Fixing the debt ceiling with a trillion dollar platinum coin

Make a silly demand, get a silly concession.

It's always interesting seeing an idea whose time has come, and today's seems to be the "platinum coin option" for the US.

America will, in two months, hit the debt ceiling. Again. The federal government will be denied, by law, the money it has been ordered to spend, by law. The three options facing it, in conventional wisdom, are a total government shut-down, a default on its loans, or the raising of the ceiling.

Since the first two are, frankly, unthinkable, the last is the only thing the administration can do. The Republicans know this, and are prepared to leverage their image as an unhinged party which would metaphorically kill the hostages to gain policy concessions.

But there is actually a fourth option. It's leveraging a quirk in the laws of the nation, but it is, by any reading of those laws, entirely legal. United States law says:

31 USC § 5112 (k) The Secretary [of the Treasury] 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.

That is: at any time, the Treasury Secretary – Tim Geithner – can mint platinum coins in any denomination.

The other important aspect is how government spending is actually accounted for. The Treasury has a "bank account" at the Federal Reserve. When it pays someone, it's the Fed which hands the money over. When it needs money to put in that bank, it sells bonds at auction.

The debt ceiling is, in that simple version of the story, basically a ban on the Treasury selling any more bonds. As a result, it's bank account will run dry, and all hell will break loose.

But if Geithner mints a trillion dollar platinum coin, he can just waltz over to the Fed, deposit that, and the government's ability to spend is restored.

The plan sounds too good to be true, but it's really not. Joe Weisenthal has a bumper post debunking the biggest myths about it, but the trick to understanding it is to think of it as a legal, not monetary, trick. In terms of the real economy – outside of strange intragovernmental transfers designed to get around bizarre anachronistic limits – nothing has changed. The state is still taking money in through borrowing and taxing, and still putting money out through spending. It's just some of the borrowing is transferred from the Treasury, which does it under the authority it has to raise the national debt, to the Federal Reserve, which does it under the authority it has to borrow against assets it holds. Like, for instance, a trillion dollar coin.

This plan has been knocking around for years, now. It was first suggested during the last showdown, in 2011, by Pragmatic Capitalist's Cullen Roche. Weisenthal jumped on board, and then slowly so did others.

But in the last couple of days, there has been a White House petition calling for the President to do it, discussions in Congress, Paul Krugman mulling over the idea and a Huffington Post front page on it.

But the best argument has been Josh Barro's in Bloomberg. Barrow takes the legal quirks of the situation, and applies them to a political analysis. After all, although the President has the power to do it, doesn't mean it wouldn't be extremely politically damaging to actually go ahead with it. Barro's solution:

Hitting the debt ceiling isn't an option. It's no way to run the country, and Republicans know that. So, a debt-ceiling increase shouldn't count as a "concession," and it's nutty for Obama to have to give substantive policy ground to get one.

Monetizing deficits through direct presidential control of the currency, in lieu of borrowing, is also no way to run a country. It's silly, and it's perfectly legal. Agreeing not to do so is therefore the ideal "concession" for Obama to offer in return for Republicans agreeing to end the threat of a debt-default crisis.

Make a silly demand, get a silly concession. Perfect!

A non-platinum, single dollar coin. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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No, Christopher Hitchens did not convert to Christianity on his deathbed

From Mother Theresa to Princess Diana, for Hitchens, there were no sacred cows. He certainly would not have wanted to become one. 

The suggestion that atheist writer Christopher Hitchens converted on his deathbed was inevitable. When the evangelical Christian Larry Taunton appeared on Newsnight last week to discuss his new book, he suggested that “the Hitch” was “contemplating conversion” in his final days. The collective sigh from his fans was palpable.

That particular claim is uncontroversial. Of course Hitchens “contemplated” Christianity – to say so simply suggests he had an open mind. However, the book goes further, and claims that Hitchens began to doubt his convictions in his final days. Taunton writes that: “Publicly, he had to play the part, to pose, as a confident atheist. In private, he was entering forbidden territory, crossing enemy lines, exploring what he had ignored or misrepresented for so long.” The book is littered with similar insinuations that he was, so to speak, losing his faith. His close friends, those he wasn’t paid to spend time with as he was with Taunton, deny this completely.

Naturally, the book has sparked a host of rumours and junk articles that suggest he converted. Not one to let a cheap shot slide or leave an insinuation untouched, Hitchens was forward-thinking enough to not only predict these accusations, but deliver a perfect pre-buttal. When Anderson Cooper asked him, a short while before his death, whether he had reconsidered “hedging his bets”, he responded:

“If that comes it will be when I’m very ill, when I’m half demented either by drugs or by pain when I won’t have control over what I say. I mention this in case you ever hear a rumour later on, because these things happen and the faithful love to spread these rumours.”

If that isn’t enough, however, his wife has made clear in the strongest possible terms that talk of a softening on Christianity and a deathbed conversion is entirely untrue. “That never happened. He lived by his principles until the end. To be honest, the subject of God didn’t come up.”

The spreading of fallacious rumours of deathbed conversions by the religious is predictable because there is so much historical precedent for it. Many of history’s most famous atheists have suffered this fate, so, in a sense, Hitch has now been inducted into this hall of infamy alongside the likes of Darwin, Thomas Paine, and David Hume. In God is not Great, he wrote that “the mere fact that such deathbed ‘repentances’ were sought by the godly, let alone subsequently fabricated, speaks volumes of the bad faith of the faith-based.”

Now, not for the first time, Hitchens has fallen foul of this bad faith. After all, what can be more abhorrent than baying for a man to abandon his lifelong principles when he is at his most vulnerable, and spreading callous lies when he can no longer respond? It speaks for the complete lack of confidence these people must have in their beliefs that they strike when the individual is at their least lucid and most desperate.

Hitchens felt the bitter end of the religious stick when he was dying as well, and he responded with typical wit and good humour. He was told that it was “God’s curse that he would have cancer near his throat because that was the organ (he) used to blaspheme.” His response? “Well, I’ve used many other organs to blaspheme as well if it comes to that.” One suspects that he would have rubbished recent talk in a similarly sardonic fashion.

Likewise, for a man who was not afraid of a provocative title himself (see: The Missionary Position, No One Left to Lie to) it would be reasonable to think he’d accept his own life as fair game. From Mother Theresa to Princess Diana, for Hitchens, there were no sacred cows. He certainly would not have wanted to become one.

Fortunately, we are blessed with the wonders of the internet, and Hitchens can respond to these claims as Thomas Paine and David Hume could not – from the grave. His prediction and preparation for this speaks of an intellect like no other. In a posthumous debate he still wins out.