to meaningfully represent actuality). Fifelfoo (talk) 02:42, 26 June 2012 (UTC)

Where to find my Hardy.

Dear Sirs and Madams,

As you know the story of Mr. Hardy and Mr. Ramanujan, and I would like to find a similar partnership after having your very fine answers to my question here. http://en.wikipedia.org/wiki/Wikipedia:Reference_desk/Science#why_don.27t_swampies_use_non-exchanging_heat_exchange_with_air.3F I have over 3000 ideas, a sample of any fifty of which should be sufficient to convince anyone who fits the ability of the person who answered this question. However, I do not think someone is able to be my partner only because they are rich, e.g. a VC. They cannot evaluate this in any way. So, the suggestions so far have not been suitable. Can you suggest to me a more appropriate method to find an appropriate person? I am not interested in starting a business, but instead in the merits of the individual ideas which I would like to patent individually. THank you for any help and general advice Sirs and Medams.

Ranbir — Preceding unsigned comment added by 84.3.160.86 (talk) 18:05, 23 June 2012 (UTC)

You need to find yourself a patent agent, who will assist in the process of getting your ideas patented. There is a list of links at the bottom of that article which will assist you in searching for the people you need. --TammyMoet (talk) 18:30, 23 June 2012 (UTC)

Venture capitalists aren't just rich, they a good at judging whether business ideas have merit (otherwise they don't stay rich for long!). Banks are another good source of start-up capital. There is no point just patenting an idea if you aren't going to do anything with it. You either need to start a business using it or sell it (or, a business model that has become popular recently, sue people for violating it). Keep in mind, though, the answer to your last question was that other people had already thought of your idea and determined that it wasn't suitable for widespread use. I expect the same will be true of many of the other 2,999. Being a successful inventor involves a lot more than just having lots of ideas. --Tango (talk) 22:06, 23 June 2012 (UTC)

To find a Hardy, you have to be a Ramanujan. So far I'm not seeing it. Looie496 (talk) 02:14, 24 June 2012 (UTC)

To be fair, you didn't understand the question I posted to the other desk, which actually turns out to work fine at the cost of some building space. 78.92.81.230 (talk) 15:50, 24 June 2012 (UTC)

I don't know if Ranbir will pick up the comment I left on my talk page, but basically if he needs someone to help with initial stages of development, he needs to contact his local Chamber of Commerce or its equivalent in his country. --TammyMoet (talk) 15:58, 24 June 2012 (UTC)

I have replied there. 78.92.81.230 (talk) 16:25, 24 June 2012 (UTC)

Lia Fáil

How has the stone even withstood such a turbulent history? Most of the symbols of Wales and Scotland were destroyed or taken away by the English in an attempt to destroy the spirit of those nations, ie. the Holy Rood, the Stone of Scone and Llywelyn's coronet. Why wasn't the Lia Fáil or the Hill of Tara damaged/vandalized in the numerous wars and conflicts between the Irish and English? Or has the stone loss importance since Celtic times.--Queen Elizabeth II's Little Spy (talk) 19:32, 23 June 2012 (UTC)

Secondly, how significant was the vandalizism of Lia Fáil in terms of news coverage, reaction, concern, etc.? --Queen Elizabeth II's Little Spy (talk) 19:32, 23 June 2012 (UTC)

The (putative) stone was split in two in the past, and repaired, and was again split in the same place when it was stolen/repatriated from Westminster Abbey in 1950. I'm guessing you mean before 1950; I don't think it's clear when the original damage occurred. - Nunh-huh 20:56, 23 June 2012 (UTC)

No, that was a different Stone of Destiny, the Stone of Scone. -- Finlay McWalterჷTalk 21:00, 23 June 2012 (UTC)

Oops, thanks for the correction. Two stones of destiny then.... and I see the Lia Fáil is also said to have been recently damaged in our article, so now it's clear why the question was raised! - Nunh-huh 21:06, 23 June 2012 (UTC)

Yeah, it is the Irish one. Still, nothing.--Queen Elizabeth II's Little Spy (talk) 22:12, 24 June 2012 (UTC)

word for this personality type

What's a word to describe a person with an inability to appreciate 'simple pleasures' such as nice weather or family life. ike9898 (talk) 20:04, 23 June 2012 (UTC)

If it's a permanent condition, perhaps clinically depressed (but, of course, a doctor would be needed to determine if they really have this condition). StuRat (talk) 20:09, 23 June 2012 (UTC)

I guess what I failed to include in my definition is that the person could enjoy other things such as Pop Culture or Science; just not the simple pleasures. I'm not really looking for something scientific here, necessarily. For example, sometimes there's a word based on a famous literary character that serves as the archetypal example of the things; 'Polyanna' may be one of this type word (I don't actually know). Or it could be a term from psychology. Doesn't matter, I'm looking for anything.ike9898 (talk) 20:20, 23 June 2012 (UTC)

It doesn't quite fit, but a person with a "thrill seeking personality" is bored by normal life, and needs an adrenalin rush to feel anything. StuRat (talk) 20:29, 23 June 2012 (UTC)

You'd do well to pick a word that seems close to what you are looking for, then do a google search for "your word, synonym". You might start with hedonist, sensualist, voluptuarist, thrill seeker. Try sybarite. μηδείς (talk) 20:36, 23 June 2012 (UTC)

Speaking of pop culture, in one episode of HIMYM, Marshall Eriksen describes Ted Mosby as "unhedonistic" (the opposite of "hedonistic"), defining it as being "unable to appreciate pleasure". Of course, that doesn't quite match the definition given on Wiktionary. From the terms on hedonism, we also find "ascetic", though that has more to do with denying oneself pleasure, rather than being able to enjoy pleasure. V85 (talk) 20:43, 23 June 2012 (UTC)

Anhedonia is the term I've heard. It means inability to take pleasure in things that most folks would take pleasure in. ←Baseball Bugs ^{What's up, Doc?} carrots→ 20:50, 23 June 2012 (UTC)

That might very well have been the term he used, with my ears mishearing it. V85 (talk) 21:04, 23 June 2012 (UTC)

A rather less clinical term is Eeyore. In the UK, the phrase "miserable old git" has wide currency - the subject need not be old. Alansplodge (talk) 21:02, 23 June 2012 (UTC)

How about gloomy gus, sourpuss, killjoy or wet blanket?--Fuhghettaboutit (talk) 21:26, 23 June 2012 (UTC)

None of those necessarily applies, since the OP has implied the subject requires a sophisticated level of pleasure, like a sybarite, possibly; not that he is incapable of pleasure, or that he tries to share his misery with company. μηδείς (talk) 03:59, 24 June 2012 (UTC)

OP. This isn't quite the same, but what about a personality type lives to much in his head, discounting direct experience of the world? ike9898 (talk) 13:35, 25 June 2012 (UTC)

Introvert ? StuRat (talk) 14:00, 25 June 2012 (UTC)

Acedia is another word that might describe the condition. Textorus (talk) 23:16, 25 June 2012 (UTC)