http://nymag.com/daily/intelligencer/2013/01/simpsons-trillion-dollar-coin-bill-platinum-ceiling.html

Anyway, I’m not personally a fan, but the famous picture of Joe with the Biker Chick on his lap is honestly showing his best side, and Ruben’s really captured that pretty well.  Us Delawareans like our politicians to have a bit of the common man about them… that’s why Tom Carper dresses up like Frankenstein’s monster on Halloween and goes down to Main Street of Newark (DE not NJ) and tosses candy to little children.   I am totally not making any of that up.  He was an awesome monster, he has the build for it.

*Bwahhahahahaha

“It’s a liquidity trap!”

However, politically, Obama would instantly lose the message war, and be declared “the tax-n-spend liberal who wasted a trillion!” Even after he has cut the federal budget so far he has nothing left to appease the fascists with…

Paul Krugman is an expert in relativistic economics.

Short version answer of your specific: under the sane versions of the plan, the trillion dollars DOESN’T get injected into the economy.  A trillion more dollars EXIST, but they just sit there.  Since inflation comes about when there are too many dollars chasing too few goods, dollars that exist but don’t enter circulation don’t matter.

It’s basically business-as-usual, except instead of the Fed creating additional money, the Treasury does it, and the Fed changes tack to make sure this doesn’t result in disaster.  (The Fed creates additional money as a matter of course; a certain amount of inflation is planned in to modern currencies, to keep people from hoarding it.)

Not only that, I’m pretty convinced it’s being kept artificially low at the moment (in the UK at least). Banks are lending, people are spending, companies are hiring – and yet I still hear people follow statements with “It’s a recession don’t you know!”. Is it? Where is it? I can’t see it…

So not only do wages not increase, but my savings are still worth diddly squat – oh, and of course we’ve just gotten used to VAT being 2.5% higher as an emergency strategy. That sure is a financial crisis, but I’m not convinced it’s the same one that we had a few years back. Maybe I’m just crazy.

Yes the stock market would lose a few points if this happens because as the last five years have shown us, austerity economists and investment bankers are behaving like, and I use the technical term, “selfish crybabies”.   They favor economic policies that benefit only a shortsighted creditors view of the micro economy (which is another definition of supply side economics).  As such  they are of the opinion that social spending must be cut to the bone or eliminated entirely so that we can spend all of the money we were spending on social security on medicare on their own pet issues such as lowering taxes.

Inflation, isn’t that bad for the consumer as long as they can get increased wages*.  It really it bad for those on fixed income unless their benefits are adjusted.  Creditors hate inflation, because it devalues all of the loans they’ve made. But that same inflation allows consumers to pay back the loan easier with “cheaper” dollars. 

*since wages have not tracked with increased productivity since the late ’70s this is not a given.

It’s all theater.  The debt limit isn’t a real limit and the trillion dollar coin isn’t real money.  The fake currency cancels out the fake debt limit to allow the economy to function (?) as it did before this “crisis”.