To Coin a Craze
The hashtag #mintthecoin is currently white-hot in the Twitterverse. In case you’re not following the discussion, it has to do with the idea that one option President Obama has, should House Republicans be determined to deny the necessary rise in the debt ceiling so as to force the US government to default on many of its financial obligations sometime around mid-February, is to take advantage of the statute allowing the Treasury to mint platinum coins of any denomination to fashion a, say, $1 trillion coin and present it to the New York Federal Reserve to, in effect, create that money to spend.
This is the idea advanced particularly vehemently these days by Nobel Prize-winning economist and NYT blogger Paul Krugman, who notes that while it might seem a silly idea on its face, any notion that the Republicans can be persuaded to stop holding the credit-worthiness of the US Federal Government hostage is “just ridiculous – far more ridiculous than the notion of the coin.”
Some do not agree, so that a full-fledged debate on the advisability of #mintthecoin has erupted among the American punditocracy. But don’t think no one outside American borders has also noticed:
This includes the prominent Munich-based newspaper Süddeutsche Zeitung, as picked up by Dirk Elsner on his @blicklog feed.
The piece, by Jannis Brühl, is entitled “Heads or Tails,” and its essential function is to describe to German readers what is going on – or, rather, just what the heck is going on over there in the USA with this crazy-sounding coin-minting plan that, as Brühl puts it, beflügelt die Phantasie – basically, is mind-blowing.
Anyway, she explains things mainly by trying to sum up (and link to) the main proponents and opponents of the #mintthecoin idea, although at one point in the article she maintains that “It is extremely doubtful whether courts will accept the technical, literal interpretation [of the law that the Treasury can mint platinum coins to any denomination] as constitutional.” This shows she has clearly missed the recent pronouncement by Harvard Law professor Laurence Tribe that it’s constitutionally OK. (Yes, he’s not a judge; but he’s the country’s most eminent constitutional law expert.)
On the other hand, Frau Brühl does come up with a literary device for trying to understand this brouhaha that has eluded even American commentators. Remember that Simpsons episode back in the late 1990s, The Trouble with Trillions, when Homer was sent off to track down a trillion-dollar bill that Mr. Burns had run off with after he was supposed to deliver it to the Europeans just after WWII? As you might recall, Homer and Mr. Burns eventually wind up offering it to Fidel Castro to buy Cuba, but he steals it, etc., etc. So yeah, it’s sort of like that.
A more serious point is the objection to #mintthecoin raised by Reuters financial blogger Felix Salmon, namely that simply resorting to coin-minting shenanigans in order to avoid default will “torpedo the international credibility of the United States just for the sake of some short-term one-upmanship.” Really? #Mintthecoin and no one buys US Treasuries anymore? It would be nice to get, say, some authoritative German viewpoint on this (or, in particular, Chinese), but I’ll just need to keep looking.
