I'm a big fan of Felix Salmon, and I love the Flying Spaghetti Monster, too so when he says, 'If you believe that the country is best run by grown-ups, you can’t believe in #mintthecoin, because it simply isn’t a grown-up strategy,' He makes the case for me. You see, the country is not run by the grownups, but by a cruel conservative caucus of tea party nuts that care nothing about the people of the US, but will give everything to a Jack Abramoff ideology of governing.
This morning, Joe Weisenthal and I took our message in favor of minting a trillion-dollar platinum coin to "Bloomberg Surveillance," where we were met with the usual shock and horror from hosts Tom Keene and Sara Eisen. Platinum coin opponents are so distressed that one, Republican Representative Greg Walden, has said he will introduce legislation to ban the coin, citing my post from last week as a dangerous instigation.Walden, Keene and Eisen are all wrong. Here are my responses to the most common objections we are getting to the platinum coin proposal, in increasing order of persuasiveness:
1. "That's silly/zany/juvenile!" This is probably true, but it's not a dispositive objection. Republican intransigence over the debt ceiling is juvenile. There is no particular reason that the president should not use a juvenile strategy in response.The key question to ask about the platinum coin is not "is it juvenile?" but "will it work?" Minting the coin will allow the federal government to continue to meet its spending obligations despite hitting the debt ceiling. It will allow President Barack Obama to pressure Congress to repeal the debt ceiling. That -- not whether it seems silly -- is the important thing.
2. "Where will we get all the platinum?" I'm honestly surprised by this question, but I'm hearing it a lot, including from the Guardian's Heidi Moore and from Keene this morning.To be clear: We do not need a trillion dollars' worth of platinum to make the trillion-dollar coin -- less than an ounce will do. This is not a move to a "platinum standard," and it shouldn't even have any impact on the markets in platinum. There will be no need for dump trucks full of precious metal to head toward the mint.
3. "But that will be inflationary!" This is a more serious objection, and it gets at what the platinum coin strategy really is -- financing the federal government's operations by printing money instead of borrowing it. The trillion- dollar coin will never circulate, but it will be used to back cash payments coming from the Treasury that would have otherwise been financed by bond purchases.
Paul Krugman has been weighing in also and says if the freaks in Congress continue to hold the debt ceiling hostage then just mint the damn thing.
So minting the coin would be undignified, but so what? At the same time, it would be economically harmless — and would both avoid catastrophic economic developments and help head off government by blackmail. What we all hope, of course, is that the prospect of the coin or some equivalent strategy will simply take the debt ceiling off the table. But if not, mint the darn coin.
Ezra Klein has been doing some reporting on the coin also and debunks a childish attack on the platinum coin idea from the NRCC:
Funny, but quite wrong. The NRCC is suggesting that you need $1 trillion worth of platinum to mint a $1 trillion platinum coin. For some bullion coins, that may be true—the coin is worth the value of the underlying metal. But there’s a clear exception for U.S. platinum coins. Again, here’s Section (k) of 31 USC § 5112:
(k) 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.
That’s why the platinum coin option could technically work. The Secretary of Treasury can order up a small platinum coin and give it any value he wants. Say, $1 trillion. That coin would be deposited at the Federal Reserve. The Fed would credit the Treasury’s accounts with $1 trillion. Now the federal government would have enough money to pay its bills without having to worry about debt-ceiling restraints on borrowing. At least for a little bit.
Any idiot who takes a minute to think about seigniorage understands that you don't need an equal weight for value trade off when minting currency. And the former head of U.S. Mint agrees: The platinum coin option would work
*The media refuses to report any real facts about the tea party politicians and Conservatives so when they once tried to renege on the debt in 2011 which would have collapsed economies world wide, nothing much was made of it.
*When they refused to raise taxes on the wealthy even after the election, nothing much was made of it by the media and now they are once again trying to hold hostage the US government by kidnapping the debt ceiling.
*They've made a mockery out of the filibuster rules ever since Obama took office and the media said nothing.
* An insanely low number of judges have been appointed under Obama's White House because Republicans block the nominations.
With a record like this it's not hard to see why the platinum coin is a strategy worth considering and using if need be. That's why I'm behind it.