Krugman Calls for President to Mint the Coin

(4 pm. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

Sign the petition to Mint the Coin

US Mint Platinum CoinThis past week calls by Republicans to not raise debt ceiling got little push back from the talking heads this Sunday as Senate Minority Leader Mitch McConnell made the morning rounds insinuating that it might not be so bad. Lets get something straight that the MSM village is allowing to happen here. The Republicans are conflating passing a budget bill (future spending) with making the payment on those expenditures (past spending). Those two things are NOT the same. The debt ceiling addresses the later and the consequences of even threatening to not pay US debts would have the same, if not greater, negative results as it did in 2011 when the feral children of the House held it hostage. The result of that debacle was the current sequestration bill and “fiscal cliff” crisis.

The inflation that everyone from the Federal Reserve to Wall St. wants to the one thing that would put the US in the same boat as Greece, facing increasingly higher interest rate payments. In other words the debt ceiling and the budget resolution are NOT the same and should not be treated the same.  The sequester and the budget resolution are negotiable; the debt ceiling is not.

This idea of holding the debt ceiling is in fact so dangerous to the world economy that politicians, economist and pundits are calling for President Barack Obama to act by using possibly the only legal means he may have, mint a Trillion Dollar Platinum Coin. Even New York Times columnist and economist, Paul Krugman has change his mind calling for the president to be ready to mint that coin:

Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious. [..]

It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable – if you’ve been living in a cave for the past four years.Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous – far more ridiculous than the notion of the coin.

So if the 14th amendment solution – simply declaring that the debt ceiling is unconstitutional – isn’t workable, go with the coin.

If you think that this possibility isn’t serious, consider the fact that the feral children of the House now do introducing legislation to prevent the president from minting the coin

And now a US Congressman has come out against the coin idea and is proposing a law to ban it (via Matthew O’Brien). Ironically, this action actually legitimizes the coin option. [..]

In the past, hiking the debt ceiling was pretty painless, but some in the GOP are staunchly opposed to doing it, raising the specter that the US will default on its obligations.

It’s because of this that some people are getting more excited about the “Platinum Option,” which refers to a technical loophole in the law that allows the Treasury to create platinum coins in any denomination, theoretically up to a trillion and beyond. [..]

We’ve posted his full press release below, but the key thing here is that the idea is now legitimized, as a GOP Congressman implicitly acknowledges that the coin idea is currently legal.

Note that in his press release, the Congressman uses the flawed analogy of comparing the US government to a small business. Unlike governments, small businesses can’t print money. And small businesses can’t “deficit spend,” the way governments can.

The opponents of this idea are also wrong. Josh Borrow, who writes at Bloomberg‘s The Ticker, enumerates why their arguments are all wrong and concludes:

Minting the platinum coin would be less economically damaging than any of the above options, which is why Obama should announce he will pursue it if the debt ceiling is not raised. Hopefully, inflation hawks will be so alarmed by the president’s intention to use his direct monetary authority that they will choose to cut a deal and we’ll never actually get to the minting stage.

But if Republicans call Obama’s bluff, he should be ready to mint that coin – – and to save the economy by doing so.

Sign the petition to Mint the Coin



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    • TMC on January 10, 2013 at 18:53
    • banger on January 10, 2013 at 19:05

    It was talked about last year but “everyone” dismissed the idea as being, well, kind of radical. Somehow things have changed so that now we can discuss it in the mainstream. What changed? I don’t know–but it appears to me, reading the Tea Leaves and listening to Spirit, that the “liberal” part of the neoliberal oligarchy believes that the mad “populists” on the right have had their day and now it’s time to bring them to heel and let the business of America return to business. They’ve defeated the left, cowed the “progressives” but now a new balance needs to be struck as we head towards a changeover to empowering the Jeb Bush/Chris Christie side of the Republican Party.  

    • TMC on January 10, 2013 at 23:10

    Here it is, unedited save for the added link to the statute:

    I don’t think it makes sense to think about this as some sort of “loophole” issue. Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins. First, the statute itself doesn’t set any limit on coin value. Second, other clauses of 31 USC §5112 do set such limits, but §5112(k)-dealing with platinum coins-does not. So expressio unius strengthens the inference that there isn’t any limit here.

    Of course, Congress probably didn’t have trillion-dollar coins in mind, but there’s no textual or other legal basis for importing this probable intention into the statute. What 535 people might have had in their collective “mind” just can’t control the meaning of a law this clear.

    It’s also quite clear that the minting of such a coin couldn’t be challenged; I don’t see who would have standing.

    Bottom line: This is a situation where the political and economic considerations, not the legal considerations, have to drive the decision-making about this option. It’s certainly a lot better from just about every perspective than having the nation stuck on either horn of the very real dilemma you outlined below, which I agree offers no plausible way out as long as enough leaders in Congress insist on playing Russian Roulette with our economy and risking our full faith and credit by using the debt ceiling as a bargaining chip as they are threatening to do.

  1. It’s a pathetic statement when a nation is driven to such a state that it must seek and employ whatever means possible to avert “disaster!”  Nonetheless, if this, a “platinum coin” is all there is, then it should be used period.

  2. Dear B. E.,

    You may have heard the news: President Obama announced the nomination of Jack Lew to be the next Secretary of the Treasury.

    We campaigned for Paul Krugman to be the next Treasury Secretary.

    Here’s what Krugman said about President Obama’s choice of Jack Lew in an interview with Bill Moyers:

    “The Secretary of the Treasury is not now going to be somebody who does deep thinking about the economy. There are people the president can call on for that, including outside economists, including Joe Stiglitz… including myself,” Krugman tells Bill. “What the president needs right now is a hard-nosed negotiator. And rumor has it that’s what he’s got.”

    In the interview, Moyers talks about our grassroots campaign.

    You can watch a preview of the interview here:

    Thanks again for your support of this campaign, which broke through into mainstream media!

    – Robert Naiman, Just Foreign Policy

    I knew I liked Krugman for a good reason!  

  3. paying in Martian “quatloos.”

    I think we should take them up on it while the offer stands.

  4. The Treasury and the Fed want no part of a $1 trillion platinum coin in order to prevent the consequences of possibly going over the fake fiscal cliff!

    By Steve Holland

    WASHINGTON | Sat Jan 12, 2013 6:09pm EST

    (Reuters) – So much for the $1 trillion platinum coin idea.

    The U.S. Treasury Department said on Saturday it will not produce platinum coins as a way of generating $1 trillion in revenue and avoiding a battle in Congress over raising the U.S. debt ceiling. . . .

    Read more here!

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