The platinum coin is killed as America careens toward default

The platinum coin is dead, long live the debt ceiling.

On Saturday evening, the Washington Post's Ezra Klein dropped a bombshell: The platinum coin gambit – the plan to circumvent the American debt ceiling by minting a trillion-dollar coin and depositing it in the Federal Reserve – is dead. Klein writes:

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” he said.

The Treasury's take on the law is one thing; but the Federal Reserve, as a quasi-independent body, is really what's put the kibosh on the whole plan. If it doesn't believe that using a platinum coin to circumvent the debt limit would be legal, that's it. The lynchpin of the plan was that the Treasury, after using powers granted to it through a loophole in a law intended to let it mint commemorative coins for collectors, would be able to deposit the coin in its account in the Fed. If the Fed won't take it, the plan's bust.

Joe Weisenthal, the most consistent advocate of the platinum coin, points out that it's hard to work out what point of law the Fed was actually trying to apply here:

It seems odd that the Fed would decide that there's some legal tender that it will recognize, and some legal tender that it wouldn't recognize.

Paul Krugman, who became a high-profile advocate of minting the coin last week, asks what the administration's plan is now, but also somewhat unfairly places the blame on Obama. Given the White House's comment to Buzzfeed focuses on the Fed, it seems like they weren't exactly behind the move to pre-emptively remove the bargaining chip from the table.

Regardless, the administration's position now is clear. The debt ceiling must be lifted, and they will offer no "concessions" to do so. With the platinum coin out of the equation – and with the so-called "constitutional option", where the President cites the 14th amendment's command that the validity of the public debt "shall not be questioned" and ignores the debt ceiling, ruled out by the White House last month – the Republicans can be under no illusions that if they fail to concede, America will definitely have a messy government shutdown, and will likely enter technical default on its public debt. The only question that they have to answer is whether they have an ounce of rationality left, or if they'll take the whole system down, themselves included.

Past experience suggests that the latter is worryingly possible. For one thing, conservative economists like John Cochrane have been minimising the effect of hitting the ceiling. Cochrane casts doubt on possibility of default by rightly pointing out that the Treasury has enough income to make debt repayments even if the ceiling is hit. But by ignoring the practical aspects of hitting the ceiling, he bypasses an important point. The treasury pays its bills with a vastly complex, automated system. It is not clear it has the technology to "prioritise" debt repayments, nor is it clear that to do so would be legal.

And even worse, those GOP members who do understand the likelihood of a default aren't too concerned. Politico's Jim Vandehei, Mike Allen and Jake Sherman write:

GOP officials said more than half of their members are prepared to allow default unless Obama agrees to dramatic cuts he has repeatedly said he opposes…

“For too long, the pitch was, we’ll deal with it next time,” said Rep. Jason Chaffetz, a conservative from Utah. He said GOP lawmakers are prepared to shut things down or even default if Obama doesn’t bend on spending. “No one wants to default, but we are not going to continue to give the president a limitless credit card.”

If the US did default on its debt – even just by paying a coupon a day late – the international knock-on effects would be massive, and unprecedented. Now that every option for preventing that has been taken off the table save for negotiating with the most radical congress ever, the financial community may start to take note.

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.

Getty
Show Hide image

25 times people used Brexit to attack Muslims since the EU referendum

Some voters appear more interested in expelling Muslims than EU red tape.

In theory, voting for Brexit because you were worried about immigration has nothing to do with Islamophobia. It’s about migrant workers from Eastern Europe undercutting wages. Or worries about border controls. Or the housing crisis. 

The reports collected by an anti-Muslim attack monitor tell a different story. 

Every week, the researchers at Tell Mama receive roughly 40-50 reports of Islamophobic incidences.

But after the EU referendum, they recorded 30 such incidents in three days alone. And many were directly related to Brexit. 

Founder Fiyaz Mughal said there had been a cluster of hate crimes since the vote:

“The Brexit vote seems to have given courage to some with deeply prejudicial and bigoted views that they can air them and target them at predominantly Muslim women and visibly different settled communities.”

Politicians have appeared concerned. On Monday, as MPs grappled with the aftermath of the referendum, the Prime Minister David Cameron stated “loud and clear” that: “Just because we are leaving the European Union, it will not make us a less tolerant, less diverse nation.”

But condemning single racist incidents is easier than taking a political position that appeases the majority and protects the minority at the same time. 

As the incidents recorded make clear, the aggressors made direct links between their vote and the racial abuse they were now publicly shouting.

The way they told it, they had voted for Muslims to “leave”. 
 
Chair of Tell Mama and former Labour Justice and Communities Minister, Shahid Malik, said:

“With the backdrop of the Brexit vote and the spike in racist incidents that seems to be emerging, the government should be under no illusions, things could quickly become
extremely unpleasant for Britain’s minorities.

“So today more than ever, we need our government, our political parties and of course our media to act with the utmost responsibility and help steer us towards a post-Brexit Britain where xenophobia and hatred are utterly rejected.”

Here are the 25 events that were recorded between 24 and 27 June that directly related to Brexit. Please be aware that some of the language is offensive:

  1. A Welsh Muslim councillor was told to pack her bags and leave.
  2. A man in a petrol station shouted: "You're an Arabic c**t, you're a terrorist" at an Arab driver and stated he “voted them out”. 
  3. A Barnsley man was told to leave and that the aggressor’s parents had voted for people like him to be kicked out.
  4. A woman witnessed a man making victory signs at families at a school where a majority of students are Muslim.
  5. A man shouted, “you f**king Muslim, f**king EU out,” to a woman in Kingston, London. 
  6. An Indian man was called “p**i c**t in a suit” and told to “leave”.
  7. Men circled a Muslim woman in Birmingham and shouted: “Get out - we voted Leave.”
  8. A British Asian mother and her two children were told: "Today is the day we get rid of the likes of you!" by a man who then spat at her. 
  9. A man tweeted that his 13-year-old brother received chants of “bye, bye, you’re going home”.
  10. A van driver chanted “out, out, out”, at a Muslim woman in Broxley, Luton
  11. Muslims in Nottingham were abused in the street with chants of: “Leave Europe. Kick out the Muslims.”
  12. A Muslim woman at King’s Cross, London, had “BREXIT” yelled in her face.
  13. A man in London called a South Asian woman “foreigner” and commented about UKIP.
  14. A man shouted “p**i” and “leave now” at individuals in a London street.
  15. A taxi driver in the West Midlands told a woman his reason for voting Leave was to “get rid of people like you”.
  16. An Indian cyclist was verbally abused and told to “leave now”. 
  17. A man on a bike swore at a Muslim family and muttered something about voting.
  18. In Newport, a Muslim family who had not experienced any trouble before had their front door kicked in.
  19. A South Asian woman in Manchester was told to “speak clearly” and then told “Brexit”. 
  20. A Sikh doctor was told by a patient: “Shouldn’t you be on a plane back to Pakistan? We voted you out.”
  21. An abusive tweet read: “Thousands of raped little White girls by Muslims mean nothing to Z….#Brexit”.
  22. A group of men abused a South Asian man by calling him a “p**i c**t” and telling him to go home after Brexit.
  23. A man shouted at a taxi driver in Derby: "Brexit, you p**i.”
  24. Two men shouted at a Muslim woman walking towards a mosque “muzzies out” and “we voted for you being out.”
  25. A journalist was called a “p**i” in racial abuse apparently linked to Brexit.