Obama administration shoots down platinum coin idea as debt ceiling solution

[WestVirginiaRebel]

Fox News:

The Obama administration ended speculation Saturday that it would mint a trillion-dollar platinum coin as a way to avoid the debt ceiling.

Treasury Department spokesman Anthony Coley said the agency wouldn't mint one and the Federal Reserve would not accept the coin.

“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,” Coley said.

His statement was followed by one from White House Press Secretary Jay Carney.

“There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default," Carney said.

Though the idea seemed far fetched when it recently resurfaced, the Obama administration appeared to add speculation by not dismissing the idea outright.

On Wednesday, Carney said there was no "Plan B" on the debt ceiling but didn't totally rule out the platinum coin.

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Back to IOUs...

[clearvision]

Can we stop this inflammatory gun talk in the headlines....

[Valin]

Can we stop this inflammatory gun talk in the headlines....

 

You said the G word!!!

[Valin]

Treasury and Fed kill the trillion-dollar platinum coin. But other goofy ideas await to evade debt ceiling

James Pethokoukis

January 12, 2013

 

(Snip)

Unfortunately there are still plenty of goofy ideas on the table, such as issuing Monopoly money in lieu of actual new greenbacks. As law professor Edward Kleinbard wrote in earlier in the week:

 

[President Obama] should threaten to issue scrip — “registered warrants” — to existing claims holders (other than those who own actual government debt) in lieu of money. Recipients of these I.O.U.’s could include federal employees, defense contractors, Medicare service providers, Social Security recipients and others.As He should threaten to issue scrip — “registered warrants” — to existing claims holders (other than those who own actual government debt) in lieu of money. Recipients of these I.O.U.’s could include federal employees, defense contractors, Medicare service providers, Social Security recipients and others.

 

But that’s not all. Economist Stephen Williamson has cooked up another couple of options for Team Obama:

 

1) The off-balance-sheet option: Fannie Mae became a private institution, and Freddie Mac was established, as part of a Johnson administration move to take the mortgage market activities of Fannie Mae off the federal government’s balance sheet. Suppose that Fannie Mae were to issue agency securities and use the proceeds to pay salaries at the Pentagon, or Pentagon employees were to temporarily become employees of Fannie Mae. Currently under government “conservatorship” Fannie Mae has to do what the federal government tells it to do, but its agency securities are not part of the government debt for accounting purposes.

 

2) The playing-card or clearinghouse certificate option: Federal government departments could issue their employees certificates promising payment in the future, in lieu of salary. I’m not sure what makes a government debt obligation fall under the debt-ceiling limit, but the idea would be to design the IOUs so that they don’t meet those criteria. Like the playing cards and clearinghouse certificates mentioned above, there’s nothing to stop people accepting these IOUs in exchange.

 

Better to just raise the debt ceiling and come to an agreement on at least some entitlement reform and other spending cuts.