At first glance, its seems like a nutty idea. At second glance, it also seems like a nutty idea.
But it goes like this: If congress won’t let the treasury borrow more money to pay America’s bills, why not just let the US mint – MINT – a bright shiny new coin. With a face value of $1 trillion.
You see, the debt limit only limits how much debt the treasury can issue. It does not apply to cash. If a pile of cash suddenly landed on Treasury’s doorstep, there’s nothing that says the Treasury couldn’t spend that.
There are strict rules about minting gold and silver coins, but, thanks to a loophole, there is NO limit on the face value of platinum coins. And this idea – which has been percolating through the Internet for a couple of years, has now been endorsed by one Philip Diehl, the former director of the U.S. Mint – and the man who helped write the loophole.
“I have to admit we never foresaw this application of the law,” Diehl admitted in an interview with Seattle’s Morning News.
So the U.S. Mint would strike a trillion dollar platinum coin, put it in a armored car, deliver it to the Fed, which adds it to the Treasury’s bank account, and just like that, this year’s deficit is erased, and Congress doesn’t have to do a thing. You know how fracking is discovering all that hidden oil? This is monetary fracking.
Diehl said it wouldn’t cause rampant inflation or allow Congress to spend a trillion dollars more, so there’s really no downside.
“All this would do is allow the treasury to continue paying the bills that come in that Congress has already racked up,” he said.
The only weak point in this plan, is who transports the coin across town to the Fed. It had better be the president himself, since we know where he is at all times.
Yes it’s crazy.
But since it’s also pretty crazy that members of Congress are considering actually defaulting on the debt of the richest country on earth – why not fight crazy with crazy?
Diehl said it likely won’t happen (a White House spokesman dismissed the idea Wednesday.) But perhaps it’ll get Congress off the dime and actually doing something to avoid default.