It can be fun to be in the media. Getting your voice heard is a heady, empowering feeling, whether you write for distribution, appear on-air or dole out your opinions for paying subscribers. But in order to keep the spinning media world interested and talking about you, there is pressure to come up with new ideas, or recycle bad old ones. Sometimes, however, these "new" ideas aren't just interesting and fun to talk about, they're downright dangerous. One of the latest catching a lot of buzz is the $1 trillion coin.
While this notion has been attributed to my friend Cullen Roche of the Pragmatic Capitalist blog in 2011, other bloggers have been revitalizing the absurd idea of the U.S. Treasury minting up its own $1 trillion coin in order to short-circuit the debt ceiling debate coming up in February. The idea is fun and simple: Using Treasury powers to mint special platinum coins in any denomination it wishes, it could make a single $1 trillion coin, deposit it into the U.S. Treasury and use that money to continue paying debts above the debt ceiling if Congress does not approve raising it by the February deadline.
Neat, huh? Advocates claim that, ultimately, a compromise will be made on debt payments, the coin will be repaid and made whole and returned to the mint to be destroyed, resulting in no instantaneous M1 increase and inflationary pressure. Plus, for the time being, Congress (or at least congressional Republicans) will lose their ability to threaten the credit of the U.S. government in their quest for entitlement cuts.
Luckily, this idea isn't getting much traction outside of the blogosphere and on Twitter, where the plan has generated its own hashtag: #mintthecoin. It seems absurd, but the danger increases as we get closer to the February deadline and a default possibility. There will be pressure to actually use this ridiculous idea in a panicky pinch at the last hour. But it needs to be avoided at all costs -- even if some debt liabilities get are paid late and we get another bond downgrade.
"Minting the coin" would destroy the idea of U.S. currency sovereignty and would make us appear like the worst banana republic, akin to Zimbabwe or the Weimar Republic. But maybe even worse, it would destroy the idea of congressional sovereignty and our governance.
Now, I know we're all frustrated with Congress. But allowing them to sidestep their fiscal responsibilities and legislated purposes is not the way to solve an incompetent, intransigent and dysfunctional House of Representatives. If the Congress of the U.S., duly elected representatives, chooses to hurtle us over the debt cliff, even with the dire consequences that would result -- they must be permitted to do just that.
One real option that is adult and does not set aside any branches of our government remains: the 14th amendment. This amendment gives the current president the power to protect the validity of the public debt. Obama could unilaterally raise the debt ceiling, bracing for the constitutional case that would arise behind it. But although this option also lets the Congress off the hook from its responsibilities, at least the courts now can decide about the constitutionality of a debt ceiling as a legitimate bargaining chip in legislative politics.
We could then turn to the Supreme Court to adjudicate, keeping the legitimacy of the Congress as our third branch of government intact. This is another unappetizing, but far better idea than #minthecoin. Trouble is, quoting the 14th amendment won't get you more Twitter followers.