Anti Federalist
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Yeah, I'm shocked.
'Joke' Solution to Debt Clash Gets Serious Study
By ERIC MORATH
http://online.wsj.com/article/SB10001424127887323706704578228072822313666.html
What if Washington's next debt clash, widely expected to be as bitter as the "fiscal cliff" fight, could be resolved with the minting of a $1 trillion coin?
That is the idea being pushed by a handful of policy wonks and columnists, and it has caught the attention of lawmakers even though it is an unlikely solution.
Under the proposal, the U.S. Treasury would use an obscure commemorative-coin law to mint at least one platinum coin and deposit it at the Federal Reserve, giving the government breathing space as it bumps up against the $16.4 trillion borrowing limit.
Rep. Jerrold Nadler (D., N.Y.) last week said he was "absolutely serious" about pushing for the coin. Nobel Prize-winning economist Paul Krugman, in a column on the New York Times website Monday, said Washington should be ready to take the step. A petition at whitehouse.gov asks the U.S. Mint to make the coin, and had drawn over 5,000 signatures as of Monday evening.
"We would avert the absurd-yet-imminent debt ceiling face-off in Congress," the petition says.
The fervor for the concept has grown so strong that Rep. Greg Walden (R., Ore.) said he would introduce a bill to bar the Treasury from making such a move.
"This is Alice in Wonderland looking through the looking glass at debt management," Mr. Walden said.
When asked about the platinum-coin idea, White House spokesman Jay Carney said the debt-ceiling solution is a political one. "The way to prevent a debt ceiling crisis is not to manufacture one. Congress has the responsibility to pay the bills Congress racked up," Mr. Carney said.
The U.S. Treasury declined to comment.
The Treasury secretary has the power to "mint and issue platinum bullion coins" in dominations of his choosing. In theory, such coins could be used to essentially buy back U.S. Treasuries held by the Fed, thus lowering the outstanding amount of government debt and avoiding the looming debt ceiling.
Harvard Law School professor Laurence H. Tribe said the concept appears to be legally sound and would be difficult to challenge in court. But policy analysts said such a move could erode international interest in investing in U.S. debt and lead to higher inflation.
Cullen Roche, founder of Orcam Financial Group in San Diego, was among the first to float the concept in the summer of 2011 on his website, "Pragmatic Capitalism."
"It's funny that it became as mainstream as it has," he said. "We were kicking the idea around as a joke."
'Joke' Solution to Debt Clash Gets Serious Study
By ERIC MORATH
http://online.wsj.com/article/SB10001424127887323706704578228072822313666.html
What if Washington's next debt clash, widely expected to be as bitter as the "fiscal cliff" fight, could be resolved with the minting of a $1 trillion coin?
That is the idea being pushed by a handful of policy wonks and columnists, and it has caught the attention of lawmakers even though it is an unlikely solution.
Under the proposal, the U.S. Treasury would use an obscure commemorative-coin law to mint at least one platinum coin and deposit it at the Federal Reserve, giving the government breathing space as it bumps up against the $16.4 trillion borrowing limit.
Rep. Jerrold Nadler (D., N.Y.) last week said he was "absolutely serious" about pushing for the coin. Nobel Prize-winning economist Paul Krugman, in a column on the New York Times website Monday, said Washington should be ready to take the step. A petition at whitehouse.gov asks the U.S. Mint to make the coin, and had drawn over 5,000 signatures as of Monday evening.
"We would avert the absurd-yet-imminent debt ceiling face-off in Congress," the petition says.
The fervor for the concept has grown so strong that Rep. Greg Walden (R., Ore.) said he would introduce a bill to bar the Treasury from making such a move.
"This is Alice in Wonderland looking through the looking glass at debt management," Mr. Walden said.
When asked about the platinum-coin idea, White House spokesman Jay Carney said the debt-ceiling solution is a political one. "The way to prevent a debt ceiling crisis is not to manufacture one. Congress has the responsibility to pay the bills Congress racked up," Mr. Carney said.
The U.S. Treasury declined to comment.
The Treasury secretary has the power to "mint and issue platinum bullion coins" in dominations of his choosing. In theory, such coins could be used to essentially buy back U.S. Treasuries held by the Fed, thus lowering the outstanding amount of government debt and avoiding the looming debt ceiling.
Harvard Law School professor Laurence H. Tribe said the concept appears to be legally sound and would be difficult to challenge in court. But policy analysts said such a move could erode international interest in investing in U.S. debt and lead to higher inflation.
Cullen Roche, founder of Orcam Financial Group in San Diego, was among the first to float the concept in the summer of 2011 on his website, "Pragmatic Capitalism."
"It's funny that it became as mainstream as it has," he said. "We were kicking the idea around as a joke."
