Here’s the latest — an idea to “solve” the debt crisis by having the U.S. Mint print a trillion-dollar platinum coin. God have mercy, that’d be a “solution” akin to the old woman who swallowed the fly skipping everything in between and just swallowing the horse (she’s dead, of course).
James Pethokoukis dutifully passes along justification for this economic poison-pill prescription and observes:
1. So basically this would be a trillion-dollar interest free loan from the Fed for the life of the coin.
2. Let’s be clear, this is the Treasury printing money. Would financial markets view this is a good precedent? I doubt it.
3. Was minting a trillion-dollar platinum coin to evade the debt ceiling the point of the law? I sure don’t get that from the email. And, indeed, it was not. The legislation had to do with collectible coins.
4. Does it allow Washington to evade fiscal responsibility? It does. As a bank analyst at the Washington Research Group told me:
The President could assert that that 14th amendment negates the requirement for Congress to raise the debt ceiling. Or Treasury could mint a $1 trillion platinum coin and deposit it at the Federal Reserve. Neither are great options. We see chaos if the market has to confront Treasuries where the debt is backed by Congress and those where it is not backed by Congress.
And the $1 trillion coin would expand the money supply by a considerable amount, which could spark serious inflation. And it seems like something out of a Simpson’s episode. …
Pay attention to that 14th Amendment gambit; I could see the president resorting to that. Who would call his bluff? The media? The Senate? Or the cringing House?