Platinum Coin: White House Doesn't Completely Rule It Out

[onehandle]

Source: Huffington Post

WASHINGTON -- The White House routinely rules out the idea of President Barack Obama invoking the Constitution to raise the debt ceiling in the event that Congress fails to do so. But minting a $1 trillion coin to avoid a debt default? Maybe.

White House press secretary Jay Carney didn't explicitly rule out that option during his Wednesday briefing. The idea, which has gained traction in recent days despite its absurdity, is that the government could mint a $1 trillion platinum coin and the Treasury Department could use it to cover the nation's debt obligations. The debt ceiling would no longer be an issue.

Carney was asked about the prospect of President Barack Obama using the accounting gimmick if Congress doesn't raise the debt ceiling by its mid-February deadline. While Carney certainly didn't endorse it, he didn't dismiss it with the same clarity that the White House does every time the 14th Amendment option comes up as a possible nuclear option.

"The option here is for Congress to pay its bills," Carney said repeatedly when asked about the prospect of Obama considering the $1 trillion coin approach. "There is no Plan B. There is no backup plan." Pressed again later for a "yes" or "no" answer, Carney still wouldn't give one.


Read more: http://www.huffingtonpost.com/2013/01/09/platinum-coin-white-house_n_2442073.html

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Do It! Do It! Do It!

[The Velveteen Ocelot]

1. One Coin to rule them all,

with the power to dominate the other currencies and enslave their owners to Obama's will!

BWAHAHAHAHAHAHAA!

[bemildred]

5. One Coin to rule them all, One Coin to find them,

One Coin to pay the debt, and leave it far behind them.

[Hekate]

29. LOL both of you!

Well played.

[TexasTowelie]

2. I'd mint at least four of those coins.

We need to make certain that the debt ceiling doesn't become an issue again during the remainder of President Obama's term of office.

[former9thward]

3. Why not mint 25 of them?

Pay off all debts and eliminate all federal taxes and fees. Party hard for the rest of our lives.

[CreekDog]

28. yes, government spending is "partying" to you

how transparent.

[former9thward]

30. Far from it.

If one can be minted then why not 25? Then people will be freed from taxes and the government will be able to spend whatever it wants to spend without restriction. What is wrong with that?

[samsingh]

4. mint 12

with one to rule them all

[wickerwoman]

31. Seven for the EU, wisest and fairest of all beings.

Four for the Swiss in their mountain halls.
And nine for the Chinese who crave power above all things.

[samsingh]

32. what do the indians get?

[Ash_F]

6. What would the inflationary effects be?

If they were to actually do this, how would that affect the average American?

[bemildred]

7. It's equivalent to paying down the debt $1T.

I fail to see how that causes more inflation than the status quo.

[Ash_F]

8. Was the plan to pay down the debt before with newly printed money?

If so, then yeah I don't see the difference either. But I don't know if that is the case.

[bemildred]

10. Newly printed money is pretty much all we have, most of it's not even paper. nt

[bemildred]

13. PS: As far as I can tell, there is no plan, the idea is to stay deep in debt.

So as to hamstring the government and enforce implementation of policies you can't win with at the ballot box.

[dixiegrrrrl]

19. Paper "money" is an IOU..look at a dollar bill.

It says Federal Reserve Note, legal tender for all debts public and private.But there is nothing of value to back it up other then the
"good faith and credit" of the government.
Which of course is rapidly losing our faith and its credit.

Coins, on the hand, have long been considered valuable as "real money" because they were backed by the value of metal they were made of.
Indeed, some coins like all copper pennies are now worth MORE than face value.
Silver dimes are very collectible, again for the value of the metal, tho they can only buy 10 cents worth of something at the store.

So, the thinking about the platinum coin would be sorta along those lines...except who would buy a trillion dollar bill or coin, and who could they 'sell" it to?

[Orangepeel]

9. The answer you'll get to the question depends on who is answering the question

From Krugman (emphasis added):

The first level is that in practice minting the coin would be nothing but an accounting fiction, enabling the government to continue doing exactly what it would have done if the debt limit were raised.

Remember that the coin is supposed to be deposited at the Fed, which is effectively just a semi-autonomous government agency. As the federal government proper drew on its new Fed account, the Fed would probably respond by selling off some of its $3 trillion balance sheet. In effect, the consolidated federal government, including the Fed, would be financing its operations by selling debt instruments, just as always.

But what if the Fed decided not to shrink its outside balance sheet? Even so, under current conditions it would make no difference — because we’re in a liquidity trap, with market interest rates on short-term federal debt near zero. Under these conditions, issuing short-term debt and just “printing money” (actually, crediting banks with additional reserves that they can convert into paper cash if they choose) are completely equivalent in their effect, so even huge increases in the monetary base (reserves plus cash) aren’t inflationary at all.

And if you’re tempted to deny this diagnosis, I have to ask, what would it take to convince you? The other side of this debate has been predicting runaway inflation for more than four years, as the monetary base has tripled. The same people predicted soaring interest rates from government borrowing. Meanwhile, the liquidity-trap people like me predicted what would actually happen: low inflation and low rates. This has to be the most decisive real-world test of opposing theories ever.

http://krugman.blogs.nytimes.com/2013/01/08/rage-against-the-coin/

[otherone]

12. kick for the link

sheds some light on my post below

[Ash_F]

14. Thanks for the read.

I did not know the factoid that inflation has been low despite the monetary base tripling in the last four years. I'll have to do more reading on why that is.

[Orangepeel]

22. Krugman on the liquidity trap

http://krugman.blogs.nytimes.com/2011/10/09/is-lmentary/

I don't completely understand it, but I don't think that Nobel prize was for nothing.

[dixiegrrrrl]

24. "why that is" is because the gov't stopped measuring high inflation items.

If your food bill and your heating/cooling bill and your medical expenses are the same or lower than they were 10 years ago,
then there is no inflation.
But Gov't does not measure any of the those things in the "Consumer Price Index"

If your income is 10x higher than it was 10 years ago, there is no inflation.
but if it is lower, than you have less money to buy the same items you used to buy.
Which is inflation.

[high density]

15. That's the thing, all this hyperfocus on the debt/deficit

when we can borrow money at a cost near zero. It's just insane. I think everybody agrees the debt is a problem, it's just not a problem we need to have brought up every two months through some crisis manufactured by the Republicans. I can only imagine the outrage if Democrats were doing something like this back when Bush was starting to run up this bill by lighting up massive unfunded wars and massive unfunded tax cuts.

[tclambert]

18. Questioning George W. Bush was unpatriotic, no matter how dumb-fucking stupid his actions were.

"Let's go to war with Iraq" which had nothing at all to do with the 9/11 attacks "because they might have noocular weapons" despite every expert saying they could tell from thousands of miles away that Iraq didn't. "You dare to question the President? What are you, French?"

[otherone]

11. can someone explain how minting one coin would INCREASE inflation?

I don't see it..

[tclambert]

16. I love the idea of the platinum coin! It makes the whole debt limit crisis look ridiculous.

Which is what it deserves. Some have suggested putting a Republican's face on it, like Ronald Reagan, or John Boehner as a sort of slap in said face. Personally, I'd like the motto on it changed from "In God We Trust" to "Republicans are so stupid (see other side)" printed on both sides.

[dipsydoodle]

17. If anyone here really believes it would happen

then dream on.

[eltopomaravilloso]

20. I just have to say that if they mint that coin and use it as currency

then they had better be sure to keep an eye on it.

There is about $150 billion in gold at Fort Knox, whereas this coin would be worth more than 6 times that.

[hunter]

21. I think it should be an invisible coin, like the Emperor's Clothes.

It's not a big deal. All money is invisible. We work for it because we think it's real.

Gold and platinum are not money either, they are pretty metals that represent money, for reason's I've been unable to fathom.

We're not going to be using money if we ever make it past our present savage and ignorant state to create a Star Trek Next Generation kind of technocracy. I'm pretty sure our "money" religion is about to blown away by the overwhelming environmental catastrophe our worship of money has brought about.

[radhika]

23. Nicholas Cage must be appointed Guardian of the Platinum Coin....

The safety of the-world-as-we-know-it hangs in the balance.

[onehandle]

25. Agreed! nt

[samsingh]

33. okay

[defacto7]

26. In a way, it is almost like

filing bankruptcy on a trillion in debts; a US chapter 7 on part, but no equity to trade off. That much platinum doesn't exist on the whole planet so it's just dropping paper debt. In the long run I still see a hole in the world economy equal to 1 trillion bucks though.

[The Velveteen Ocelot]

27. If it is actually to be worth $1 trillion, and not just an accounting fiction,

wouldn't it have to be pretty large, like the size of a manhole cover? Much bigger, as it turns out: http://qz.com/41604/how-big-would-a-1-trillion-platinum-coin-be/