tiredstars t1_j28cvld wrote
First thing: this only works if your debt is denominated in your own currency. In other words, if you're the US and your debt is in US dollars, you can do this. If you're Argentina and your debt is in US dollars then you definitely can't mint a billion US dollar coin to pay it off.
>Presumably, because there's only 6 of them and they are taken out of the economy instantly, they wouldn't hyperinflate the currency?
There's the trick. Why do you say this money is taken out of the economy instantly? Let say the government owes me $1 billion and gives me one of these coins to pay off that debt. I'm not going to want to keep that coin locked away, I'm going to want to spend or invest it!
Derikoopa OP t1_j28dh1b wrote
I hadn't considered international currencies. Perhaps you could mint your own country's currency according to the exchange rate?
I will say you've got me regarding the economy. I suppose I was thinking of debt as a human being, that if we are all in debt, then we all have negative money. Therefore, once the coin had been sent to the central bank, it would just kinda.... exist or something xP
tiredstars t1_j28fuwq wrote
The problem with that first plan is that exchange rates aren't fixed. Generally the more money you print, the lower your exchange rate will go.
tiredstars t1_j28iypj wrote
Also it is possible for the government to create this money, then take it out of circulation. It produces a billion dollar coin, and then raises taxes (but not spending) by a billion dollars.
Of course, if you pay me $1bn for my debt, then immediately hit me with a $1bn tax, I'm not going to be very happy.
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