Would minting a $1 trillion coin really solve America's debt woes?
For the past few days, there's been this wild money story out of the U.S., though you'd be forgiven if you haven't read much on it.
It's a tale so crazy that few mainstream media outlets have given it note, and perhaps when we look back that will be the narrative's most resounding legacy.
But here it is, nonetheless: as the U.S. continues on mired in debt, some have taken to suggesting the Treasury Department mint a $1 trillion platinum coin to avoid hitting the debt ceiling.
No, no, take your time. We'll wait while you roll your eyes. Yet the idea of minting a 13-figure coin actually has some powerful people discussing it, and even some who suggest it could work.
First, a quick refresher on the U.S. debt ceiling. The principle of the debt ceiling seems strong -- apply a limit on how much debt America can carry at one time, and stick to it. It's the same way you'd run your own personal spending, right?
*Bing: Who owns the most U.S. debt?
But because the politics of raising the debt ceiling have become so contentious, what was once a drab, bureaucratic process has morphed into full-scale reform on fiscal responsibility.
So as America struggles with moving up its latest debt ceiling, some have taken a tiny paragraph in the U.S. statute and run with it. The statement reads:
"The Secretary may mint and issue bullion 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."
The Secretary, in this case, is Tim Geithner, Obama's top finance man. In theory, the above graph appears to give Geithner free reign to print money, as he sees fit. Why not, then, mint a trillion-dollar coin, march it over to the Federal Reserve and -- presto! -- the debt ceiling crisis is averted.
Of course, this is only rooted in the literal translation of the U.S. statute. Many smart people have taken to discussing how minting a trillion-dollar coin could work -- hey, even noted economist Paul Krugman took a stance -- and how it could avoid ramping up magnificent inflation, being used instead as a short-term debt stopgap.
But certainly any interpretation of the statute that uses a functioning human brain proves otherwise. The legality of minting a magical platinum coin has been raised (and even that throws out the political suicide of Obama's administration creating a "get out of jail free" card from thin air), and I'm inclined to believe this story will pass without much more bluster.
The statute, in what must be its most accurate reading, simply applies to commemorative coins and other collector's items. As Oklahoma Rep. Frank Lucas recently described the minting of such coins, they would "(have) no cost implications whatsoever."
Indeed, Mother Jones' Kevin Drum seems to have it right: no matter the technicality in the wording of the American statute, any court to rule on minting a trillion-dollar coin would surely find that doing so would not adhere to the spirit of the law, and instead would just take advantage of the letter of it.
By Jason Buckland, MSN Money