You Know What? Mint That Coin, Just Do It Already

...In fact there are three freely convertible currencies in the Galaxy, but none of them count.
The Altairian Dollar has recently collapsed,
the Flainian Pobble Bead is only exchangeable for other Flainian Pobble Beads,
and the Triganic Pu has its own very special problems.
Its exchange rate of "eight Ningis to one Pu" is simple enough, but since a Ningi is a triangular rubber coin six thousand eight hundred miles along each side, no one has ever collected enough to own one Pu.
Ningis are not negotiable currency, because the Galactibanks refuse to deal in fiddling small change.
From this basic premise it is very simple to prove that the Galactibanks are also the product of a deranged imagination.
-- Douglas Adams, from the Restaurant at the End of the Universe (to be read in Stephen Fry's voice) 

With the wingnut Republicans regaining control of the House - and again back on their obsession with destroying the federal government and the global economy in one fell swoop, even with all the warnings about what the damage will be - the talk about government shutdowns has returned.

The Democratic response to the Far Right threats of massive spending cuts has been mixed, bouncing between allaying fears to bringing up alternative spending methods to outfox the Tea Party/Freedom Caucus hijackers hoping to crash the whole bus over the cliff. One thing the liberal and left-leaning blogging punditry keeps throwing out there is the "MINT THE COIN" idea.

The Coin refers to a law on the books allowing the U.S. Mint to issue a platinum-based coin with any denomination (face value) assigned to it as needed. For example any one-ounce gold coin has a $50 face value, the half-ounce gold coin is $25, etc. When they passed the law in the 1990s, the intent was to give the US Mint a means to raise money selling to avid coin collectors who buy these things up not for the metal's worth but for the collectible value. 

At the time, the idea was that a collectible platinum coin could go for like $500 or $100 or something above the gold coin (capped at Ye Olde Fiddy). Thing was, when the Republicans became more radical and more desperate to gut the federal government's fiscal capabilities since then, someone got the idea that the U.S. Mint using the backing of the "Full Faith and Credit" clause in the Constitution could issue a platinum coin with a face value more than what the federal debt would be, and using that to pay off said debt so the radicals would lose the "debt ceiling" hostage they've been threatening to kill since the Obama years. Various government officials and economists have looked at the scheme, and announced "it could work."

With the debt ceiling crisis back for 2023, the Mint the Coin talk is back as well. As Mike the Mad Biologist blogged recently: 

This bit of arcana matters because Speaker McCarthy in his desperate attempt to stop getting punched in the nuts on national television over and over again to win the House Speaker position has promised to use the debt ceiling–the process where Congress sets a cap on the amount of debt that can be issued–as economic terrorism to force all sorts of horrible policy, including sweeping Social Security cuts. Admittedly, this is a long-standing Republican strategy, but it’s become increasingly likely they will do this...

This is really stupid and ridiculous, but so is any Congress that contains QAnon conspiracists, outright fraudsters, and pedophile pimps. Meanwhile, Biden won with the majority of the vote. It’s time for him to exert his popular mandate and protect the full faith and credit of these United States...

Minting the Coin may be a ridiculous option, but it has the value of being 100 percent legal compared to some of the other options ahead of us to avoid the GOP shutdown. Dylan Matthews noted at Vox:

The Obama administration found the idea too unserious there to use, but the legal case for minting the coin is as solid as platinum. Just ask debt ceiling hardliner Sen. Mike Lee (R-UT), who was sufficiently concerned about the option to introduce legislation to close the platinum coin loophole. The plain text of the 1997 law clearly allows the treasury secretary to do this, and Jay Powell, the Fed chair who in a past career was an expert on the debt ceiling and its dangers, is arguably legally required to accept the coin as a deposit.

You can also imagine more serious variations on the concept. Progressive economist Mike Konczal once proposed issuing a $20 billion coin every day to keep the government running until Congress agrees to abolish the debt ceiling for good. And a $20 billion coin is, what, 1 percent as silly as a $2 trillion one?

The other options Matthews explores - Invoke the 14th Amendment's clause that the validity of the Public Debt shall not be questioned, argue that the debt ceiling is unconstitutionally interfering with the mandates Congress already gave to the Executive branch, or issue "quasi-debt securities" like government war bonds to temporarily avoid the debt crisis - all have the problem of getting challenged in the courts. Any of that would risk the possibility this current Supreme Court - controlled by Far Right jurists - using the situation to rewrite the Constitution, and giving the wingnut Republicans the chance to collapse the federal government.

The Platinum Coin can't be challenged, not in a way that could risk nuking our nation's ability to literally print money. Silly idea, yes. Legal idea, still yes.

The whole "Mint the Coin" thing is so silly I love it. It's absurdism brought to a political stage already overwhelmed by Far Right hypocrisy and faux Fox-Not-News outrage. Republicans want to destroy our nation's economy with another government shutdown? Here's a single coin to resolve the whole matter, nyah.

Hell, I want the Mint to print that coin now, just for the thrill of it. Think, A TRILLION DOLLAR COIN, small enough to fit in a pocket. It'll be like Scrooge McDuck's Number One Dime, a tempting target of cat burglars everywhere. The comic book and action movie industries would have a field day coming up with stories about the Coin Heist to End All Coin Heists. And then all you gotta do is go to a country that won't press charges and slap that coin down on a bank counter and demand the bank cash it in for you. BWHAHAHAHAHAHAHA (dude, could that happen?)

You could put the Platinum Coin behind glass and take it on a tour to every Economics college across the nation. It'll be the Mona Lisa, the King Tut Coffin, the unreleased copy of the Batgirl movie of coins. Have students working towards their MBAs lining up $5000 a ticket just to press their noses against the glass and dream of touching that coin.

Get that coin pressed today, US Mint, and President Biden could use it as the coin flip to this year's Super Bowl!!! YES!!!!!

So many possibilities with a Platinum Trillion-Dollar Coin.

Do it, Treasury Secretary Yellen. PRINT THE COIN. BECOME A GOD. BWHAHAHAHAHA.

My Two Cents On The Platinum Coin (Yeah, I Went There)

With the Fiscal Cliff no longer an issue, the next scheduled disaster from our elected leaders is apparently yet another Debt Ceiling vote needed to ensure the Federal government can pay out those Medicare checks, military pay, and basically keeping the street lights on.

There's a good argument to be made that we don't even NEED a Debt Ceiling vote, the whole thing can be done through other budgetary bills and never be an issue: but sad to say the powers that be in Congress don't want to give up their ability to be bratty monsters to their fellow Americans, and also they've realized they can use this man-made disaster to wriggle out some twisted deals making the rest of us suffer in the process.

Considering how broken the system is, we've got a ton of people thinking outside of the box, using some lateral thinking.  And one idea that's come up - it actually started brewing last year when the government shutdown over the last Debt Ceiling vote happened - is the fact that under current law the Treasury Department can cast a platinum coin, give it any value they deem fit, and then use that coin as revenue to be spent however the government needs.  The actual value of platinum as a metal isn't at stake - this is called Seigniorage - all that matters is what value the Treasury Secretary can put on that coin.  As a result, the Secretary could stamp it as a One-Trillion-Dollar (that's 1,000,000,000,000.00 if you wanna count out the zeroes) Coin and that coin, probably no bigger than an Eisenhower Silver Dollar, will be worth that one trillion.

A law originally designed to allow the government to make and sell commemorative coins to a collectibles industry to turn a modest profit could be used to tell Congress to go screw itself over the Debt Ceiling nonsense:

As former Congressman and author of the original bill Mike Castle told Dylan Matthews of the Washington Post, the intent was to use the government's seigniorage power to very modestly reduce the deficit. Seigniorage is the delightfully literal concept of making money by making money. It's the difference between the cost of creating currency, and the value you assign to that currency -- in other words, the "profit" governments get from minting money. The trillion-dollar coin is seigniorage just like commemorative coins are seigniorage -- well, except that the trillion-dollar coin is a whole, whole lot more of it. Even if you don't find this terribly convincing, it doesn't really matter. The plain text of the law, not its intent, is what matters. And that means the trillion-dollar coin is almost certainly legal.

To be fair, our debt obligations aren't as high as one trillion: it's roughly about 52 billion.  A more modest plan would be to mint more than 52 platinum coins at One-Billion each and save the One-Trillion coinage for a more special occasion.

That persons among the Obama administration are talking seriously about this of course has the Far Right in an tizzy.  Most of them don't even realize the concept of seigniorage and are trying to mock the Platinum Coin proponents by thinking one trillion worth of platinum has to be cast for the world's largest coin.  The truth is much simpler: the coin can be the size of a DIME (our smallest coinage) and as long it's made out of platinum it can get valued however high it can, meaning it CAN be a One-Trillion Coin.

This may look on its face like a silly solution.  But the reason we're even thinking of this as a legitimate possibility is due to the fact that Congress is broken.  Full-on partisanship rules the floor, and the House Republicans have convinced themselves to never retreat on any issue that would give Obama a good day.  Especially if they can use their hostage-taking on the Debt Ceiling vote to force harsh social spending cuts on the Democrats.  There is no reason to believe that the House GOP will negotiate in good faith to resolve the matter, and we'll be facing yet another showdown just like in 2011 that crimped the nation's bond rating and caused enough financial chaos to choke a bull.

To consider Matthew O'Brien's thoughts:

As my colleague Derek Thompson explains, a world without a debt limit increase is a world where the government has to stop paying 40 percent of its bills overnight. Everything from food stamps to defense spending to maybe even Social Security benefits would go unpaid. Now, Congress would presumably relent after a few weeks of this, but if it didn't, the economic damage would be mind-blowing...

And that brings us to the trillion dollar coin. If you haven't heard, there's a law that technically lets the Treasury mint platinum, and only platinum, coins in whatever denomination it chooses. It's legal, it's doubtful anybody would have standing to challenge it in court, and it would let us keep paying our bills, without setting off massive inflation, if the debt ceiling isn't raised. But as Ross Douthat and Ezra Klein point out, the politics of it are toxic. It sounds crazy, and it would look like a crazy power grab, all of which would empower the very Republicans pushing us towards a possible default. Risking complete catastrophe is worth it if it will break the swamp fever according to this logic. That very well could be true if we were talking about a run-of-the-mill catastrophe, but it falls apart when we're talking about a debt default. The financial fallout and increase in our long-term borrowing costs are much too high a price to pay for discrediting the default caucus. Here's the way out. If Congress doesn't lift the debt ceiling in time, Treasury should prioritize payments while Obama and Republicans negotiate an increase. But if a day ever comes when incoming revenues won't meet interest payments, Treasury should mint a platinum coin to cover the difference. As Steve Waldman argued, use a billion dollar instead of a trillion dollar coin -- and only as a last resort to avoid irrevocable damage.

The full faith and credit is worth a platinum coin.

 

Personally, I kinda find this One-Trillion Coin idea amusing, a creative solution to a bankrupt problem.  But I'm kinda also with O'Brien here: I don't think we should be jumping straight at the platinum coin as the immediate solution.  The real problem is that we've got a Republican base pushing for a default (remember Grover Norquist, kids?  He wants to drown your government in his bathtub) no matter the hazards.  Going to the coin solution isn't going to solve the way Congress does business.  Congress needs serious fixing, especially considering how much of a sick joke the Debt Ceiling really is.

 

Get rid of the Debt Ceiling.  That's the real solution.  The pity of it is, that also takes real political courage right now, and NO ONE has that.