January 28th, 2013
Over the past few weeks we have witnessed the essence of political dysfunction in the US as the idea of the Treasury minting a $1 trillion coin to circumvent the debt ceiling went from a joke to a respectable policy option. One must wonder what the world is coming to when suggestions like these are being taken as serious possibilities for dealing with our fiscal crisis. For those of you who are less familiar with this idea, the Treasury’s plan was to mint a single large platinum coin with a $1 trillion denomination. That coin would then be put on deposit with the Federal Reserve who would provide a more exchangeable form of currency. The result would be to provide the government financing without having to issue new debt. Poof!! In an instant, we could have $1 trillion at our disposal. Fortunately, after receiving a surprisingly large amount of consideration, the proposal has been abandoned.