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Cleavon Little in Blazing Saddles
By now I'm sure you’ve probably heard more than you want to know about the platinum coin—although if you like learning fancy new words, you have to admit, “seignorage” is a pretty cool one.

But I want to take a few minutes to explain why I think minting a $1 trillion quarter and then having the Treasury secretary pretend to yank it out of Ben Bernanke’s ear is not such a good idea—and might be a really stupid one politically.

(Continue reading below the fold.)

It’s not because I worry about the legality of the trick. Larry Tribe’s word is good enough for me, and besides, fear of breaking the law is about the worst possible reason for opposing a good debt limit fix, since if and when the limit is breached, a whole bunch of laws are going to be broken—one way or another.

It’s also not because I think it would spook the financial markets. Again, if the debt limit is broken, and the true value of the single most important piece of electronic paper in the world—the 90-day Treasury Bill—becomes a topic for debate, the financial markets aren’t going to be spooked, they’re going to be slumped over their trading desks suffering massive coronaries.

I’m against the coin because I think it’s a bad idea politically, and the main point to understand about the debt ceiling is that it is a political issue, not a legal or even a financial one.

This has been true ever since the GOP revolutionaries of ’95 first tried—but failed—to use the debt threat to force draconian spending cuts on Bill Clinton.

(An interesting historical fact: The debt ceiling law was originally passed during World War I to make it easier, not harder, for the Treasury to borrow money, since prior to that time Congress had the power to force a separate vote on each and every federal bond issued.)

Why would minting the coin be a political blunder of the first order? Two reasons:

  • It would give the Republicans an easy out from the trap they have set for themselves by threatening to take the U.S. financial markets and economy hostage.
  • It would change the subject from the threat of a financial meltdown to the methods the POTUS has taken to prevent that meltdown.

The belief that the debt ceiling threat is actually another self-inflicted debacle in the making for the GOP is not universally held, of course.

Indeed, up until the last few weeks conventional wisdom (oxymoron alert) held that since the Republicans really were bat shit crazy—or were themselves being held hostage by their batshit crazy teabagger wing—the GOP held the upper hand, i.e. “they really might do it!”

I’ve always been skeptical of that argument, which might be because I covered the original 1995 debt showdown, in which the GOP House—revolutionary zeal notwithstanding—caved pretty quickly under the triple pressure of Wall Street, Main Street, and the more establishmentarian GOP Senate.

The truth is that the debt ceiling isn’t just a Weapon of Mass Destruction—it’s a Weapon of Mutually Assured Destruction. That being the case, the idea of the Republicans taking the entire U.S. creditor class hostage has always reminded me of the scene from Blazing Saddles where the black sheriff—facing a rural lynch mob in the making—takes himself hostage and threatens to blow his own head off:

First townfolk guy: Hold it, men. He's not bluffing.
Second townfolk guy: Listen to him, men. He's just crazy enough to do it!
You may recall that the ruse only worked because the townsfolk were, to quote Gene Wilder’s character, “simple farmers, people of the land, the common clay of the New West . . . You know: morons.” So it’s easy to see how the standard Beltway pundit would be similarly impressed by the GOP’s bluster.

But sharper media minds, like Greg Sargent over at the Plum Line, also have started to question whether the debt hostage gives the Republicans any kind of leverage they can actually use:

GOP leaders well know that if they [trigger the debt bomb] the entire business community will join with Obama and Democrats to tell them to back off or take the blame for cratering the economy, leaving Republicans further isolated.
And sure enough, GOP leaders of late haven’t exactly been acting like (to mix movie metaphors) Al Pacino in Dog Day Afternoon, screaming “Attica! Attica!” out the front door of the bank.

When you hear John Boehner talking about a “rolling” series of monthly debt ceiling hikes (we can only imagine how thrilled his caucus was to hear that that they might be asked to take those votes) it suggests someone has already blinked, and that someone isn’t the president of the United States.

More importantly, the outcome of the first fiscal cliff battle—sent to the floor by Boehner in flagrant disregard of the “Hastert Rule”—demolishes the argument (one I was for a time inclined to share) that the teabaggers can veto any deal that doesn't amount to an abject Obama surrender. That doomsday device has been tested, and found wanting. Which means a road to compromise is open, if not exactly wide open.

Even worse (from Karl Rove’s point of view), the spectacular failure of Boehner’s “Plan B” in the tax fight suggests the GOP has very little room for tactical maneuvering—such as having the House pass a debt limit extension paired with deep spending cuts, and then sending to the Senate (and the White House) as a take-it-or-leave it offer.

Some of the teabaggers (those not committed to oppose any debt ceiling increase upon pain of death—or loss of primary) might go for such a gambit, but the average Republican almost certainly wouldn’t, not without some Democratic votes as cover.

All of which leaves the Republicans out at the end of a very long limb, swaying in a very high breeze. Are they really going to use the threat of financial Armageddon to demand a ransom consisting entirely of whopping huge cuts in Medicare and Social Security—cuts even their own base fiercely opposes?

The platinum coin would give the GOP way too easy a path to climb back down off that branch they’re perched on. In fact it pretty much offers them a free ride in a cherry picker.

If Obama mints the coin, the Republicans can instantly switch (they’re incredibly good at this) from threatening financial chaos to ferociously demagoguing the prevention of that chaos—in a way that the 99.9 percent of the American people who aren’t constitutional lawyers or financial economists can easily understand.

We’ve already gotten a pretty good taste of their material: Like the National Republican Congressional Committee’s brilliant argument that the weight of a $1 trillion coin would sink the Titanic.

I said brilliant and I meant it. As a monetary concept, the idea that a $1 trillion coin has to contain $1 trillion worth of precious metal may be so freaking stupid it makes Glenn Beck look like Milton Friedman. But, as a political talking point for the cable news viewing masses—the teabagger masses in particular—it’s right on target: simple, intuitively obvious, and hard to refute without using words like “seignorage.” It even comes with its own funny graphic.

Also, while the sink-the-Titanic argument may be a lie, it is a lie with “mythic truth” behind it: Minting a $1 trillion coin is an extreme solution, one that bends the law, if not to the breaking point, then at least to the point of absurdity. The political consultant hasn’t been born yet who couldn’t spin gold—maybe even platinum—out of that one.

For the GOP, the coin would be a political Godsend: No more having to make good on insane threats, or defend that insanity in the 2014 elections—or even explain and justify a craven retreat to their teabagger base. Instead, almost infinite opportunities to attack a president bent on subverting the U.S. Constitution in order to go on running up huge amounts of public debt, blah blah blah.

For the GOP electoral machine, what’s not to like?

None of this would matter if the coin really was the only way out of an economic catastrophe. Desperate times call for desperate measures, and there’s always the risk that the House GOP leadership will refuse to flout the Hastert Rule a second time, reactivating the teabagger Doomsday Device.

As Krugman puts it, if the choice is between a financial collapse that makes 2008 look like the failure of a neighborhood lemonade stand, and having the Treasury secretary put on a clown suit for a few minutes, who wouldn’t choose the clown suit?

But a clown outfit isn’t necessary—as much as one might suit Tim Geithner. If the ultimate push came to the ultimate shove, and the debt ceiling were in imminent danger of being breeched, Obama wouldn’t have to mint a coin. He wouldn’t even have to twist the meaning of the 14th Amendment to cover a federal, as opposed to a state, debt repudiation.

All the POTUS would have to do is call a press conference to announce that, after careful deliberation with his attorneys, he has decided that his inaugural oath to ensure the laws are faithfully executed requires him to ignore the debt ceiling, in order not to violate the more numerous laws duly passed by Congress that appropriate funds, award benefits, and mandate timely payment to federal creditors.

Sure, it’s a Star Trek argument (“the needs of the many outweigh the needs of the one”) but what exactly would the Republicans do about it? Take the POTUS to court?  

Someone (Larry Klayman and Justice Watch, if no one else) almost certainly would sue, no matter what solution Obama chose—the $1 trillion coin included. And while Larry Tribe’s word is good enough for me, it might not be good enough for the conservative majority on the Supreme Court.

That being the case, if a court showdown is inevitable either way, why not put the POTUS on the strongest political ground possible?

To me, arguing that the POTUS is upholding the law as best he can in an impossible situation seems a better alternative to getting cute with the coinage laws. It is, after all, exactly the same argument used by Abraham Lincoln in the early months of the Civil War, after he usurped the congressional power to suspend habeas corpus:

Are all the laws but one to go unexecuted, and the government itself . . . to go to pieces, lest that one be violated?”
During the post-9/11 hysteria, and again during the Iraq War, conservatives were pleased to quote Lincoln ad nauseam to justify the Bush Administration’s innovative interpretations of both the Patriot Act and the Authorization of Military Force Resolution.

We can assume they would not be so enthusiastic to see the same thoughts re-expressed in the present crisis. But we can also hope the voters—who already favor Obama in this fight—would understand and accept its basic justice (not to mention sanity).

At a time when even political uber-pundit and closet reactionary Charlie Cook understands that the GOP is way behind the eight ball (“Republicans . . . have to proceed with great caution.”) it seems to me the administration can afford, just this once, to take a stand on principle.

When it comes to how the Supreme Court might actually rule on a claim of presidential emergency power to pay the debt, I have to plead legal incompetence—although my perception is that the court generally has been reluctant to be the referee when the legislative and executive branches go at it over their respective constitutional powers (see: War Powers Act).  

Maybe such considerations no longer restrain justices who claim to believe in judicial restraint. I don’t know. But the hard, cynical fact is that court review—much less a ruling—almost certainly would come too late to save the Republicans from a humiliating political defeat (although the same would also be true with the coin, for that matter).

Who knows? There is also the upside possibility that the court would rule for the executive in such a case, taking the debt ceiling off the negotiating table for all time. Do any erstwhile plaintiffs (nuts like Klayman excepted) really want to risk that?

The final point of debate, I suppose, is the effect on the markets of an assertion of presidential emergency power versus the coin. Another imponderable, as Ezra Klein reports. But I personally find it hard to believe that minting a $1 trillion coin (which sounds like something Zimbabwe would do) would be more reassuring to financial traders than a solemn presidential declaration, posthumously endorsed by Abraham Lincoln.

There’s not really much point in asking questions that nobody can answer. But there’s also not much point, at least in my opinion, in fooling around with platinum coins when a much more direct, compelling, and equally effective solution is available.

On the other hand, who would break the bad news to the American Numismatic Association?

Update 1/12 12:15 AM ET: Something that just struck me about these debt limit scenarios: Any workaround of a congressional failure to raise the debt ceiling is going to depend entirely on the cooperation of the Federal Reserve.

If it's the platinum coin, the Fed (Fed of New York) would have to accept and credit it to the Treasury's account -- not dispute its legality and force the Treasury to go to court.

If it's a 14th Amendment claim or an assertion of inherent executive power, the Fed's role would be a little different, but still crucial. By law, the Fed cannot buy federal debt directly from the Treasury. (It used to do that long ago, but the authority was allowed to lapse in 1981.)

To sell debt publicly, the Treasury would need the participation of the "primary dealers" -- the big Wall Street and foreign banks licensed to bid at Treasury auctions. No bids from primary dealers (or insufficient bids to fully cover the debt at auction) would basically shut the market down. We, or at least Wall Street, would be back in heart attack mode.

My guess (and that's all it is) is that primary dealers would be unwilling to bid -- or would demand truly userious, Greek-style discounts -- unless the Fed was clearly on board with the presidential program. It would probably signal that stance by communicating a willingness to purchase or re-discount (lend against) bonds issued under disputed authority.

Needless to say, this is hardly a position the Fed wants to be in. While the GOP leadership might secretly be relieved, the central bank would be far too attractive a political pinata for them not to take a bat to it. The teabaggers and Paultards, of course, would go completely bonkers -- or more bonkers, if such a thing is possible.

Result: Lots of hearings, lots more talk about a Fed "audit," lots more bashing of the Fed's QE (quantitative easing) policies -- now directly tied to the fiscal dispute.

At this point, Ben Bernanke needs all that like he needs an ice pick to the brain. In fact he might, if given his choice, take the ice pick. I can already hear him: "A year from fucking retirement, and I gotta deal with THIS?"

The historical overtones are also interesting: To my knowledge, it would be the only time in the Fed's history it has been dragged smack into the middle of a constitutional crisis. But the same can hardly be said for its distant ancestor: the Second Bank of the United States, which got into a ferocious fight with the seventh president of the United States, Andrew Jackson.

The bank (and its congressional supporters, many of them bought and paid for, Lincoln style) lost that fight, and the bank lost its charter, and thus its life. This cleared the way for an 80-year experiment in free state banking that is judged, by most monetary historians, to have been a colossal failure -- but of course don't try telling that to Ron Paul.

I'm guessing the Fed would emerge in better shape from a debt limit showdown -- assuming it aligned itself with, instead of against, the eventual winner, which in this case again looks like it will be the executive branch.

But you never know.

Originally posted to billmon on Fri Jan 11, 2013 at 04:12 PM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  Tip Jar (203+ / 0-)
    Recommended by:
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  •  Depends on the Chamber of Commerce ... (6+ / 0-)

    When it comes to how the Supreme Court might actually rule on a claim of presidential emergency power to pay the debt, I have to plead legal incompetence—although my perception is that the court generally has been reluctant to be the referee when the legislative and executive branches go at it over their respective constitutional powers (see: War Powers Act).

    .. since that is who Roberts gets his orders from

  •  Yeah, that's been my main point about (21+ / 0-)

    the coin. It gives republicans a reason to avoid the debt ceiling. Which, they shouldn't do. They should be forced to knuckle under and pass it.

    As an alternative, what could be done in the event Republicans default is issue scrip. Worked for California.

  •  14th vs platinum coin (3+ / 0-)
    Recommended by:
    hnichols, furi kuri, Lujane

    There's no difference (other than the legal.)

    With the 14th, the Treasury walks to the Fed Reserve with $1 trillion of special non-lawfully-authorized bonds and gets credited for the bonds. (There's no way the Treasury would try to sell those bonds to the public.)

    With the coin, the Treasury walks to the Fed with a $1 trillion platinum coin and gets credited for it.

    The only other option is to stop pay on the bills.

    •  Fed not allowed to buy direct from Treasury (12+ / 0-)

      Used to be, but that authority expired in 1981. By law, must purchase T bonds/notes/bills on open market -- so primary dealers have to buy first.

      Of course, if Fed signals will buy/discount up to whatever amount needed, dealers will probably be happy to buy.

      So effectiveness of presidential emergency directive may depend more on Fed than anyone else.

      My strong guess is that absent a court injunction, Bernanke goes along -- protects financial system. He can always argue the decision was above his pay grade.

      •  that's the least of the problems (2+ / 0-)
        Recommended by:
        hnichols, furi kuri

        The Pres. is not authorized to issue debt his own authority.

        You're handwaving around the central question: what do you think "ignoring the debt ceiling" means in practice?

        The simplest interpretation is that "ignoring the debt ceiling" means depositing Presidential bonds with the Fed.

        •  Not sure what you mean by "presidential bonds" (3+ / 0-)
          Recommended by:
          turdraker, eztempo, Beetwasher

          What I mean is that Treasury continues to offer debt at auction in the expectation that primary dealers will continue to bid -- because Fed will continue to buy from them, because it accepts (or at least ian't prepared to challenge) the president's claim of authority.

          That may not be realistic, but don't see how it's "handwaving"

          Whatever the specific vehicle the POTUS used to get around the debt limit, it would ultimately depend on the Fed to go along (i.e. what if Treasury shows up with $1 trillion coin, and Fed says, "we don't think so"?)

          So I don't really see what we're arguing about.

      •  Heh, poor Paul Mozer (2+ / 0-)
        Recommended by:
        eztempo, Beetwasher

        I worked there when it happened (in a different division) and I find it darkly humorous that we're facing perhaps the best time in history to want to corner the treasuries market.

        "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

        by kovie on Fri Jan 11, 2013 at 07:08:33 PM PST

        [ Parent ]

      •  This, today, from former Director of the Mint, (6+ / 0-)

        Phillip Diehl,

        Some critics might claim that the Fed doesn’t buy precious metal coins from the Mint. But it did for many decades, right up until the 1950s and ’60s with the silver Eisenhower dollar and Kennedy half-dollar. Also, some critics will claim that the Secretary is constrained to produce coins solely for the purpose of meeting the needs of commerce. This is refuted by the 50 State Quarter program (and other circulating programs) in which public demand was 5 times the baseline commercial demand due to collecting and hoarding behavior. This increase in “non-commercial” demand was a feature of the program, not a bug. Higher seigniorage profits were a key selling point emphasized in the House committee hearings and the floor.

        "When in doubt, do the brave thing." - Jan Smuts

        by bunnygirl60 on Fri Jan 11, 2013 at 09:44:27 PM PST

        [ Parent ]

    •  What about NYT editorial on scrip? (3+ / 0-)
      Recommended by:
      Lujane, eztempo, George Hier

      Which I think is a more tortured, circuitous solution and more injurious.

      An even crazier idea.

      "I feel like I'm still waiting to meet my true self. I'm assuming it's gonna be in a dark alley and there's gonna be a fight." ---Rachel Maddow

      by never forget 2000 on Fri Jan 11, 2013 at 06:56:01 PM PST

      [ Parent ]

      •  Yeah, back to Continental Congress currency, eh? (1+ / 0-)
        Recommended by:

        The warrants the NYT contemplate are the most likely adjunct to Boehner's "partial shutdown" that'll be pulled out by the Administration as a way to kind of reassure suppliers and contractors, et. al., that are owed money by the Feds.  But it will still be messy, and held in about as much esteem as those Continental bonds that Alexander Hamilton had to clean up after the Revolution. (Not really, but there'll be a period of confusion, and many scrip holders will be fleeced by speculators in the interim.)

        •  It has worked in CA (0+ / 0-)

          When the state budget wasn't passed on time and the state ran out of money.  Vendors and contractors were paid with registered warrants, tax refunds also.  

          More likely to be used in he event of gov't shutdown.

          The scientific uncertainty doesn't mean that climate change isn't actually happening.

          by Mimikatz on Sat Jan 12, 2013 at 05:27:56 PM PST

          [ Parent ]

      •  that's creating money (1+ / 0-)
        Recommended by:
        George Hier

        based only on Presidential authority which would be worse than all other proposed solutions.

        •  No, its issuing debt CONGRESS already appropriated (0+ / 0-)

          and was spent as required by law.  Congress knew those appropirations in excess of revenue could only be funded by incurring debt.  It does not have the power to now say it will not allow the Executive to issue the actual contractural instruments - bonds - to pay the debt it already ordered incurred and spent.

          Banana republics may do that.  The Constitution did not create a banana republic.

          All imo, of course.

      •  Mebbe Obama should give Jerry Brown a call. (0+ / 0-)

        Brown could tell how California's embarrassing turn through a scrip-for-cash episode turned into a popular referendum that raised taxes to meet the State's obligations ... matching revenue to appetite, at least, if not to the needs and ambitions of most Californians.

      •  Scrip may be better (0+ / 0-)

        All elected officials should be immediately pay by scrip.  All of them can go to their districts and find someone to offer them a line of credit in exchange for signing the scrip over.

        Soon, we will be all paying all bills with scrip.  Again, most firms could get a line of credit to cover expenses in exchange for scrip.  If they do not want the scrip, they can stop doing business with the government.

        Now, I know this wil not delay the fiscal cliff very long, but I suspect with none of the elected officials receiving any cash, and district level contractors not receiving payment, the problem will quickly go away.

    •  "stop pay on the bills" (0+ / 0-)

      Which violates the law as well as destroys the world economy.

      I agree with the administration that Congress has to pay its bills, but they are legally (and policy-wise) wrong by saying that can't or won't mint the coin.


      Mitch Gore

      Want to end too big to fail banks? Then move your money and they will no longer be too big.

      by Lestatdelc on Sat Jan 12, 2013 at 03:50:58 PM PST

      [ Parent ]

  •  it should be the last resort (24+ / 0-)

    but just talking about it, making the republicans worry about it, having one of their house leaders propose legislation making it illegal- it helps create the framework. obama has said he won't play the brinksmanship game again, and now the republicans know that he does have options, and that no matter how hard they try, they really can't get away with a tantrum that threatens to blow up the economy, as long as the democrats won't allow them to.

    The cold passion for truth hunts in no pack. -Robinson Jeffers

    by Laurence Lewis on Fri Jan 11, 2013 at 04:32:03 PM PST

    •  Yes, last resort (4+ / 0-)

      If the House shuts things down and tries to stick it out, hoping to turn some of the pressure on them onto Obama to get him to make a deal, he can pull out the platinum coin at a time when public opinion is behind it.

      I think when the WH games this out they can't assume the House Republican won't be this stupid, as they have been that stupid before. Saving the day with a stupid gimmick at a time when the country is howling mad at the House Republicans for shutting down the government will work, IMO.

      Our reason is quite satisfied ... if we can find a few arguments that will do to recite in case our credulity is criticized... Our faith is faith in someone else's faith, and in the greatest matters this is most the case. - William James

      by radical empiricist on Fri Jan 11, 2013 at 08:49:23 PM PST

      [ Parent ]

    •  Agreed that it should be a last resort (1+ / 0-)
      Recommended by:
      Laurence Lewis

      But shutting the door on that last resort simply to apply political pressure is fucked up and simply stupid.


      Mitch Gore

      Want to end too big to fail banks? Then move your money and they will no longer be too big.

      by Lestatdelc on Sat Jan 12, 2013 at 03:54:06 PM PST

      [ Parent ]

  •  Yes, the coin was giving me a headache (6+ / 0-)
    Recommended by:
    sja, hnichols, LordMike, liberte, MRA NY, eztempo

    The script IOU"s make more sense and might actually have a miniscule chance of happening.

    Still, the coin idea was fun.  It's just that too many people started taking it too seriously.

    •  Script issuance has same problem as coin (7+ / 0-)

      Too gimmicky, easy to demagogue. Still think POTUS better off following in Lincoln's footsteps.

      But at this point really doubt it will come to that.

      •  Think about it... (3+ / 0-)
        Recommended by:
        hnichols, econlibVA, eztempo

        1. Obama goes on TV and says that due to the crisis we cannot pay everyone that is entitled to be paid, but that he is directing the Treasury to issue IOU's, both paper and electronic.

        2. Obama goes on TV and says that due to the crisis he has directed the US Mint to make a trillion dollar platinum coin, and now we no longer need to raise the debt limit.

        Both may be unlikely, but one isn't a complete fantasy.

        •  issuing money (1+ / 0-)
          Recommended by:

          Those IOU's would be money.

          •  And it's all fiat money (2+ / 0-)
            Recommended by:
            Lestatdelc, wsexson

            Is a $100 bill with Ben Franklin's mug on it any more "official" or less silly than a shaped piece of platinum?

            Government and laws are the agreement we all make to secure everyone's freedom.

            by Simplify on Sat Jan 12, 2013 at 03:27:57 PM PST

            [ Parent ]

            •  Yes, politics is as much perception as anything (2+ / 0-)
              Recommended by:
              chrismorgan, ConfusedSkyes

              If the trillion dollar coin is PERCEIVED as a gimmick then it is probably not politically advisable.

              My speculation is that it would be perceived as a gimmick (and probably an unlawful one despite what Tribe and other experts might say to the contrary) by the vast majority of people who don't pay a lot of attention to the details.

              •  AS long as our fiat currency is not understood, we (3+ / 0-)
                Recommended by:
                wsexson, dorkenergy, chrismorgan

                will never have a progressive fiscal policy.

                So, the coin's gimmicky, then our monetary system is gimmicky.

                Which I would, sadly, agree is the perception.

                Because people don't understand our money.

                •  But our money is not PERCEIVED as gimmicky (0+ / 0-)

                  The coin would be.  That's my main point.

                  Getting a bit off track, but what would you consider to be a "progressive" monetary system?  Are you of the Keynesian school?  The Monetarist like Friedman?  Austrian?  The so-called New Monetarist?

                  •  I like Modern Monetary Theory and Steve Keen (1+ / 0-)
                    Recommended by:

                    the best.

                    The coin is perceived as gimmicky, and when you tell people we have a fiat currency, and what that means, it's perceived as gimmicky.

                    And until people realize we haven't been on the gold standard for a long time, and aren't going back, then they will continue to assume the fed budget is analogous to the household.

                    And that's a problem.

                    And related to this, they'll continue to assume that China is our banks and we borrow dollars from China so we can have dollars.

                    Cuz people don't understand that dollars can only come from US, and China must earn dollars by giving us stuff, and so then already HAS dollars witch they then park in Treasuries.....

                    If people understood that  ALL money, both dollars and private credit money, is just pulled out of a rabbit's hat -- just like the coin, THEN ---  the coin is seen as money, like any other money.

                  •  PS, if people realized that ALL money is pulled (1+ / 0-)
                    Recommended by:

                    out of thin air, then MAYBE they would stop confusing tokens for the REAL economy, which is what most progressives say they support.

                    But it does NOT help that most progressives then turn around and jump on the band wagon of keeping the fact that ALL money is created out of thin air a secret.

                    It's very frustrating, cuz we rob ourselves of the very BEST argument for concentrating on the real economy.  

                    Rather than tokens -- which are produced at will -- out of thin air.

                    Including private bank credit tokens.

                    But....  only the coin is "gimmicky" ?????

        •  I like the scrip... (3+ / 0-)
          Recommended by:
          socal altvibe, jacey, bfbenn

          ...depending on who gets it.

          Social Security recipients and medicare doctors get cash. Servicemen/Servicewomen get cash.

          Defense contractors get scrip.

          Any tax refund on income over $250k gets scrip.

          Farm subsidy payments of more than $75,000? Scrip.

          All bond and t-bill interest payments should be made with scrip.

          Any corporation that is due a refund gets scrip.

          ...and so on.

      •  CA had to issue scrip in 2009 (6+ / 0-)

        California had to issue scrip in 2009.  It sucks, but IMHO that's the most logical way out of this mess.  Plus, it has the political advantages of telling the public that they'll get paid when the GOP House decides to stop holding hostages.  All the bondholders will get paid on time, and those with scrip will put serious pressure on Congress, and that's what we need.

        Yes, Virginia, there is an alternative to the death penalty!

        by econlibVA on Fri Jan 11, 2013 at 06:23:30 PM PST

        [ Parent ]

      •  Not gimmicky... (4+ / 0-)
        Recommended by:
        Lujane, ImpactAv, rbird, econlibVA

        It's been done before successfully in California.  It's also politically toxic to the GOP.  Just imagine social security recipients getting scrip instead of a deposit.


        by LordMike on Fri Jan 11, 2013 at 06:39:18 PM PST

        [ Parent ]

      •  Actually, I don't think the 14th flies (2+ / 0-)
        Recommended by:
        Sandino, Simplify

        if you were attempting to defend the conduct in front of the Supreme Court.

        The mere existence of the coin option, which I believe most legal analysis deems facially lawful, with legitimate questions regarding constitutionality, would reasonably preclude the 14th approach, as it relies on an appeal to the necessity of violating one duly enacted law (Debt limit) to avoid violating another duly enacted law(Spending Bills), or Constitutional Amendment (14th).  With the coin, it is no longer necessary to violate any duly enacted legislation, or run afoul of the Constitution.  

        This all relies on the Coin legislation actually being considered constitutional, but you would be hard pressed to say the Administration isn't operating in good faith in relying on its presumed constitutionality.

        p.s.  No, I don't see any of these cases making it to the Supreme Court.

        p.p.s. No, nothing I've seen from Obama suggests he would ever "Mint the Damn Coin."

        p.p.p.s.  Boy would I love for some economist to tell me what would happen if he minted a $60T coin.

        "'re going to find that many of the truths we cling to depend greatly on our own point of view." Obi-Wan Kenobi

        by thepook on Fri Jan 11, 2013 at 10:47:26 PM PST

        [ Parent ]

      •  But Lincoln wiped out debt with issuing (0+ / 0-)

        "greenbacks" which is simply the same thin as "the coin".


        Mitch Gore

        Want to end too big to fail banks? Then move your money and they will no longer be too big.

        by Lestatdelc on Sat Jan 12, 2013 at 03:55:03 PM PST

        [ Parent ]

    •  so it gives you a headache b/c it looks silly (17+ / 0-)

      so therefore it's a bad idea?

      this is one reason Republicans beat Democrats politically. Democrats are afraid to do anything that might make them look bad; therefore they never take any risks. Always keep  doing things the same way they've done them before. The last big move they made was in the late 80s, when they decided to move rightward and embrace Big Business. Since then, they've been the most risk-averse politicians I've ever seen. The only one of them who has been really innovative is Howard Dean, and you see what they did to him.

      if necessary for years; if necessary, alone

      by SouthernLiberalinMD on Fri Jan 11, 2013 at 08:02:47 PM PST

      [ Parent ]

      •  FINALLY some sense in this thread! (5+ / 0-)

        Thank you.

        Making an argument based upon the politics fails to address the actual, real monetary and economic issues which are confronting the WH and Treasury.

        In addition to rendering ALL of the GOP arguments related to the economy impotent, see details here, which is the perfect political reason TO implement PCS, it would also resolve the major economic threats facing us and give us the needed capital to address things like climate change and infrastructure. The only reason not to do it would flow from fear, a lack of understanding about what it really is or from a desire to always do things the way they have always been done (gold standard anyone?)

        My signature line, below, offers insight into why I first started to think about PCS in terms of this issue but diving in deeply and learning much, much more is the reason I have stuck with it.

        "When in doubt, do the brave thing." - Jan Smuts

        by bunnygirl60 on Fri Jan 11, 2013 at 09:56:01 PM PST

        [ Parent ]

        •  You're welcome! (1+ / 0-)
          Recommended by:

          I'm still unsure about PCS as the source of massive capital for revamping our infrastructure, etc., though I don't have an knee-jerk or immediate opposition to the idea.

          I'm entirely in favor of PCS as a way of getting out of this crappy trap the Republicans keep putting us in.

          I feel strongly that no matter what we choose to support, the argument "But it'll make us look stupid b/c nobody's ever done it before" should be the last thing we listen to.

          if necessary for years; if necessary, alone

          by SouthernLiberalinMD on Fri Jan 11, 2013 at 10:24:22 PM PST

          [ Parent ]

          •  If you haven't read them, letsgetitdone has (5+ / 0-)

            amazing, fact based, diaries on the subject that may be of help. I have written two that are, essentially, the "For Dummies" version and I have another coming tomorrow which discusses the policy space created by the larger version of the PCS idea. (Not to pedal diaries, just to suggest in case you are looking for information.)

            "When in doubt, do the brave thing." - Jan Smuts

            by bunnygirl60 on Fri Jan 11, 2013 at 10:37:55 PM PST

            [ Parent ]

          •  How is it any different really (2+ / 0-)
            Recommended by:
            katiec, dorkenergy

            that traditional debt instruments that also cost interest on top of the actual principal amount raised for Gov. spending?

            The only "threat" in PCS is that it eliminates the profitable (for the banks) treasuries market and destroys the basic premise behind austerity public policy as a needed and valid positions.


            Mitch Gore

            Want to end too big to fail banks? Then move your money and they will no longer be too big.

            by Lestatdelc on Sat Jan 12, 2013 at 03:59:10 PM PST

            [ Parent ]

        •  Tim Duy's take on this (0+ / 0-)

          Tim Duy has an interesting take on this – On The Disruptiveness of the Platinum Coin

          “The platinum coin idea was ultimately doomed to failure because neither the Federal Reserve nor the Treasury could allow for even the remote possibility it might be successful”
      •  No, b/c it isn't a practical reality (0+ / 0-)

        Sure, it's not likely that Obama will do it, and that's part of the reason I'm sick of it garnering so much attention.

        More important is why he won't do it.  Of course it is pure speculation, but it would likely be a political disaster.  His approval ratings among DK users might skyrocket, but among average Americans, even Democrats, it would likely plummet.  And Boehner's would skyrocket.  Do we really want that?

        Our President is not a political neophyte.

      •  So why not give them rope rather than platinum? (0+ / 0-)

        I agree with what you say about Democrats in general, but in this instance the best thing the Democrats can do is stay out of the way.

        The GOP corporate masters and small business supporters do not want the solvency or ratings or full faith and credit the the US to go away. 2014 could be all over for the GOP  politically in one stroke if they go off this cliff. Obama was ready to raise the limit since 2011. This is all on them. Though the coin has been a fun way to rile them up for the last week, it's not needed. As long as Obama continues not to negotiate over the limit, the teabaggers have nothing.

        And fear not, Howard Dean still has plenty of influence around here.

    •  It is unnecessary. Just pay the bills as (0+ / 0-)

      Appropriated.  Declare that Congress' budget authorizes issuance of debt and let the GOP sue to stop it if they dare.   It's one thing not to pass a debt ceiling. Another to sue to force the economy to collapse.  The GOP would never recover

      Hay hombres que luchan un dia, y son buenos Hay otros que luchan un año, y son mejores Hay quienes luchan muchos años, y son muy buenos. Pero hay los que luchan toda la vida. Esos son los imprescendibles.

      by Mindful Nature on Fri Jan 11, 2013 at 11:27:21 PM PST

      [ Parent ]

  •  Fantastic (4+ / 0-)

    Convinced me.

    I am not voting against Hillary, I am voting for Obama

    by NewDem on Fri Jan 11, 2013 at 04:36:57 PM PST

  •  I quite agree (15+ / 0-)

    We've bailed out the Goppers and saved them from themselves too many times.

    Let them shoot the hostage if they want--and let them take the consequences. It will be the death of the GOP as a mainstream party.

    Why is it that whenever the Goppers insist on handing us their heads on a silver plate, we not only refuse to take their heads, but insist instead that WE put our heads on the plate too?

  •  Nicely put, Billmon... (9+ / 0-)

    and nice to see you.

    The only way to ensure a free press is to own one

    by RedDan on Fri Jan 11, 2013 at 04:54:43 PM PST

  •  How about 100 million... (7+ / 0-)

    $100,000 coins to every family or individual in the country?  That comes to ten trillion. (don't do this on your fingers and toes)

    That should be a nice jump-start in a different way.

    Fuck inflation.  This is an emergency.

    Preparing for the Mayan doomsday prophecy by hastily trying to get in the good graces of snake-bird god Q’uq’umatz

    by dov12348 on Fri Jan 11, 2013 at 05:01:28 PM PST

  •  I agree that it is a bad idea (8+ / 0-)


    I feel like the proponents of the idea discount the millions of tiny threads we Americans currently have dangling out of our sanity sweater. People latch onto this kind of shit with fervency. Bankers can get away with trillions of dollars of paper/digital fraud buried under an unknowably complex financial system. The blame can be distributed in a thousand faceless directions. No one gets prosecuted. But the trillion dollar coin focuses millions of eyes on a single image. This image becomes a meme; it gets talked about by nearly everyone. It gets Photoshopped, pinned on cubicle walls, becomes part of email chains that never die. People think of things like this when they go vote. Because it is one solitary object that sticks in your mind's eye. Those images are an advertiser's wet dream!

    It is no measure of health to be well adjusted to a profoundly sick society. -- Krishnamurti

    by The Zipper on Fri Jan 11, 2013 at 05:09:46 PM PST

  •  We *have* to issue the coin. (10+ / 0-)

    It will drive the GOP crazy. End of.

    This is the desideratum I have for all policy proposals. This is the criterion I use to test all potential actions. This is the touchstone, the lodestar, of the true progressive.

    Well, this and puppets with huge papier-mache heads.

    Long-term workability, political viability, the appearance of sanity -- those are for timid souls, people who think small.

    "Politics is not the art of the possible.
    It consists in choosing between the disastrous and the unpalatable" J.K. Galbraith

    by Davis X Machina on Fri Jan 11, 2013 at 05:25:53 PM PST

    •  I'm sorry, but that strikes me as really dumb (3+ / 0-)
      Recommended by:
      alain2112, Aquarius40, GayHillbilly

      infantile, even.

      •  Woops, sorry - Poe's Law strikes again (4+ / 0-)
        •  One very useful thing could come of it (8+ / 0-)

          Money and debt wouldn't be treated so damn seriously.

          It's serious when you don't have food. It's serious when you don't have water. It's serious when you will freeze in the cold.

          Money, however is a convenient tool to make trades.

          Banks make more of it out of thin air when they increase their loan portfolio. Wall Street outfits make more of it when they increase their leverage. And the Fed makes more of it, too.

          What's real are the land, water, buildings, goods, services and jobs the money represents.

          Dems need to focus on the real things. Printing money will never make up for a decline in the real stuff, so we must take care of the real stuff. However, if we kill jobs when we're under full employment, to service debt, we are being fools of the worst sort. We would be acting like Republicans.

          I kind of like the idea of minting the coin but Obama tells no one and keeps it in his pocket like a Monopoly "Get out of jail free" card. It's better than default and Republicans would surely impeach in the House if he pulled a Lincoln.

          look for my eSci diary series Thursday evening.

          by FishOutofWater on Fri Jan 11, 2013 at 06:36:30 PM PST

          [ Parent ]

          •  our government just made it out of thin air (14+ / 0-)

            when they bailed out the banks to the tune of 16 trillion, 770 billion. apparently that wasn't silly or difficult, but finding 1 or 2 trillion to keep the country running is impossible.

            If you can magic 16 trillion out of thin air to save the damned banks, why can't you magic 1 trillion or 2 trillion out of the air to write down people's mortgages and create jobs?  Or, at the very least, keep the Republicans from holding the entire fucking economy hostage?

            if necessary for years; if necessary, alone

            by SouthernLiberalinMD on Fri Jan 11, 2013 at 08:07:17 PM PST

            [ Parent ]

            •  Right ON (3+ / 0-)
              Recommended by:
              SouthernLiberalinMD, emal, Bisbonian

              Second this righteous rant!!

              Modern GOP: Birthers and Deathers Teabaggin' in a widestance on astroturf

              by Wrench44 on Fri Jan 11, 2013 at 10:21:30 PM PST

              [ Parent ]

            •  Same point made (1+ / 0-)
              Recommended by:

              here by Glenn in a comment over at New Economic Perspectives.

              His version:

              The government issued a 16 trillion dollar credit as an electronic ledger entry to bail out the banks. There was no corresponding debt issued at that time, as this would have been apparent by inspection of the national debt at the time this credit was added to the ledger. [emphasis added]

              There is no question that this is what happened. The question is whether the government thinks we, the people, are as important to it as the banks are.

              Money is a concept that is valid as long as we believe in it. Its physical instantiations are merely symbols representative of the concept, whether the symbols be paper, electronic ledgers, coins, or any other symbol the people of a society are mutually willing to suspend their disbelief about.

              So, the Gov't comes up with $16T for Banksters -- but for "We, the People", the Gov't is broke ??

              We need to start by correcting our own assumptions regarding the relation between government, "We, the people", "We, the corporations" -- in particular, "We, the banks".

              United We Understand

              by dorkenergy on Sun Jan 13, 2013 at 12:56:10 AM PST

              [ Parent ]

        •  it's the bane of those of us who don't use (1+ / 0-)
          Recommended by:

          sideways smiley faces.

          I totally agree that the coin is a politically idiotic idea.  But I totally disagree that the 14th isn't germane.  Where do you get that reading?

          "Well, yeah, the Constitution is worth it if you succeed." - Nancy Pelosi // Question: "succeed" at what?

          by nailbender on Fri Jan 11, 2013 at 06:49:07 PM PST

          [ Parent ]

      •  It's roughly how the GOP approaches us (2+ / 0-)
        Recommended by:
        bunnygirl60, gooderservice

        You can want to be above that if you like, but I think it's way past time we actually tried to fight rather than simply looking righteous, well-groomed, and beyond reproach.

        if necessary for years; if necessary, alone

        by SouthernLiberalinMD on Fri Jan 11, 2013 at 08:04:32 PM PST

        [ Parent ]

      •  Actually, that is the way your entire post first (1+ / 0-)
        Recommended by:

        struck me. I thought about it for a while and have decided that I understand your fervent desire to take an entirely political approach, I just think, IMHO, that it is the small way out. We can solve the biggest economic problems we have or we can bicker with the GOP. I'm for crushing the life out of them by tying them to the tracks of a train they never saw coming.

        "When in doubt, do the brave thing." - Jan Smuts

        by bunnygirl60 on Fri Jan 11, 2013 at 10:11:22 PM PST

        [ Parent ]

    •  Imprecise (0+ / 0-)

      There might, hypothetically, be socially useful good ideas that wouldn't drive the GOP (more) insane. If such an issue came up someday, your lodestar would lead you astray.

  •  "POTUS is upholding the law as best he can in an.. (4+ / 0-)

    ..impossible situation", seems like the best choice.

    Then announce (SOTU?) Mitch McConnells own idea of transferring the debt ceiling authority to the President as a solution that would work without a hitch unless, once again republicans reject any solution for no rational reason other than the President agrees with it - further exposing the GOP as the culprit.

     McConnell Filibusters His Own Bill To Lift Debt Ceiling
    BY SAHIL KAPUR DECEMBER 6, 2012, 2:20 PM

    Senate Minority Leader Mitch McConnell (R-KY) wanted to prove on Thursday that Democrats don’t have the votes to weaken Congress’ authority on the debt limit. Instead they called his bluff, and he ended up filibustering his own bill.
    The legislation, modeled on a proposal..
    [The Big Blink? McConnell Proposes Giving Obama Authority To Raise Debt Limit Alone]
    ..McConnell offered last year as a “last-choice option” to avert a U.S. debt default, would permit the president to unilaterally lift the debt ceiling unless Congress mustered a two-thirds majority to stop him. President Obama has championed the idea.
    Further explanation of McConnell’s prior debt ceiling transfer of authority to the President in the summer July of 2011 Mitch McConnell offers this proposal:
    WASHINGTON -- Senate Minority Leader Mitch McConnell (R-Ky.) floated a novel way out of default Tuesday, suggesting that Congress give up its power to raise the debt ceiling, and instead effectively transfer that authority -- and the political pain that comes with it -- to the White House for the remainder of Obama's current term.
    Starting at minute 1:40 is an explanation of McConnells offer to transfer debt ceiling decision/authority over to the President

    Taking this option puts the onus squarely on republicans. Any failure that follows they eat.

    This could lead to eliminating the debt ceiling crap altogether imo.

  •  Eh. (7+ / 0-)
    It would give the Republicans an easy out from the trap they have set for themselves by threatening to take the U.S. financial markets and economy hostage.

    It would change the subject from the threat of a financial meltdown to the methods the POTUS has taken to prevent that meltdown.

    I agree with both of these, but not as consequences for actually minting the coin. Assuming default, the consequences of not minting the coin would be disastrous. The "consequence" would be avoiding disaster, in that case. And if there's no default, no coin would be minted.

    What you list are consequences of TALKING about minting the coin, and having it being seen as a viable alternative to default. Unfortunately, it IS a viable alternative to default, and you can't stop people talking.

    So, it is what it is. I say: embrace the non-disastrous choice and seek to explain why it's not insane.

    it fitfully blows, half conceals, half discloses

    by Addison on Fri Jan 11, 2013 at 06:14:05 PM PST

    •  Exactly so. (1+ / 0-)
      Recommended by:

      They could have upped the political pressure without having slammed the door on the only viable solution if the GOP follow through on their kamikaze plan and drive us to default.


      Mitch Gore

      Want to end too big to fail banks? Then move your money and they will no longer be too big.

      by Lestatdelc on Sat Jan 12, 2013 at 04:05:21 PM PST

      [ Parent ]

  •  I own a platinum coin (3+ / 0-)

    I'll gladly sell it for $1 Trillion dollars.

    ¡Cállate o despertarás la izquierda! - protest sign in Spain

    by gjohnsit on Fri Jan 11, 2013 at 06:21:30 PM PST

  •  President Obama needs to have the coin minted (5+ / 0-)

    and then, at the appropriate moment, he can say:

    "Excuse me while I whip this out."

    "Why do we see the same old Republicans all over the news all the time when they were kicked out for screwing everything up?" - socratic's grandma

    by Michael James on Fri Jan 11, 2013 at 06:23:45 PM PST

  •  I thought they might ride up to a toll booth (5+ / 0-)

    without any change and ask somebody to go back and get a shitload of trillion dollar coins......

    The modern conservative is engaged in one of man's oldest exercises in moral philosophy;the search for a superior moral justification for selfishness

    by CTMET on Fri Jan 11, 2013 at 06:31:31 PM PST

  •  Mint the coin and end the debt ceiling charade (7+ / 0-)

    "Too often we excuse those who are willing to build their own lives on the shattered dreams of others" Robert F. Kennedy

    by realwischeese on Fri Jan 11, 2013 at 06:37:45 PM PST

  •  So where do you get the idea that the 14th amend- (4+ / 0-)

    ment, Sec 4, only applies to the individual states?  

    Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
    (my emphases)


    "Well, yeah, the Constitution is worth it if you succeed." - Nancy Pelosi // Question: "succeed" at what?

    by nailbender on Fri Jan 11, 2013 at 06:45:43 PM PST

    •  And here's a pretty good analysis of it by Chait (1+ / 0-)
      Recommended by:

      at TNR.

      Jack Balkin delves into the legislative history and shows why the 14th Amendment has a provision guaranteeing the debt in the first place. the sponsor of the provision, Benjamin Wade, wrote at the time:

          [The proposed amendment] puts the debt incurred in the civil war on our part under the guardianship of the Constitution of the United States, so that a Congress cannot repudiate it. I believe that to do this wil give great confidence to capitalists and will be of incalculable pecuniary benefit to the United States, for I have no doubt that every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.

      In other words, it's in the 14th Amendment to guard against exactly what Congressional Republicans are doing right now.
      Balkin's historical perspective is very persuasive even though he doesn't present it as an argument for using Sec 4 today, per se.  But it's crystal clear where the history takes us, and it's to the Obama Oval Office where he has the responsibility to invoke this clause to put down the hostage taking now and for all time.  He owes it to the country's future.  

      Also interesting to note that the Chait piece highlights another dynamic that isn't mentioned around here: that the GOP leadership would welcome the deus ex machina of the 14th as it would defuse the suicide vest they've wired and are threatening to trigger.

      "Well, yeah, the Constitution is worth it if you succeed." - Nancy Pelosi // Question: "succeed" at what?

      by nailbender on Sat Jan 12, 2013 at 02:50:23 PM PST

      [ Parent ]

  •  Obama should take it to SCOTUS (0+ / 0-)

    Maybe I'm missing something, but taking it to the Supreme Court settles it. I can not imagine Roberts or Kennedy being willing to allow the United States to default. Thomas and Scalia will be against anything that favors the Obama Administration, but I really think that taking it to court settles it politically and permanently.

    "I feel like I'm still waiting to meet my true self. I'm assuming it's gonna be in a dark alley and there's gonna be a fight." ---Rachel Maddow

    by never forget 2000 on Fri Jan 11, 2013 at 06:48:01 PM PST

  •  Great analysis (6+ / 0-)

    And I'm inclined to agree. Even if Repubs don't realize it, they're effectively bluffing, because there's no way that they'll be allowed to actually default by Main St. and Wall St. And even if they somehow manage to do it, Obama can simply ignore the debt ceiling law, which may well be unconstitutional, by issuing a legal finding to that effect, thus simultaneously rendering the house GOP majority politically impotent and making them hated by the corporate and financial elite, which will throw its support to Obama & Dems.

    Plus, even if they manage to extract huge cuts to entitlements from Obama and Dems go along with it--both of which I really doubt will happen for mostly politically reasons--it'll hurt them politically as much if not much more than it'll hurt us. So either way, their apparent hostage-taking over the debt ceiling is a political loser for them. And eventually, they'll realize it, if they already don't, which I think they do even if they're not showing it openly, making all this just posturing and positioning for the actual deal that will eventually be struck.

    We're not going over this cliff, both sides know it, and everything we're going to see and hear from both sides is just so much posturing and positioning for the actual deal that will eventually be struck, less a Grand Bargain than another kicking of various cans down the road. And maybe this time that won't be such a bad thing, considering the alternatives.

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Fri Jan 11, 2013 at 07:03:18 PM PST

    •  This sounds vaguely familiar, isn't it how Bush (1+ / 0-)
      Recommended by:
      George Hier

      was able to use torture, even though it was in violation of US law as well as international treaties? And if so, do you think the GOP could possibly recognize the slippery slope they created?

      Obama can simply ignore the debt ceiling law, which may well be unconstitutional, by issuing a legal finding to that effect

      "I cannot live without books" -- Thomas Jefferson, 1815

      by Susan Grigsby on Fri Jan 11, 2013 at 08:48:32 PM PST

      [ Parent ]

      •  You're comparing saving the global economy (3+ / 0-)
        Recommended by:
        Bill Roberts, Aquarius40, Beetwasher

        to practicing torture? Even Jefferson was willing to ignore the constitution when he felt there was a higher purpose involved. All presidents have, for better or worse. It's impossible to strictly adhere to it and govern effectively. The slope's been slippery for over 200 years. The key is to do this only when absolutely necessary, and prudently. Obama, unlike Bush, would be doing both. So in such an instance, I'd be ok with it, as a last resort.

        Thing is, I don't think he'll need to, as they're either bluffing, or won't be allowed to do this by the powers that be.

        "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

        by kovie on Fri Jan 11, 2013 at 09:14:55 PM PST

        [ Parent ]

        •  No, I was comparing the method. Not the goals. (1+ / 0-)
          Recommended by:
          Dogs are fuzzy

          Sorry if I wasn't clearer, but I was only thinking of the way I would be answering the howls that would be sure to come from the far right - some of whom are unfortunately, relatives.

          "I cannot live without books" -- Thomas Jefferson, 1815

          by Susan Grigsby on Sat Jan 12, 2013 at 12:23:56 AM PST

          [ Parent ]

    •  I Think The Idea Is Being Floated As A Distraction (0+ / 0-)

      And serves several useful purposes in a tactical sense.  I do not believe their is any serious intent to implement.  There may be an attempt to make it seem as if It's being seriously considered.

      This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: []

      by Beetwasher on Sat Jan 12, 2013 at 03:46:09 PM PST

      [ Parent ]

  •  I'm waiting for Fonzie's take on things ... (1+ / 0-)
    Recommended by:
    George Hier

    since this debt-limit circus is starting to really reek of jumping sharks.

    The rest of the world isn't going to keep taking us seriously for very much longer, if they are at all anymore.

  •  But, billmon, say you're walking down the street (1+ / 0-)
    Recommended by:

    ... and you see a shiny trillion dollar coin on the sidewalk.

    I mean, we've all found a coin on the ground from time to time.

    Tell you what, if I found a trillion dollar coin, I'd quit my job, buy a custom titanium bike, and ride around the world.

  •  Much as I respect your analysis,... (12+ / 0-)

    I disagree with you on this. I think the damage that would be done by a default - whatever the nature - would be disastrous for this country and the world. The idea that the Rethugs would pay a penalty for their shenanigans has some merit but they would not be the only ones hurt and we have nearly two years to wait before the next election might yield some potential of revenge. That's a long time for sentiments of whom to blame to simmer.

    I happen to be one who thinks we should go whole hog and mint a $60 trillion coin and take back our economic system from the wall $treet terrorists but I don't see that happening with this President. But a $1 trillion coin would shake the 1% elite to the core and begin an inevitable questioning of the whole monetary structure and its bias against the the average citizen. That would be a great thing IMHO.

    One thing that doesn't get mentioned is that the coin seignorage idea is beginning to filter into the MSM and as more talking heads begin to explore it, it increasingly is becoming more familiar. It's only a matter of time before  it appears far less of a wild and crazy idea. Especially when respected experts are weighing in with reassurance of the legality and appropriateness of this solution.

    I'm not saying that the President should go with it right now but I certainly think that if a default - and I think that would include scrip issuance, selective payment of bills, shutdown of government, etc - nears, the coin gambit should be pursued.

    Just another faggity fag socialist fuckstick homosinner!

    by Ian S on Fri Jan 11, 2013 at 07:22:38 PM PST

  •  Don't mint it, strike it. And use the gavel on the (7+ / 0-)

    Senate floor - Harry Reid's gavel.  Strike the coin in the Senate and you've got a lot of symbolism to work with in the media.  Striking out the stupidity of holding the economy hostage for outdated policies.  Striking out the partisan craziness of the modern Republican party.  Striking out the magnified voice of the U.S. gentry who've otherwise grown accustomed to a gilded financial forecast.  Strike the coin and make them all pay for the partying decades of the affluent.  Put us all back to work with a gesture worthy of John Henry.  

  •  What happens... (1+ / 0-)
    Recommended by:

    when law, politics, and economics collide?

    More unemployment.

    The Department of Treasury is already:

    (1) suspending sales of State and Local Government Series Treasury securities;
    (2) determining that a “debt issuance suspension period” exists, which permits the redemption of existing, and the suspension of new, investments of the Civil Service Retirement and Disability Fund and the Postal Service Retirees Health Benefit Fund;
    (3) suspending reinvestment of the Government Securities Investment Fund and
    (4) suspending reinvestment of the Exchange Stabilization Fund.
    "Suspending reinvestment" means "borrowing" from the fund by not issuing T-bills.

    That means:
    1. State and local governments cannot invest in federal T-bills bought from the Treasury but must go to the secondary market.
    2. Civil service and postal employees' retirement funds are put at some risk depending on how long this goes on.  These are one form of so-called "entitlements".
    3. The Government Securities Investment Fund allows federal employees to buy government securities.  Federal employees cannot add to that part of their Thrift Savings Plan portfolio.
    4. Wikipedia explains the Foreign Exchange Stabilization Fund:

    The Exchange Stabilization Fund (ESF) is an emergency reserve fund of the United States Treasury Department, normally used for foreign exchange intervention. This arrangement (as opposed to having the central bank intervene directly) allows the US government to influence currency exchange rates without affecting domestic money supply.
    Treasury is borrowing from a contingency fund for different purpose than what Congress intended.  Or is there legal authorization to use this fund in this way?

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Fri Jan 11, 2013 at 07:48:54 PM PST

  •  Wrong. Terrible ideas+excuses put us here not coin (12+ / 0-)

    Not putting a raise in the Bush tax cut deal in 2010 when there was leverage with them expiring was a bad idea.

    Then when I and others predicted and it would blow up and did, and there was this option then and this option now.

    And the GOp could go through with it and this administration would get the blame because that is how it works; whomever is in office gets blamed.

    It's also incredibly naive to think they would even have to go through with it given the pledges on $250,000 were broken. We know from the Jack Lew memo what Obama was willing to give up. Boehner just couldn't get the votes at the time but they used it to create this debacle we need to get out of. yes, we need to use the TDC, not listen to naive excuses and theories about this unprecedented embarrassing mess the POTUS and Congress allowed to happen even though anyone could see this was going to happen.

    No, a terrible idea is deluding one's self into thinking this historically unprecedented debacle where raising the debt ceiling is something to be bargained with and something to be used to cut SS and medicare and push for more austerity is somehow 11th dimensional chess.

    Platinum Coin Seignioriage is more than just ending this debacle, it;'s about taking on austerity and educating the public on how our system works which is why the trillion dollar coin should be the start and we should go beyond that to have these coins pay for appropriations instead of issuing more bonds we don't need because we created what is being used as liquidity and lent to us when it's only there as a small interest rate tool; one of many we set as a government with the Fed.

    And like the filibuster the debt ceiling should go, but our country's legislature is a failure so we need a way to make the debt payments while spending enough to raise deficits to put money in the private sector but without the threat of political default.

    No, it's TDC to start out and then PCS to fight austerity politics for good or people who make these excuses will have the shattered lives of seniors and everyone else because the safety net was cut because they dismissed the only idea now worth pursuing.

    Yeah, I don't care about what you think; I care about the debate this spawned where we are finally talking about how our system really operates and can operate within that framework if only Congress and the naive people that support Congress doing this believing in political gamesmanship fairy tales would just get out of the way.

    I don't negotiate grand bargains with deficit terrorists!

    by priceman on Fri Jan 11, 2013 at 07:52:28 PM PST

    •  "Yeah I don't care what you think" (3+ / 0-)
      Recommended by:
      Ree Zen, sviscusi, user8531

      Believe me, the feeling is mutual.

      •  Wow! You are smaller than I thought. (7+ / 0-)

        priceman was saying, essentially, that the debate and the education involved in this conversation, nationwide, is incredibly important. Sadly, you missed that. You also, of course, have missed all the facts about PCS and MMT along the way but you are in good company on that since a lot of people don't really have that background and haven't taken the rather large amount of time it takes to do the reading. I'm hoping you will keep reading on this subject and try to re-open your mind to the actual monetary and economic issues involved.

        As for you, priceman,

        Platinum Coin Seignioriage is more than just ending this debacle, it;'s about taking on austerity and educating the public on how our system works which is why the trillion dollar coin should be the start and we should go beyond that to have these coins pay for appropriations instead of issuing more bonds we don't need because we created what is being used as liquidity and lent to us when it's only there as a small interest rate tool; one of many we set as a government with the Fed.
        YES!!! Exactly.

        "When in doubt, do the brave thing." - Jan Smuts

        by bunnygirl60 on Fri Jan 11, 2013 at 10:25:35 PM PST

        [ Parent ]

        •  How can it educate the public... (0+ / 0-)

          ...when the GOP, as Billmon pointed out, was already demagoguing it?

          Visit for Minnesota news as it happens.

          by Phoenix Woman on Sat Jan 12, 2013 at 06:37:59 PM PST

          [ Parent ]

          •  The GOP doesn't control the mind of the country (2+ / 0-)
            Recommended by:
            dorkenergy, triv33

            They were demagoguing it the the dumbest way imaginable regarding the amount of platinum in the coin. Sorry, that's really not a good argument. It's actually astonishingly defeatist and ignorant. The GOP says we need entitlement cuts; I guess we better just surrender SS and Medicare. I guess we better just surrender to the fact that the US is broke because the GOP said it. On taxes, let's lower top rates beyond the Bush tax cuts. It's what they believe and their so powerful. let's lower the Capital gains tax to 0%. It's what they believe and I guess we better accept it.

            Wrong. The fact that this support for the TDC and PCS forced the WH to respond shows its effectiveness in educating the public which would go further there if we didn't just get the signal from the WH that they want cuts and don't care about solutions.

            So that is not a good point; neither is anything in this diary.

            I don't negotiate grand bargains with deficit terrorists!

            by priceman on Sat Jan 12, 2013 at 09:10:47 PM PST

            [ Parent ]

  •  I don't want all the businessmen (4+ / 0-)

    and Wall St goons lining up behind Obama, not particularly.

    I want the Republican party to stop creating this particular "shock and awe" style economic threat. Whether they follow through on it or not, it is used to justify all kinds of actions that never would have been justified without it. As in, for instance, the fiscal cliff itself, which would never have existed had it not been for Boehner threatening Obama over the debt ceiling in 2011. And the fiscal cliff resulted in a large portion (84%?) of the Bush tax cuts becoming permanent, none of which would have happened without the Republican hostage-taking in summer 2011.

    I want this crap to stop. Aside from it being bad policy, it's anti-democratic (small 'd') in the worst way. "I could never get sufficient support for my lame-ass idea from my colleagues (and much less from the people of the US) so I'm going to threaten to BLOW UP THE FUCKING ECONOMY UNLESS YOU GIVE! BOW DOWN NOW BEFORE ME, BOW DOWN!"

    Haven't we had enough of that?

    In terms of the politics of this series of events, my priority is short-circuiting one of the ways that Congress (and others) use invented, manufactured economic crisis to plunder and destroy programs that serve large numbers of Americans. If we allow them to continue to do it, their "cuts" will extend even to eliminating whole pieces of the government itself.

    So I don't care so much about the optics, or about helping the Democrats attain their goal of impressing Wall St and the Chamber of Commerce with how much less crazy they are than the Republicans.

    if necessary for years; if necessary, alone

    by SouthernLiberalinMD on Fri Jan 11, 2013 at 07:59:20 PM PST

  •  A Flaw In Your Reasoning. (6+ / 0-)

    Republicans never need a reason to make political hay. If they don't have something, they'll just make something up.


    Lipstick on a pig!

    So to reason that a certain move should be made because the GOP could use it means that you accept the fallacy that they won't anyway. They will.

    Therefore the argument should be whether minting a coin to pay the debt that CONGRESS created is wise in and of itself ... not whether Republicans will use the issue to cry about.

    Remember, Republicans will cry about anything, and lacking anything, make it up. Victims, all their lives.

  •  I vehemently disagree (11+ / 0-)

    First, the "business community" did NOT back away from the GOP after the first iteration of this debt ceiling showdown. Mitt Romney's campaign never lacked for funding.

    Second, the idea that we have to keep it simple is dangerous and misleading. For decades the wrong-wingers have been shoving the Overton Window closer and closer to outright fascism, but playing on simple emotional issues. Now we're supposed to mimic them because explaining the intricacies of money creation are too difficult? Frankly, money creation is the PERFECT issue to force Americans to snap out of their stupor and despondency.

    Third, this issue of money creation strikes at the very heart of the bankster oligarchy. Whether the creation and allocation of new money and credit will be used for private gain or for public good is THE key issue on which so many other issues actually hinge. You want to stop global climate change? You need $100 trillion world-wide to build a new industrial base and transportation systems that do not burn fossil fuels. You think the zombie vampire squids of Wall Street and the City of London are going to fund that kind of revolutionary economic development?

    This issue of money creation is what must be used to ruthlessly destroy the crebibility and political power of the bankster oligarchy.

    A conservative is a scab for the oligarchy.

    by NBBooks on Fri Jan 11, 2013 at 08:33:44 PM PST

  •  I respectfully suggest (5+ / 0-)

    that the Trillion-Dollar Coin proposition has already accomplished much more than could ever have been expected of such a hair-brained scheme.

    The GOP (or their mouthpieces) have been forced to respond, and the only argument they have found is that a 1 T coin would sink the Titanic or weigh more than 1 Bazillion blue whales.  Or something to that effect.  That is an admission of defeat.  They have no argument, no justification for their obstruction, and they're reduced to spouting such moronic nonsense that anyone with half, no a quarter, no 1/32 of a brain knows that they're full of shit.

    Anyone who takes 1 second to think about this knows that they're blackmailing the country, and don't have a leg to stand on.  After years of making up plausible-sounding 'economic theories' to justify their class warfare and slash-and-burn governance, they are finally reduced to spouting complete gibberish. They have finally run out of talking points.

    190 milliseconds....

    by Kingsmeg on Fri Jan 11, 2013 at 09:15:47 PM PST

    •  Nothing hair-brained about it (1+ / 0-)
      Recommended by:

      The PCS/TDC idea is really nothing mote than QE for public spending instead of trying to get private banks to loan with free money money created out of tin air. We have already tripled the money supply in the past 2 and half years which has not created inflation much less hyperinflation.


      Mitch Gore

      Want to end too big to fail banks? Then move your money and they will no longer be too big.

      by Lestatdelc on Sat Jan 12, 2013 at 04:12:28 PM PST

      [ Parent ]

  •  Well said. Let the GOP blow their heads off. (1+ / 0-)
    Recommended by:

    I might even be willing to live under a bridge or in a tent to see them commit suicide.

    •  I'm not willing to live under a bridge (1+ / 0-)
      Recommended by:

      It might be all well and good for young, healthy adults to talk glibbly about such things but it's not young, healthy adults who will suffer and die under those conditions. Children, retired people, the chronically ill will bear the brunt of that kind of sacrifice. Do you think they are willing to put their lives at risk just to claim a political victory? Maybe you should ask some before volunteering their lives and health.

      "Given the choice between a Republican and someone who acts like a Republican, people will vote for a real Republican every time." Harry Truman

      by MargaretPOA on Sat Jan 12, 2013 at 02:29:17 PM PST

      [ Parent ]

  •  I love the coin (0+ / 0-)

    but frankly I am afraid that the concept of phony money will produce bloodshed. There's too many people with arsenals and fragile mental states.

    If they think the Kenyan president is destroying our currency with phony money, some of them will come out shooting.

    A couple of crazies shoot up the IRS every year, even without senor-age platinum coins.

    Orly, it isn't evidence just because you downloaded it from the internet.

    by 6412093 on Fri Jan 11, 2013 at 09:29:50 PM PST

  •  Wrong on both counts. (6+ / 0-)
    It would give the Republicans an easy out from the trap they have set for themselves by threatening to take the U.S. financial markets and economy hostage.
    They've dug so many traps for themselves, they can't move without falling into one. The best one? Let them stand against Social Security and Medicare. Do NOT make an offer, nor accept any demand which means people get less of anything, including time of their lives where they get benefits.
    It would change the subject from the threat of a financial meltdown to the methods the POTUS has taken to prevent that meltdown.
    This is the Passive President theory again. It could just as easily be portrayed as Strong Defense of America. The President can just as easily say "tell me what the options were. These people -- the same people who are never tire of attacking the Social Security and Medicare people paid for -- ... almost ruined the global economy... and so forth.

    There is no stronger political ground than issuing the coin. What? Congress is going to take the POTUS to the Supreme Court insisting on its right to destroy the World Economy; arguing that a law passed and signed is not a law passed and signed.

    I'd pray for that spectacle!

    That aside, the real advantage, in my opinion, to the Trillion Dollar Coin is "Look Ma! No Bonds!" Bonds means borrowing. A certain amount of money comes in, that money plus interest goes out.

    Such a coin couldn't help but turn into a discussion: well, why do we borrow money when we can issue it, anyway? The effects of future budgets, deficits, and debts might turn out to be extremely salutary. And a win for the nation, as well as the Democratic Party.

    And do we ever need that discussion.

    Markos! Not only are the Gates Not Crashed, they've fallen on us. Actual Representatives are what we urgently need, because we have almost none.

    by Jim P on Fri Jan 11, 2013 at 09:30:23 PM PST

  •  Forget minting a $1 trillion platinum coin... (5+ / 0-)
    Recommended by:
    Sandino, YoloMike, DRo, Bisbonian, GeoffT

    Mint 20,000 $1 billion coins, and use them to pay off the entire debt. Sure we'll have some inflationary issues, but given that the M3 money supply is somewhere around $18-20 trillion, and the currency and credit derivatives are around $629 trillion, I'd guess we'd be looking at perhaps a doubling in the price of goods, easily compensated for by increasing the minimum wage. This would have the additional benefit of effectively cutting in half the debt load of the states, businesses, and individuals.

    Then forbid the investing of the SS surplus into the federal government, so the politicians can't use it to falsely balance the budget.

  •  make the coin out of melted down guns (1+ / 0-)
    Recommended by:

    that would actually be worth something

    what price would you put on the value of 30 thousand lives and the loss in quality of life imposed on 200 thousand gunshot victims and the grief and burden placed on the families and friends of all these people?

  •  More important question (0+ / 0-)

    Why did Mel Brooks stop making movies?

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Sat Jan 12, 2013 at 04:56:47 AM PST

  •  asdf (1+ / 0-)
    Recommended by:
    George Hier

    I agree with diarist right down the line - and want to add a third reason why issuing such a coin would be a political disaster:

    To use a law for a purpose so obviously not intended by its existence would invite the GOP to come up with similar 'legal but obviously not intended interpretations of law" when they want something THEY desire but which lawmakers have, probably reasonably, denied them.
    It really is just that simple. When you start using laws in ways they were never meant to be implemented, you will discover quite quickly that 'interpretation' and 'technically legal" can be a double-edged sword.

    Sadly, everything Communism said about itself was a lie. Even more sadly,, everything Communism said about Capitalism was the truth.

    by GayIthacan on Sat Jan 12, 2013 at 02:04:17 PM PST

  •  The Ayn Rand Petition (0+ / 0-)

    I petitioned the White House to mint a trillion dollar coin.
    I hope that you'll sign my petition.


    God gave you free will to define God, use it to make the best God that you can.

    by Dotty Gale on Sat Jan 12, 2013 at 02:16:16 PM PST

  •  The Coin would give Republicans an eternity of (1+ / 0-)
    Recommended by:
    George Hier

    propaganda to use against the Democrats, and if anyone thinks they wouldn't drive it in to the ground hasn't been paying attention to them over the years.  

    It is political suicide.   I live in central Illinois.  I interact with conservatives all the time.   Here is the perfect analogy for  those who don't seem to get it:

    Remember how we all actively hope that they'll run Sarah Palin again?  Right now conservatives are hoping, wishing, and praying, that Obama prints a trillion dollar coin.  

    For very similar reasons.  

    The tent got so big it now stands for nothing.

    by Beelzebud on Sat Jan 12, 2013 at 02:16:28 PM PST

  •  It only matters whether the GOP is bluffing (2+ / 0-)
    Recommended by:
    chuckvw, a2nite

    if the president actually calls their bluff.  I'm having a hard time imagining this happening, and wonder if we just end up with a bad "compromise" instead.

    There are thousands hacking at the branches of evil to one who is striking at the root. -Thoreau

    by Frameshift on Sat Jan 12, 2013 at 02:20:44 PM PST

  •  First, I don't think the coin will happen (1+ / 0-)
    Recommended by:

    Obama has never shown any great desire or ability to think that far outside the conventional box. More importantly though, it seems to be billmon's position that if the economy blows up, it will be worth it because people will blame Republicans. Must be nice to have the kind of wealth or security to put partisanship over the lives of tens of thousands, hundreds of thousands or even millions of people who are going to lose their livelihoods when the nation's credit gets downgraded and the selling frenzy on Wall Street begins. Know what? I've voted exclusively Democratic since the early 1990s because they aren't batshit insane but I have to draw the line at anything and everything goes just to hurt Republicans. Talk about a Pyrric victory!

    "Given the choice between a Republican and someone who acts like a Republican, people will vote for a real Republican every time." Harry Truman

    by MargaretPOA on Sat Jan 12, 2013 at 02:24:11 PM PST

    •  I do not think that is billmon's position at all (0+ / 0-)

      "The Founding Fathers envisioned a robustly Christian... America, with churches serving as vital institutions that would eclipse the state in importance." The Real Ron Paul

      by 815Sox on Sat Jan 12, 2013 at 04:08:48 PM PST

      [ Parent ]

  •  I feel much better now. (0+ / 0-)

    Even with all the caveats. Thanks, billmon.

    "The only thing we have to fear is fear itself."........ "The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little." (yeah, same guy.)

    by sidnora on Sat Jan 12, 2013 at 02:27:43 PM PST

  •  Well argued. (0+ / 0-)

    This post made me change my mind.

  •  They actually probably *would* take him to court (1+ / 0-)
    Recommended by:
    George Hier

    "what exactly would the Republicans do about it? Take the POTUS to court?"

    Yes, they would do that exact thing about it.

    There's a significant contingent of Republicans that's been floating the impeachment trial balloon near-constantly since Obama's been elected.  They'd absolutely salivate at the prospect of Obama openly stating that he was going to flout the law because it made two contradictory demands of the President.

    By my judgement, this has all the disadvantages of the "14th Amendment" approach, but none of the upside, since it has the president openly declaring his intent to break the law as well.

    But honestly, the fact that this double-bind does exist, that the president would need to violate the law either to conform to the debt limit, or to conform to the appropriations bill that exceeds it, makes me suspect that it isn't just about brinksmanship and extortion here; some of the teabaggers may really just be trying to entrap Obama into an "impeachable offense".

  •  I got a much better idea (0+ / 0-)

    Boehner and Pelosi flip for it.  They use a quarter.

  •  I agree it's dumb. (0+ / 0-)

    So let's amend that law so the next Republican in the White House doesn't do it.  There's little chance that he or she will be as wise as the current President.

    "Unrestricted immigration is a dangerous thing -- look at what happened to the Iroquois." Garrison Keillor

    by Spider Stumbled on Sat Jan 12, 2013 at 02:51:47 PM PST

  •  Very informative diary. (0+ / 0-)

    I'm persuaded that the Trillion Dollar Coin plan is nuts.

    I wish I had the depth of knowledge that billmon so consistently (and not sufficiently frequently) displays.

    I also wish I could write so sharply.  I'm pretty well known in my own field for clear, strong writing; but it's nothing like this.

  •  "Isn't anyone going to help that poor man?" (0+ / 0-)

    "Shut up Harriet, that's sure to get him killed."  In the movie, the bluff works. Sheriff Barack might do well to emulate Sheriff Bart. I love coin ploy., amusing and likely effective.  

  •  Actually, The IDEA of it IS Brilliant As a Red Her (1+ / 0-)
    Recommended by:

    Red Herring.  Make the Repubs believe this IS being considered, its a great distraction on a number of levels and serves several useful functions.

    I agree, it wouldn't be smart to implement, but of is smart to float the idea and make it seem like its a serious consideration.

    This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: []

    by Beetwasher on Sat Jan 12, 2013 at 03:40:54 PM PST

    •  Actually you have it backwards (1+ / 0-)
      Recommended by:

      Implementation is brilliant as it is a brilliant idea as policy, screaming it is a hair0brained idea is a red herring, form the real dangers of not doing and letting the GOP drive us into default.


      Mitch Gore

      Want to end too big to fail banks? Then move your money and they will no longer be too big.

      by Lestatdelc on Sat Jan 12, 2013 at 04:17:13 PM PST

      [ Parent ]

      •  Nope, Because There are Better Fall Back Options (0+ / 0-)

        By making the other side believe this is the fall back, and I'll bet they do believe it, means they will be unprepared for what you truly intend to do.

        Simply continuing to auction treasuries and ignoring the debt limit is a far superior option.  Let them believe Obama is going to issue the coin and let them.prepare their strategy to respond.  They will be caught off guard.

        In the end It's moot cuz they'll Cave anyway.

        This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: []

        by Beetwasher on Sat Jan 12, 2013 at 04:35:58 PM PST

        [ Parent ]

        •  There is? (0+ / 0-)
          Because There are Better Fall Back Options
          Name them please.

          Simply ignoring the debt limit and continuing to issue more treasures/new debt is not only a violation of the law (and would prompt an impeachment) and not solve the issue, and would likely trigger serious market repercussions even trying to continue to issue them since their legality would now be in doubt.

          Why not just go with PCS and eliminate the debt issue entirely by eliminating the debt?


          Mitch Gore

          Want to end too big to fail banks? Then move your money and they will no longer be too big.

          by Lestatdelc on Sat Jan 12, 2013 at 05:02:47 PM PST

          [ Parent ]

          •  Uhhh, You Didnt Read The Diary, Did You? (0+ / 0-)

            Billmon explains it well.

            GOP could pursue impeachment over thr coin too.  Whatever Obama dors they'll claim its illegal and scrrqch about dictatorship and impeachment.

            This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: []

            by Beetwasher on Sat Jan 12, 2013 at 05:09:02 PM PST

            [ Parent ]

            •  Exactly, the GOP will go for impeachment no matter (0+ / 0-)

              So go with an actual permanent solution which Platinum Coin Seigniorage (PCS) and the TDC option are.


              Mitch Gore

              Want to end too big to fail banks? Then move your money and they will no longer be too big.

              by Lestatdelc on Sat Jan 12, 2013 at 10:34:43 PM PST

              [ Parent ]

              •  No, the permanent solution to THIS problem is (1+ / 0-)
                Recommended by:

                abolishing the debt ceiling as a legal idea, either de jure or de facto.

                The coin is not a solution to THIS problem - the debt ceiling -, nor is it permanent.  Do we mint another coin next year?  Every year?

                If congress wishes to spend less, it must spend less.  Deciding it will spend on credit and then later not pay the bill and instead for the Executive to decide who dies so Bankers will give more $ next year, is not a power it has, or should have.

                •  Yes (0+ / 0-)
                  Do we mint another coin next year?  Every year?
                  Every year?
                  If congress wishes to spend less, it must spend less.
                  Yep. And that wouldn't change if we converted to Platinum Coin Seigniorage (PCS).


                  Mitch Gore

                  Want to end too big to fail banks? Then move your money and they will no longer be too big.

                  by Lestatdelc on Sun Jan 13, 2013 at 03:03:29 PM PST

                  [ Parent ]

                  •  U miss the pt: THIS problem is the debt ceiling. (0+ / 0-)

                    U fix that by abolishing the debt ceiling.

                    If you want the coin b/c u want to 'teach the pleebs they're stupid about money' or 'break the bankers by making their interest, arbitrage, etc. schemes meaningless', then you're doing exactly what the Thugs are: using the debt ceiling as a Trojan horse for another, altogether different agenda.

                    At bottom, both Thugs and those who would do that have no faith in the People or democracy.  In addition, bc of that any fundamental policy change they make is doomed and illusionary bc it never actually had majority support produced by honest operation of the democratic/representative process.  

                    Thugs are now learning this and seeing the world they made center of their reason d'etre crumble to mud. See, Dobson Why would we want to emulate that?

              •  Platinum Coin Is Not Permanent (0+ / 0-)

                You have a very fundamental misunderstanding of the entire issue, it seems.

                This post is dedicated to myself, without whom, I'd be somebody else. Though I'd still be an asshole. My Music: []

                by Beetwasher on Mon Jan 14, 2013 at 05:59:02 AM PST

                [ Parent ]

  •  Except the Gingrich shutdowns (2+ / 0-)
    Recommended by:
    George Hier, chrismorgan

    were not at all over the debt limit. They refused to pass appropriations bills to fund the Gov.

    Apples to ball bearings.


    Mitch Gore

    Want to end too big to fail banks? Then move your money and they will no longer be too big.

    by Lestatdelc on Sat Jan 12, 2013 at 03:47:50 PM PST

  •  The only sensible thing to do (3+ / 0-)
    Recommended by:
    AnthonyJKenn, wsexson, George Hier

    is make more concessions for a temporary extension...  And then again in three months... And again in three weeks... And then before you know it it's election time again and we will have to look even more sensible and centrist to get those undecided votes...

    We must look sensible and grownup at all times as they slice us repeatedly with the (dire) strait razor of increment. Never look outside the box. The powder might get wet!

    The remote is broke so we watch the same movie over and over again.

    Perpetual crisis means never having to say you're sorry.

    by chuckvw on Sat Jan 12, 2013 at 03:54:46 PM PST

    •  Absolutely. (1+ / 0-)
      Recommended by:

      The fact of the matter remains that with this rejection of the platinum coin, and their earlier rejection of the 14th Amendment solution, there are only two possible scenarios resolving this crisis:

      1) TeaPublicans stand their ground, we default; Obama forces a partial shutdown of all but essential functions of government and waits for GOTP to cry uncle; then he and McConnell negotiate another "Grand Bargin" which combines the social spending cuts of Simpson-Bowles with modest regressive tax reform..which is then modified by the House GOTP to include even more rancid social spending cuts; which Obama accepts in exchange for punting the debt ceiling another 3 years or so...and we face the same situation again in 2017.

      2) TeaPubs stand their ground; but at the end just when default is inniment, Wall Street pounds them into submission and forces them to accept a deal...which basically follows Scenario #1 (chained CPI + increase in SS eligibility age + deep cuts in other social programs in exchange for regressive tax reform and a partial repeal of "ObamaCare").

      Anyone who thinks that the TeaPubs will simply back down are simply fools who don't understand the ideology and intensity that underlies them. They will no more give Barack Obama credit than they would grant him US citizenship. They want to beat him down and force him to do the cutting of his own party base....and fortunately for them, he seems to want the same thing on his own.

      Plus....the forces that now run the Republican Party aren't any more kind of the "Republican establishment" telling them what to do than they are about Obama. They are more than willing to push the envelope to pursue their agenda...because they think that they can get it all back in 2014 and 2016, when Dems in the Senate are as vulnerable as they were in 2010, if not more vulnerable. Plus, they are in protected districts which would require superhuman efforts and lots of $$$$ by the Dems to overcome, so they don't have any motive to surrender; if anything, they have to face the possibility of being primaried by even more radical TeaPubs funded by the usual suspects with lots and lots of money. (And also, if the SCOTUS repeals Article 5 of the Voting Rights Act and gives a green light to all the processes of voter suppression, that will give the TeaPubs an additional boost of confidence.)

      The fact remains that the Democrats have simply committed these past 30 years to run away from classic New Deal/Populist values, because they are as dependent on the same corporate Big Money interests as the Repubs are. That, not merely the pressure of the TeaPubs, explains the rightward economic creep of the Democratic Party under Clinton, which under Obama has now become a full on gallop. All this "debt ceiling" drama tells is that the Democrats will ultimately do as they always have done under pressure: sacrifice liberal economics and adopt the New Austerity.

      But, I guess that some people still won't see that until they wake up on March 1st and open their paper to see the latest sellout compromise.

      Open your eyes, are being played.  Again. And again.

  •  If the canadians can do it why can't we? (2+ / 0-)
    Recommended by:
    Thor Heyerdahl, wsexson

  •  Thank you. The whole coin thing = big mess (2+ / 0-)
    Recommended by:
    FiredUpInCA, George Hier

    I already here enough from conservatives screaming about the debt and deficits (even though this is just about paying the bills).

    The last thing we need to do is spend our Presidents second term locked up in plays er I mean court battles.

    "The Founding Fathers envisioned a robustly Christian... America, with churches serving as vital institutions that would eclipse the state in importance." The Real Ron Paul

    by 815Sox on Sat Jan 12, 2013 at 04:07:46 PM PST

  •  What would happen if . . . (1+ / 0-)
    Recommended by:
    George Hier

    . . . Obama simply announced when Congress refuses to extend the debt ceiling:

    Fellow, citizens:

    Congress has spoken. They have decided to repudiate the debt that they themselves have incurred. As President, I had no choice but to spend the money that they appropriated. Today, I have no choice but to accept their decision. They are the elected representatives of the people. They alone are in control of government spending, as our Constitution says. And since I have no authority to overrule them, I must accept their choice.

    Of course. The President would tell Boehner in advance that this would be his response. Let him stew in his own juices.

    Note to Boehner and McConnell: "You don't need a weatherman to know which way the wind blows." --Bob Dylan-- (-7.25, -6.21)

    by Tim DeLaney on Sat Jan 12, 2013 at 04:20:24 PM PST

  •  Art. 4 of the 14th Amend. was created to prevent (1+ / 0-)
    Recommended by:

    what the R's are threatening. See Jack Balkin's History of Section 4

    What do we learn from this history? If Wade's speech offers the central rationale for Section Four, the goal was to remove threats of default on federal debts from partisan struggle. Reconstruction Republicans feared that Democrats, once admitted to Congress would use their majorities to default on obligations they did disliked politically. More generally, as Wade explained, "every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress."

    Like most inquiries into original understanding, this one does not resolve many of the most interesting questions. What it does suggest is an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.

    PBO should cite Art. 4 and Mint the Coin if he has to in order to keep us out of default.

    Warren is neither a Clintonesque triangulator nor an Obamaesque conciliator. She is a throwback to a more combative progressive tradition, and her candidacy is a test of whether that approach can still appeal to voters.-J. Toobin "New Yorker"

    by chuck utzman on Sat Jan 12, 2013 at 04:24:58 PM PST

    •  My understanding is clause in 14th was to prevent (0+ / 0-)

      ex-Confederate states from repudiating US war debt.

      But if Balkin is right, 14th might be stronger legal ground than inherent powers. Too bad POTUS already dissed.

      But 14th, inherent power likely to have same real-world effects: Supreme Court eventually decides, meanwhile world watches to see if dealers, investors will buy. Fed is the key.

  •  Can't rec this enough (1+ / 0-)
    Recommended by:

    Minting a trillion dollar coin would be a Get Out of Jail Free card for the GOP.  

    "When I was an alien, cultures weren't opinions" ~ Kurt Cobain, Territorial Pissings

    by Subterranean on Sat Jan 12, 2013 at 04:37:42 PM PST

    •  Politically, yes (0+ / 0-)

      But actually puts us more at risk should the GOP actually drive us into a position if default by taking a viable solution off the table.


      Mitch Gore

      Want to end too big to fail banks? Then move your money and they will no longer be too big.

      by Lestatdelc on Sat Jan 12, 2013 at 05:05:11 PM PST

      [ Parent ]

  •  Yeah. But all this depends on (1+ / 0-)
    Recommended by:
    George Hier

    The President taking a stand on principle.  And the last time this debt ceiling nonsense came up, he couldn't find a principle with both hands and a flashlight.  It's how we got the Budget control act, and the sequester, after all.
    I, personally love the idea that he's going to simply and flatly refuse to negotiate on this issue.  A little steely eyed grit on this would go a long way to force the Republicans in the house to remember that there are Democrats in the House that have a valid vote, too.  It is fully in the power of the Republican leadership to walk away from the tea party minority, work with the democrats, and refuse to let the government, the nation, and their party to be taken hostage by a couple dozen backwoods ignoramuses with rich backers.

  •  FINALLY, someone around here making SENSE on (0+ / 0-)

    this issue.

    No one would like for Obama to go the coin route more than Republicans. It is the best possible outcome for them.

    It gives them something to run against in 2014 and beyond. It lets them avoid a tough vote that they'd otherwise have to explain to their base. It would do nothing to change the incentives for Republicans to continue taking hostages.

    This is a GOP prisoners dilemma, just like the tax hike they passed over New Years. They want the debt ceiling to be raised - a majority of them do know better than to jeopardize the full faith and credit of the US government. They just don't want to have to vote on it.

    If Obama does this right, and I believe he will, it will be an opportunity to make GOP gerrymandering backfire even further than it already has. I bet boehner would love to be in the minority right now so his caucus wouldn't have to get their hands dirty by voting for an increase, letting them proselytize and lambast from their media soapbox while knowing it would all be completely on the Democrats' shoulders.

  •  Wonderful confluence (0+ / 0-)

    A post and comment discussing both a Trillion Dollar Coin and Blazing Saddles -- my favorite movie comedy? Sweet!

    Now if only Brooks would do a movie about a Trillion Dollar Coin, now that would be some comedy.

    Apocalypse? I'd prefer Wax Lips.

    by dryfoo on Sat Jan 12, 2013 at 07:05:48 PM PST

  •  While Tribe is obviously an expert... (1+ / 0-)
    Recommended by:

    ...on Constitutional law, I don't think one should take his word as "good enough for me" w/o close examination.

    It seems that he flip-flopped 180 degrees in his position on the Second Amendment having held the "collective right" view for many years before switching to the diametrically opposed "individual right" view. This was presumably due to actually examining the issue closely since the Constitution didn't change in the intervening years in any way that would change one's thinking on the topic. See for example:

    Laurence H. Tribe, a law professor at Harvard, said he had come to believe that the Second Amendment protected an individual right.


    The first two editions of Professor Tribe’s influential treatise on constitutional law, in 1978 and 1988, endorsed the collective rights view. The latest, published in 2000, sets out his current interpretation.

    The "platinum coin" trick has not been carefully vetted at this point so I think it would be safest to not assume that Tribe, upon closer examination, may not change his mind as he seems prone to initially promoting, for extended periods of time, positions on very important issues that match his biases (or those of his circle perhaps) rather than facts.

    My understanding is that the claimed authority for the Secretary of the Treasury to mint "trillion dollar platinum coins" is from 31 USC § 5112(k). However, various subsections of 31 USC § 5112 give the Secretary the authority and responsibility to mint all our common coins (pennies, nickles, dimes, quarters, dollar, and various other, mostly numismatic, coins) and defines technical details of their manufacture. For example, this section (31 USC § 5112(a)(3)) authorizes the Secretary to mint

    [...] a quarter dollar coin that is 0.955 inch in diameter and weighs 5.67 grams [...]"
    and (USC § 5112(b)) specifies that quarters shall be
    [...] clad coins with 3 layers of metal. The 2 identical outer layers are an alloy of 75 percent copper and 25 percent nickel. The inner layer is copper. The outer layers are metallurgically bonded to the inner layer and weigh at least 30 percent of the weight of the coin [...]
    Although 31 USC § 5112(k) leaves detailed specification of platinum coins up to the Secretary, nowhere does it indicate that the platinum coins minted under 31 USC § 5112(k) require any less, or more, backing of actual assets than, say, pennies, nickles, dimes, quarters, or dollar coins or, generally, specifies how such coins enter circulation. There are some limited details on how some numismatic issues enter the public market -- but these all are coins whose value is their base metal, not their inscribed value. One such issue is the
    five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold
    authorized under 31 USC § 5112(a)(10) and which must be sold
    to the public at a price equal to the market value of the bullion at the time of sale, plus the cost of minting, marketing, and distributing such coins (including labor, materials, dies, use of machinery, and promotional and overhead expenses)
    (i.e., way more than $5) per 31 USC § 5112(i)(2)(A)

    Therefore, as far as I can tell, the Secretary has the same authority, at best, to mint a single $1 trillion dollar coin as one trillion $1 coins and (or 100 billion $1 coins for that matter). Although it's obviously easier to mint the single coin, minting one trillion one dollar coins seem identically legally. The only complication that comes to mind may be that Congress hasn't allocated enough money to Treasury to actually cover the costs of making that many one dollar coins.

  •  Can we finally put the ridiculous coin scheme to (0+ / 0-)


    Obama just needs to stand up for progress and up to the tea baggers.

  •  sadly, the GOP's bargaining strength depends (0+ / 0-)

    largely on the continued ability of the left to ignore talk radio - to use the debt ceiling this way in the first place, to intimidate, enable, and get the teabaggers back (and the media's), and to dominate messaging for large parts of the country to spin this any way they want, whatever obama does, until the next elections.

    This is a list of 76 universities for Rush Limbaugh that endorse global warming denial, racism, sexism, and GOP lies by broadcasting sports on over 170 Limbaugh radio stations.

    by certainot on Sat Jan 12, 2013 at 10:01:48 PM PST

  •  yes, to pretty much all of this. I don't see how (1+ / 0-)
    Recommended by:

    anyone who would want to sue (Congress, Thugs) would have standing and how those who might have standing (purchasers of the new 'post-default' bonds would want to pauper themselves by suing - and indeed, they might not be allowed to sue since they bought the new bonds with full knowledge of its contingent nature.)  The courts are likely to say that Congress' solution is impeachment imo.  eah, good luck with impeaching POTUS for saving the world from your collosal f-up.

    The problem with the coin is not simply that it lets the Thugs off the hook with what looks like a gimmick, and they will scream loudly is 'an unconstitutional, dictatorial power grab' (but they will do so for any solution other than surrendering to, i.e., lteabaggin', them).  It is also that it write very big the dirty little secret we all know but dare not speak: that our money has value only because we all say so.  Avoiding processing that unsettling to small minds fact will likely cause non-wingnuts enough unease to hurt BO & Ds at the same time if lets Thugs off the hook.  Not a good thing if we're trying to avoid this nonsense repeating.

    The best political and legal solution is to simply make the argument that the Constitution does not give the Congress power to force the Executive to not pay the bills the Congress already legal required the Executive incur with its approproations.  IOW, Congress does not have the power to force the government to commit theft and fraud, which is what most folks gets charged with when they pull this kind of crap - buying stuff on credit it had no intention of paying.

    Further, if Congress wishes to defund various programs, its Constitutional power is found in the appropriations process, i.e., simply not appropriating as much for them.  It does not have the Constitutional power to force the Executive to do what it refuses to do and defund various programs and further choose which ones.  In fact, such an act by the Executive has already been held illegal by SCOTUS. See, Nixon era Impoundment cases.  Since, instead, Congress has continued or increased funding (e.g. defense) far beyond the known levels of revenues, it has already authorized - indeed, mandated, since it also refuses to raise sufficient revenue - issuing debt thru the regular Executive procedures to pay for it.

    Those are quintisential politically issues, not likely to be stuff courts will want to wade into, except to hold the debt ceiling statue unconstitutional.

    All imo, of course.  And while I am a lawyer, I am hardly a constitutional scholar.  Your mileage may vary.

    But, I agree this is the best poltical position for BO & Ds should Thugs try to force a default.

    •  The situation... (0+ / 0-) not that different from the public-policy exception to employment-at-will. Even if you're an employed-at-will employee your boss cannot, with impunity, make your continued employment contingent upon your breaking the law for him.

      "Politics is not the art of the possible.
      It consists in choosing between the disastrous and the unpalatable" J.K. Galbraith

      by Davis X Machina on Mon Jan 14, 2013 at 05:46:09 AM PST

      [ Parent ]

  •  The politics of our glacial constitutional crisis (0+ / 0-)

    I agree with billmon (no brainer) that it is the politics that matter here. As an increasingly insane and disciplined GOP freezes our Madisonian system of checks and balances into ungovernable territory, we're just going to keep living in crisisland. The GOP must be made to bear the burden of their politics if not their policy.

    I had not seen the coin as a political out until I read this diary, but that is indeed what it is. The GOP must be asked repeatedly to propose their cuts to Medicare and SS or we lose the politics everytime.

    Obama is a tool; and I mean that in the nicest way.

    by hoipolloi on Sun Jan 13, 2013 at 06:18:13 AM PST

  •  Calls from the White House (0+ / 0-)

    Paul Krugman:

    Meanwhile, I get calls. The White House insists that it is absolutely, positively not going to cave or indeed even negotiate over the debt ceiling — that it rejected the coin option as a gesture of strength, as a way to put the onus for avoiding default entirely on the GOP.

    Truth or famous last words? I guess we’ll find out.

    "In the end, we will remember not the words of our enemies but the silence of our friends" -Martin Luther King Jr

    by blue denim on Sun Jan 13, 2013 at 01:42:10 PM PST

  •  I find your point about the B of the US ironic... (0+ / 0-)

    ...since Andrew Jackson, of course, is the founder of the Democratic party.

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