Obama's Two Coin Debt Ceiling Fix
A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. Paper money, along with gold, silver and copper coins, are all tightly controlled.
This
hasn't seen much coverage, and rightfully so, but there is an easy out
for President Obama on the perpetual debt ceiling debates.
Simply mint two tiny platinum coins. I'm being serious, actually...
A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. Paper money, along with gold, silver and copper coins, are all tightly controlled.
As absurd as the idea is, it is right there in the books:
“The
Secretary may mint and issue platinum bullion coins and proof platinum
coins in accordance with such specifications, designs, varieties,
quantities, denominations, and inscriptions as the Secretary, in the
Secretary’s discretion, may prescribe from time to time.”
So
here is how this ill-conceived plan would pan out. The president has
the U.S. Treasury mint two $1 trillion coins. While he is at it, they
might as well be paper thin and tiny.
After all, there is no need to waste actual money here on precious metals.
Once
these coins exist, the president would order the coins to be deposited
in a Federal Reserve vault. The Fed would transfer a $2 trillion balance
into the U.S. Treasury's accounts. Voilà! Two years of unfettered spending!
Horrifying? Irresponsible? Completely Absurd? Yes. Completely legal? Yep.
I certainly will not make any claim to supporting the idea, but some people seem to like it. At least in theory.
“I like it,” says
Joseph Gagnon of the Peterson Institute for International Economics.
“There’s nothing that’s obviously economically problematic about it.”
As
Gagnon points out, the U.S. government would simply be using the money
to keep spending at existing levels, so it wouldn’t immediately create
any runaway inflation. If it did cause problems, the Fed could always
counteract the effects by winding down some of its other programs to
inject money into the economy.
After
all, the effect it would have on the economy is almost identical to what
the Fed is doing through quantitative easing. It would just be a big
lump sum. The Fed is only a couple hundred billion away from injecting
$2 trillion into the economy over the last several years already.
I'm
sure Mr. Gagnon really only likes the apparent ease of which it skips
over a ridiculous situation that shouldn't exist in the first place.
The
only reason we have a debt ceiling issue is because Congress has given
the president contradictory commands. The president has to spend money
how Congress allocates it and Congress has forbidden him to borrow
enough money to obey its orders.
After a
half century of this irresponsible management, we're stuck with almost
$16.5 trillion in debt and $1 trillion yearly deficits.
Has
the farcical ineptitude of Congress really gotten so bad that this idea
to completely circumvent them with this absurd idea almost seems like a
breath of fresh air?
Well,
we know it won't happen, so we don't have to worry about this becoming
reality. Knowing that fact while watching congressman blather and bumble
around with no clue about how to fulfill their sworn duties makes
shutting them up with two tiny platinum coins sound awfully nice.
That
makes this absurd concept a testament to how terrible Congress – and the
perpetual debt ceiling debates – have really become.
Article Source: Wealthwire