There has a been a lot of talk on Twitter about something involving the making of a platinum coin worth $1 trillion in order to avoid the upcoming debt ceiling fight. Don't know what anyone is talking about? Never fear, we're hear to explain the #mintthecoin movement.
So, yeah, why is everyone talking about making a platinum $1 trillion coin?
According to Business Insider's Joe Weisenthal, this conspiracy theory started on Cullen Roche's Pragmatic Capitalist. Weisenthal's been one of its most vocal supporters though. It's picked up steam over the last few days thanks to a column from The New York Times' Paul Krugman, backing from Rep. Jerry Nadler, an endorsement from Bloomberg's Josh Barro, and this evening it was trending thanks to a White House petition and the official coining of the coin's very own hashtag. (Pun fully intended.)
So why would the U.S. make, and what would it do? Wouldn't the economy burn down?
Weisenthal explains the what better than we ever could:
Although the Treasury can't just create money out of thin air to pay its bills, there is a technicality in the law that says the Treasury has special discretion to create platinum coins of any denomination, and the thinking is that Tim Geithner could make the coin and walk it over to the Federal Reserve and deposit it in the Treasury's bank account.
Barro explains the why:
Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.
Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.
Basically, Geithner's last act as Treasury Secretary is to create a platinum coin worth $1 trillion, throw it in the country's bank account and protect us all from a prolonged headache over raising the debt ceiling. Should he do that, the President no longer has to ask Congress to raise the debt ceiling. Creating a platinum $1 trillion coin would circumvent the debt ceiling fight. And many of your initially perceived detractions to the $1 trillion coin have been debunked here, again by Joe Weisenthal, the coin's biggest fan. The gist: the economy and the dollar would be fine, for the most part. Obama tells Congress it's an option he's considering, and the consequences of creating a $1 trillion coin are less than the consequences of defaulting on the country's loans, so Congress' power at the negotiating table is rendered moot. Like Mayweather-Pacquiao, the fight never happens. Planned debt ceiling fight cancelled.
That seems kind of easy, right? Why didn't Obama think of this before?
Because no one's first resort to a debt ceiling fight is to create what is essentially a loonie on horse steroids, duh.
Who else is running with this idea?
Tons of people! We're glad you asked.
Lockhart Steele jumped on the #mintthecoin train early Thursday evening:
The Atlantic's Matt O'Brien is smart and thinks it's a good idea:
A billion dollars isn't cool. You know what's cool? A trillion dollar coin. #mintthecoin— Matt O'Brien (@ObsoleteDogma) January 4, 2013
Dave Weigel thinks it would come in handy in a Chicago street fight (because that's where Obama cut his teeth, as it were) and also likes making
Crocodile Dundee The Untouchables references (Note: sorry, Dave, for thinking you would make Crocodile Dundee jokes):
@thestalwart He pulls a knife -- you pull a coin. That's the Chicago way.— daveweigel (@daveweigel) January 4, 2013
What are some other consequences we should be worried about?
I bet a gagillion dollar coin would fix the economy, cure AIDS and give me unlimited lives on pacman— john r stanton (@dcbigjohn) January 4, 2013
But what if Two-Face steals the trillion dollar coin— Alex Pareene (@pareene) January 4, 2013
So, there's that to worry about.
This article is from the archive of our partner The Wire.