There's been loose talk lately about minting a trillion-dollar coin or two to get the U.S. out of the economic chaos that the upcoming showdown over the debt ceiling could unleash. Is it so wrong?
That's not the same as printing up a couple trillion dollars in U.S. currency. It's just a way for the Treasury Department to make good on the debts that the Congress has already committed itself to paying.
The idea may be "silly but benign," as Paul Krugman put it in a New York Times Op-Ed today, but the idea that President Obama may get out of a showdown with the fringe right is sufficiently alarming that Rep. Greg Walden, R-Ore., said he will introduce legislation to outlaw such economic gimmickry.
"Some people are in denial about the need to reduce spending and balance the budget," he said in a statement. "This scheme to mint trillion-dollar platinum coins is absurd and dangerous, and would be laughable if the proponents weren't so serious about it as a solution. I'm introducing a bill to stop it in its tracks."
He went on to say that his bill would take "the coin scheme off the table by disallowing the Treasury to mint platinum coins as a way to pay down the debt."
Why would legislation be necessary to stop such a thing? Because it's entirely legal, that's why. The coinage act allows the secretary of the Treasury to order coins in any domination, according to Pragmatic Capitalism. "Geithner could sidestep the debt ceiling this afternoon by ordering the West Point Mint to coin a 1 oz. $ 1 trillion coin," writes Cullen Roche.
Walden added that the U.S. "must reduce spending and get our fiscal house in order."
No word yet on how another defaulting on our debts will get that done. Stay tuned.
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