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Sunday, January 13, 2013

One Bad Idea Down, One to Go

On the "$1T Coin" front, consistent with the analysis I set out two days ago, Ezra Klein reports that a Treasury Department spokesperson gave him this statement yesterday: "Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit."  Klein goes on to note that "The inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless."  As I explained Friday, proponents of the "$1T Coin" had not taken the critical role of the Fed and its institutional perspective into account, a serious omission from a policy-making perspective, much like the neocons' failure to take Shiite-Sunni differences into account in their scenarios for occupying Iraq.  Klein's post also has some interesting quotes from the legislator behind the platinum coin section of the U.S. Code, who acknowledges it was never intended to do anything more than help numismatists (so that's what legislators spend their time on). Hopefully this idea's fifteen minutes of fame are over.

On the "14th Amendment solution" front, Reuters ran an article yesterday quoting several Constitutional law scholars throwing cold water on the argument, including Erwin Chereminsky at Cal-Irvine, who recognizes the obvious: "The debt ceiling is set by statute, and the president can't change statutes unilaterally.""