Krugman: Be Ready To Mint That Coin

[ProSense]

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.

For those new to this, here’s the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.

And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all...So if the 14th amendment solution — simply declaring that the debt ceiling is unconstitutional — isn’t workable, go with the coin.

- more -

http://krugman.blogs.nytimes.com/2013/01/07/be-ready-to-mint-that-coin/

[RomneyLies]

1. I hope the design is ready to go, he only needs to mint a couple or three.

When the debt ceiling is raised, borrow the money, buy back the coins, and lock them up in Ft. Knox until the next time the idiots in Congress hold the economy hostage.

[TeamPooka]

33. the design should be Obama giving Congress (or Boehner) the finger

because the GOP Congress deserves it.

[RomneyLies]

43. I still say it should have Ronald Reaga's face on it

But a hand flipping the bird on the obverse side would be nice.

[Liberalynn]

49. I vote for Reagan's face too.

[RomneyLies]

50. The scene of the Boston Tea Party on the back might be most appropriate, though.

[Liberalynn]

73. Kind of a wink and a nod to those really responsible

I like it!

[Cha]

70. lol..

yeah, let the Coin reflect the times. rofl The teabaggers deserve all the derision they get.

[unblock]

2. why even bother with the 14th amendment?

at a minimum, the 14th amendment path requires a protracted legal dispute and and conceivably a rationalization for impeachment.

minting the trillion dollar coin is pretty clear-cut in its legality and arguably is exactly what congress is "ordering" the president to do if it authorizes spending and refuses to authorize more debt -- the logical solution is simply to print more money, or in this case, mint more money.

[paulkienitz]

16. congress could close the coin loophole at any time

so the constitutional fight is what's needed long term.

[unblock]

18. obama would veto it.

but i agree that if republicans can manage to get both houses of congress and the white house, they could pass a law preventing the trillion-dollar coin solution.

on the other hand, i don't see the 14th amendment as helping much. it lets treasury pay existing debt but not raise new debt. so perhaps it buys some time but not much. eventually we can't have to issue new debt and then what?

[ewagner]

3. "Game it out"

I'm not being flippant but I think that's what has been done in the White House but I haven't seen it done here.

What I'm talking about is "gaming out" the possible moves for each scenario. I'm particularly interested in the two mentioned by Krugman: minting the coin and the 14th amendment solutions.

The White House has already said that they won't use the 14th amendment solution which makes me believe they gamed it out and found a dead end or higher-than-acceptable risk element in it. I'm suspecting that "the game" would go something like this:

President announces that debt ceiling is unconstitutional
President orders borrowing of $$$
Repubs file suit against the President
Repubs seek restraining order
Repubs file articles of impeachment
Law suit and impeachment drag through court system
Impeachment moves faster
crisis ensues
Country Credit rating goes down
Interest rates go up
Impeachment dies in Senate
Supreme Court assumes jurisdiction
Supreme Court rules ??????????

All in all...not a pretty scenario. If anybody believes the House Repubs would sit back and accept a declaration by the President that the Debt Ceiling was unconstitutional, they don't know how these nut cases are.

Have they done the same with the minting-the-coin scenario? Are they even taking it seriously?

Your comments are solicited.

[notadmblnd]

57. Wouldn't the SC have to declare the debt ceiling unconstitutional?

Not the President?

[ewagner]

72. The way I saw it happening

...was that the President had to create a "cause of action" that someone else filed suit on...that suit would work it's way through the courts...and yes, the Supreme Court would eventually decide upon the constitutionality of the question/cause of action.

[banned from Kos]

4. The Fed might not take this coin "on deposit".

The Fed alone decides how much money goes into circulation.

[unblock]

20. it doesn't go into circulation

and i can't see any fed, certainly not one headed by bernanke, accepting default over accepting a trillion-dollar coin legally minted.

keep in mind that this is a fed that routinely creates money out of thin air.

[banned from Kos]

24. The money created out of "thin air" buys real assets like Treasuries

or MBS.

This silly coin is nothing but $80 worth of metal.

[unblock]

25. those real assets at best but produce legal tender

which is no more or less silly than the trilliion-dollar coin.

how is a trillion dollars worth of cash produced through treasuries or mbs and better than a trillion-dollars worth of cash produced by minting it? yes, effectively it increases the money supply but that's really what congress does when it authorizes the spending in the first place.

[banned from Kos]

28. The thin air money is backed by real assets and

the trillion dollar coin is not. They sell the assets later to retire the thin air money. Poof! It leaves just as easily as it was created.

Only the Fed can increase the money supply anyway.

[unblock]

40. real assets that are backed by... money minted/printed by treasury.

there's nothing fundamentally different about a $10 bill or a nickel or a trillion-dollar coin.

it's all backed by nothing more or less than the full faith and credit of the federal government.

which is the same thing that is legal tender for retiring all those real assets.

[TeamPooka]

34. a coin that is legal tender IS legal tender.

it does not matter how much the metal is worth.
The costs to make a penny are more than a penny.
We make $10 coins with $1600 of gold in it so your argument is baseless.

[TwilightGardener]

5. Anyone else think it's funny that you can just make yourself a trillion-dollar coin?

I don't know why, this just cracks me up.

[RomneyLies]

8. The law was passed during Clinton's administration

and Treasury opposed it being passed because it was so poorly worded and gave vast power to the Treasury Secretary.

[Cha]

71. Yep..

it's weird.

[slackmaster]

6. That would be a nightmare for cashiers everywhere

Just as much of a hassle as $1 coins and $2 bills.

[TwilightGardener]

9. Yes. Also a nightmare if you wanted a Mountain Dew out of the machine

and all you had was this stupid trillion dollar coin.

[slackmaster]

10. Those things always give change in Susan B. Anthony or Sacajawea dollar coins

[Jeff In Milwaukee]

12. BREAKING: Man buried under mountain of dollar coins (nt)

[TeamPooka]

35. lol

[Buns_of_Fire]

26. Imagine going to the local 7-11 and buying a Moon Pie and an RC Cola with it!

Lord, they look at me strangely enough when I do it with a couple of Sacajewea dollars...

Of course, this is all hypothetical. It would have fallen out of my pocket and gotten lost in the cushions of the couch LONG before I'd have a chance to spend it.

[SpartanDem]

7. Don't even bother with the 14th, it's legally dubious at best.

But here is you have a clear loophole that you can drive a Mack truck through.

[Ganja Ninja]

11. Put the image of Ronald Reagan on one side and ...

the Boston Tea Party on the other.

[Brother Buzz]

36. Word!

[harun]

42. +1

[Jeff In Milwaukee]

13. They should mint two of them

And Obama should buy a pair of loafers...

Shoes so expensive even my wife wouldn't buy them!

[Nye Bevan]

22. What a feeling.......

just to walk around the Oval Office a couple of times with a couple of trillion dollar coins jingling in your pocket!

[Jeff In Milwaukee]

39. Absolutely

I was in Mexico several years ago, and the exchange rate was such that a $100 travellers check converted to 250,000 pesos. I told my wife, "I don't care if it IS worthless, having a quarter million in ANYBODY'S currency feels awesome!

[Yavin4]

14. Anybody Got Change for the Soda Machine? n/t

[lumberjack_jeff]

15. It may be benign... once.

If it becomes a practice, it is not. Alternatively, he could print one million, million-dollar coins. This is big money, and it adds to the money supply even if it's not in circulation.

[foxtrotzulu]

17. Default talk is rubbish. No coin needed

The US Government is not in any danger of default. Income is (approx.) 200 billion/month. Debt service is (approx) 35 billion/month. There is no need to mint a special coin and create a false crisis to service the debt.

Yes, we would have a 114 billion/month short-fall. Yes, some tough choices would need to be made about what parts of government to stop funding. But there is no real danger of default.

[Nye Bevan]

23. Paul Krugman won the Nobel Prize for Economics and he seems to think that one may be needed.

What are your economic credentials?

[AgingAmerican]

32. It would be horrifically stupid.

Last edited Tue Jan 8, 2013, 12:13 AM - Edit history (1)

It could easily trigger global economic collapse. There would be a worldwide run on T bills, which are heavily used as collateral in world financial markets. That's just one of the side effects.

[TeamPooka]

37. maybe you should trot back to fox zulu.....

Welcome to DU

[AgingAmerican]

64. [phone]

n/t

[TeamPooka]

67. :)

[moondust]

19. Republican lips are watering!

Mmmmmm, trillion dollar coin! Richer faster! Richer faster! Richer faster! Richer faster!

[Nye Bevan]

21. Normally, I would argue against such sneaky shenanigans.

But the Congressional Republicans are not normal. They are reckless, scary people who are more than prepared to hold the country to ransom, wreck our credit rating, and sabotage the economy, just to score some cheap political points against President Obama and ingratiate themselves with the Tea Party morons.

So yes, mint it. Also, I am looking forward to seeing whose face will be on it. And I am also looking forward to the inevitable Hollywood movie in which Ben Stiller tries to steal it.

[bongbong]

27. Ben Stiller?

I would prefer "Oceans 1 Trillion"

[marble falls]

29. I agree. They should mint it for $1,000,000,000,000.03.

[dragonlady]

30. Whose face should be on it?

I was thinking about that just this morning. What important American figure hasn't yet been on any kind of currency? I'd go for Teddy Roosevelt.

[Panasonic]

48. Ronald Reagan.

As a compromise to the Republicans. Since only three will be minted, and it'll stay in the vault of the Treasury - nobody can get to it. Locked down like Fort Knox.

The obverse? Reagan's wrinkled butt.

And it's legal tender.

[haele]

31. For the "face" on the coin -

Grover Norquist with a Mad Hatter's hat. Seal/Motto: Non Bathonie satis exiguus (yes, I used Google translate - my high school latin is very, very rusty)

Obverse side, the Mad Hatter's Tea Party, including Norquest, Boener, McConnell, and Ayn Rand as Alice.


Haele

[caveat_imperator]

41. John Maynard Keynes would be a perfect face for the coin. :)

I'd love to see Smedley Butler's face on our money one day as well.

[Initech]

53. Hmmm... Jeremy Renner as the high strung sidekick or Mark Ruffalo as the extroverted sidekick?

[David__77]

38. It should definitely be floated by "anonymous leakers."

...

[BlueCaliDem]

44. That $1 trillion dollar coin is interesting, but it's not something we should seriously

look in to.

The GOP's true masters, as we here (not the trolls, but the true DUers here) all know, is Big Business, foreign and domestic. When Big Business sees the GOP are going to eviscerate their bottom line and not raise the debt ceiling to pay debts already incurred, they will come down on them like raging tigers.

All President Obama has to do is not negotiate. Stand firm and tell them, "Raise the debt ceiling". That's it.

For the doubters here, remember he promised he wouldn't keep tax cuts for the top 2% the last time they held the U.E. benefits hostage (and just before Christmas, too, those assholes) and forced him to extend them. He kept his promise as we've seen in the last fiscal slope deal.

He has said, steadfast, that he will not debate on the debt ceiling. I believe he is dead serious.

[OccupyManny]

45. He is right on

The debt is all funny money. Average Americans shouldn't care. We need more spending and investments in infrastructure and education.

[Rosco T.]

46. They should mint 10 of them....

... defuse the GOPigs for a while, let PBO keep 9 of them in his desk. Ready to be deposited.

[Nye Bevan]

55. In which case he should probably invest in one of these. Just to be safe.

[ThoughtCriminal]

47. But be careful with it

[Drunken Irishman]

51. Reminds me of that Simpsons episode with the trillion dollar bill that Burns stole...

And then it ended up in the hands of Castro.

[Initech]

52. "If it's a crime to steal a trillion dollars and hand it over to Cuba then I'm guilty!"

"And if its a crime to bribe a jury so help me I'll soon be guilty of that!!!!!"

[Incitatus]

54. Whose face should get put on it?

[Drunken Irishman]

56. Truman.

[Faryn Balyncd]

58. Reagan

.

[elehhhhna]

59. jane fonda

can't image anyone who'd pissoff the republics more than Jane Fonda










Maybe Karl Marx...but they wouldn't know who he was

[WillyT]

60. K & R !!!

[MannyGoldstein]

61. Krugman is dead wrong.

It would stop a perfectly good opportunity to shock-doctrine the little people.

Regards,

Third-Way Manny

[WillyT]

63. Once Again... SPOT ON !!!

It would truly ruin their 3rd Way Dimensional Chess.



Did you get a gander at this: http://www.democraticunderground.com/10022150897

[Amonester]

62. Link to the White House's site online petition here:

https://petitions.whitehouse.gov/petition/direct-united-states-mint-make-single-platinum-trillion-dollar-coin/8hvJbLl6

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[scarletwoman]

65. It should have Dick Cheney's face on it, along with his quote, "Deficits don't matter." (nt)

[Larrymoe Curlyshemp]

66. Kicked and Recced

Without complaint!

[Hekate]

68. KnR for Krugman's really interesting idea. Any ideas for the design? Lame Duck?

There would not be enough room for all the zeroes, would there? The trillion would have to be spelled out...

Krugman says the face should be Boehner's without question. I think that on the back in place of the proud eagle there should be a duck with a busted wing.

[Fire Walk With Me]

69. Money out of thin air, yet the poor have to suffer program cuts.