RIP Trillion Dollar Coin (Updated)

A moment of silence for Krugman’s answer to the question of life, the universe — everything! fiscal hostage taking:

The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. ”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,” he said.

So long, and thanks for all the fish.


Update (by SH): More Krugman.

If I’d spent the past five years living in a monastery or something, I would take the Treasury Department’s declaration that the coin option is out as a sign that there’s some other plan ready to go. Maybe 14th Amendment, maybe moral obligation coupons or some other form of scrip, something.

And maybe there is a plan.

But as we all know, the last debt ceiling confrontation crept up on the White House because Obama refused to believe that Republicans would actually threaten to provoke default. Is the WH being realistic this time, or does it still rely on the sanity of crazies?

…As I said, if we didn’t have some history here I might be confident that the administration knows what it’s doing. But we do have that history, and you have to fear the worst.

Meanwhile I’m seeing tweets like this from Dem stalwarts:

That’s how it should be. RT @theplumlinegs: Nixing of coin presents GOP with stark choice: Compromise, or be seen destroying US economy.

— Kevin Drum (@kdrum) January 12, 2013

Which rather smacks of Democrats playing their own game of chicken with the national economy for their own political gain, to me. In fact, it sounds very like the Dem plan, from people who all earn more than the national average, is something along the lines of “The Republicans will blink first but even if they don’t and the economy tanks all the poor people who will get even poorer will blame them and vote for us, so where’s the downside?”

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"I don't fuck much with the past but I fuck plenty with the future."

3 CommentsLeave a comment

  • Hey, you read it here first. I called that “the Fed won’t take it” in some comments a ways back. I assume I get a prize? 😉

    One thing that is starting to become clearer (to me, at least): We can now understand why Obama was eager to make a “Grand Bargain”.

    A “Grand Bargain” in which entitlements were seriously damaged could have once been a huge victory in the sense that it would have taken away the House majority’s leverage over the Senate and executive branch. The damage having being done, and with the House majority out of bullets by virtue of the Bargain, Obama could have had 5 years without getting nickled and dimed every few months as the House forces us to lurch from crisis to crisis.

    In retrospect we can ask why the House majority didn’t bite:

    In proposing the Grand Bargain I think (in retrospect only) that Obama’s miscalculation was underestimating how utterly secure the GOP feels in its power (by virtue of solidly owning the House and being very strong in a lot of localities and states). Obama (by virtue of the composition of the House) has always been and remains in a very weak position.

    (What all this is suggesting to me is that progressive ought to be playing a long game that includes migration to and (smart) activism within solidly red districts.)

    • When I read your reply to that thread back there it struck me as being quite sensible and that you sounded like a pretty grounded observer.

      The long game suggestion is often made but never effectively pursued. I assume because it is a lot harder than it seems and, of course, suggested on blogs by people who tend by nature to be thinkers rather than doers. In the mid naughts there was a lot of blogging energy poured into making sure that every Republican had an opponent. And I imagine that to some extent the blogging energy helped. 2006 was huge for instance.

      As for the coin. I think the fact that it got discussed and never actually shot down, and indeed the Fed and the Treasury are saying they “won’t” do as opposed to saying they can’t do it, has served the really important purpose of putting the world on notice that this really is a silly discussion and has no actual affect on the likelihood of a real default.

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