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Could he mint a $1 trillion platinum coin?
Having a statutory debt limit is silly. Maybe it's time for an equally silly solution to the problem?
The idea of having the Treasury mint a $1 trillion platinum coin has been floating around for a while -- there's even a We The People petition supporting it at the White House website -- and Josh Barro is the latest to promote its merits.
I'm glad to see Representative Jerrold Nadler lending his support to the idea that PresidentBarack Obama should avert a debt-limit crisis by issuing large-denomination platinum coins, as permitted by 31 USC § 5112.
In case you're not familiar with this idea: In general, the Treasury Department is not allowed to just print money if it feels like it. It must defer to the Federal Reserve's control of the money supply. But there is an exception: Platinum coins may be struck with whatever specifications the Treasury secretary sees fit, including denomination.
This law was intended to allow the production of commemorative coins for collectors. But it can also be used to create large-denomination coins that Treasury can deposit with the Fed to finance payment of the government's bills, in lieu of issuing debt.
This is admittedly hard to take seriously, but federal law does empower the Secretary of the Treasury to "mint and issue platinum bullion coins and proof platinum coins," which at the Secretary's "discretion," may be "prescribed from time to time."
This gave some creative folks an idea for how to resolve a debt-ceiling crisis: if Congress won't allow the White House to borrow money to finance Congress' spending, the White House could instead have Tim Geithner (or his successor) mint a platinum coin (or a series of coins), in unlimited quantities, to pay the government's bills.
Or so the argument goes.
Barro added that the White House would worry about inflation, so the new coins would come with a pledge to "have the Treasury issue enough bonds to buy back all the newly issued currency as soon as it is allowed to do so," along with an offer "to sign a bill revoking his authority to issue platinum coins -- so long as that bill also abolishes the debt ceiling."
Obviously, this is a gimmick, and no way for a 21st century superpower to deal with its finances. Then again, the idea of the legislative branch refusing to allow a debt-ceiling increase to pay for spending its already spent is also no way for a 21st century superpower to deal with its finances.
Keep in mind, Congress is putting the president in an awkward legal position. On the one hand, the White House is obligated to follow the law that creates the debt ceiling. On the other, the White House is also legally obligated to protect the full faith and credit of the United States.
In other words, in two months, President Obama can't pay the government's bills, and he can't not pay the government's bills. The mind-numbing dilemma leads to desperate ploys, such as calls for platinum coins.
And as Brad Plumer explained a year and a half ago, this gimmick at least has the benefit of simplicity: "[T]he Mint makes a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Federal Reserve moves this money into Treasury's accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations in the near term without issuing new debt. If the Fed was worried about all that newly created money being pumped into circulation, it could always counteract the inflationary effects by selling off the $2 trillion in securities it owns from quantitative easing (thereby taking an equivalent amount of money back out of the economy)."
Is the gambit really legal? Opinions vary, though Kevin Drum argues persuasively that the plan wouldn't stand up in court and shouldn't be taken seriously.
But the fact that this is even a topic of conversation reinforces what is plainly true: radicalized congressional Republicans sure have made a mess of things.
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I'll only buy one if Glenn Beck tells me too
The government can make and sell high quality diamonds. The government does own the resources.
Right...
As if the value of the platinum would ever exceed the $1 Trillion face value... or you'd ever have the $1 Trillion in the first place...
However, if you wanted to make money on it, you could stamp out replica $1 Trillion coins, platinum-clad, and make a mint selling them to idiot 'collectors' for $50 a pop...
/snark
Let's tell our debtors "we will ""work"" off the money owed". And send in the army. Build stuff. Does it have to be payment "in kind"?
The Chinese would get a big "chuckle" out of that.
I suppose while it may sound silly - we are dealing with silly, over-grown, unreasonable, unknowledgeable children and WE can't allow them to further erode "the FULL FAITH & CREDIT" of our government thereby hurting US - so go for it Mr. President!
14th Amendment, Section 4...
President Obama, falter not in fear,
For we reflect the ideals you espouse.
Your foolish feckless foes don't want to hear
"You have our full support" in deafened House.
You know, full well, that you possess the right,
The duty to extend expended debt.
Though former leaders failed us in foresight,
Your duty lies in paying charges set.
The Taxed-Enough-Already Party hates
The fact that you were chosen to lead this land.
They refuse to care for these United States,
For "united"'s a concept they can't understand.
Invoke the 14th to avoid default,
And don't give in to TEA Party assault.
OR the president could just borrow the money and tell the Republicans "sue me" and let SCOTUS determine if the Consitution trumps a law written in the 1930s. It ought to be fun watching the strict Constitutionalists argue that the Constitution is just a "Godamn piece of paper" like Bush did.
In other words, in two months, President Obama can't pay the government's bills, and he can't not pay the government's bills. The mind-numbing dilemma leads to desperate ploys, such as calls for platinum coins.
Mr. Benen - your observation keenly lends itself to the fact that because of such a dilemma Congress has historically raised the debt ceiling without any partisan controversy.
Call all your loved ones, friends and neighbors and educate them to how these Congressional Republicans are bushwhacking our nation! If the Republican brand takes up this extreme hostage taking so recklessly, they had better batten down the hatches on their gerrymandered Congressional districts cause there shan't be any Republicans re elected to the Senate in the next election cycle!
Talk about painting yourself into a corner, barefooted - Why do these bums hate America? -Kevo
"Why do these bums hate America?"
I don't think they hate America. I think they believe they are saving America.
They will not listen to anyone who tries to convince them that what they want is bad for America. Because those are the very people who are trying to destroy the America they love.
Hofstadter on the pseudo-conservative (i.e. what is today's movement conservative)
"It can most accurately be called pseudo-conservative -- I borrow the term from the study of The Authoritarian Personality published five years ago by Theodore W. Adorno and his associates -- because its exponents, although they believe themselves to be conservatives and usually employ the
rhetoric of conservatism, show signs of a serious and restless dissatisfaction with American life, traditions and institutions"
“Their political reactions express rather a profound and largely unconscious hatred of our society and its ways -- a hatred which one would hesitate to impute to them if one did not have suggestive clinical evidence ... The pseudo-conservative, Adorno writes, shows 'conventionality and authoritarian submissiveness' in his conscious thinking and 'violence, anarchic impulses, and chaotic destructiveness in the unconscious sphere…… The pseudo conservative is a man who, in the name of upholding traditional American values and institutions and defending them against more or less fictitious dangers, consciously or unconsciously aims at their abolition.'"
The whole situation brings to mind what Abraham Lincoln said in 1860, about secessionists who blamed the critics of slavery for the looming civil war: “A highwayman holds a pistol to my ear, and mutters through his teeth, ‘‘Stand and deliver, or I shall kill you, and then you will be a murderer!’’
I'm a fan of trillion dollar coins. And 14th Amendments. And spine implantations in Democrats.
The latter would have an especially beneficial impact on good governance. Most specifically, when it comes to legislation protecting the middle class.
Yes, indeed. We wouldn't be where we are today if Democrats had spines over the last 20 years.
Interesting idea, but I still think the best solution is to blanket the airwaves with the truth. Find a catchy way to say that the money's been spent (by Congress, BTW) and now this is just the bill come due for prior approvals. And add that Congress holding up payment is deliberate and sinister deception of the American public by these elected officials. Shame 'em into cooperating!
Good luck with that. The President has to make it known there will be no negotiation. Force the issue. Make every American know what the deal is and what the Republicans are doing. The onus is on the President to take the Republicans on.
I agree, Disgusted. It's not for MSNBC or TRMS to do, because it wouldn't reach the necessary audience. This is White House messaging, for sure.
The onus should be on the media to call out liars, and or on the civil courts to sue people for lying in public.
Yes, absolutely, JL. Time for Obama to lead. Only he can do it. He has the position, the power, and the responsibility.
Unfortunately, Luz, the media does not perform it societal function and responsibilities. They are a major reason for the problems for the country. We wouldn't be in this sorry state of affairs if we had a responsible media. We don't. The President is the only person, the only institution that can act on this.
and he can't do that without the media's support, hence he has to go out on the trail to every podunk town just so that newspaper will finally report the truth.
All the Republicans calling for limiting "Presidential power" to increase the debt need lessons in constitutional law: only CONGRESS can provide money and "increase the debt." But of course that would mean these morons would have to learn how the government and the constitution actually work, something they have never done since they were all the ones snoring in the back of class during the part about "how a bill becomes a law."
@Luz: The media *has* to cover what the President says. The President has to use that. If we ever get to the point the media doesn't cover what the President says, the country is dead.
@TCinLA: They know how it works TCinLA. Very well. They are trying to break it. And they're doing a good job of it and with a lot of assistance from the AlmostRepublican party.
Looks like Obama needs to unleash the Big Dog, the Secretary of Explaining Things, once again. Will Faux News give any coverage to a Bill Clinton speech, if he were to give one? Hopefully we will find out.
As far as the Trillion Dollar coin or going 14th amendment, threaten it often and loudly while you reiterate that the debt ceiling will be non-negotiable.
Obama would have to go to repuke districts to apply the most pressure, and that is at the very real risk of his life.
He has the state of the union speech coming up in which he can be on TV telling the repukes that anyone who thinks he has a "credit card" is a lying stupid d-bag.
If I'm not mistaken, there will be a SOTU address between now and the debt ceiling fight. Perfect platform for Obama to lay it out for the country.
I would suggest it even easier to just print money and control inflation. One of the big upsides to this is no longer having to collect taxes. Control inflation by laws that allow the rich to ONLY spend money on themselves or on ventures that would create new jobs. Use the rich as a "sink" to get rid of circulating moneys, let them fill their basements with hundred dollar bills. Anytime anyone wants to spend over a million, they would have to explain what for. Any stock purchases would have to be held for 6 months.
Socialize resources (already done), energy, some banking, higher education (pay people to go to college, putting millions of people to work), decentralize industry,,,. This is essentially what we would do in an eminent emergency/war anyway
We would be saying that someone's labor is worth money and print money to pay for it accordingly, putting everyone to work. And yes Pepsi will end up with all the money, BUT not be able to spend it.
All countries would do it and they would police each other to keep their currencies strong.
Isn't there a "School House Rock" episode that speaks to the Congressional Spending Authority?
Methinks it's time to send them a copy.
I'd suggest that Kevin Drum's "persuasive" argument against it is hardly so. It's an assertion that the courts wouldn't read the actual text of the law so much as create an interpretation of intent and rule based on said intent. There's a (huge) loophole in the law as it is and no one really disputes that. That congress passed a law that allows for unintended uses isn't really novel; it happens all of the time (note how many people/corps aren't in court/prison over abuse of technicalities in tax laws).
Anyway, the supreme court hardly works in a vacuum, so if the decision were either:
1) Rule that the text of the law does indeed allow this, though it's application is a bit different than was intended.
2) Rule that the intent of the law was different, though that ruling would likely cause immediate grievous damage to the US and work economies.
I'd suspect that they'd lean toward 2) (or more likely they'd find reason to not rule such as not finding "standing" or some such).
...that the plan wouldn't stand up in court...
So, who's going to sue? The House? Boehner? The GOP? Whatever...Go for it. If the GOP is nervous about the talking filibuster demonstrating what charlatans they are, they should be doubly nervous about spending the taxpayers money on a lawsuit to not pay what they've already spent.
I am for this idea...sick of Republican intransigence.
Why isn't MSM shouting this all over the place? Fine, it's all owned by rich moguls. But, if the country defaults, their fortunes aren't going to be worth squat. Surely they realize this. When the world switches to the Chinese Yuan as the default currency (which I would if this goes as badly as repubs are hinting), their fortunes won't be worth nearly as much either. I only hope they gag the beast in time..
I thhink thhe rich make money whhether thhe economy goes up or down, and these very obvious "down-turns" are gold mines for traders/speculators. "Thhey are @!$%#ing on trillions of dollars and, in thheir own interest, thhey shhould? not want it to be devalued/inflation. Thhis, thhough is a gambit.
a HHuey quote..
....lightbulb!
Exactly Jitter , what is fiction , is what mcconell is presenting , as the maddow blog pointed out earlier
It does not matter if it holds up in court , it will already be done by then , that's how a president with balls LEADS , it can even be sold as a national security move , which the ussc gives a full pass to every time , unfortunately obama governs like a patsy , so he will not do it , because it will hurt the gop's feelings
Yes, I favor the 14th Amendment authority, and the platinum coin, and - MOST OF ALL - President Obama standing by his stated intention not to negotiate on the debt limit issue. The problem is that Obama has drawn a firm line in the sand in past challenges, and then scuffed it out with his shoe. If the President stands firm on his 14th Amendment obligation, issues a platinum coin as a shiny object to enrage the right wing, and stays firm on not negotiating the debt ceiling with Congress, he can just pay the bills owed without theatrics. Congressional Republicans can whoop and holler, but their only real weapon is to impeach him. If anyone mounts a legal challenge, the courts will probably uphold the 14th Amendment over the debt-ceiling law, and cite standing to duck the platinum coin business.
In my estimation, the wild card is Tim Geithner. I don't have direct information, but Geithner is the most likely candidate to counsel the President to back down. If he's gone, I have more confidence in the Obama instincts. Oh, and the most likely long-term effect, besides putting the "debt ceiling" to eternal rest, is that Democrats will have a stronger chance of winning the House of Representatives in 2014.
There are innumerable good reasons to push Geithner out the door. This is just one more.
he can just pay the bills owed without theatrics
Um..don't you think minting a Trillion $ platinum coin is a LOT of theatrics?
No. Obama stepping out of The Beast in front of the Fed and idly flipping the coin as he strode up the steps with the media in tow to make the deposit would be theatrics. And funny as hell.
I'm getting ready to post the comment below on my Facebook page. If any of this is incorrect, let me know before I publish it. And you're all welcome [hint-hint] to copy and paste it yourself. The more eyeballs on this the better. ;-)
It's correct.
You can't say, "I'm not going to pay the Visa bill this month," and neither can the government
Yes you can. People do it everday.
One can make the Minimum Payment Due, but then, what is carried over to the next payment has more interest slapped on it, plus any new purchases...
This, of course, is what we've been doing since Eisenhower...
And when people decide not to pay the bill often enough, their credit gets downgraded (again), and everything from insurance to borrowing money to utilities can cost them more, because the creditors are no longer as certain they're going to pay the bill. Our debt is high enough that if our credit gets downgraded again and interest rates on it rise, we are going to have a LOT of interest payments.
Not without consequences Skip.
Do it !!!!........Don't mess with the fools just mint the coin.Worry about the legal stuff after or re-purpose the law; the Bush admin did it for torture why not for this.Nobody went to jail for torture.
"Time for a $1 trillion platinum coin?"
No. It's time for SEVERAL $1 trillion platinum coins. Then we can put an end to this ridiculous debate for a good long time.
Yeah,why not? There aren't many people out there - including a lot in government - who do not take all this seriously. It's all play money to them, so why not add some more play money into the mix. Then, sometime in the future some magic will happen and all this will just go away without any real sacrifice.
downer man,,
But yeah,, the world will have some kind of huge disaster (in the next 10 years), and yeah it will all go away.. Be nice/smart if we planned a little for said disasters. A big chunk of Hawaii is going to fall into the ocean (bad for shipping and LA). t
There are how many other potential huge landslide/tsunamis (40)? Which is about the same number for potential candidates for creating volcanic winters? How about that asteroid that almost hit us a few months ago,, that they didn't see coming?
Conquering space would be the funnest thing to throw money at..
THE FACES OF AMERICAN WOMEN - PLATINUM TRILLION!
One side would be a likeness of Rachel Maddow, the reverse Paris Hilton, sort of like la Madeline in France!
I favor platinum nose rings for bankers so that congressmen can lead the bankers around by the nose for awhile. Turnabout is fair play.
This sounds dumb but the 14th amendment idea is fine I think the president would win in the supreme court if it ever got that far . He could raise the debt ceiling to whatever figure he likes or abolish it entirely I think the 4 justices that typically side with him plus Roberts would want to wreck the full faith and credit of the Us and its possible Scalia on a literal interpretation(its pretty clear) and possibly even unanimous...
Judging by his actions, I do not think Barack Obama fears this fight (speaking of the "debt ceiling") the way he might have in 2011.
Point of fact, I think he's spoiling for a fight to knock out what the right-wing sees as a weapon before they get entrenched with it (a "pre-emptive strike" so to speak).
Now, I don't know if he'll do this far out thing, personally -- being a Constitutional Lawyer -- I see the President simply issuing an Executive Order for more Bonds to be sold and declare the entire "debt ceiling" as Un-Constitutional, challenging Republicans to take him to Court if they disagree (i.e. -- taking the law out of the hands of a handful of radical Republicans in the House and taking his chances with the Supreme Court).
Considering their ruling in regards to the Healthcare bill, I don't anyone can truly predict how the Supreme Court might rule on such an issue (while Democrats certainly aren't prepared to call John Roberts "Amigo!" just yet /s, Republicans sure aren't mouthy like they were either, so one has to think they also have their doubts that he would have their back).
Why stop at a trillion, make 15 of them and hey, national debt is gone! (Yes I know that would totally wreck the world economy, but it could be fun just to see the look on China's face. "Here you go.")
Reminds me of an old Jeff Foxworthy joke, speaking to being the rears paying his car loan --
"No I don't have any money!"
"Well, Mr. Foxworthy could you write a check".
"Oh co...wait...a check! SURE! Here, hell, I'll just pay the whole thing off!"
China only owns $1.16T of our debt. Get that right wing talking point out of your brain.
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
Who Actually Holds The American Debt? WE DO!
The largest holders of the American Debt are the Federal Reserve, the Medicare Trust Fund and the three Social Security Trust Funds - Old Age, Disability and Survivor's... Private holders of Treasury Bonds and Savings Bonds are in there, too...
Do you really think those Funds would voluntarily bankrupt the nation?...
The only way they could - or would - is if those funds are privatized and run by financial managers on Wall Street, who would liquidate as much as they can, as fast as they can, to get more cash to gamble with...
Which is the ultimate plan of the Republican and TEA Parties...
I know where there is a platinum mine in MT if he needs the raw materials for his coin.
It's merely as silly as allowing the credit rating of the United States of America to become a pawn.
I vote for a Roosevelt on the obverse. Perhaps Teddy charging up San Juan hill rather than a bust to make it unique or make that the reverse.
I'm liking this. In the spirit of bipartisanship have Teddy the progressive republican on one side and FDR the Democrat who saved us from the laissez faire republican trio Harding/Coolidge/Hoover on the other.
You could have FDR in the car with Hoover as an option. You know, the "yeah, you're not talking to me 'cause I've gotta bail your a$$ out" pic http://memory.loc.gov/service/pnp/ppmsc/02800/02895r.jpg
OT: I saw a debate with Robert Reich vs. Art Laffer last night. Reich had a wonderful zinger. "There were two years in the last hundred years where income inequality hit an all-time high. One was 1928, the other 2007. What did those two years have in common?" Reich and his partner crushed Laffer and his partner according to the debate hall audience poll.
A few years ago Zimbawe issued 10, 20, 50 and 100 Trillion dollar bills, so we would not be the first country to offer denominations in the Trillions. :)
Also, gold is currently worth more per ounce than platinum on the spot market so maybe it should just be in gold. Either way it would be pretty funny since a one ounce gold coin with a denomination of $50 is worth $1,660 roughly ...BUT our "new" Platinum coin - if it is an ounce - would have a denomination of $1,000,000,000,000,000 would be worth $1,560.
The Obama administration has already done this on a smaller scale by transferring a billion unusable one dollar coins to the Federal Reserve. Thus, the path is made for a trillion dollar coin.
http://www.npr.org/2011/06/28/137394348/-1-billion-that-nobody-wants