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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The joy of only winning once: why England should be proud of 1966

We feel the glory of that triumphant moment, 50 years ago, all the more because of all the other occasions when we have failed to win.

There’s a phrase in football that I really hate. It used to be “Thirty years of hurt”. Each time the England team crashes out of a major tournament it gets regurgitated with extra years added. Rather predictably, when England lost to Iceland in Euro 2016, it became “Fifty years of hurt”. We’ve never won the European Championship and in 17 attempts to win the World Cup we have only won once. I’m going to tell you why that’s a record to cherish.

I was seven in 1966. Our telly was broken so I had to watch the World Cup final with a neighbour. I sat squeezed on my friend Colin’s settee as his dad cheered on England with phrases like “Sock it to them Bobby”, as old fashioned now as a football rattle. When England took the lead for the second time I remember thinking, what will it feel like, when we English are actually Champions of the World. Not long after I knew. It felt good.

Wembley Stadium, 30 July 1966, was our only ever World Cup win. But let’s imagine what it would be like if, as with our rivals, we’d won it many times? Brazil have been World Champions on five occasions, Germany four, and Italy four. Most England fans would be “over the moon” if they could boast a similarly glorious record. They’re wrong. I believe it’s wonderful that we’ve only triumphed once. We all share that one single powerful memory. Sometimes in life less is definitely more.

Something extraordinary has happened. Few of us are even old enough to remember, but somehow, we all know everything that happened that day. Even if you care little about the beautiful game, I’m going to bet that you can recall as many as five iconic moments from 50 years ago. You will have clearly in your mind the BBC commentator Kenneth Wolstenholme’s famous lines, as Geoff Hurst tore down the pitch to score his hat-trick: “Some people are on the pitch. They think it’s all over. It is now”. And it was. 4 - 2 to England against West Germany. Thirty minutes earlier the Germans had equalised in the dying moments of the second half to take the game to extra time.

More drama we all share: Geoff Hurst’s second goal. Or the goal that wasn’t, as technology has since, I think, conclusively proved. The shot that crashed off the cross bar and did or didn’t cross the line. Of course, even if you weren’t alive at the time, you will know that the linesman, one Tofiq Bakhramov, from Azerbaijan (often incorrectly referred to as “Russian”) could speak not a word of English, signalled it as a goal.

Then there’s the England Captain, the oh-so-young and handsome Bobby Moore. The very embodiment of the era. You can picture him now wiping his muddy hands on his white shorts before he shakes hands with a youthful Queen Elizabeth. Later you see him lifted aloft by his team mates holding the small golden Jules Rimet trophy.

How incredible, how simply marvellous that as a nation we share such golden memories. How sad for the Brazilians and Germans. Their more numerous triumphs are dissipated through the generations. In those countries each generation will remember each victory but not with the intensity with which we English still celebrate 1966. It’s as if sex was best the first time. The first cut is the deepest.

On Colin’s dad’s TV the pictures were black and white and so were the flags. Recently I looked at the full colour Pathe newsreel of the game. It’s the red, white and blue of the Union Jack that dominates. The red cross of Saint George didn’t really come into prominence until the Nineties. The left don’t like flags much, unless they’re “deepest red”. Certainly not the Union Flag. It smacks of imperialism perhaps. In 1966 we didn’t seem to know if we were English or British. Maybe there was, and still is, something admirable and casual about not knowing who we are or what is our proper flag. 

Twelve years later I’m in Cuba at the “World Festival of Youth” – the only occasion I’ve represented my country. It was my chance to march into a stadium under my nation’s flag. Sadly, it never happened as my fellow delegates argued for hours over what, if any, flag we British should walk behind. The delegation leaders – you will have heard of them now, but they were young and unknown then – Peter Mandelson, Trevor Phillips and Charles Clarke, had to find a way out of this impasse. In the end, each delegation walked into the stadium behind their flag, except the British. Poor Mandelson stood alone for hours holding Union Jack, sweltering in the tropical sun. No other country seemed to have a problem with their flag. I guess theirs speak of revolution; ours of colonialism.

On Saturday 30 July BBC Radio 2 will commemorate the 50th anniversary of the 1966 World Cup Final, live from Wembley Arena. Such a celebration is only possible because on 16 occasions we failed to win that trophy. Let’s banish this idea of “Fifty years of hurt” once and for all and embrace the joy of only winning once.

Phil Jones edits the Jeremy Vine Show on BBC Radio 2. On Saturday 30 July the station celebrates the 50th anniversary of the 1966 World Cup Final live from Wembley Arena, telling the story of football’s most famous match, minute by minuteTickets are available from: www.wc66.org