Your daily jolt: Defuse the next debt debate with a pair of trillion-dollar coins

You know we have another debt-ceiling debate coming up. The last one resulted the “fiscal cliff” we’re still struggling with. Republican threats to block it are already in the air.

But some economists are advocating an odd tactic to defuse any impasse: two $1 trillion-dollar coins. From the Washington Post:

Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

“I like it,” said Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

***
At a gathering of 200 national immigration leaders this week sponsored by the U.S. Conference of Catholic Bishops, Atlanta Archbishop Wilton Gregory offered Republicans some advice on immigration reform. From the Georgia Bulletin:

The bishops “will resist” any proposal that offers undocumented persons legal status without a path to become citizens, he said in a keynote address.

***
You remember that vow by national Republicans to ditch Todd Akin’s U.S. Senate campaign after his “legitimate rape” remark? It didn’t take. From USA Today:

New campaign finance filings show that the National Republican Senatorial Committee sent $360,000 to the Missouri Republican Party’s federal campaign committee on Nov. 1. And the NRSC — which is charged with electing GOP candidates to the Senate — sent another $400,000 on Nov. 2.

***
Chamber executive Brandon Beach has scheduled his first fund-raiser in the rapid-fire Senate race to replace Chip Rogers. It will be next Thursday at the Olde Blind Dog Irish Pub in Milton. The headliner will be Lt. Gov. Casey Cagle. Attendees are asked to send $250 checks to Denise Deal, daughter-in-law of Gov. Nathan Deal. This is known as covering your bases.

Long-time GOP activist Brian Laurens announced last night that he, too, will run for the House seat being vacated by state Rep. Sean Jerguson of Woodstock. Jerguson, like Beach, is running for Senate District 21. Also in the race for House District 21: Scott Turner, who was defeated by Jerguson in the July GOP primary.

We’re hearing that Republican Mike Keown, the former state House member and 2010 congressional candidate, is considering running for Senate District 11, vacated on Thursday by blue jean-wearing state Sen. John Bulloch, R-Ochlocknee.

- By Jim Galloway, Political Insider

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15 comments Add your comment

rukidding

December 7th, 2012
9:41 am

Brian Laurens is a joke

Jon Lester

December 7th, 2012
9:55 am

Why only 2 coins? Why not 16?

Don't Tread

December 7th, 2012
10:23 am

I like it, said Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

And this guy works at the Peterson Institute for International Economics? He was obviously NOT hired based on merit. Did 0bama appoint him?

If you’re going to do that, why bother with platinum (or any other metal)? Just print some trillion-dollar bills, deposit them in the treasury, and we have an instant surplus! What an incredible idea!

George Chidi

December 7th, 2012
10:35 am

You can’t print the bills because there’s a law against it. The platinum coin bit is a quirk; the law explicitly allows the Treasury to mint platinum coins in any denomination the Secretary would like.

Whoops.

jaypat

December 7th, 2012
10:39 am

Constitutionally, the power to “coin money, regulate the value thereof and of foreign coin” resides in the Congress, not the Executive branch, of which the Treasury department is a part. (See US Constitution, Article 1, Section 8, clause 5.)

Apparently this is one of the least understood–yet most important–aspects of life. If people knew that the way money is created is simply by entering some numbers into a computer, we’d all be better off for it.

The entire monetary system is just a spreadsheet, with debits on one side and credits on the other.

Don't Tread

December 7th, 2012
10:40 am

Well since 0bama apparently can pick and choose which laws he wants to enforce, he can just not enforce that one. Problem solved. Woohoo! Instant prosperity for everyone!

George Chidi

December 7th, 2012
10:42 am

And if Obama is clever, he’ll mint a prototype coin right now, with Boehner’s face on one side and the Treasury building on the other.

George Chidi

December 7th, 2012
10:45 am

You’re right, Jaypat. The power resides in Congress. And this is how they have exercised it, right here in 31 USC § 5112 “Denominations, specifications, and design of coins.” Note section (k):

“The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

That’s the law as written right now. There are specific limits in this statute on paper currency, and of coinage of other metals. Platinum is an exception. By law.

Congress can exercise its power to change this law, of course. Assuming it can get a change through the Democratically-held Senate …

George Chidi

December 7th, 2012
10:54 am

It won’t be trillion dollar coins, of course. They’ll mint 2,000 $1 billion coins. It serves the same purpose and allows for a finer-grade adjustment.

Ostrich Racer

December 7th, 2012
11:00 am

Instant inflation. Oy.

red herring

December 7th, 2012
11:09 am

i wouldn’t doubt that obama and the chicago crew would actually try some crap like minting their own trillion dollar coins. after all they minted a health care plan that we can’t pay for. they print money so they can buy our own debt and nobody sees the danger in all that. we are half way down a greasy slope (not slippery) and going way too fast to keep from going down the tubes…at least those receiving all the govt. benefits are doing well in obama’s recovery summers–all 4 of them so far.

George Chidi

December 7th, 2012
11:13 am

It’s legal, red herring. It represents a shift in power over debt issuance from Congress to the executive, but the economic mechanics remain the same. Right now, Treasury issues debt in the form of bonds, and 80 percent of that debt of late is being bought by the US Fed. The treasury takes the money from the Fed and buys stuff.

The same thing would happen with the coins.

WAW

December 7th, 2012
11:28 am

The only time in history that the United States has been debt free was under Andrew Jackson who used similar methods to release the banker’s hold on the country. “We fired our guns and the bankers kept a running”. Not much difference in this and war on the Visa card (recent history, pun intended).

East Cobb RINO, Inc. (LLC)

December 7th, 2012
11:32 am

Senate District 21, House District 21………. Agenda 21. Now it all makes sense.

jaypat

December 7th, 2012
8:51 pm

It may seem counterintuitive, but every time in US history that the budget has been balanced [or in the case of Andrew Jackson, nearly eliminated (all but $40,000)], either a recession or a depression has always followed.

That is because it is new money that allows the economy to grow. [This is true whether the US is on a "hard money" standard (paper convertible to some specific quantity of a metal) or on a "soft currency" model.]

All those people who went around the US a couple of years ago predicting the imminent rise of inflation, the fall of the value of the dollar, a rise in interest rates and a somewhat mysterious condition they called “crowding out” (there would be no money available fo’ the po’ folks because the gummint done borrowed it all up) have been proven conclusively wrong.

I hope we can move beyond that now.