Daily Archives: 07/29/2011

Too Much Blame to go Around

No one has distinguised themselves in the debt limit fight.  Let comment one by one.

President Obama – He’s failed on at least two counts.

First, he should have done something with the debt commission results he received at the start of the year.   As a liberal Democrat, I think he had more credibility to address entitlements than any Republican.  Like Nixon opened up China he could have taken steps that moved us well ahead in dealing the debt.  Did he?  No, he walked away from his opportunity.

Second, He’ negotiated so badly that he’s asked the Republicans to keep upping their demand.  If Obama had any backbone, I think the Republicans would decide they had a deal as good as they can get, AND SHOULD TAKE IT.

House Republicans – They seem to have showed themselves to be more dangerous than we could have imagined.

First, they don’t seem to understand the risk they’re putting the entire country at.  Many seem to take talk radio as their expertise.

Second, their leadership it now seems clear don’t really speak for them.  Boehner can’t seem to deliver the Republican votes.  Obama I think has contributed to this.

Third, they’re in politics but don’t seem to know what Politics is.  Politics is finding ways to accommodate different points of view.  It recognizes diversity of opinion as a reality, whether you like it or not.  The house Republicans do not understand and are making it impossible for the US government to function.

Loose Change

Well you can joke that President Obama should be going through the White house sofas looking for loose change.  Actually, that may be a way to at least buy time agains the debt limit impasse.  Brad DeLong suggests this.  I’m not sure trillion dollar coins are needed, as maybe $500,000,000 might buy at least a week or two.  Other ways to go might include selling gold.

That seems to me the only way that he can faithfully execute all the laws. Otherwise, he has to break some–or have the Treasury Secretary violate his fiduciary duty as trustee of various trust funds.

Minting high-denomination platinum coins, by contrast, creates no such problems. And is completely legal.

I suggest that he immediately mint 50 ten-pound liberty-head coins, each of them denominated at $100 billion, and temporarily store them in the Treasury Secretary’s office. Then the Treasury Secretary can take them up one at a time to the Federal Reserve Bank of New York in a special armored train as required.

Think how much money the federal government could make from the movie rights alone..,

Matthew Yglesias:

The Platinum Coin Option: I keep hesitating to write about this because it sounds insane, but Jack Balkin’s a professor at Yale Law School so I’ll let him say it:

Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time. Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

It’s right here in 31 USC § 5112 “Denominations, specifications, and design of coins.” It’s super-prescriptive about all kinds of things until you get to section (k):

(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.

It actually seems to me that there’s a colorable argument that President Obama is legally obliged to order Secretary Geithner to order the mint to start creating large denomination platinum coins. The debt ceiling is legally binding. We can’t borrow any more money. But at the same time, the Social Security Act is still valid. There are appropriations bills that extend through September. The assumption is that starting August 2, the Treasury will start “prioritizing” payments. But whence the legal authority to do that. By contrast, the legal authority to mint platinum coins is right there in the statute. This would, I assume, lead to a downgrading of American sovereign debt.

I would furthermore say that by the failure of President Obama to have taken this step last month he has already violated his oath of office. One of the laws he is required to faithfully execute requires that he prevent the debt of the United States from being questioned. Yet by his inaction the debt of the United States is, right now, being questioned–and is being increasingly questioned more and more as time passes.

The President’s Obligation to Take Care That the Laws Be Faithfully Executed Requires Him to Start Minting Large-Denomination Platinum Coins
J. Bradford DeLong
Fri, 29 Jul 2011 01:17:57 GMT