Could Obama sidestep a debt-ceiling showdown by minting $1 trillion coins?
Some say the Obama administration could avoid a brewing fight over raising the credit limit (yes, yet again) by minting super valuable coins — and spending them
The federal government is going to run up against the $16.4 trillion debt ceiling by February, which could trigger another potentially disastrous battle over raising the limit, like the one that caused such a panic last year. Brad Plumer at The Washington Post proposes a novel way for President Obama to avoid an "economic calamity": "He could always show up at a press conference bearing two shiny platinum coins, worth… $1 trillion apiece." It sounds crazy, but some economists say minting two trillion-dollar coins — as long as they're made of platinum — could actually let Obama sidestep another fight with Republicans, who last year used the need to raise the limit as leverage to force spending cuts. According to this theory, Obama could move the coins through the Federal Reserve into Treasury's accounts and — voila! — the federal government has enough money to cover its bills for another two years without borrowing any more money, thereby staying safely below the debt ceiling.
Wrong, says Ed Morrissey at Hot Air. This idea "sounds utterly insane because, well… it is utterly insane." The teensy drawback is that it would "devalue the world's baseline currency by about two trillion dollars." Doing so would stoke inflation. Creating money that wasn't circulating before always does. It also makes a mockery of our government's finances, and if anyone actually lends this government money — by buying its bonds — knowing this is how we pay off our obligations, "the joke is on them."
Actually, this plan is different, says John Carney at CNBC. This new money wouldn't cause inflation, because it would merely replace the money we otherwise would have conjured up by printing bonds.
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Yes! Brilliant, clever, it just might work — except it's never, ever going to happen, says Kevin Drum at Mother Jones.
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Harold Maass is a contributing editor at The Week. He has been writing for The Week since the 2001 debut of the U.S. print edition and served as editor of TheWeek.com when it launched in 2008. Harold started his career as a newspaper reporter in South Florida and Haiti. He has previously worked for a variety of news outlets, including The Miami Herald, ABC News and Fox News, and for several years wrote a daily roundup of financial news for The Week and Yahoo Finance.
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