Friday, January 4, 2013

Dumb Platinum #Supercoin Idea Just Won't Go Away

There is an amusing idea going around that the Treasury could mint a trillion dollar platinum supercoin and use it to exceed the debt ceiling, thus effectively sidestepping Congress and any constitutional concerns about the ability to exceed the ceiling.

I initially thought the idea was a wry commentary on the absurdity of the political problems surrounding the debt ceiling. But no! Some people actually take this **** seriously...
Since our media thinks it appropriate to propagate this nonsense, I'll just interject that the coal standard is more sensible. At least then we could prop up the value of the currency by producing energy... and a consumable currency has the advantage that it makes people want to spend it! Hey, if you're really worried about inflation....

I am kidding.

But seriously... the notion that the Treasury could perform this legal maneuver without massive repercussions is laughable. We might as well sprinkle fairy dust across the land or send PDFs of million dollar bills for people to print at home.

Let's be clear: we don't need an obscure legal trick to permit Treasury to go over the ceiling. The ceiling can already be exceeded, and the only consequence is that the matter might be litigated in Congress... a very lengthy process that might result in a slap on the wrist. What, you think it'd be as bad as the Nixon shock?! Big deal.

These legalities of what Treasury should or shouldn't do in the short term don't matter one iota. What really matters is global confidence in our bond system. Those who invest in our bonds need to know that we have the basic mathematical competence to live within our means. And doing that is really not complicated: the Simpson-Bowles plan is a realistic, sensible framework. All we need now is national leadership which cares more for our children than themselves. We don't need fairy dust or platinum coins or clever legal tricks... we need back-to-basics common sense and responsibility.

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