The awesomest way I’ve yet seen out of the debt ceiling crisis. No pesky constitutional issues, yet completely bypasses the ongoing congressional clusterf&*#.
Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.
Sure, printing money tends to carry inflationary risk. But (a) in this case, the risk would be somewhat offset by resolving a political crisis that is causing a lot of angst in the markets, and (b),
To prevent the money from contributing to too rapid inflation, the Fed could simply conduct reverse QE—sell some of its enormous stock of government debt to absord some of the new money in the system. Though it’s unlikely that inflation would be too serious an issue; indeed, it could be helpful.
So, sounds like a great solution. I wonder if they’ve got the presses fired up already. Just make sure that there’s a mighty secure vault to hold them. Also, I hope they won’t do the same stupid thing they keep doing with dollar coins that look just like quarters. Make them square, or something. When you’re digging around for a trillion-dollar coin in your pocket, you want to be sure you can grab the right one quickly.
Lets say we mint two $1T coins. Then, a few weeks later, Dems and GOPers get along and find a combination of taxes and expenditures which resolves the deficit, even running a surplus soon. In fact, we keep paying down debt, and now we’re on the road to financial freedom and we’ve still got these two $1T coins.
Do we just shred ’em later? Do we convert them to $2T in currency over time and release it into the economy? Once the money is there, what do we do with it?
but one way out, it seems to me, is that once there’s a viable way of replacing that money (borrowing, revenues, spending cuts, whatever), or when it’s otherwise feasible to reduce our cash holdings by $1T, you withdraw a coin and melt it down. Done.
Like I said, just don’t lose it. 😀
Obviously.
This reminds me of the effort to pass health care under the revenue laws that evade a Senate filibuster — it’s far too smart and unusual for the Beltway to understand, so they’ll squawk about how it undermines the spirit of RonnieandTip and bipartisan democracy access.
Be creative. Also, there is numerology to consider, as long as we are making financial market talismans, essentially.
http://en.wikipedia.org/wiki/The_Trouble_with_Trillions
As with gold, silver, nickel, copper, platinum is a commodity. Something of hard value. A reserve note is a piece of paper backed only by one’s faith in the Federal Reserve. Faith may come and go with the wind, but a commodity that hits you in the head is real.
JFK attempted to bring back silver certificates in the summer of 1963 stabilize the dollar with the issuance of Executive Order 11110. Upon his assassination, the new president, LBJ, had the program stopped.
Germany’s economic miracle of pulling out of hyperinflation to a valued currency was achieved by putting commodity value to the currency. Replacing the Papiermark with the commodity backed Rentenmark.
While adding value to circulation money by adding commodity value would do JFK proud, I doubt the Federal Reserve controlled Treasury would allow it. But, some states might.
“There was a time when a fool and his money were soon parted, but now it happens to everybody.” –Adlai E. Stevenson
I see now this is about joke, not solution. A one trillion dollar coin rather than one trillion dollars of hard currency. Ha, ha, ha.
Nevermind .
“He that laughs last didn’t get the joke.” -old saying.
^///^
Is this different from printing a trillion dollar bill? Or is that in effect what we do now.
is that printing a trillion dollar bill would be illegal, because there is a statutory limit on how much paper money can exist at any time. However, oddly enough, there is no such limit on coins. Hence, the $1 trillion coin idea.
The post you linked to is now a month old written when there was time to consider other options. I for one have become MORE convinced over time that the 14th amendment is the way to go. The debt was made valid by appropriating the various funds, cutting taxes, etc. By not raising the ceiling or defaulting, we are basically unilaterally declaring the debt to be invalid, which the 14th amendment forbids.
I just don’t think that’s true. Debt that is in default is still entirely valid – that, after all, is why we have foreclosure and similar remedies.
If the 14th Amendment were worded differently, I wouldn’t have any hesitation. But the words are what they are, and in IMHO, they don’t apply to valid debt where the problem is that the debtor is (temporarily, one hopes) out of cash.