Tags: Nadler | trillion | dollar | coin

Rep. Nadler: Treasury Should Mint Trillion Dollar Coin to Avert Debt Limit Crisis

By Michael Kling   |   Monday, 07 Jan 2013 08:18 AM

Many observers worry about the country defaulting and the stock market crashing if Congress becomes gridlocked over raising the debt ceiling.

Yet there's a simple solution that a growing number of experts are pushing: The Treasury Department could mint a trillion dollar, platinum coin, deposit it with the Federal Reserve and draw against it to pay the country's debt.

Supporters of the idea note that the Treasury Department cannot print all the money it wants, but it can by law create platinum coins of any denomination.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

"It sounds silly, but it's absolutely legal," Rep. Jerrold Nadler, D-N.Y., told Capital, a news website on New York. "And it would normally not be proper to consider such a thing, except when you're faced with blackmail to destroy the country's economy, you have to consider things."

Republicans have vowed to refuse to raise the debt ceiling without deep spending cuts, while President Barack Obama has vowed not to negotiate over the debt limit.

Obama might only need to say he will mint the coin if needed in order to remove the Republicans' threat, argue Nadler and other “super coin” backers.

The law allowing such super coins was meant for commemorative coins for collectors, but can also be used to make large-denomination coins to pay government bills in lieu of issuing debt, explains Bloomberg columnist Josh Barro, another super coin supporter.

The Treasury should issue enough bonds to buy back all newly issued currency as soon as possible to avoid long-term inflation expectations from rising, Barro writes. Obama, he says, could agree to end his authority to mint such super coins if Congress gives up its authority over the debt ceiling.

A group is gathering petitions to prompt the Obama Administration to mint the coin.

The petition reads: "With the creation and Treasury deposit of a new platinum coin with a value of $1 trillion U.S. dollars, we would avert the absurd —yet imminent — debt ceiling faceoff in Congress in two quick and simple steps! While this may seem like an unnecessarily extreme measure, it is no more absurd than playing political football with the U.S. — and global — economy at stake."

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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