Krugman backs minting a $1trn platinum coin

The real funny story's the debt ceiling.

Paul Krugman, Nobel Laureate and New York Times columnist/blogger, has written that President Obama should be willing to mint a $1trn platinum coin in order to avoid having to compromise over the debt ceiling.

Krugman blogs:

He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious…

It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years. Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous — far more ridiculous than the notion of the coin.

Krugman is… half right. As Felix Salmon notes, it's no surprise that the people most in favour of the platinum coin option are largely economists. From an economic point of view, there really is no reason not to do it. Less informed commentators use basic knowledge of economic theory to warn that minting the coin is "printing money" which will lead to "massive inflation"; but since using the legal quirk to prevent a government shutdown wouldn't lead to an increase in the money supply, those fears are unfounded.

Instead, the problem is the political one. Salmon sums it up:

If you believe that the country is best run by grown-ups, you can’t believe in #mintthecoin, because it simply isn’t a grown-up strategy. If you believe that the House Republicans behave in crazy and illogical ways, then you can’t believe in #mintthecoin, because the threat of minting the coin doesn’t work against someone who’s crazy and illogical. And if you believe that the best way to approach the debt ceiling is to try and abolish it altogether, then you can’t believe in #mintthecoin, because the entire strategy is based on the idea of keeping the ceiling where it is, and then trying to circumvent it.

There are still some economic problems with the idea, which Salmon touches on. The chief ones are to do with the sheer uncertainty of minting the coin. Everyone thinks it is probably legal – but until and unless the Supreme Court affirms that, nobody can be certain it is. Which means that for an indeterminate period, the US economy would be like Schrödinger's Cat, in a superposition between default and creditworthiness. That's not desirable for anyone.

The real reason to carry on talking about minting the coin isn't, as Krugman argues, because it might mean that Obama actually mints it. But nor is it, as Salmon argues, because it might scare the Republicans into backing down. It is, instead, to come up with something Obama can "concede" on without actually having to concede on anything at all. Obama offers to change the law to ban minting the coin, in exchange for also changing the law to end the debt ceiling. It's the argument made by *Bloomberg*'s Josh Barro.

And make no mistake, the debt ceiling is ridiculous. Quite beyond its pernicious effects – it would prove beyond doubt that the American political system is broken, would almost certainly lead to the US defaulting on its international debt payments, and would definitely lead to crippling immediate defaults on *national* debt payments like tax refunds and federal salaries – it is a legal limit which makes no sense, politically or economically. The debt ceiling is a limit, set by congress, on how much the executive branch can borrow. But the executive branch's spending is also set by congress: when it authorises a bill, the president is not allowed to spend a penny over the amount specified, nor a penny under.

The debt ceiling could only ever have one of two effects: either it does nothing, because it is higher than the amount congress has ordered the executive branch to borrow; or it forces the President to break the law, either by ignoring the debt ceiling or by ignoring all of the other bills passed by congress instructing him to spend.

And we're laughing about the platinum coin?

A US platinum coin. Photograph: Wikimedia Commons

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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I didn't expect to have to choose between a boyfriend and Judi Dench - but it happened

He told me I'd spoiled the cruise by not paying him enough attention. But what was I to do when Dame Judi Dench asked for a chat?

This happened around 20 years ago, in the days when a new boyfriend was staying at my house. One quite memorable mid-morning, the phone rang while we were in bed and it was the editor of the Times; then it rang again (when we were still in bed) and it was Dame Judi Dench. Yes, Judi Dench.

I was as surprised as anyone would be. True, I had recently written a radio monologue for her (about a wistful limpet stuck on a rock), but I hadn’t attended the recording, so I had never met her, or expected ever to hear her say, “Hello, is that Lynne Truss?” in that fabulous Dame Judi voice that only she possesses.

She said that she and her husband, Michael, were often invited to perform public readings; could I help by writing something? Stunned, I said that I would love to. She gave me her number. I hung up.

I can’t remember why I didn’t jump straight out of bed to start work on the Dame Judi project. But what I do remember is that when the phone rang yet again, we ignored it, on the grounds that, post-Judi, it could only be a disappointment.

A few months later, I was invited on a winter cruise, sailing from Colombo in Sri Lanka to Singapore. I took the boyfriend. It was only when we were changing planes at 3am that I spotted, among the other dog-tired passengers, Dame Judi with a group of friends.

Nervously, I went and said hello, what a coincidence. She said that we must talk. Then the holiday began and the boyfriend and I had a wonderful time. We met nice people and enjoyed the ship, although we consistently failed to identify our allotted muster station.

At the end of ten days, we were sitting on deck at Singapore, when I said, “Well, wasn’t that lovely?”

The boyfriend took me aback by saying, “Actually, glad you asked. No, it wasn’t.” I had spoiled the whole experience, he said, by continually talking to other people when I should have been talking to him.

I was very upset. All this time, he’d been unhappy? Casting my mind back, I realised it was true that I had made friends on board (and he hadn’t); also, at dinner, I had openly talked to the person sitting beside me, because I thought you were supposed to.

And now I stood accused of cruise-ruining! “I’ll get us some tea,” I said. “Oh, yes?” he fumed. “You’ll be gone for an hour, as usual.” And I said “No, I won’t. I promise.”

And so I went inside, wiping away my tears, and someone started chatting to me and I squeaked, “Can’t stop.” After that, I just slalomed through the throng with my head down.

Then, as I re-emerged into the sunlight with a prompt, relationship-saving cup and saucer in each hand, there was Judi Dench, and she said, “Shall we have our little chat now?” 

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad