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A Couple of Bad Ideas

The User's Profile Chris Martenson December 10, 2012
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This week a couple of very bad ideas were floated, one having to do with U.S. natural gas (NG) supply, and the other a proposal for how the U.S. president could avoid having to deal with the pesky debt ceiling.

Throughout the entire unfolding of the crisis, we have all been patiently waiting (if not agitating) for reality to gain a place at the table of ideas.  Instead, we still have the usual fare of the absurd and the ridiculous, indicating that we are not quite ready yet to entertain the serious business of negotiating the various predicaments that we face.

Bad Idea #1: The Trillion-Dollar Coins

Let's begin with the latter idea concerning the debt ceiling.  Here it is:

Could two platinum coins solve the debt-ceiling crisis?

Dec 7, 2012

If President Obama wants to avoid an economic calamity next year, he could always show up at a press conference bearing two shiny platinum coins, worth… $1 trillion apiece.

Okay, that sounds utterly insane. But ever since last year, some economists and legal scholars have suggested that the “platinum coin option” is one way to defuse a crisis if Congress can’t or won’t lift the debt ceiling soon. At least in theory.

The U.S. government is, after all, facing a real problem. The Treasury Department will hit its $16.4 trillion borrowing limit by next February at the latest. Unless Congress reaches an agreement to raise that borrowing limit, the government will no longer be able to borrow enough money to pay all its bills.

Last year, Republicans in Congress resisted lifting the debt ceiling until the last minute — and then only in exchange for spending cuts. Panic ensued. So what happens if there’s another showdown this year?

Enter the platinum coins. Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts.

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Top Comment

When I first read of the idea of the platinum coin solution I thought it was a joke. Honestly. But now that there are actually...
Anonymous Author by westcoastjan
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