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The 1,000,000,000,000 Dollar Coin

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Kel-chan
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Response to The 1,000,000,000,000 Dollar Coin Jan. 12th, 2013 @ 09:05 PM Reply

good lord this is retarded....

srsly

why don't they just make it a zillion dollars and then we can be in a surplus...

I want to smack somebody

The 1,000,000,000,000 Dollar Coin

leanlifter1
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Response to The 1,000,000,000,000 Dollar Coin Jan. 12th, 2013 @ 09:07 PM Reply

At 1/12/13 09:03 PM, Feoric wrote:
No, it's fiat, it's not actually "worth" a trillion dollars, much like quarters aren't "worth" 25 cents (there's only about 6 cents worth of metal in each american quarter if my memory serves me). This is called seigniorage.

I get the impression that FIAT currency does not bother you in the leased.


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Kel-chan
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Response to The 1,000,000,000,000 Dollar Coin Jan. 12th, 2013 @ 09:22 PM Reply

At 1/12/13 09:07 PM, leanlifter1 wrote:
At 1/12/13 09:03 PM, Feoric wrote:
No, it's fiat, it's not actually "worth" a trillion dollars, much like quarters aren't "worth" 25 cents (there's only about 6 cents worth of metal in each american quarter if my memory serves me). This is called seigniorage.
I get the impression that FIAT currency does not bother you in the leased.

all currency is essentially fiat

people have to agree on the value of something in order to use it as a medium of exchange

However when you already have a market value of something and then arbitrarily alter that it throws the whole system into the shitter

Feoric
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Response to The 1,000,000,000,000 Dollar Coin Jan. 12th, 2013 @ 09:25 PM Reply

At 1/12/13 09:22 PM, Kellz5460 wrote: all currency is essentially fiat

people have to agree on the value of something in order to use it as a medium of exchange

However when you already have a market value of something and then arbitrarily alter that it throws the whole system into the shitter

Except the coin isn't going into circulation, and the only exchange would be between the Treasury and the Fed. There is no market value, because it's not going to market.

leanlifter1
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Response to The 1,000,000,000,000 Dollar Coin Jan. 12th, 2013 @ 09:47 PM Reply

At 1/12/13 09:22 PM, Kellz5460 wrote:
all currency is essentially fiat

people have to agree on the value of something in order to use it as a medium of exchange

However when you already have a market value of something and then arbitrarily alter that it throws the whole system into the shitter

The people didn't agree on the value the Government enforced it by law that's FIAT currency. See the problem with Government regulated law enforced currency as well as private ownership of the creation of currency aka "The Fed" is that it creates a debased or "devalued" currency and will ultimately end in the eventual demise of not just the FIAT currency in question but of the entire economy that surrounded the FIAT currency in question. Typically all FIAT currency's of the past have failed with the only aspect that has stood the test of time being the respective political systems dereliction to stop and prevent the continual debasing and devaluation by way of just letting the printing presses run away unregulated. Run away FIAT currency has been a problem for thousands of years and people are still to ignorant even with the internet to recognize or even care that the problem is happening again for the umpteenth time since as far back as the days of ancient China .


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leanlifter1
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Response to The 1,000,000,000,000 Dollar Coin Jan. 12th, 2013 @ 09:53 PM Reply

At 1/12/13 09:25 PM, Feoric wrote:
At 1/12/13 09:22 PM, Kellz5460 wrote: all currency is essentially fiat

people have to agree on the value of something in order to use it as a medium of exchange

However when you already have a market value of something and then arbitrarily alter that it throws the whole system into the shitter
Except the coin isn't going into circulation, and the only exchange would be between the Treasury and the Fed. There is no market value, because it's not going to market.

The Coin is a Farce LOL as the Government and the Fed do not deal in paper and coin currency they deal in fraudulent Promissory notes in exchange for digital numbers in a computer database/program as a very small percentage of currency is physical. The monopoly money in circulation is just a means to calm the people and make them think that a fancy piece a paper and coins really mean something.


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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:05 AM Reply

But that money will still be used. That is the whole problem.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:40 AM Reply

At 1/13/13 12:05 AM, Ceratisa wrote: But that money will still be used. That is the whole problem.

And money would still be spent if the debt ceiling was just raised by Congress? Right? What's the difference?

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:44 AM Reply

At 1/13/13 12:40 AM, Feoric wrote:
At 1/13/13 12:05 AM, Ceratisa wrote: But that money will still be used. That is the whole problem.
And money would still be spent if the debt ceiling was just raised by Congress? Right? What's the difference?

The difference is the fabrication of money vs borrowing it.

Camarohusky
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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:57 AM Reply

At 1/13/13 12:05 AM, Ceratisa wrote: But that money will still be used. That is the whole problem.

The money only actually becomes inflation the minute it is used. Until then it's merely an internal number swap to tip toe around the debt ceiling (AKA "the Conservative gun to our heads")

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 01:07 AM Reply

At 1/13/13 12:57 AM, Camarohusky wrote:
At 1/13/13 12:05 AM, Ceratisa wrote: But that money will still be used. That is the whole problem.
The money only actually becomes inflation the minute it is used. Until then it's merely an internal number swap to tip toe around the debt ceiling (AKA "the Conservative gun to our heads")

But the money IS used that is the entire point.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 01:25 AM Reply

At 1/13/13 01:07 AM, Ceratisa wrote: But the money IS used that is the entire point.

Nobody is arguing that. Here's what you're missing: they're just using the money to pay for what they're already expected to pay for. It's functionally the same as raising the debt ceiling. The money does not "exist" until it is spent.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 01:55 AM Reply

At 1/13/13 01:25 AM, Feoric wrote:
At 1/13/13 01:07 AM, Ceratisa wrote: But the money IS used that is the entire point.
Nobody is arguing that. Here's what you're missing: they're just using the money to pay for what they're already expected to pay for. It's functionally the same as raising the debt ceiling. The money does not "exist" until it is spent.

It isn't the same because one involves debt and another involves trillions of dollars that go towards future spending. Debt goes somewhere. It is owed.

Feoric
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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 04:33 AM Reply

At 1/13/13 01:55 AM, Ceratisa wrote: It isn't the same because one involves debt and another involves trillions of dollars that go towards future spending. Debt goes somewhere. It is owed.

To be honest I don't really understand what you're saying here but let me start from scratch and tell me what you're seeing differently. How we go about spending the money derived from the coin option would probably cause more inflation as opposed to just simply lifting the debt ceiling by 1 trillion (the coin itself doesn't cause inflation), because the one trillion would be borrowed over the course of approximately one year instead of being issued instantly. Of course, in contrary to what the members of the funny house screech from the rooftops, we do not have an inflation problem right now, and the $1t coin isn't going to magically create one.

Moving forward, by depositing $1t into the Treasury's account when the coin is deposited to the Fed, it means the Treasury now has money to keep paying our obligations without having to issue debt, which is a good thing because the Treasury would still be prohibited from issuing any more debt (because of the debt ceiling, assuming a deal is not reached). Once Congress then goes ahead and eventually increases the debt ceiling by $1t, the Treasury would then withdraw the $1t in exchange for getting the coin back. Then they would melt down the coin and go back to financing the government the typical way, by selling bonds. The one trillion isn't injected into the economy instantly, and nothing says it has to be spent in its entirety. It's not permanent, nor is it dangerous. The coin option is effectively printing money in order to pay off our debt - to leave room for the creation of new debt.

Is it ridiculous? Absolutely, that's why I love it! What's even more ridiculous is the fact that Congress can authorize spending money and somehow not simultaneously authorize that we actually spend it, risking a global market meltdown in the process. By comparison, the coin option is sane.

Thecrazyman
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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 07:57 AM Reply

The 1 trillion dollar coin is perhaps the most ridiculous thing ever thought of, there's better ways to get the United States of America out of debt but this just isn't one of them.

One of the things they need to do is to not spend so much money on the United States Department of Education, that alone has been soaking up a LOT more then it should, over billions dollars is just too much for education.

Another thing too, this goes beyond the United States Department of Education, The No Child Left Behind Act is also a very bad idea to begin with and one of the big reasons why the school systems have gone downhill is because too many students are being put in the wrong classrooms.

That said, put the students in the right classrooms, ones they feel best with, putting them in the wrong classrooms just isn't the answer, it in fact will cause more problems then it will solve.

The United States of Department of Homeland Security in fact needs to go, a lot of people took note it's wasting our tax dollars and also brings about the reason to why the locals need to learn to govern themselves more.

The War on Drugs also did more harm then good and caused even more problems then it can solve, that too is one of the big reasons why this nation has gotten deeper into debt, this is why some people need to come to the realization that everyone takes drugs, for medical purpose or for addition purpose matters not, only thing that matters so, don't abuse drugs nuf said.

What dose all this have to do with The 1,000,000,000,000 Dollar Coin? The Coin worth that much money just doesn't make any sense and rendered the most unreasonable thing in an attempt to get this nation out of debt.

Kel-chan
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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 09:18 AM Reply

just a quick point to-

It doesn't matter if a trillion dollar coin is minted and doesn't go into circulation

The equivilent is the billions/trillions the fed has given out to countries and the bonds that other countries buy. Even if that money is not in direct circulation it still is essential money or more appropriately glorified IOUs.

This for example is why everybody is scared of china dumping US t-bills or the fed continuing do quantitative easing and buying gov't debt.

Eventually that money is going to get out when people see the value of it is zero since its not backed by any physical tangible wealth. Then the tsunami of US Tbill junk bonds will comeback to the US as massive hyperinfation as we can no longer pay debt with that money hence this stupid trillion dollar coin BS.

I'm sorry but any sane gov't (oxymoron i know) is not going to accept arbitrary revaluation of an asset when they're owed some serious geetis.

Congress should just pick up a rock and say its worth a Bajillion dollars cuz its the same damn thing

Kel-chan
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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 09:22 AM Reply

Also it should be said that the US dollar is no longer a petrodollar. Our currency is backed by our military might quite clearly and has been for atleast the past 40 years.

Don't accept our paper or trillion $ coins you have to face the wrath. Only problem is that gamble is moot when you're dealing with other superpowers that not only fund your country's debt but also manufacture all your country's products...

isn't this how the world wars started with every country being in debt to eachother and trying to beggar thy neighbor?

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 09:37 AM Reply

At 1/13/13 12:40 AM, Feoric wrote:
And money would still be spent if the debt ceiling was just raised by Congress? Right? What's the difference?

Thinking on it further, I'm now a proponent of minting the coin.

at least with the coin we won't be running up our tab with China and could end up saving billions in the long run.


I'm not crazy, everyone else is.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 11:28 AM Reply

I heard that there is only enough gold in the entire world to cover a football field, which isn't much, considering the number of people who have looked for it. There is probably at most half of that much platinum in the world. I wonder how much the value of all the platinum in the world would be? I already said the gold would equal a trillion dollars, so maybe all the platinum in the world could get us out of debt.


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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:05 PM Reply

At 1/13/13 01:07 AM, Ceratisa wrote: But the money IS used that is the entire point.

ENOUGH!!!!

Here's a lesson on infaltion, shit people.

Let's say there is 1,000 total units in circulation. Each unit is worth 1. I control the units.

I need some space on my books so I print 1000 extra units, but put them in a safe. Has there been inflation? 2000 total units - 1000 units not in circulation = 1000 units in circulation. No inflation.

Now let's say my wife feels uncomfortable about our amount of units in our bank. I take those 1000 new units from my safe and put it into hers. My wife now has 1000 units more, but those still haven't gone into circulation, leaving the value of the original thousand still at 1:1.

My wife is getting antsy and wants something shiny. She goes to the jewelry store and uses 10 of the new units to purchase shiny earrings. Now there are 1010 units for a total of 1000 Value. Each unit has lost value from 1 Value per unit to 0.99 Value per unit. Now and only now is there inflation. Let me repeat that:

Now and only now is there inflation.

So, as I said before, until the treasury spends that money outside of itself that money is not in circulation and has no effect on the value of the dollar.

Want a real world example? Diamonds. Part of the reason jewel diamonds are so damn expensive today is that there are huge (and I mean massive) stores of diamonds that are not in circulation. DeBeers is said to have enough diamonds in storage to devalue the entire world's supply by 50%. The mere existence of those diamonds doesn't effect the rarity (and thus the value) of the diamonds. The existence of diamonds in circulation dictates the rarity and value of diamonds. The same goes for money.

Camarohusky
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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:06 PM Reply

At 1/13/13 11:28 AM, Ericho wrote: so maybe all the platinum in the world could get us out of debt.

Nope. Releasing that much platinum would cause so much platinum inflation that we would not be able to get the amount of our debt.

The more platinum we released the lower the value and the less money we would get.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:36 PM Reply

At 1/13/13 09:37 AM, Korriken wrote: Thinking on it further, I'm now a proponent of minting the coin.

at least with the coin we won't be running up our tab with China and could end up saving billions in the long run.

We're not paying China anything, quite the opposite. Real interest rates are negative, they are literally paying us for the privilege to park their money into our bonds.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:37 PM Reply

At 1/13/13 12:05 PM, Camarohusky wrote:
So, as I said before, until the treasury spends that money outside of itself

Isn't that the entire point of this?
...

Feoric keeps repeating this "won't go to market" but then basically says the opposite by saying this will allow the government to pay off XYZ thing.
I must admit I don't get it. How is it not going to market if it's used to pay off 1 trillion in debts ( or whatever else )?


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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 12:47 PM Reply

At 1/13/13 12:37 PM, poxpower wrote: Feoric keeps repeating this "won't go to market" but then basically says the opposite by saying this will allow the government to pay off XYZ thing.
I must admit I don't get it. How is it not going to market if it's used to pay off 1 trillion in debts ( or whatever else )?

Think of it this way: the government is borrowing the money through the Federal Reserve as a proxy to avoid a technical spending limit imposed by Congress. The coin isn't minted for public use, it's an accounting trick. The money raised from the coin will be spent exactly the same way money would be spent if the debt ceiling is raised. It's not being used to pay off debts, it's used to pay for running the government as it normally is until a deal is reached.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 01:43 PM Reply

At 1/13/13 12:47 PM, Feoric wrote:
Think of it this way: the government is borrowing the money through the Federal Reserve as a proxy to avoid a technical spending limit imposed by Congress. The coin isn't minted for public use, it's an accounting trick. The money raised from the coin will be spent exactly the same way money would be spent if the debt ceiling is raised. It's not being used to pay off debts, it's used to pay for running the government as it normally is until a deal is reached.

But when you raise the DEBT ceiling you create more DEBT, not more money.

bewbewbewbewbebwebbwebbwbebwbew


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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 02:02 PM Reply

At 1/13/13 12:56 PM, Ceratisa wrote: It won't be minted.

Probably. I don't think there is any question that Obama really wants to work out a deal, even if it plays into the GOP's hands.

But, remember this: it is in the administration's best interest for people to believe that they would never actually mint the coin. Obama has certainly looked into the coin and invoking the 14th since he isn't a dumb man and I'm sure he realizes the important of having a fallback option if an agreement is not likely. We're still in the public posturing phase. I don't take anybody's statements on anything at face value at this point.

At 1/13/13 01:43 PM, poxpower wrote: But when you raise the DEBT ceiling you create more DEBT, not more money.

Not raising the debt ceiling prevents the Treasury from issuing and servicing t-bills, which raise cash. Cash leads to spending. Spending leads to debt. Debt leads to cash. Rinse, wash, repeat.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 02:36 PM Reply

At 1/13/13 02:02 PM, Feoric wrote:
Not raising the debt ceiling prevents the Treasury from issuing and servicing t-bills, which raise cash. Cash leads to spending. Spending leads to debt. Debt leads to cash. Rinse, wash, repeat.

You just said it PREVENTS the raising of cash. How are you equating this with RAISING CASH...??

I don't get your argument. Maybe it's because I don't know how this system works, but what you're talking about makes no sense to me. I keep re-reading your posts and have no idea what you're trying to say.

As far as I understand, if they don't raise the debt ceiling, it would mean defaulting on a lot of payments, which will devalue the US's credit /confidence rating and cause all sorts of shenanigans. But it won't increase the debt or the money supply.

If they raise the debt ceiling, it will create ( for instance ) 1 extra trillion in debt, payable in the future with interest.

If they print 1 trillion, it increases the money supply by one trillion, which they use to pay off existing debt. How is that not increasing the money supply? Isn't the point to pay for stuff RIGHT AWAY?

Sorry I am just not getting this.

As far as I understand, the only "trick" to this coin is to allow the wrong people to print money, but it's still printing money.

But I am not an expert in this at all. Just trying to understand.


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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 03:22 PM Reply

At 1/13/13 02:36 PM, poxpower wrote: You just said it PREVENTS the raising of cash. How are you equating this with RAISING CASH...??

The debt ceiling prevents the Treasury from raising cash. With the coin made, the Treasury can now do this regardless of the debt ceiling being raised on time.

As far as I understand, if they don't raise the debt ceiling, it would mean defaulting on a lot of payments, which will devalue the US's credit /confidence rating and cause all sorts of shenanigans. But it won't increase the debt or the money supply.

Correct.

If they raise the debt ceiling, it will create ( for instance ) 1 extra trillion in debt, payable in the future with interest.

The debt ceiling doesn't create the debt, it allows debt. The debt isn't created until money is spent. You can raise the debt ceiling to 400 quadrillion dollars, that doesn't mean we're 400 quadrillion dollars in debt.

If they print 1 trillion, it increases the money supply by one trillion, which they use to pay off existing debt. How is that not increasing the money supply? Isn't the point to pay for stuff RIGHT AWAY?

Not necessarily. The normal way for the Treasury to pay its bills is to sell debt (t-bills). Hitting the debt ceiling means they can't do that, so the coin gives them a route to a temporary bridging loan from the Fed. The money is not to pay existing debt, it is to pay for the operational costs of running the government. It's just an insane wacky way to technically increase the debt ceiling by bypassing Congress by using a loophole in a bill which was, ironically, passed by Congress. Let's look at how this works, both normally and under the coin option:

Normally, if the Treasury needed a hypothetical 500 billion bucks, they would sell 500 billion dollars worth of t-bills. They get their 500 billion, and spend it.

Now, let's use that same exact hypothetical situation, except they can't sell t-bills because of the debt ceiling being reached. This is how the coin would work under that scenario: the coin is minted and the Treasury borrows 500 billion dollars from the Fed. The Treasury can now spend 500 billion dollars. Eventually, the debt ceiling will be raised. This what will happen when that happens: the debt ceiling is finally lifted, so the Treasury now sells 500 billion worth of in t-bills as it normally would. The Treasury now gives the proceeds to Fed. The Treasury gets coin back and destroys it. The net result of this is that the Treasury sells $500B in T-bills, and spends $500B. Both scenarios have the same net effect of the Treasury selling $500B in T-bills and spending it. One is just more complicated than the other.

Back to the real world example, the $1T injects no money at all into the economy directly. It is essentially collateral for a temporary loan from the Fed to cover monetary needs during the crisis, sort of like a checking account. Once the crisis is over, the loan is repaid and the collateral returned. It's completely neutral, fiscally.

Sorry I am just not getting this.

As far as I understand, the only "trick" to this coin is to allow the wrong people to print money, but it's still printing money.

But I am not an expert in this at all. Just trying to understand.

Completely understood, I'll be here as long as I need to.

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Response to The 1,000,000,000,000 Dollar Coin Jan. 13th, 2013 @ 04:32 PM Reply

At 1/13/13 12:37 PM, poxpower wrote: Feoric keeps repeating this "won't go to market" but then basically says the opposite by saying this will allow the government to pay off XYZ thing.
I must admit I don't get it. How is it not going to market if it's used to pay off 1 trillion in debts ( or whatever else )?

It's the equivalent of a husband giving money to his wife in a community property state. The wife now has money on her books, but in the end, the husband and the wife are the same monetary unit. It's nothing other than a cute shifting of numbers until thecouple wants to go out and spend that money.

Also, if you look closely at the debt and see that a huge chunk of it (at least 3 trillion) is completely fake (interest owed from the US to the US), this 1 trillion coin being fake makes no difference.

It's merely internal number play and until the government actually spends the money outwardly, it never really exists.