Magic coins in
wonderland?
By Jim Surber
I’ve
decided that
it is unfortunate that Lewis Carroll wasn’t born a century or so later
than he
was. Think of how much more inspiration he could have gleaned for his
satirical
works from our modern US government than from Victorian England.
Consider this
conversation between Alice and the Cheshire cat in his “Alice in
Wonderland.”
“But
I don’t want
to go among mad people,” Alice remarked.
“Oh, you can’t help that,”
said the Cat:
“we’re all mad here. I’m mad. You’re mad.”
“How do you know I’m mad?”
said Alice.
“You must be,” said the Cat,
“or you wouldn’t
have come here.”
This
perfectly
describes the current situation in Washington. If you don’t believe
that the
sublime lunacy of our government gets more outrageous by the day, then
you
haven’t heard about the trillion-dollar coin. As the date when the US
Treasury
runs out of money grows nearer, and the politicians prepare for a
repeat of the
2011 partisan standoff over the debt ceiling, a supposedly legal scheme
has
been proposed to solve the impasse.
Our
government can
print new money, but there is a statutory limit to the amount of paper
currency
that can be in circulation. Ironically, there is no similar limit on
the amount
of coinage, and a little-known statute gives the secretary of the
Treasury
authority to issue platinum coins in any denomination.
Knowing
this, a
solution to the debt ceiling becomes very simple. The Treasury
Department
directs the US mint to create a few platinum coins, deems each one
worth 1
trillion dollars, and delivers them to the Federal Reserve. Next, they
use the
“proceeds” to buy back an equivalent amount of Treasury securities. No
more
fight over the debt ceiling, since it is now lowered by $trillions of
additional
government “assets” that have been created.
If
you think this
would be an absurd, reprehensible action by the Obama administration,
consider
what is now being done by the GOP to counter the potential action.
Congressman
Greg Walden, an Oregon Republican, vows to introduce a bill to “stop
the
$trillion coin in its tracks.” Walden was quoted saying, “This is Alice
in
Wonderland looking through the looking glass at debt management.”
It
is hard to
argue with his statement, but it would be nice to know his motive. It
could be
either indignation toward a totally asinine scheme or fear of the
nullification
of impending Republican obstructionism over raising the debt ceiling. I
think
we all know which is more likely.
Mr.
Walden and his
peers on both sides of the aisle have run a terrible tab of government
debt for
the many programs they have voted through. Many also voted against the
“pay as
you go” rule, which would have blocked any tax cuts without offsetting
tax
increases or spending cuts. Now, the majority of the House of
Representatives
have decided that the nation’s debt payment should be optional.
Some
of those who
allegedly represent the interest of Americans have combined a
continuous
commitment to spending with an insidious refusal to pay the bills.
The
debt ceiling
is not about Obama’s credit rating. It is about OURS. It is about
things like
whether the IRS can send tax refund checks, or if soldiers can be paid.
It is
about how much more the debt we already have is going to cost us, if we
tell
the world that we are not a good credit risk. As silly as the
trillion-dollar
coin sounds, the debt ceiling is far sillier and much more potentially
destructive. We still owe the money.
The
trillion-dollar coin idea is legal, only because it is not specifically
illegal. Creating and using it could be disastrous, but no more than
voluntarily defaulting on our self-imposed obligations. If one side can
hold
the debt ceiling hostage, does the other have a right to employ a
“unique”
counter-strategy? Could it be that the only thing we have to fear is
fear of
the trillion-dollar coin itself?
No,
our greatest
fear should be the continuation of the partisan political gamesmanship
and the
proliferation of uncompromising politicians that are continually
returned to
office by we the people. If US political leaders want creditors to keep
buying
the dollar, shouldn’t these potentially disastrous games of
brinkmanship end?
A
quick search of
available media has not revealed who or what would be the graven
image(s) on the
coin. It would seem fitting to have Obama and Reid on one side, with
Boehner
and McConnell on the other. A well-known satirist has suggested the
Charmin
bears, because “when you pull an idea like this out of your a__, you’re
going
to need something soft.” He was then asked that since the US debt is 16
trillion dollars; why not mint a $16 trillion coin? He appropriately
replied,
“That idea is just silly.”
As
Alice in
Washington might have said, things just keep getting “curiouser and
curiouser.”
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