Bob Owens

The saddest truth in politics is that people get the leaders they deserve

The magical thinking behind a trillion dollar coin

Written By: Bob - Jan• 08•13

New York Times economist/editorial Paul Krugman has always been viewed as being a bit “special” by many of us, and for good reason. His latest proposal, to mint a $1 trillion coin to get around the debt ceiling is just the latest in a long line of desperate coping mechanisms to avoid fiscal reality:

Should President Obama be willing to print a $1 trillion platinum coin if Republicans try to force America into default? Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious.

For those new to this, here’s the story. First of all, we have the weird and destructive institution of the debt ceiling; this lets Congress approve tax and spending bills that imply a large budget deficit — tax and spending bills the president is legally required to implement — and then lets Congress refuse to grant the president authority to borrow, preventing him from carrying out his legal duties and provoking a possibly catastrophic default.

And Republicans are openly threatening to use that potential for catastrophe to blackmail the president into implementing policies they can’t pass through normal constitutional processes.

Enter the platinum coin. There’s a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector’s items — but that’s not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.

“…while doing no economic harm at all.”

Noted economist Ray Stevens, who has a much firmer grip on economic reality and the dangers of printing worthless coin and script, preempted Krugman’s laughable suggestion more than a year ago.

“Once you renounce any sense of decency it gets easier and easier.”

That about sums it up, Mr. Stevens.

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4 Comments

  1. Steven says:

    A “Trillion dollar coin” or a trillion dollar note – will simply “make more cash” so we can spend it.

    And devalue the buying power of each and every citizens hard earned cash – and especially their savings.

    My wife and I stopped saving into our Retirement Account in about 2010 / 2011 when they announced QE III.

    We started prepping – because when you are starving that wad of worthless paper you have, or pretty shiny gold nugget you paid $1500 for isn’t going to feed you.

    If I had told you 20 years ago this is where we would be – liberals, and ESPECIALY Paul Krugman, would have laughed in my face and called me a loon.

    And …. here we are.

  2. notamobster says:

    Mr Krugman is not even a Keynesian, he’s an imbecile. What he is suggesting no different from what the Fed is currently doing with QEFinity. The ONLY difference is that an actual coin would be real money in circulation as opposed to the debt money we are creating in digital format. It would effectively devalue every dollar by doubling the amount of currency in circulation. Mr Krugman knows this. He knows that ‘the Berbank’ is doing precisely this, every moment of every day. This year’s plan will see $4T in unsterilized QE added to the Fed’s balance sheet.

  3. dustydog says:

    Republicans will stand up to Obama on this. After a fierce fight, they will compromise a thousand billion dollar coins instead of one trillion dollar coin.

  4. R7 Rocket says:

    And yet the anti gun kooks think they can do house to house gun confiscation using a bankrupt fed govt. Well… they are kooks after all.