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The Legality of #mintthecoin

[ 211 ] January 9, 2013 |

I have a piece up at the Prospect explaining in more detail that the trillion dollar platinum coin is 1)unambiguously legal, and 2)is preferable to allowing the GOP to either shoot the hostage and crash the economy or to make this hostage-taking an institutionalized feature of the American political system.

The argument that the platinum coin is illegal, then, must rely not on technical legal arguments but on arguments that the coin would violate settled norms of presidential behavior. But Congress using the debt ceiling for blackmail also violates long-established norms. When choosing between unprecedented innovations, it seems obvious that the one that ends a constitutional crisis is infinitely preferable to the one that would make constitutional crises an entrenched institutional feature that may result in economic disaster. I agree that norms are important, and that we should not always rely on hyperformalist readings of the law when they violate settled norms of behavior. But in the context of a minority party transforming what has always been a symbolic vote into a yearly threat to destroy the functioning of the American government, it’s difficult to take the argument that norms should preclude a lawful but unprecedented response from the Obama administration seriously.

There’s an even bigger problem with Drum’s argument. The Obama administration minting a trillion-dollar platinum coin would not violate the law. Complying with a refusal to lift the debt ceiling, however, would require Obama to violate the law.

Krugman has more.

Comments (211)

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  1. howard says:

    You honestly believe today’s supreme court would uphold this?

    I favor krugman’s moral obligation bonds for that very reason.

    • Anonymous says:

      I don’t think the SC would even bother to hear any case involving the coin.

    • Scott Lemieux says:

      You honestly believe today’s supreme court would uphold this?

      Why wouldn’t they?

      • Murc says:

        To play devil’s advocate, there are probably three votes on the Supreme Court in favor of sticking it to Obama any chance they get.

        But no way Kennedy or Roberts touches this thing. They’re conservative, but they’re also establishment.

        • L2P says:

          I sincerely doubt it. My amateur vote-counting gives you Alito, and that’s it. This isn’t a normal “conservative/liberal” case. It doesn’t involve commerce, or cultural cases, or “socialism.” It’d be a straight-forward separation of powers/interpretation case.

          I’d bet Thomas would vote for Obama on this one. He’s actually pretty technical; look at his tax work. He’s probably not going to see it as idealogical.

          Kennedy and Roberts are going to simply say the statute is unambiguous in a two-paragraph opinion.

          I don’t see any reason Scalia wouldn’t view this as a chance to show he’s not a hack. There’s no real conservative principle at stake here other than hating on Obama. He can write an opinion following his “we just apply the law as written” principles and sleep soundly.

          I could certainly be wrong, but I can see this being a much more reasonable outcome than “5 conservatives voting against Obama.”

          • Scott Lemieux says:

            I’d bet Thomas would vote for Obama on this one. He’s actually pretty technical; look at his tax work. He’s probably not going to see it as idealogical.

            And, as I say, Scalia too. The idea that the vague intentions of cherry-picked legislators should trump the plain text of a statute is something Scalia feels very strongly about. He’s going to repudiate that so that the Supreme Court can take responsibility for destroying the world economy? There’s just no reason to believe this. It’s like arguing that the Supreme Court would accept Orly Taitz’s arguments because they want to stick it to Obama.

          • sibusisodan says:

            I don’t see any reason Scalia wouldn’t view this as a chance to show he’s not a hack.

            IANAL, but hasn’t the honorable gentleman had plenty of opportunities to demonstrate a consistently held principle of law and allowed most of them to pass by? Contrast Raich and NFIB

      • howard says:

        Because 4 of them are extreme right-wingers and kennedy is an idiot.

        I do believe moral obligation bonds would be unchallengeable, but i think roberts et al would find an argument to strike down the platinum coin solution (perhaps by finding an underlying constitutional flaw with the statute).

        I’d love to pursue this further, but meetings beckon

        • RedSquareBear says:

          I’m as much of a fan as anyone is of hating the current Supremes lineup.

          But the statute (see below) is so plainly written that it’s crossing into “That flag has gold trim therefore it’s nautical, therefore no taxes” territory to imagine that even this SCOTUS would intervene.

          Even to give Obama a black eye.

      • cpinva says:

        mr. lemueux, if you would, could you please provide either a link to, or a copy of the exact statute in question? i ask, because you argue the “plain meaning of the text” position, from what i read, of a part of the specific statute itself, the “plain meaning” of the text was ambiguous, hence my position that the courts would go to the committee reports, in an effort to determine specifically what congress intended by the statute, that they were seeming unable to clearly convey in the statute itself.

        i read your linked article, hoping it would contain either a link to the code, or a copy of the text, which it didn’t.

        i believe both: a. it’s a bad idea, even if the plain text supported it, or the committee reports did., and b. the plain text doesn’t plainly support your interpretation, and probably neither do the committee reports. i could be wrong.

        hence, my request. i did try finding it, but clearly my search skills haven’t come up with the right terms.

        • Bijan Parsia says:

          Here’s a link.

          The clause in question:

          (k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

          • cpinva says:

            ok, that makes a big difference. standing on its own, it is not “plain”, because there is context not available. that context would be the other provisions of the code, identifying similar types of coins to be minted, of the clearly collectible variety (gold $50 dollar pieces, for example). these pieces are then identified, in a subsequent subsection, as numismatic, subject to restriction in use, under section 5132(a)(1). the section authorizing the minting of the platinum coins has no such stated restriction. it stands on its own.

            i reverse my earlier opinion, with respect to the legality of using them, to fill the gov’t coffers, and getting around the debt ceiling “crisis”. however, as to the political efficacy of doing so, i still don’t think its a great idea.

            • Bijan Parsia says:

              I’m not sure why you think the provision alone doesn’t have the plain meaning it has, but it is true that the rest of the clauses only strengthen the plain meaning. (I.e., contra-DrumIII, bullion coins can be sold at more than their metal value; contra-non-delegation, it’s clear that most aspects of the coin have been delegated in various ways, etc.)

      • Why wouldn’t they?

        Maybe it’s irrational, but I’m still jumpy about Bush vs. Gore, and I assume that those assholes are capable of anything.

        • L.M. says:

          Even from a completely cynical political perspective, though, it seems very unlikely that the Supreme Court would intervene on behalf of the House Republicans here. We know that there were (and probably still are) 5 justices on the Supreme Court who willing to completely make shit up in order to capture the presidency, certainly. But we also know that there are only 4 justices (probably just barely shy of a fifth, but still shy) who are willing to completely make shit up in order to strike down the Affordable Care Act.

          Intervention on behalf of the House Republicans here would require a similar degree of completely-making-shit-up as Bush v. Gore or the dissent in Sebelius, for an outcome that is *much* less valuable than striking down the Affordable Care Act.

    • Anon21 says:

      Who even has standing to challenge the coin?

      • Rhino says:

        Not a lawyer, but I would think anyone who could be forced to accept it as tender. Therefore literally any individual or corporation on earth.

        It’s currency, it’s existence means it could conceivably be paid to someone.

        • (the other) Davis says:

          Not a lawyer, but I would think anyone who could be forced to accept it as tender.

          Way too speculative of a harm to support standing under any reasonable understanding of that (admittedly incoherent) doctrine.

          • Rhino says:

            Like I said, not a lawyer.

          • Rhino says:

            Actually wait. Since currency is quintessentially fungible, the instant that coin enters the system everyone is using some of that trillion dollars in every transaction. That means if its actually illegal, everyone has standing because they are uttering counterfeit currency. They have standing because they have potentially been forced to commit a felony merely by using cash withdrawn for there ATM.

            Is that any MORE silly than any other aspect of this circus?

            This is such fun!

            • Rhino says:

              Arghh ‘their ATM’

              Edit function please

            • Malaclypse says:

              But then we also all have standing to sue the fed every time it changes fractional reserve requirements.

              • cleter says:

                And that’s why the Supreme Court would shy away from wading in on this. They wouldn’t want to set a precedent that everybody who owns a wallet has standing to sue every time there’s a change in monetary policy. Of course, Scalia might have another one of those magical “No Precedent” cards left over from Bush v Gore, so who knows.

            • Bijan Parsia says:

              What Mal said.

              Again, the shape of a reasonable legal challenge would be someone refusing to accept the specific coin who is obliged to accept it. So, the government could use it to pay for (past) services or deposit at the Fed or send such coins as Social Security payments and the recipients could try to use it to pay their mortgage. If anyone refused it (for debt) then they could be sued. The dispute would be precisely whether it was legal tender.

  2. somethingblue says:

    Legality aside, the whole debate is exposing some remarkably widespread and basic ignorance about what money is and how it works. I mean, even I can understand that you don’t need a trillion dollars worth of platinum to mint a platinum coin with a face value of a trillion dollars. But I think the NRCC really does believe this. It’s just mind-boggling.

    • DrDick says:

      There are a whole lot of people who are profoundly uncomfortable with the idea that money is merely a symbol with no inherent value.

      • The Dark Avenger says:

        A good example is the currency of Yap.

        Yap is notable for its stone money, known as Rai: large doughnut-shaped, carved disks of (usually) calcite, up to 4 m (12 ft) in diameter (most are much smaller). The smallest can be as little as 3.5 centimetres (1.4 in) in diameter.[4] There are five major types of monies: Mmbul, Gaw, Fe’ or Rai, Yar, and Reng, this last being only 0.3 m (1 ft) in diameter. Many of them were brought from other islands, as far as New Guinea, but most came in ancient times from Palau. Their value is based on both the stone’s size and its history. Historically the Yapese valued the disks because the material looks like quartz, and these were the shiniest objects around. Eventually the stones became legal tender and were even mandatory in some payments.[5]

        The stones’ value was kept high due to the difficulty and hazards involved in obtaining them. To quarry the stones, Yapese adventurers had to sail to distant islands and deal with local inhabitants who were sometimes hostile. Once quarried, the disks had to be transported back to Yap on rafts towed behind wind-powered canoes. The scarcity of the disks, and the effort and peril required to get them, made them valuable to the Yapese. However, in 1874, an enterprising Irishman named David O’Keefe hit upon the idea of employing the Yapese to import more “money” in the form of shiploads of large stones, also from Palau. O’Keefe then traded these stones with the Yapese for other commodities such as sea cucumbers and copra. Although some of the O’Keefe stones are larger than the canoe-transported stones, they are less valuable than the earlier stones due to the comparative ease in which they were obtained. Approximately 6,800 of them are scattered around the island.

        As no more disks are being produced or imported, this money supply is fixed.[6] The islanders know who owns which piece but do not necessarily move them when ownership changes. Their size and weight (the largest ones require 20 adult men to carry) make them very difficult to move around. Although today the United States dollar is the currency used for everyday transactions in Yap, the stone disks are still used for more traditional or ceremonial exchange. The stone disks may change ownership during marriages, transfers of land title, or as compensation for damages suffered by an aggrieved party.

        http://en.wikipedia.org/wiki/Yap#Stone_money

        • ajay says:

          The islanders know who owns which piece but do not necessarily move them when ownership changes.

          A lot like gold reserves: when a country sells some, it doesn’t necessarily ship it abroad, it just moves the bars to a different shelf in the vault labelled “Property of Bundesbank” or whatever.

        • DrDick says:

          A better example is the cacao beans used by the Aztecs or the strings of cowry shells used in West Africa. these have the advantage of also being general purpose money (like ours). Yap stone money is special purpose money that is only used in limited contexts and not for general commerce.

      • LeeEsq says:

        Many historians believe, I learned this courtest of Debt:The First 5000 Years, was that money was original a unit of abstract value to measure debt like a mile is an abstract value to measure to distance before it was anything physical. Money the abstract unit of value was turned to money the thing when Mesopatamian city-states figuered it was an easy way to pay soliders and officials.

        Market fundamentalsits do not like this theory because demonstrates that markets are basically a government creation. If governments existed before markets and created them in the first place than government would have a right to regulate them.

        • DrDick says:

          That is pretty much true (though I am ambivalent about the abstract measure of debt part). Having just taught this unit in my cultural anthropology class, money is always a symbol whose value is entirely arbitrary and symbolic, not linked to any inherent value. Likewise, true markets (with supply and demand pricing and free exchange of all goods) only emerge with states (possibly also in complex chiefdoms transitioning to states) and are entirely dependent on state regulation to function.

          • LeeEsq says:

            Really? Why are you ambivalent about money being an abstract unit representing debt. The idea that money came into existence because it beats barter has been thoroughly disproven. What other alternative arguments are there?

            • DrDick says:

              Where has the idea that money beats barter been disproven? We have exactly zero documented barter economies. Markets do not exist in the absence of money.

              • Malaclypse says:

                Where has the idea that money beats barter been disproven?

                Graeber.

                We have exactly zero documented barter economies.

                Which is why money does not replace barter.

                I think you are agreeing with LeeEsq, but have misread him.

                • DrDick says:

                  I see. I am still skeptical about Graeber’s idea that money originates as an idea before it has material reality. In large part as this is purely speculative, since there are no written records from ancient states without money and there is no such institution in any known non-state or primitive state society in the historic period.

              • mark f says:

                DrDick: You’ve mentioned this sort of thing before. If you’re still reading this thread, can recommend reading on the same topic(s) as Debt that prefer?

                Thanks!

        • bradP says:

          Isn’t debt a hard thing to come upon when there isn’t a market of some sort?

          How is the debt generated if not by some sort of exchange at an agreed upon price?

          If governments existed before markets and created them in the first place than government would have a right to regulate them.

          That’s a really poor argument. Its like saying the government can run propaghanda 24/7 because the FCC standardized television standards.

          • LeeEsq says:

            No, not really if you think in terms of feudalism and hierarchical obligations. Debt in this case is what you owe your superior for protection or whatever. No market necessary. Debt was what people owed the Temple or King.

            • DrDick says:

              Taxes predate markets by a large margin, appearing in chiefdoms (which do not have markets). It is important to recognize that trade and market-like exchanges do not become routine until the emergence of the state.

              • LeeEsq says:

                When I really want to piss off libertarians, I like to remind them that there can be no private property without the state.

                • bradP says:

                  This is obviously untrue, unless you are making a couple jumps where property is defined by state enforcement and your argument is tautological.

                  Private property is the right to quiet enjoyment of some economic good. The state is not the only thing that can generate the respect/enforcement of property rights.

                • Malaclypse says:

                  This is obviously untrue,

                  No, it isn’t. Find a counter-example.

                • bradP says:

                  No, it isn’t. Find a counter-example.

                  If the government stopped protecting the property rights of a factory owner, the owner isn’t going to throw up his hands and let the masses take the spoils. He is going to pay people to protect it.

                  Voila, private property.

                  If the revenue is sufficient to support his own needs and pay for the protection of the property, the property is sustainable.

                  Hell, Graeber seems to rely very heavily on slavery, the most basic and rawest form of property.

                  And the domestication of plants and animals seems unlikely without some pre-state concept of property.

                • DrDick says:

                  This is obviously untrue

                  Speaking as an expert, no it is not. Private property as we know it (particularly in land) emerges with the state.

                • Malaclypse says:

                  If the government stopped protecting the property rights of a factory owner, the owner isn’t going to throw up his hands and let the masses take the spoils. He is going to pay people to protect it.

                  Voila, private property.

                  Until a bigger warlord comes along.

                  Seriously, Brad, are you failing to get that you just described fucking Somalia? You think hiring a fucking private army is “the right to quiet enjoyment of some economic good”?

                  This is why libertarianism cannot be parodied.

                • bradP says:

                  Until a bigger warlord comes along.

                  No different from state sanctioned private property. Nothing about the state makes our rights inalienable.

                  Seriously, Brad, are you failing to get that you just described fucking Somalia? You think hiring a fucking private army is “the right to quiet enjoyment of some economic good”?

                  This is why libertarianism cannot be parodied.

                  Is the question whether private property can exist free of the state or not?

                  What should be property is a very different question from what is property.

                  Chances are anyone who can afford to hire a private army is probably going to have private property. Whether it is legitimate property rights or not is another question, but the rights are enforced and there.

                  Now, the difference between hiring a private army to protect one’s property and being a state can be fuzzy, which is why I allowed the tautological out above.

                  But in the end, property rights exist where they are both wanted and able to be enforced. Unless one defines the state by that very enforcement ( I think that opens up other problems), property can exist free of the state.

                • Malaclypse says:

                  Chances are anyone who can afford to hire a private army is probably going to have private property.

                  Helpfully highlighted the question you begged.

                • bradP says:

                  Helpfully highlighted the question you begged.

                  That doesn’t seem to beg the question unless you define the state as those with the ability to protect property rights.

                • Malaclypse says:

                  “Afford to hire” presupposed both 1) an accepted medium of exchange, and 2) generally accepted title to said medium. So yes, you have begged some important questions.

                • bradP says:

                  Helpfully highlighted the question you begged.

                  It seems you have gon past the point of saying that markets and property are not possible without the state to saying that noone can even possess something of value.

                  A relatively advanced understanding of toolmaking may have been enough to spur exchange and hiring:

                  “See how handy this tool is? Protect this stockpile and I will make you one.”

                • bradP says:

                  “Afford to hire” presupposed both 1) an accepted medium of exchange, and 2) generally accepted title to said medium. So yes, you have begged some important questions.

                  And the medium only need to be accepted between the parties, which is not hard when trading in person, and the “title” most only extend through consumption.

                • bradP says:

                  Brad -
                  This whole discussion has devolved into grotesque stupidity based on your completely false assertion that all exchange = markets (it does not!) and that there is any more than a superficial resemblance between the systems I am describing and market exchanges. Go educate yourself and read some economic anthropology and burn your Mises and Hayek (which are loaded with false assumptions).

                  I think it has more to do with your desire to separate economic gain from social/political gain.

                  Where the norm was abundance, such as the afore mentioned Northwest Native American tribes, sure, there was little similarity to anything like a market. But when scarcity takes over, there is little separating an economy based on recriprocal gifts or submitting to custom and what is traditionally accepted as a market economy.

                • DrDick says:

                  I think it has more to do with your desire to separate economic gain from social/political gain.

                  Just when I though this discussion could not get any more stupid, you come up with this. The definition of market exchange is that it is primarily economically motivated. You are pulling your standard stupid libertarian trick of trying to redefine words to suit your purposes.

                • bradP says:

                  Just when I though this discussion could not get any more stupid, you come up with this. The definition of market exchange is that it is primarily economically motivated. You are pulling your standard stupid libertarian trick of trying to redefine words to suit your purposes.

                  With social/religious/political/military leaders also almost universally also the wealthy class it is very hard for me to separate the drives. I understand that such behavior can be motivated without consideration for economic gain, but invariably social status translated into wealth.

                  Where it didn’t, there were severe practical limitations on how much actual economic gain could be obtained, scarcity was not much of an issue, or a combination of both.

                  I have found a copy of The Gift that I am fixing to read.

                • Nathan, Prophet of YHWH says:

                  With social/religious/political/military leaders also almost universally also the wealthy class it is very hard for me to separate the drives.

                  Thou art the man, Brad.

                • DrDick says:

                  I understand that such behavior can be motivated without consideration for economic gain, but invariably social status translated into wealth.

                  Wrong again. You really ought to quit before you reach China. This is only true in a narrow range of societies (though the most common sort today). The direct correlation between social status and wealth only appears in some chiefdoms and states (more of that private propertuy and the state business for you).

                • bradP says:

                  Wrong again. You really ought to quit before you reach China. This is only true in a narrow range of societies (though the most common sort today). The direct correlation between social status and wealth only appears in some chiefdoms and states (more of that private propertuy and the state business for you).

                  Fair enough. You would know better than I.

                  Can you provide a source for a society that had the capacity to actually store wealth and resources, or where abundance didn’t overwhelm their capacity to store, yet social status didn’t largely translate to wealth?

              • bradP says:

                It is important to recognize that trade and market-like exchanges do not become routine until the emergence of the state.

                Didn’t exist or wasn’t routine? This is important.

                • DrDick says:

                  Does not exist in the modern form. Trade exists, but is structured very differently (not primarily along market principles) and remains highly socially embedded. By “routine”, I mean central to the operation of the economy. In non-state societies, most households produce all or most of what they consume. Normal economic exchanges are handled via largely kin-based sharing and gift exchange.

                • bradP says:

                  Does not exist in the modern form.

                  You mean tribal hunter-gatherers didn’t get together on a stock market floor and exchange?

                  Which gets to this point:

                  In non-state societies, most households produce all or most of what they consume. Normal economic exchanges are handled via largely kin-based sharing and gift exchange.

                  This is a matter of the limitations placed upon them by the lifestyle. Would have exchange occurred at a necessarily small level pre-state? Absolutely. That is a sign that people did not have much to exchange, not that it didn’t occur.

                  Even the kin-based sharing and gift exchange has the accounting and expectations that largely define a market, as evidenced by what Graeber says about debt.

                • DrDick says:

                  This is a matter of the limitations placed upon them by the lifestyle. Would have exchange occurred at a necessarily small level pre-state? Absolutely. That is a sign that people did not have much to exchange, not that it didn’t occur.

                  Even the kin-based sharing and gift exchange has the accounting and expectations that largely define a market, as evidenced by what Graeber says about debt.

                  Once again you reveal the abysmal ignorance of reality that is at the heart of libertarianism. Not in modern for means that exchange values are not established primarily by supply and demand (these are customary and relatively stable over long periods), that the primary goal is personal economic gain (social/political alliance is generally more important), and exchange is deeply embedded in ongoing social relationships and connections. As to the limitations of their societies, I would observe that the Salish & Sahaptin Indians of the Interior Northwest are estimated to have traded a million pounds of dried salmon a year.

                • bradP says:

                  established primarily by supply and demand (these are customary and relatively stable over long periods)

                  Supply and demand are merely constructs that help us understand what is going on with the economy and predict the future. It is not a description of reality. As Mises wrote:

                  A market price is a real historical phenomenon, the quantitative ratio at which at a definite place and at a definite date two individuals exchanged definite quantities of two definite goods. It refers to the special conditions of the concrete act of exchange. It is ultimately determined by the value judgments of the individuals involved. It is not derived from the general price structure or from the structure of the prices of a special class of commodities or services. What is called the price structure is an abstract notion derived from a multiplicity of individual concrete prices. The market does not generate prices of land or motorcars in general nor wage rates in general, but prices for a certain piece of land and for a certain car and wage rates for a performance of a certain kind.

                  Supply and demand are axiomatic laws that spontaneously occur in systems of trade. It is no less applicable to prehistoric systems of exchange, and no more an description of reality today.

                  , that the primary goal is personal economic gain (social/political alliance is generally more important),

                  I don’t know how you separate the the two categories. Gaining status in social/political alliances is not economic gain?

                  How do you define economic gain?

                  and exchange is deeply embedded in ongoing social relationships and connections.

                  Perhaps I don’t understand what you are getting at with this, but a huge portion of disposable incomes are spent on social status and signals.

                  As to the limitations of their societies, I would observe that the Salish & Sahaptin Indians of the Interior Northwest are estimated to have traded a million pounds of dried salmon a year.

                  What are you trying to contribute to your argument with this?

                • Malaclypse says:

                  Supply and demand are axiomatic laws that spontaneously occur in systems of trade

                  Words fail to describe just how naive, and incorrect, this is.

                • bradP says:

                  Words fail to describe just how naive, and incorrect, this is.

                  I’m not sure you understand what I’m getting at, but ok.

                • DrDick says:

                  Brad -
                  This whole discussion has devolved into grotesque stupidity based on your completely false assertion that all exchange = markets (it does not!) and that there is any more than a superficial resemblance between the systems I am describing and market exchanges. Go educate yourself and read some economic anthropology and burn your Mises and Hayek (which are loaded with false assumptions).

                • (the other) Davis says:

                  Hey DrDick, do you have any recommended economic anthropology reading? I’d actually be curious to read up on that.

                • Hogan says:

                  exchange is deeply embedded in ongoing social relationships and connections.

                  Perhaps I don’t understand what you are getting at with this, but a huge portion of disposable incomes are spent on social status and signals.

                  And much of that spending goes to people that the buyer doesn’t know personally, because the people the buyer knows personally don’t have that stuff to sell, but the buyer is willing to engage in those transactions without such acquaintance (without even seeing the seller, in many cases); and the buying/selling neither grows out of nor creates any kind of social relationship between buyer and seller. That’s a market, and that’s what non-state economies don’t have.

                • Malaclypse says:

                  Hey DrDick, do you have any recommended economic anthropology reading? I’d actually be curious to read up on that.

                  I’m not DrDick, and I’d also like to see his recommendations, and neither of these is anthro, but you can’t go wrong with reading both Capital (esp Vol 1) and Keynes’ General Theory.

                • mark f says:

                  you can’t go wrong with reading both Capital (esp Vol 1) and Keynes’ General Theory.

                  What kind of Commie are you, wanting us to read Keynes?

                • Malaclypse says:

                  What kind of Commie are you, wanting us to read Keynes?

                  One who sees the parallels between an analysis focusing on over-supply and maldistribution, and one focusing on under-demand and low velocity of money.

              • DrDick says:

                Oy. All of you are putting me on the spot a bit since my sources are at the office. Stuart Plattner, Stephen Gudeman, Richard Wilk, and Rhoda Halperin are good in different ways. Hann & Hart, Economic Anthropology is a good overview, as is James Carrier, A Handbook of Economic Anthropology. Kahn & LloberaThe Anthropology of Pre-Capitalist Societies is another good source as is Hann, Property Relations.

                • DrDick says:

                  Also, Brad could start by reading Marcel Mauss’s The Gift.

                • Malaclypse says:

                  Didn’t Sahlins have something? Been decades, and my memory fails me…

                • DrDick says:

                  For Marxist perspectives, there are David Seddon, Relations of production, Donald Donham, Alice Littlefield, and J.R. Clemmer. For those who do not wading deep into the weeds, there are the French Structural Marxists like Godelier, Meillassoux, Terray, and Rey.

                • DrDick says:

                  Mal -
                  He did, Stone Age Eonomics, but it is rather out of date and not the best source these days, though much of value there and it would do Brad good to read it. Raymond Firth is another pretty good older source.

                • Malaclypse says:

                  Thanks.

                • bradP says:

                  Also, Brad could start by reading Marcel Mauss’s The Gift.

                  Yeah, not sure I’m reading the right thing. The introduction kinda surprised me:

                  Thus we have a double aim. We seek a set of more or less archaeological
                  conclusions on the nature of human transactions in the societies which surround
                  us and those which immediately preceded ours, and whose exchange institutions
                  differ from our own. We describe their forms of contract and exchange. It has
                  been suggested that these societies lack the economic market, but this is not true;
                  for the market is a human phenomenon which we believe to be familiar to every
                  known society. Markets are found before the development of merchants, and
                  before their most important innovation, currency as we know it.
                  They functioned
                  before they took the modern forms (Semitic, Hellenic, Hellenistic, and Roman)
                  of contract and sale and capital. We shall take note of the moral and economic
                  features of these institutions.

                • DrDick says:

                  The introduction kinda surprised me:

                  Please note the publication date. He is using the term in a rather different manner than you are (or I am).

          • DrDick says:

            The actual argument is that markets emerge because the government is there to regulate them. State regulation (or state enforced regulation) is what provides the trust necessary for routine exchanges with people to whom you do not have strong ongoing social relations.

            • L.M. says:

              A corollary is there that there is simply no such thing as “natural,” “free,” or “unregulated” market; the only question is what purposes market regulation will serve.

      • cpinva says:

        were you to do a survey, you would probably find that most of those people are older, and remember when the country was on the gold standard. a dollar bill represented a dollar’s worth of gold, in fort knox, and there could only be as much in paper bills, as there was gold in the vault.

        There are a whole lot of people who are profoundly uncomfortable with the idea that money is merely a symbol with no inherent value.

        in that sense, paper bills had tangible value (at least psychologically), all by themselves, even though you couldn’t exchange it for actual gold. having not grown up with that concept of paper bills, for me it simply represents of medium of exchange, much simpler than the barter system.

        • ajay says:

          were you to do a survey, you would probably find that most of those people are older, and remember when the country was on the gold standard.

          Pity they’re mostly too young to remember the Great Depression.

        • RedSquareBear says:

          But gold-convertible (or any other-convertible) currency is just second-order symbolic.

          You can exchange this symbolically valuable item (a dollar bill) for another symbolically valuable item (a bit of gold) but it’s still just a symbolic exchange, just shifted up one.

          Gold ins’t an example of intrinsic worth (unless you’re into dentistry or microcircuitry I guess).

          It’s all symbols all the way down.

  3. Murc says:

    In other circumstances, I’d entirely agree with K-Drum. This is, in fact, a case of using the letter of the law to ignore its spirit, and in other circumstances I would regard a President who I thought was considering a unilateral and massive expansion of the money supply using dubious methods with a lot of skepticism. So I’m sympathetic to his viewpoint, especially because the Bush years inculcated in me a massive bias towards respecting the laws, norms, and procedures the Republicans were gleefully subverting or wiping their asses with.

    These aren’t other circumstances. These are the circumstances we have now, where Congress is actually considering simply not paying their bills.

    The inescapable fact is that the platinum coin, while a bad idea, is the least worst option. (This assumes that the Republicans won’t cave in. That would be an actual GOOD option.) Drum engages in some hand-waving saying that the proper solution to the debt limit debacle is to make the Republicans pay a political price for it. They should be made to do so, but in practical terms the way they’ll pay a political price is by shutting down the government and inflicting genuine harm to millions of people.

    I think well enough of Drum to be pretty sure that if we enter, say, week two of a shutdown with no sign the Republicans are even thinking of budging, he will suddenly come around on the platinum coin.

  4. bob mcmanus says:

    http://www.economist.com/blogs/freeexchange/2013/01/economics-platinum-coin-option

    Somebody who understands banking and the Fed discusses the platcoin

    Banks won’t want a $1 trillion platinum coin, so the Fed will only buy* the coin if Treasury forces it to. The Treasury, in “depositing” its coin at the Fed, is in reality ordering the Fed to print money. And if Treasury doesn’t take the coin back, the money stays printed.

    The Fed implements QE when it has decided that’s the best way to carry out its monetary policy objectives. Buying a coin solely to finance the deficit is monetizing the debt, precisely the sort of thing central bank independence was meant to prevent. How could any Federal Reserve chairman justify cooperating in such a scheme, in particular since the Fed would be taking the White House’s side in a fight with Congress over a matter of dubious legality?

    Note the “buy” for people who tell it is a “deposit” whatever that is.

    Steve Randy Waldman at Interfluidity has a post with good comments

    There is a way around this problem that preserves the Fed’s independence. That would be for the Treasury to issue the coin to the public, instead of the Fed, thereby leaving the Fed’s balance sheet, and its control of monetary policy, alone. Of course, no one would want a $1 trillion coin. But Gary Gorton, an economist at Yale University, suggests there might be demand for a bunch of $50 million coins.

    Just do it. 1 million million-dollar-coins, how about to every Afro-American family? But messing with the Fed is big trouble.

    • Malaclypse says:

      1 million million-dollar-coins, how about to every Afro-American family?

      While free-money-for-people-not-banks is a good idea under the current circumstances, please note that this is entirely tangential to solving the debt limit problem.

      • L2P says:

        Side note: Congress did not authorize the Executive Branch to provide $1 Million coins to every African-American Family. It authorized the minting of platinum coins as part of the Treasury’s currency function. That’s (partly) why Balkin suggests that the government then just keep it and loan on it as collateral.

        Thus, the difference between a constitutional exercise of power (minting a trillion dollar platinum coin), and an unconstitutional exercise of power (minting that coin, and then giving it for free to whoever the President wants.)

        • John says:

          Wouldn’t loaning on it as collateral constitute borrowing money, which go up against the debt limit?

          • L2P says:

            Not as I understand it. The Government’s net obligations are zero, because it has collateral greater than the loan (it has no “debt”). I’m not an expert here – I could easily be mistaken, I’m just going off what the smarter people tell me.

            • Bijan Parsia says:

              Sell the coin rather than deposit it.

              Indeed, I believe the treasury could do that with gold or silver. The statute sets a minimal level, not a maximum. If the fed wants to buy a REALLY SNAZZY coin, that’s their prerogative.

              They surely would prefer the seigniorage because it means they didn’t do anything active.

    • Murc says:

      How could any Federal Reserve chairman justify cooperating in such a scheme, in particular since the Fed would be taking the White House’s side in a fight with Congress over a matter of dubious legality?

      They justify it on the grounds that if they don’t go along, the economy tanks.

      That’s how.

      As for the rest, my understanding is that the Federal Reserve is obligated to accept on deposit (and it would be a deposit; if it isn’t, then the term has no meaning and every time my paycheck is direct deposited its the bank ‘buying’ my money) any legal tender the treasury presents to them. They could take the Treasury to court, of course, arguing that the coin isn’t legal tender. They’d have standing.

      That would be for the Treasury to issue the coin to the public, instead of the Fed, thereby leaving the Fed’s balance sheet, and its control of monetary policy, alone

      … to what end?

      Why on Earth would the Treasury want to do this? They’re not trying to increase the money supply. They want to pay their bills! So they get a platinum coin and place it on account somewhere so they have money to do that.

      This is actually a common practice. It’s roughly analogous to how companies do payroll.

  5. Joe says:

    So let’s say it’s technically legal. I really doubt Drum cares about technical legality. He cares about the big picture. The big picture is this is a f-ing gimmick. Colbert rightly ridiculed the idea but now we are continuing to take it seriously.

    We have to address the problem and gimmicks won’t do that. If McConnell is willing to float a “let the President raise the limit with Congress having the power to override him by a 2/3 vote” which won’t happen in practice, the opening to a real solution is there.

    The coin idea instead just lets this thing continue. Focusing on its “legality” is missing the forest for a single tree.

    • somethingblue says:

      We have to address the problem and gimmicks won’t do that. If McConnell is willing to float a “let the President raise the limit with Congress having the power to override him by a 2/3 vote” which won’t happen in practice, the opening to a real solution is there.

      And if my dog spoke Czech I could have him translate newspaper articles for me.

      Relying on Republicans to behave reasonably doesn’t have a great track record. What else have you got?

    • Scott Lemieux says:

      So let’s say it’s technically legal.

      No, let’s say that we just don’t have to say this for the sake of argument. It is unambiguously legal. Drum doesn’t even really dispute this.

      The big picture is this is a f-ing gimmick.

      So? That’s worse than letting the GOP crash the world economy than using the idiotic gimmickry of the debt ceiling?


      If McConnell is willing to float a “let the President raise the limit with Congress having the power to override him by a 2/3 vote” which won’t happen in practice, the opening to a real solution is there.

      Again, of course it would be better if Republicans would act rationally and we could get rid of the hostage taking through ordinary legislative means without submitting to blackmail. Nobody is disputing this. The question is what to do if this isn’t on the table, which it very likely won’t be.

      • Bijan Parsia says:

        No, let’s say that we just don’t have to say this for the sake of argument. It is unambiguously legal. Drum doesn’t even really dispute this.

        Well he trebled down today. And this time it’s even dumber.

        If by “not really dispute” you mean “come up with anything that’s not hilariously risible” then we agree. If “not really dispute” you mean “doesn’t advocate for”, well:

        This is true, of course. In a way, though, I wonder if this is yet another reason to think that the trillion dollar coin wouldn’t be legal. Remember that its authorization comes in a sentence devoted to the minting of bullion coins. But as a lawyer friend emailed to me this morning, “bullion coins are generally understood by other statutes within the US Code to be coins with a value effectively equal to the market value of the precious metal bullion in them. The trillion dollar coin is not that.”

        And we get the lovely “real world meaning” of a clause!

        • Malaclypse says:

          In other words, I wouldn’t be surprised if you could make a case that a $1 trillion platinum coin is really just a $1 trillion treasury bond.

          In other words, Kevin Drum does not understand what money is.

          • DrDick says:

            True of far too many people holding forth on economic matters these days.

            • Cody says:

              I foresee a Krugman rant on this. Now Economists on the Right have thrown out Keynesian economics AND their understanding of what “money” is.

              There is a disturbance in the Force…

          • Rhino says:

            To be fair, money is a pretty complicated thing when you start getting into silly shit like this.

            What I don’t get, sitting here in my hospital bed, with a nice morphine button, is how this obvious , gaping, and strangely specific loophole exists. It’s so perfect. One single, oddly specific form of currency under the complete control of a completely different authority.

            • Bijan Parsia says:

              Well, if you look at the whole statute, you might be more surprised by how specific it is on other coins. I mean, really specific, unto where you get the metal from and that you shouldn’t overpay and the edge should be like this, etc.

              At various points they lift some of these restrictions. I think that the platinum bit was just “Fuck it, we left this too late and no one wants to screw around with all the annoying detail. Let the Secretary deal with it.”

              • somethingblue says:

                My guess is that a few weeks from now someone goes back in time and persuades a congressional staffer to write it that way just to annoy Kevin Drum. Saving the world from financial apocalypse is just a pleasing side-effect.

                • Rhino says:

                  Second win of the thread. Goddamned you people have spent the last month making a very nasty hospital stay one hell of a lot more bearable! Thanks to all of you.

                  Can’t you just picture drum shaking his fist as some grinning wild man (I always picture malaclypse as looking like an irritated Karl Marx, he would be perfect) hops into a Tardis with a bottle of parchment hued whiteout and a quill pen?

                • Malaclypse says:

                  (I always picture malaclypse as looking like an irritated Karl Marx, he would be perfect)

                  Not even close. Although I am frequently and easily irritated, I lack Karl’s hirsute ability, shall we say.

                • Bijan Parsia says:

                  I hope that it’s me who gets to do this.

        • L2P says:

          That’s just precious.

          “In 16th century English common law, bullion referred to coins valued by their weight in precious metals. Obviously, we should ignore the plain language of the statute and instead only allow the Treasury to value the coin as would the English Mint in the Late Medieval Period.”

          Drum is starting to sound like Glen Beck a little bit.

          • Bill Murray says:

            if he had gone to 17th/18th century English common law and the mint, he could at least have invoked Isaac Newton

          • cpinva says:

            ok, he’s starting to go a tad off the deep end here. at least his initial arguments seemed to make some sense. he’s now set course on devolving.

            • djillionsmix says:

              It’s more like the brownian motion of debate is uncovering the core of irrationality that he was trying to cover.

              Basically every argument against the platinum coin is ‘it sounds weird and that makes me mad’

              • Why shouldn’t it make everybody mad? If an arbitrary decision can wipe out X amount of debt why don’t I get more in my bank account and why does Wal-Mart pay me nothing?

                Naturally there are some people who are just fine with accumulating these valuable piles of magic called money, but I think most of us are agreed that those guys are assholes.

                • Bijan Parsia says:

                  Why shouldn’t it make everybody mad?

                  Because some of us don’t get excised about seigniorage?

                  If an arbitrary decision can wipe out X amount of debt why don’t I get more in my bank account and why does Wal-Mart pay me nothing?

                  Actually, the only reason this is without serious negative economic consequence at this time is because of the extraordinary circumstances and limited use. If the US tried to wipe out all its debt in one go by printing money, I do suspect we’d see some nasty inflation. But as things stand, I’m inclined to leave that particular debt wiped :)

                • I’m not so much worried about the technical effects, seigniorage, etc. But the trillion-dollar coin could take Social Security off the bargaining table as well. That the coin remedy is used in this case doesn’t bug me at all, it’s more that such flexibility is not gonna be shown when it provides a direct benefit to millions who need it right now. And yes, I understand that preventing Republicans from fucking shit up forestalls some of that.

          • L.M. says:

            I maintain that this issue would not even be justiciable, not only for want of Article III standing and because it (probably) presents a nonjusticiable political question, but also because the yellow fringe on that flag in the courtroom means that this is an admiralty court, with no jurisdiction over sovereign citizens!

        • (the other) Davis says:

          One of the problems that most laypeople have with understanding law is that, deep down, they expect law to be constrained by rationality.

          But one of the first useful (implicit) lessons of legal education is that legality and rationality often have little more than a passing acquaintance with each other.

          I think Drum’s problems are that (a) he’s experiencing a Dunning-Kruger moment, and (b) he has dug himself too deeply into this position to back off it.

      • mpowell says:

        Yeah, Joe’s post misses the really obvious point that the real problem is not congressional Republicans being a bunch of dickheads about the debt ceiling. The real problem is a complete financial meltdown vastly worse than what you saw in 2008. Minting a coin doesn’t get us a reasonable law regarding the debt ceiling. That much is true. But it prevents the financial meltdown. Having a last resort if congressional Republicans can’t be compelled to pass a reasonable law that would avoid ending the world as we know it is definitely a good thing.

        • Malaclypse says:

          Minting a coin doesn’t get us a reasonable law regarding the debt ceiling.

          “I’m instructing Secretary Timmeh to mint one platinum coin every six weeks. He will stop if and only if Congress returns a bill doing two things: permanently abolishing the pig-fuckingly stupid law establishing the debt ceiling, as well as the law allowing Presidents to mint as much money as they damn well please.”

    • Murc says:

      If McConnell is willing to float a “let the President raise the limit with Congress having the power to override him by a 2/3 vote” which won’t happen in practice, the opening to a real solution is there.

      This would be an amazing deal and a huge win for good governance and any Presidential administration would be insane not to jump on it.

      Alas, we live in the real world.

      So, I’m curious, Joe. The options available are this:

      1)Obama caves and slashes spending to get a debt limit raise.
      2)Extended and protracted government shutdown.
      3)14th Amendment shenanigans.
      4)Platinum coin shenanigans.

      This is assuming the Republicans don’t come to their senses.

      So, which of these do you endorse? From where I sit the platinum coin looks like the least worst option. But these are the options. If I’ve missed one please tell me.

      • JKTHs says:

        BTW it’s not a government shutdown but a default on debt/obligations/whatever. The government shutdown would probably most certainly come a month later if options 3 or 4 were used, though I don’t think that’s as big of an issue.

    • David Hunt says:

      The coin idea instead just lets this thing continue.

      I disagree. Negotiating with the Republicans who are taking the U.S. economy hostage on an approximately annual basis is letting the thing continue. Letting it be known to Congress that you simply will not let them profit from the holding a gun to the U.S. economy’s head and that they don’t even have the power to tank the economy that they thought they did is the way to keep this from continuing. Because if the Republican’s thought that can get an even a free dessert at Wendy’s by risking the destruction of Capitalism Itself, they’d do it. Okay, there’s a bit of hyperbole there, but the Congressional Republicans use every hostage-taking opportunity to try to wrestle concessions out of the the Democrats…

      Letting them know that you will seriously mint that coin before you give them anything in return for raising the debt limit means that they’re unlikely to jam us up over it in the future…because they know they won’t get anything from it.

    • sharculese says:

      I really doubt Drum cares about technical legality.

      Drum:

      On the other hand, using a ridiculous loophole in a statute about commemorative and bullion coins in order to evade the debt limit isn’t legal. Seriously, folks: just forget it. I know I’ll never have to pay up on a bet over this since it will never be tested, but this would go against Obama 9-0 if it ever made it to the Supreme Court.

      If Drum want’s to argue that maybe this is technically legal, but that doesn’t matter because either way it’s a terrible idea, he should say that, instead of insisting that it’s obviously illegal and everyone who disagrees with him is Tea Party level crazy.

      I think Drum has a lot of interesting things to say even when I disagree with him, but the rigid absolutism he’s displaying here is bizarre and not particularly convincing, and I think people are going out of their way to attribute a more generous position to him than he actually holds.

      • L2P says:

        He seems to have a bias towards negotiation and compromise and “long term solutions” (whatever those are). Not quite at the beltway moderate, Dianne-Feinstein-is-ready-to-give-up-the-farm-to-reach-a-deal level, but he doesn’t seem happy unless there’s a “both sides lose” deal on the table.

        That, and it seems silly, like something being “silly” means we shouldn’t do it. Hell, if the Republicans would extend the debt ceiling if Obama wore a clown suit for a day, Obama should wear a clown suit. Who gives a crap? Get the thing done.

      • daveNYC says:

        How exactly is he calling something a loophole, while also calling it illegal? A loophole in a law means that whatever you can fit through there is legal, otherwise the loophole wouldn’t be there.

        • sharculese says:

          He doesn’t have a coherent argument, as he’s making increasingly clear. He doesn’t like the coin, and he’s made it his business to shout down anyone who does.

          • Rhino says:

            I don’t like the coin either (though I like the idea of minting them till congress passes a two part bill, one eliminating the debt ceiling, the other eliminating this stupid coin law)… But surely there are smarter arguments than Drum’s?

    • BigHank53 says:

      The coin idea instead just lets this thing continue.

      This “thing” is the GOP taking the government (and the whole economy, by extension) hostage if they don’t get what they want. They either have to be defeated or capitulated to: those really are the only two options.

      If we capitulate this time, they’ll be back. What incentive will they have to balance the budget when any deficit confrontation gets them something they want? Now, maybe you think that Social Security, Medicaid, Medicare, etc should all be eliminated and the only things in the Federal Budget should be defense spending and foreign aid to Israel. I don’t even think most batshit Tea Partiers want to live in that country. But what mechanism, exactly, do you propose to keep us from going there?

      Please show your work for full credit.

    • John says:

      We have to address the problem and gimmicks won’t do that. If McConnell is willing to float a “let the President raise the limit with Congress having the power to override him by a 2/3 vote” which won’t happen in practice, the opening to a real solution is there.

      That seems clearly unconstitutional. Congress has the power to borrow money, not the president. It has to pass legislation to allow the treasury to borrow money. If it has allowed that, and wants to renig, it has to pass a law to do so. What you are suggesting would require a constitutional amendment.

      • Cody says:

        Will it? The Debt Limit isn’t spending. I’m sure there are some legal acrobatics to do to separate the power of raising the debt limit and anything Congress is entitled to.

        Congress told the President to spend this money. It’s in the Constitution that he HAS to. How unconstitutional is it to have a law that says that he can do what the Constitution says he has to?

        • John says:

          Congress shall have power to borrow money on the credit of the United States.

        • Murc says:

          It’s in the Constitution that he HAS to.

          It’s in the Constitution he has to honor our debt.

          In this context, that means grabbing money from wherever in order to continue paying bondholders, which is the catastrophe we’d like to avoid.

      • Murc says:

        The 2/3rds part is pretty clearly bullshit on account of how statutes are passed by majority vote, so any Congress dead set on stopping the debt limit from rising would just… repeal the underlying statute if they didn’t have two-thirds.

        The rest of it is legit, tho.

        Congress has substantial power to delegate its powers to the executive. This is, for example, how something like the EPA works. The executive doesn’t have the power to make environmental law, but Congress can say ‘Here, have a big pot of money and an agency mandate. If you start doing things within that mandate we don’t like, we’ll pass laws on a case by case basis.’

        We’re essentially talking fig leaves here. A bill that says ‘the President can raise the debt whenever he wants but we can stop him with a vote’ is, basically, a bill that says ‘we don’t have a debt limit anymore, but we reserve the right to change our mind later.’

        • sharculese says:

          The 2/3rds part is pretty clearly bullshit on account of how statutes are passed by majority vote, so any Congress dead set on stopping the debt limit from rising would just… repeal the underlying statute if they didn’t have two-thirds.

          Presumably the President would veto that though, so wouldn’t repeal still require 2/3?

          • Murc says:

            Veto override is 3/5ths.

            • sharculese says:

              Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law.

            • John says:

              No, veto override is 2/3.

        • John says:

          I suppose that’s reasonable enough.

      • elm says:

        It would be constitutional by the same logic that Fast Track Authority in trade is constitutional. Treaties must be ratified by 2/3rds of the Senate, except trade treaties which are ratified by 50% of both the Senate and House. Clear violation of the Constitution, has existed in some form almost continuously since 1934, and no one with standing has ever bothered to object.

    • Bijan Parsia says:

      If he want to argue on policy grounds, let him. In three increasingly vacuous post she’s declaimed the mainfest, obvious, undeniable illegality based on absolutely nothing. The interpretive principles he’s appealing to are unbelievably bad in sor far as he can be bothered to articulate them.

    • catclub says:

      “The big picture is this is a f-ing gimmick.”

      The debt ceiling, in spite of appropriations that demand it be exceeded, is the first gimmick.

    • The big picture is this is a f-ing gimmick. Colbert rightly ridiculed the idea but now we are continuing to take it seriously.

      Let’s clarify terms here: nobody is saying this isn’t a gimmick. We are not “taking it seriously” in the sense of saying it’s not a gimmick. We’re “taking it seriously” in terms of thinking that a gimmick might be a good play right now.

      You know me. I’m not a gimmicky person. I’ve been calling this “political alchemy” for a long time, and you’re right that we do have to actually solve the problem.

      But I feel like Bob Hodgkins at the end of Who Framed Roger Rabbit. These people who want to go through the debt ceiling thing again are freaking toons, and that just might mean that we have to drop cartoon anvils on their heads. I don’t like it any more than you seem to, but here we are.

    • djillionsmix says:

      “The big picture is this is a f-ing gimmick.”

      You misspelled “small, irratonally angry picture”

  6. DrDick says:

    There is also this from a former head of the US Mint and the co-author of the original platinum coin bill.

  7. CaptBackslap says:

    I do worry about the political implications of the coin. There’s nothing the GOP is better at than exploiting ignorance, and the electorate’s ignorance of monetary policy is profound.

    That said, if the coin is necessary, it should have a perching eagle on one face, and a soaring eagle on the other. That way, it’ll go down in history as the Double Bird.

  8. rea says:

    When the going gets weird, the weird turn pro. The platinum coin is the appropriate response in kind to Republican debt ceiling games–it’s no more ridiculous.

  9. Theophylact says:

    For what it’s worth, Larry Tribe thinks it’s perfectly legal:

    I don’t think it makes sense to think about this as some sort of “loophole” issue. Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins. First, the statute itself doesn’t set any limit on coin value. Second, other clauses of 31 USC §5112 do set such limits, but §5112(k)—dealing with platinum coins—does not. So expressio unius strengthens the inference that there isn’t any limit here.

    Of course, Congress probably didn’t have trillion-dollar coins in mind, but there’s no textual or other legal basis for importing this probable intention into the statute. What 535 people might have had in their collective “mind” just can’t control the meaning of a law this clear.

    It’s also quite clear that the minting of such a coin couldn’t be challenged; I don’t see who would have standing.

    Bottom line: This is a situation where the political and economic considerations, not the legal considerations, have to drive the decision-making about this option. It’s certainly a lot better from just about every perspective than having the nation stuck on either horn of the very real dilemma you outlined below, which I agree offers no plausible way out as long as enough leaders in Congress insist on playing Russian Roulette with our economy and risking our full faith and credit by using the debt ceiling as a bargaining chip as they are threatening to do.

    • catclub says:

      “Of course, Congress probably didn’t have trillion-dollar coins in mind.”

      They probably did not have losing $8B is cash in Iraq, or Abu Graib, when they wrote the AUMF for Iraq, but there you are.

    • mds says:

      For what it’s worth, Larry Tribe thinks it’s perfectly legal:

      For what it’s worth, you didn’t actually need to preface “For what it’s worth” to “Larry Tribe thinks it’s perfectly legal.” Drum et al. are pretty conclusively outgunned here, unless they can finally produce an argument other than “it’s a stupid gimmick that offends my personal sensibilities.” Hell, even economically-illiterate dumbass Greg Walden (R-OR) has unwittingly provided an assist to the coin’s proponents by introducing legislation to ban the maneuver.

  10. Steve S. says:

    Even given its legality and efficacy, does anybody really see Obama doing this? Mainstream news stories are mocking the idea, comedians are mocking the idea. Obama would not only have to mint the coin he’d have to change the narrative about minting the coin. Then Lemieux would have to write part 12535412 of his 21653621523 part series on the Bully Lantern or the Green Pulpit or something. Is that a series of events we really want to set in motion?

    • Anonymous says:

      Obama would not only have to mint the coin he’d have to change the narrative about minting the coin.

      No, he wouldn’t.

    • Murc says:

      Even given its legality and efficacy, does anybody really see Obama doing this?

      Ah, that’s the real question, isn’t it?

      If you’d asked me a couple years ago, I’d have said “No, of course not. This is contrary to his temperament, his sense of good governance, and in fact his entire governing style.”

      Now? Now my answer is “It depends.”

      Obama really, really likes doing things right. He doesn’t like end-running the system and he doesn’t like making the government do weird-but-legal shit.

      But right now we’re in a situation where he doesn’t have anything else to barter away. Keep in mind we were in this precise scenario in 2011. He fought with the Republicans for a long time and the BEST he was able to get is a draw; they all kicked the can down the road to now.

      The Republicans are gonna take hostages again, and this time the ransom they want is going to strike at the very core of the New Deal. And that just might be too much for Obama to swallow.

      The sequester, I think he’ll cave on. We’re not getting out of that without him taking an axe to social spending in one way or another. But the debt ceiling? I think ‘we fund the government for a couple years in exchange for you being the first Democratic President to cut social security and medicare’ is going to be a deal he just won’t swallow. And once you reach that point, you start examining his non-cave options. Of those, the one that causes real, actual people the least pain if it works is the platinum coin.

      • catclub says:

        Caving on the sequester: Doing nothing means defense cuts and some other cuts to non-defense, but the non-defense are well away from medicare and SS, and pretty far from medicaid,
        correct?

        So is caving agreeing to no or fewer defense cuts but more non-defense cuts?

        • Murc says:

          Correct, but just because they’re away from core entitlements doesn’t mean they’re not important.

          To be clear, I sort of regard ANY cuts to non-defense discretionary spending as horrible idea. That cupboard is threadbare enough as it is.

          But the Republicans have Obama over a barrel there. The sequester is just awful and hits a ton of vital stuff. Air traffic control, food safety, all manner of environmental enforcement. The CDC. Hell, the NOAA already might have a gap in satellite coverage of goddamn hurricanes in a few years; the sequester would make SURE that happens.

          The very best we can hope for is the Republicans accept military spending back in exchange for domestic spending back. I just do not see that happening. Instead I see them ramming a bunch of cuts down Obama’s throat and him caving in because the alternative is worse.

          (This is my bead on the sequester, as opposed to the debt limit. The way I’m seeing this play out at the moment is the debt limit is used to go after core entitlements and the sequester is used to go after more prosaic government spending. This may change.)

      • Steve S. says:

        So if I’m reading you correctly you agree with me that it would be a very uncharacteristic thing for him to do but you think he might be in such a dire predicament that he’ll do it anyway. Wow, what an entertaining year of politics we can look forward to.

    • Michael H Schneider says:

      … does anybody really see Obama doing this?

      My fantasy, with pony: The Senate recesses. Treasury Secretary resigns. Obama appoints Krugman as Treasury Secretary. Since it’s a recess appointment, no Senate hearings are required.

      Krugman authorizes a dozen of the coins. He names it “The Krugman”, and uses the Krugman design offered by Josh Marshall. There’s a big parade and Krugman carries a black briefcase containing the coins to the Fed, and deposits them. Krugman, who really doesn’t want to be Treasury Secretary, resigns.

      Eventually congress decides to abandon the whole debt limit thing, the Secretary withdraws the coins from circulation and declares them no longer legal tender, and they’re auctioned on eBay as collectibles (except for the one presented to Krugman as a Presidential Medal).

  11. Adam Bradley says:

    I’m deeply disappointed that no one here has pointed out the real reason this is a horrible idea.

  12. Brian Rogers says:

    Here’s my persistent question to the Legality (and risibility) scolds: Lets say Obama does mint the totally legal coin. The Fed has to accept it, because the Fed has to accept all legal tender, which this is. The government has money and keeps paying its bills.

    And then what happens?

    Do people refuse to accept money from the government that came from the coin? This isn’t like the “I’m violating the debt limit and therefore the validity of the T-Bills I’m selling to raise money is questionable” situation where some T-Bills might be honored and some not once the breaching the debt limit is resolved in court. There’s nothing for anyone to buy – the government just has the money, and there’s no way to say which bills were paid by the coin and which weren’t.

    But lets say someone sues. With what standing? Based on what reading of the statute? Still, lets say someone does have standing and gets into a court to argue that the stature shouldn’t be read that way so the platinum coin is illegal. Then what? The government still has the money, and will still keep paying its bills. Will the court issue an injuction and say that the government has to stop paying bills with any of the money from the coin? Can a lower court do that? How long will it take for the case to reach the Supremes? Do the Supremes even touch it? (my vote: no, they dont, on standing issues).

    If the Supremes do issue a ruling against the coin, then what? Does everyone paid with money from the coin stop having that money? do they have to pay it back? There’s no way to make it NOT MONEY. What’s the upshot of the ruling? What happens?

    Does the House decide to impeach the president over the plain reading of a statue preventing them from tanking the world economy? How long does that take? Do they honestly think the Senate is going to go along with this? Will Roberts have to sew the little Gilbert and Sullivan chevrons onto his sleeves during the impeachment trial out of court tradition?

    During that time, note that the government continues to pay its bills. Which is the whole point of the exercise – to make sure the 14th amendment stays intact and the government pays its bills.

    Anyone got any idea?

    • catclub says:

      “Does the House decide to impeach the president over the plain reading of a statue preventing them from tanking the world economy?”

      I think this rhetorical question gets a non-rhetorical,
      yes, SATSQ.

      • Brian Rogers says:

        OK, and then what? What happens to the coin money during that? Does the day to day function of the government keep going?

        I’m trying to game out what the Coin-scolds think will happen if Obama uses the coin.

        (And I take it as a given we’ll see an impeachment attempt voer something before 2016 based on past practice.)

      • Malaclypse says:

        And if the House does impeach, there is zero chance the Senate will convict.

      • Cody says:

        If the Government is shutdown, can the house impeach?

        I’m aware in your scenario the government isn’t shut down, but I’m just curious.

        • Murc says:

          The Congress can’t “shut down.” It can call itself into session at any time or be called into session by the President. It also doesn’t have to meet in the Capitol. They can meet anywhere. Biden could throw a giant cookout and conduct Senate business (complete with binding votes) between dishing out franks and hamburgers.

          When we say ‘government shutdown’ we mean things like ‘various agencies close their doors due to lack of funds.’ That doesn’t really apply to Congress itself, even if there were no money to keep maintaining their fancy building.

    • Murc says:

      Do people refuse to accept money from the government that came from the coin?

      How will they know?

      But lets say someone sues. With what standing? Based on what reading of the statute? Still, lets say someone does have standing and gets into a court to argue that the stature shouldn’t be read that way so the platinum coin is illegal.

      This is a hell of a supposition.

      The answer here is ‘some crazy guy who has converted all his worldly goods into gold sues in order to avoid having to accept paper money in payment for something, and it’s thrown out of court immediately.’

      Then what? The government still has the money, and will still keep paying its bills. Will the court issue an injuction and say that the government has to stop paying bills with any of the money from the coin? Can a lower court do that? How long will it take for the case to reach the Supremes? Do the Supremes even touch it? (my vote: no, they dont, on standing issues).

      Theoretically, a court could issue an injunction saying that the platinum coin is not legal tender. The Fed could then debit the Treasury the value of the coin, which puts it in the red, thus making it unable to pay any other bills.

      Theoretically. It wouldn’t happen. I mean, anything is possible, but that’s basically a doomsday scenario. If it did happen, and it survived the Supreme Court, what happens is that we’re all fucked.

      There’s no way to make it NOT MONEY.

      Sure there is. Money is what the government says it is. It could repudiate the value of all paper money in existence tomorrow if it wanted to.

      What likely happens, though, is that the coin is declared illegal, but money already doled out with it as collateral is still money, but debited against the Treasury.

      Again, the real answer here is ‘we’re so fucked.’ At this point we’re in global financial meltdown mode and people are buying gold and canned food with their massively inflating dollars and there’s rioting in the streets.

      Does the House decide to impeach the president over the plain reading of a statue preventing them from tanking the world economy? How long does that take? Do they honestly think the Senate is going to go along with this? Will Roberts have to sew the little Gilbert and Sullivan chevrons onto his sleeves during the impeachment trial out of court tradition?

      During that time, note that the government continues to pay its bills.

      No, it doesn’t. In this doomsday scenario, there’s an injunction or a ruling declaring platinum coins aren’t legal tender. That means the Treasury doesn’t have anything on account TO pay it’s bills with.

      Which is the whole point of the exercise – to make sure the 14th amendment stays intact and the government pays its bills.

      The government paying its bills has absolutely nothing to do with the 14th amendment, which only speaks to the government servicing its debt.

      • Brian Rogers says:

        The government paying its bills has absolutely nothing to do with the 14th amendment, which only speaks to the government servicing its debt.

        Point. Still, this would solve the 14th Amendment problem (servicing the debt) and the real world problem (paying for the stuff that Congress already authorized to do, which was what I was trying to get to.

        And I’m curious – would a lower court injuction hold? If they declare the coin not money the administration would certainly appeal. Would it be money or not money during the appeal process?

        Again, we’re in global meltdown mode at this point, so it’s highly hypothetical.

        Which brings back to my original question – aside from a take as given and doomed to fail impeachment attempt, what do the coin-scolds really think will happen when the coin is rolled out as the weapon of last resort? Has anyone ever said?

        • Murc says:

          Oh, I see what you’re actually asking.

          Well, what I see happening is one of two things. Congress accepts that their bluff has been called, extracts as many pounds of flesh as it can during the separate but related sequester negotiations, and life continues as normal. Maybe they pass actual legislation fixing the debt limit and maybe Obama has to keep minting platinum for a couple years.

          The other option is full on crazy double-down ‘We will impeach the son of a bitch!’ mode, with court challenges all across the country by every right-wing nut group in existence. Assuming the courts behave sensibly, this is entirely survivable, but things would get tense and their might be a significant economic shock.

          The worst case is that we get the crazy double down and the Supreme Court takes it seriously. At that point, I start stocking up on canned goods.

          That’s what I think happens.

  13. bradP says:

    It would be really hard to sell this to the public. As convincing as “they are crazy so we are going to do something crazy” may sound, I doubt it will build any confidence in either side.

    Plus, I doubt that this will be widely seen as finding the money to pay for what congress has already bought or agreed to spend, rather than Obama being economically wreckless.

    • Murc says:

      Well, even if you’re right, so what?

      Even if Obama were reviled as the worst tyrant since Andrew Jackson, this would be preferable to allowing the Republicans to crater the entire global economy. Do you disagree?

      • (the other) Davis says:

        Count me in as another person willing to sacrifice whatever shred of credibility the political branch has left in exchange for not economically ruining the country, and possibly the world.

    • djillionsmix says:

      It would be really hard to sell this to the public. As convincing as “they are crazy so we are going to do something crazy” may sound, I doubt it will build any confidence in either side

      Despite what you personally find it comforting to believe, that one side is doing something crazy does not actually make the response to it crazy.

      I realize the platinum coin makes a lot of people irrationally angry for reasons they don’t really understand, but that doesn’t make it stop being a totally reasonable and legal response to the problem of republican insanity.

    • DrDick says:

      Harder to sell than destroying the entire global economy? That is the Republican plan.

  14. Cody says:

    Question:
    What are the chances that our credit is going to get down graded soon? This posturing from both sides is sure setting up another payment suspension. Would the rating Agencies downgrading U.S.A. to AA allow us to point at Republicans are trying to ruin the US economy?

    • Murc says:

      Frankly, I’m not sure a debt downgrade wouldn’t be part of a massive scam on the part of the banksters.

      US government debt isn’t going to be defaulted on, ever. Even the Republicans won’t allow that. In the case of a hypothetical shutdown bonds would still be honored. In fact, their price on the trading markets is likely to spike because you won’t be able to get fresh, shiny new ones.

      But a rating downgrade would let the banksters pull all KINDS of scams.

      • Cody says:

        That seems reasonable to me. Our debt was downgraded last time around, and I’m aware that it didn’t really mean anything. If we’re not repaying our debt, the rest of the world can kiss their ass goodbye. Guess that’s a benefit of being the only “superpower” left.

        However, Republicans genuinely made a huge deal out of the credit downgrade. It seems from what their economists produce about “vigilante bond buyer/magic thingies” they’re legitimately afraid of credit downgrades.

        • Malaclypse says:

          Credit downgrades do huge damage to the real economy – if borrowing costs for the US go up, that has ripple effects for other borrowers (or would, once we leave the zero bound). But what that means for banksters is that return on capital just got better.

          And the louder the Republican scream, the larger the return on capital gets.

          Party of small business my ass.

  15. djillionsmix says:

    If the debt ceiling isn’t raised the government goes into shutdown, right? Is a supreme court justice still a supreme court justice when the supreme court is closed?

    • Murc says:

      … it doesn’t work that way.

      The Supreme Court could hear cases even if Congress appropriated no money at all for their building and salaries and they had to conduct business in the back room of a YMCA somewhere.

      There isn’t some special legal state called ‘government shutdown’ we enter into. All it means is that the money isn’t available to run certain parts of it, so they get closed down. The elected/appointed parts continue to function as normal with full authority.

      Basically, it means things like the Smithsonian and national parks system close, and the Supreme Court building may close, but all the justices are still employed and still have all their power.

      • chris says:

        They don’t get their paychecks, though, do they? Does that make them too self-interested to hear the case that *determines whether they start getting paychecks again*?

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