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There is a lot of loose talk out there about the legal status of the Trillion Dollar Coin idea. Let’s go to the statute books.
Applicable Statutes
31 USC § 5111
(a) The Secretary of the Treasury—
(1) shall mint and issue coins described in section 5112 of this title in amounts the Secretary decides are necessary to meet the needs of the United States;
(2) may prepare national medal dies and strike national and other medals if it does not interfere with regular minting operations but may not prepare private medal dies;
(3) may prepare and distribute numismatic items;
31 USC § 5112
(a) The Secretary of the Treasury may mint and issue only the following coins:
(1) a dollar coin that is 1.043 inches in diameter.
(2) a half dollar coin that is 1.205 inches in diameter and weighs 11.34 grams.
(3) a quarter dollar coin that is 0.955 inch in diameter and weighs 5.67 grams.
(4) a dime coin that is 0.705 inch in diameter and weighs 2.268 grams.
(5) a 5-cent coin that is 0.835 inch in diameter and weighs 5 grams.
(6) except as provided under subsection (c) of this section, a one-cent coin that is 0.75 inch in diameter and weighs 3.11 grams.
(7) A fifty dollar gold coin that is 32.7 millimeters in diameter, weighs 33.931 grams, and contains one troy ounce of fine gold.
(8) A twenty-five dollar gold coin that is 27.0 millimeters in diameter, weighs 16.966 grams, and contains one-half troy ounce of fine gold.
(9) A ten dollar gold coin that is 22.0 millimeters in diameter, weighs 8.483 grams, and contains one-fourth troy ounce of fine gold.
(10) A five dollar gold coin that is 16.5 millimeters in diameter, weighs 3.393 grams, and contains one-tenth troy ounce of fine gold.
(11) A $50 gold coin that is of an appropriate size and thickness, as determined by the Secretary, weighs 1 ounce, and contains 99.99 percent pure gold.
(12) A $25 coin of an appropriate size and thickness, as determined by the Secretary, that weighs 1 troy ounce and contains .9995 fine palladium.
…
(k) The Secretary 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.
31 USCS § 5103
United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.
Legislative History, Such As It Is, and Plain Language
Section (k) Was Added In By P.L. 104 – 208, the 1997 Omnibus Consolidated Appropriations Act. The provision isn’t discussed in the House Report or the Senate Report as best I can tell. The statute adds several provisions besides section (k) related to commemorative coins, which generally are regarded as numismatic or collectible coins as opposed to circulating coins. The point of those sections is to enable the Treasury to make a significant seigniorage profit on these coins, and to raise money to assist in worthy causes. There are numerical limits on certain of the coins, as in section (m), presumably to protect their numismatic value, although the Secretary of the Treasury is authorized to make more if there is sufficient demand. There is no similar limitation on issuance of platinum coins. In any case, all coins are legal tender, whether they are numismatic or intended for circulation.
In a similar way, the Treasury is authorized to print U.S. currency notes itself, but the amount is limited to $300 million. 31 USCS § 5115.
Section 5111 authorizes the Secretary of the Treasury to mint and issue coins as described in § 5112 in such amounts as the Secretary decides are necessary to meet the needs of the United States. This is very broad language, and does not appear to establish any limitation on the factors that might help the Secretary determine the needs of the United States.
Of course, our conservative Supreme Court Justices aren’t interested in legislative history (except when it suits them). They rely on the plain language of the law. It would be a real hoot to watch Justice Scalia explain why the plain language is not plain enough for him.
The Debt Ceiling
The debt ceiling statute, 31 USC § 3101 sets a maximum amount of money that the Treasury can borrow. Currently, the amount is $14.294 trillion. That section is modified by 31 USC § 3101A, which allows the President to increase the borrowings by an additional $2.1 trillion subject to approval after the fact by Congress. Between the two sections, the limit is currently $16.394 trillion. The Treasury has determined that the limit has been reached, and is currently operating in an emergency fashion to avoid issuing more debt.
Constitutional Issues
There are several applicable provisions of the Constitution and statutory law that are implicated by this problem. Two law professors, Neil Buchanan of The George Washington University Law School and Michael Dorf of Cornell University Law School have written articles discussing the problem. How to Choose the Least Unconstitutional Option: Lessons for the President (and Others) from the Debt Ceiling Standoff, 112 Colum. L. Rev. 1175 (2012), and Nullifying The Debt Ceiling Threat Once And For All: Why The President Should Embrace The Least Unconstitutional Option, 112 Colum.L. Rev. Sidebar 237 (2012). Nullifying is available here. The authors describe the problem as a
… trilemma”: faced with the constitutional duty to execute the spending laws that Congress enacted, to collect tax revenues under the laws that Congress enacted, and to borrow no more than the amount of gross debt specified in the debt ceiling statute, the president would have to violate at least one of those laws when the debt ceiling is reached. In thus violating his oath to faithfully execute the laws–all of the laws–of the United States, he would be acting unconstitutionally. The only question was which unconstitutional choice would be least unconstitutional.
Id. at 239, fn omitted. In How to Choose, the authors conclude that the least serious violation of the Constitutional duty to enforce the laws would be to continue to issue debt. Their explanation is that Congress can fix the problem whenever it chooses, either by increasing the debt ceiling, or by increasing tax revenues or by cutting spending, or some combination. They point out that the problem was created by Congress, which enacted a continuing resolution on taxing and spending that practically insured that the debt ceiling would be reached sometime in 2013.
The authors note that the President has rejected the 14th Amendment solution, so they assume that the President has decided that he is required to spend less than that which Congress has required him to spend. That would, of course, violate the Impoundment Control Act of 1974, which requires the President to spend the money authorized by Congress in accordance with its instructions. Furthermore, there are two Supreme Court cases holding that the President has the Constitutional duty to comply with the spending directions of Congress. Train v. City of New York, 420 US 35 (1975) and Clinton v. City of New York, 524 US 417 (1998). The authors explain that these decisions are rooted in separation of powers, the fundamental principle of our government that each branch of government has specific powers denied to the others. The Congress has the power of the purse. The President can veto an appropriations bill, or a tax bill, but he cannot refuse to spend some of the money authorized by a spending bill, because that would give him an unbalanced veto in direct contravention of the Constitution.
Bmaz at Emptywheel makes a potent argument about the separation of powers inherent in the Trillion Dollar Coin. He doesn’t, however, deal with the separation of powers argument inherent in refusing to comply with spending directions of Congress. Bmaz might respond that the President is not refusing to spend the money, he is merely not doing it until he feels he has no choice. Still, assuming that Congress doesn’t act quickly on the matter, the problem becomes intractable almost immediately. Almost all payments are done by computer, not by check. How can short term stoppage of payments be managed without changing computer systems across the government? How is that to be paid for? Can Congress create a separation of powers problem for another branch of government and then use that problem to punish that branch? Can Congress abuse the separation of powers to the detriment of the entire nation?
The Trillion Dollar Coin as a Solution
The law professors dismiss the Trillion Dollar Coin as “cartoonish and desperate”, and state that it would “likely spook the markets, leading lenders to demand a very high interest rate”. How to Choose, at 1231. Those interest rate fears are common among a certain group of people, but so far they haven’t been realized. In any event, the same argument can be made for Treasury Obligations created in excess of the statutory debt ceiling, which is their solution.
Everyone agrees that this is a bad situation. What is the least bad alternative? Bmaz says the least bad alternative is the chaos of a government shutdown. Suppose the Secretary of the Treasury disagreed. Suppose he thought that the damage to the economy would be overwhelming. Would that justify him in issuing millions of quarters or $50 gold pieces and sending them to the Fed for deposit in the Treasury account? Again, the only statutory factor governing the determination of the Secretary is the “needs of the United States”. Would the law professors regard the minting of $50 gold pieces as cartoonish and desperate? Would bmaz suggest that it violated the separation of powers? If not, then why not the Trillion Dollar Coin?
Photo in the public domain.
133 Comments
Well supported and argued, dear Massicio
x2
Thanks for this. I’d been wondering over the past couple of days whether the scrip angle as recently used in California might work, but I can’t see how that would avoid the same usurpation-of-powers issue that I surmise to be at the heart of Bmaz’ objections to the Coin. (Plus, it would be a lot more cumbersome to implement. The Platinum Coin is quick, easy, and would involve far less expense and red tape.)
Thirded!
Good piece on the TDC masaccio, and very good question at the end. I think the opinion of lawyers dismissing: “the Trillion Dollar Coin as “cartoonish and desperate”, and state that it would “likely spook the markets, leading lenders to demand a very high interest rate”, is not to be taken seriously because it isn’t part of their legal analysis, they have no expertise in this area. Here are some other considerations.
They’re not claiming that Platinum Coin Seigniorage (PCS) is illegal; so presumably they think it’s legal. If it’s legal, it needs to be traded off against the damage that would be incurred if PCS is not used. Here’s Mike Sankowski’s take on the damage. No one who would be caught in that mess to their detriment would say that the “cartoonish” nature of the coin weighs against using to avoid that problem. Of course, the lawyers writing the paper, don’t expect the effects of a government shutdown to affect them.
If it’s legal, and it can be used to avoid the debt ceiling and, if large enough in face value, to pay off the debt as well, then it woud be both political and governmental malpractice not to use it.
Btw, “likely spook the markets, leading lenders to demand a very high interest rate”, is of no consequence. First, because the Fed controls the interest rates and not the markets; and second, because if the coin’s face value is high enough we’ll never be issuing debt instruments to the markets again anyway!
Thank you, masaccio, for your further exploration of a, frankly, completely absurd situation. The coin is, of course, no more absurd, than the “situation”, which has been diligently brought about by a very cynical political class, which includes the media.
It is interesting, to me at least, that virtually ALL of the current assaults upon reason, be it the economic “situation”, from the “debt” to the coddling of the too-big-to-jail Wall Street bankers, from the ludicrous notion of permanent war (called “endless” merely an administration ago), to the notion of the “Homeland”, to torture, to state’s secrets … all have to funnel through the narrow purview of “the LAW” … which law, or legal “system”, more precisely the people who “represent” the law, the President, the Attorney General, various regulatory agencies, the Congress, AND the Judiciary, and so on, have all, together, made a complete and total mockery of the Rule of Law, while pretending that the “separation” of powers … which REQUIRES that each of the three branches fulfill THEIR obligations to the Constitution AND to “the people”, the quaint title still held by the “sucker class” (the “hindmost” majority, whom the political class, which includes the media, have tossed to the to the “devil” in their willingness to pervert the Rule of Law to serve the true rulers), still obtains. There is no meaningful “separation”, any longer, the unitary Executive holds full and total sway.
Doubtless, there is order in tyranny, but there is neither honest justice nor sustainable principle.
Now, bmaz may well argue that the coin would tip the “balance” even further toward the Executive, and I sincerely hope that he might make an appearance here, this evening, to elucidate his understandings, for I find his legal reasoning interesting and, invariably, well-supported with respect to his perspectives and prejudices.
From my perspective and admitted prejudice, I consider that civil society cannot survive without the Rule of Law, nor do I hold that a government which seeks to pervert the “consent” of the governed with secrecy and deceit, as well a regarding any citizen as “fair game” for secret rendition or death, and ALL citizens as possessing no right, absolute or otherwise, to privacy, or even to know WHAT the law IS, I do not hold such government, as that, to be legitimate, to be, itself, a follower of the law, nor ever its subject, for such a government cannot and will not examine itself, when the executive declares herself or himself to be above the law.
The two-faced “coin” of the realm is, now, composed of unfetter greed and limitless power.
Any notion of “separate” powers, of “checks and balances”, under these conditions, is absolute and unmitigated nonsense.
Given this reality, a coin worth even $60 trillion is no more absurd than “bailing” out the bankers to maintain the semblance of “economic order” enshrined in the fatuous notion of “shared” austerity, a code name for deliberately engineered social calamity and collapse.
It is a cruel hoax, this notion of honest, responsible “authority”, pretending to stand for the “interests” of “the people”, yet it pales into absurd insignificance, in the face of pending environmental collapse.
It is semantic evasion of the first and last order … and somewhere, where cosmic jokes are in fashion, there is an endless belly laugh …
Dw
Thank you. That is a consideration that to now has been missing in the argument.
Exactly, DW.
Smoke and mirrors. At most, if implemented, the magical coin will only delay the inevitable.
Comrade.
Capitalism is fraud.
Well, someone’s got to say it.
Yes.
Even if Ludwig (your “SOB”, as he was pleased to say) may no longer do so, OB.
Perhaps, a bunch of us will have to take turns in the saying?
DW
Good one DR.
Shorter DR this is just a fucking joke.
Screw ‘em. Stamp the friggin’ coin. The TGOPers can pound salt if they don’t like it.
I want to let the supremes do their job on this one . Shut it down if they dare.
“either by increasing the debt ceiling, or by increasing tax revenues or by cutting spending, or some combination.” applies only to the gold standard accounting but not to fiat money with money creation by the govt.
A. (State taxes = state spending – state debt) for the states of USA,,Greece and other Euro nations , and also during the gold standard.
B. ( Federal Deficits = Net Private Savings + Net Imports,) for money creating USA.
For B, deficits MUST exceed net imports (about 500 billion) for there to be ANY growth.
Cutting deficits is ENTIRELY in the wrong direction.
Before the supreme court rules on the platinum coin, it should be taught algebra.
The least bad situation would be the chaos of a gov shutdown?
Fourthed!
Ignorance is not bounded by the constitution.
Maybe. I can think of far worse. Can you?
From minting the coin to pay the bills?
No. More like 10 to 30 million dead in America.
Debt is illusion. Power is the point.
So you figure a civil war will break out?
OB realizes that Class War is being waged … and it will become VERY deadly for the many.
Things are not going to really “improve”, bluedot12, despite the “election” of the “lesser evil” …
However, everyone will be exhorted, “Do not take this personally, it is only business …”
How many things may yet be “privatized”?
The Post Office?
Social Security?
And so on …
Who will “win”?
Who will lose?
Criminal fraud? Do you think we’ve seen the last of it, or permanent war and permanent dis-employment?
Not to mention the “collateral damage”.
What happens when civil society is deliberately destroyed?
When tyranny rules?
We, all, shall see.
We will feel it, up close, and VERY personal.
DW
Probably, yes. And I’m optimistic, by my standards. Sorry, but that’s the way I see it. Doesn’t mean I like it.
Who wants to live through a revolution and civil war? Not I. I probably won’t; I’m 55 now. I’d rather drink beer and watch football and make love to my wife.
But our current financial and economic system just doesn’t freakin’ WORK!
It CAN’T last. I’m intelligent enough to know THAT.
I hope people like you can come up with something to avert this; but I don’t know what that may be. Luck.
Yes, they can. In fact, that is the inherent tug and pull, check and balance, built into the Constitution and laws built on it.
Yes, they would; and, yes, I do.
A constitutional form of government is a difficult endeavor if it is to endure. If it is, the long run integrity of the constitution must be paramount. That is the difference in the old, but true, saw of a nation of law, or a nation of men. I see the constant chatter about “oooooh the President must execute the law” and therefore this one or that one etc. What a load of claptrap. The root, primal responsibility of the President, and other officers, is to “protect the Constitution”. That duty extends to not undermining it with cheap gimmick because it is oh so efficacious at the moment.
And I have nothing but root disdain for the uninformed position by Mr. Firestone that lawyers who actually remember the duty of preserving the Constitution are “not to be taken seriously”. Out of some sense of comity, I will not go further.
Masaccio, to some extent, I think you misunderstand me. Unless you are suggesting that any time is a good time to float a few tons of coins in to the system to pump it up (if so, can we have the Mars program back?), then it is something that would be exercised as an emergency power of the Executive Branch. But, whether the magic coin or non-congressionally authorized issuance of debt instruments, neither would even be considered until the “emergency” is ripe, not ahead of time. So, the technical default will happen. Frankly, I would probably prefer it simply fester while the government is pared down to priorities (as Dorf and Buchanan seem to think the Administration may have in mind) and let the GOP be on the hook for the hell wrought. The MOTUs would not let that exist for any significant period of time.
That said, between the issuance of non-congressionally authorized debt and the magic coin, by FAR the better option is the former. The “Platinum Coin” is the stuff of governmental quackery. Mike Dorf and Buchanan are quite right about that. So for the non-authorized debt issuance, if done, once the “emergency” was ripe, the President would then “disregard” (this is a specific legal term of art, not the general meaning; see: Prakash, 96 Georgetown Law Journal 1613) the debt ceiling statute, 31 USC 3101, and then issue the inferior debt as needed. That forces the Congress to then either cut a deal, sue the Executive (by and through Obama) or let it then become the norm. But the far superior component here is that a formal finding would have to be made and specified, and the issue made ripe for Congress to avail themselves of a forum (the Executive has no ready means to sue Congress over the execution of a law, in this case the debt ceiling statute, the Executive is responsible for enforcing).
There are currently no indications of that so it is hard to believe. Nonetheless, these sort of things can erupt without notice. The coin could help avert a default which would be very hurtful to us all. We do not need even greater unemployment and poverty. It could take many more years to work out of this and then something could erupt.
That’s not going to happen. The argument will run in standard legal lines, which don’t include either MMT or algebra.
Tyranny. syn. Dictatorship, aristocracy, oligarchy.
Rel. Capitalism, free enterprise, free market.
Ant. Socialism(so long as you keep people like Stalin and Mao, and maybe even me, out of the picture), anarchism, democracy.
Be vewwy, vewwy quiet. We are hunting bunny wabbits.
Convince me that this debt ceiling “crisis” is not the product of a conspiracy between Obama and the Republican caucus. I think it absolutely is, though they may never have exchanged words to that effect. It is a synchronization of desires, clues and actions.
Legal? Lol! The legal system is run by those who make the laws.
And it ain’t us! At least, not the likes of me.
Now.
I do find your faith in our legal system touching, but then again, I was born when Eisenhower was President. Who was President when you were born, dude? Let’s give everybody a frame of reference, here.
Conspiracy? Well, yeah, of course. It’s not secret, though. It’s right out in the open for all with eyes to see.
Just because the corporate media doesn’t talk about it doesn’t make it any less real. And I-Phones don’t help; they’re corporate, too.
Even if their founder is dead, and I’m alive, and I like it that way.
Exactly. But the folks at the kids’ table don’t want to hear that. Perhaps because none of them have ever a) worked in government or b) been lawyers.
How else do we make sure it makes the nightly news ? Non-violent resistance is preferable, but do we have the time ? When’s the last time you heard OWS or October2011 mentioned? They both still survive. A real shock to the “system” is needed.
Off your meds again, bmaz?
P.S. Capitalism is fraud. Where art though,Ludwig ?
So you think the President should determine that the debt ceiling is unconstitutional, and ignore it. You don’t deny that issuance of the coin is possible, and quite likely to be upheld, if anyone can figure out how to sue over it. Why is the latter more disgusting than determining that some statute is unconstitutional?
And why is it less likely to be less disruptive to markets than shutting down the government? And why would anyone buy treasuries which are not clearly authorized by law? Do you think a pension plan would be justified in making that purchase?
As I understand it before either option is used the situation must be “ripe”. That means I think that we must suffer some form of government shutdown and non payment of bills and likely worker layoffs. Then we can issue debt, assuming anyone wishes to buy it, or go the quackery route and issue the coin to bypass the bond markets. If that is roughly what you mean, then it seems somewhat easier to mint the coin. And once that is accomplished the relevance of the debt limit becomes, well, moot.
Presumably even going the debt route the relevance of any future fight would also be moot, except for the people who use it for their purpose. That suggests this needs to be defeated. And that in turn leads to the magic coin.
I would only add to this that the gov shutdown could have rather serious implications on the markets and the employment situation. I am not at all certain the disruption would be any less with the debt route.
I also tend to think of the coin as a gimmick. I wish it did not have to be used. But there is a time for everything, as someone said. I am not in favor of a suicide pact, which is where this seems to be headed. Would the Supreme Court strike it down? Impeach the President?
The coin might delay the collapse of capitalism, but it cannot and will not prevent it.
Capitalism has only one goal and one goal only: the accrual of more capital, the more quickly the better. It assumes never-ending expansion.
The world is limited. Capitalism does not recognize that fact, because it can’t.
And the magical coin does absolutely nothing to prevent the exponentially growing inequality of wealth which is condemning our society to revolution and probably civil war. Societies like ours that permit such things never last. Be it internal revolution or foreign invasion, they always fail.
G’head! Pick a culture, any culture, and prove me wrong. You can’t.
Besides, and I admit I could be wrong here, depending on the stupidity of the American people, which is pretty freakin’ amazing, I don’t think we HAVE more than a decade or so before the excrement hits the rotating blades.
There will be no peaceful movement of change, here. It will be violent and bloody. The rest of the world will quiver in fear, as they should ’cause we gots nukes, and I have no idea what will come afterwards.
I’m too damned old, probably, to actually do anything about it.
If you’re not, please save my grandkids. Think!
Really, don’t believe me? Go check the Presidential oath of office. And then take yer own meds.
Pretending only this piece of platinum is worth a trillion and that other piece is worth 1550 an ounce, USD, that will solve everything. No taxes can ever be collected again, because we don’t need them. We have fantasy in charge. Pretending we can solve debt that is climbing so fast that only the very rich can scam their way to prosperity by impoverishing the remainder of us has been so successful so far. Making sure the US dollar that is worth $.025 of a dollar after 100 years of the federal reserve printing funny money to pay the bribes, foreign and domestic will guarantee it is toilet paper will solve the destruction of our forests.
I can’t believe grown ups are talking as though magic solves their every day issues. Does no one have the sense to see what is going to happen as the rich get richer with a stock market that can’t ever go down again?
Why not allow democracy instead of corporate fascism as a form of government? Why bother with the constitution that dictated what money is when our founding fathers saw that every attempt at paper currency had failed and caused systemic collapse in every nation that used it in the history of our planet ? The default will hurt, but it might cause democracy to replace fascism. It did before.
Good points. I think the magic coin has the advantage of making,the debt limit law moot and remove it as a forced suicide pact on the economy available to whatever group of crazies are in Congress at any time. Congress can reduce spending whenever they want — no matter how stupid that may be.,
The Constitution according to whom? Scalia? Roberts? How can the POTUS uphold something we can’t even fucking define? While people are suffering.
The Congress can authorize spending, appropriate funds, and then not let the Executive borrow to meet the obligations? Are you fucking serious? That’s what the authors had in mind?
If so, piss on the Constitution.
Your citation to Prakash is fascinating. It supports the use of the TDC as well as the idea of trying to ignore the Debt Ceiling law and issue Treasury Obligations that exceed the limit.
Which is why I think that the most effective use of the coin gambit would be as a leverage tool: “I promise not to use this coin gambit if you promise to go back to pro-forma raisings of the debt ceiling and actually deliver a budget on time without the need for continuing resolutions.”
And Bmaz, should you not stick to your roman drivel? Your writing has shown you dream of being in the coliseum. I was so sickened by your outrage that the football god could be torn down by the needs of sexually abused children. I puked when reading your drivel about Emperor Joe and his centurion Sandusky being too good to have done what they did for 35 years. You knew, and you ignored it. You are one with your gods now.
Abvse yourself citizen. You vacated your host.
Oh no, if the DC Circuit and/or SCOTUS ever considered the Platinum Coin on its merits, they would roll over, laugh, and punt that argument right out on its ear. I simply think it is preferable to the coin because it would contemplate a specific finding of relative unconstitutionality of a specific statute and provide a groundwork for the Branch harmed to seek redress. The coin plan does not appear to contemplate such formalities.
As to disruption of the markets, I think ALL the options will do that.
To expand on Prakash, he thinks that the president should consult experts, and make his choices in public. A public discussion of these issues would be fascinating, wouldn’t it?
Seems like an option here. But long term that law has to go or be rendered ineffective.
Best comment, hands down, I have ever read on FDL — EVAH!
Your reward is in heaven, OT.
Piss on the constitution? Do you prefer your religion to be called treason or sedition?
Well off eh? Making money renting a slum to the subhuman?
This lake appears to have gone dry. It is Laguna Seca, so polluted that you can’t race any longer. The inhabitants of the asylum are in charge.
It definitely would, if the president could get over his instinctive impulse to fear transparency. Yeah, he’d be tipping his hand as to his ultimate strategy, but he’d also be educating the public, which would work in his favor in the end.
I understand exactly Prakash’s relative meaning/import to this issue. I read it days ago, and then read it again. It does do what you say, and also, I think, gives you a hint of why I draw the lines I do between the coin and the non-authorized debt instruments. That said, I still by my relative preference I think.
Oops, that response should have been to Masaccio at 43.
I would not stoop to dignify the ignorant bleatings of Oldtree who apparently did not have the capacity to comprehend the Due Process analysis I gave of the Penn State situation.
Either suits.
Good bye lake, I came when you were the sweet flow of the springs and the rivers that fed you from the moutains. When only Jane and Christie spoke of a humanity that cared much for each other, and sought protection in a world gone mad.
It is nearer to the desert now, and I will remember the fight for democracy.
You denied anything but football until you could deny it no more. Be lost, your earthly presence has been drained from you.
A public discussion of any serious topic would be very refreshing.
You mean like drones?
I can see if the Tres. Sec refuses to do the magic coin thing this whole affair just goes away. But assuming he takes the coin to the Fed, what happens? The fed must accept it and then what? We start impeachment proceedings and go to the Supremes? What a spectacle. Would any of it succeed?
I suppose the same thing could happen if the Treas Sec tried to sell bonds?
So why not go the route to kill the stoopid law?
billmon weighs in:
Of Blazing Saddles and platinum coins: Why minting a $1 trillion one is neither smart nor necessary
YES! I’d love to hear Obama’s justification for collateral damage.
The Treasury is already doing this:
Is this an infringement of the separation of powers?
I figured as much, B. ;-)
And I understand completely.
Good question.
Masaccio, Bmaz, Cindy: What say you?
Those are the steps begun under the “Emergency Measures” to extend the “debt ceiling date”, which was stated to be otherwise reached on December 31, 2012, no? If so, then they are putatively Constitutional by my understanding, although I have not looked at it in any depth.
I liked that article.
Can Obama use “Emergency Measures” to hire all able bodied, willing to work citizens so we can have some “HOPE” ,again ?
Do you consider, bmaz, that Obama “and other officers” ARE, in fact, protecting the Constitution?
Would that extend to protecting and observing the Rule of Law?
What of the “patterns” of abuse, of making a mockery of the separation by browbeating the judiciary over “national security” and “side-stepping” the obligation of Congressional oversight, especially as regards perpetual war?
DW
This one was the one that looked squirrely to me:
That is a contigency fund intended to stabilize fluctuations in foreign currency transactions. Did Congress also intend it for other contingencies.
That by Billmon is spot on politically, and also even legally why the default followed by issuance of non-congressionally authorized debt is so far superior to the magic coin. Because of the political question doctrine, I do not see the courts intervening on the merits, so how it is all played politically and constitutionally is key.
Heh, you got me; no clue.
In many areas, Obama certainly has not. I don’t know what he will do here, I can only opine as to what I think he should do.
Would the courts intervene if Obama created “Emergency Employment Stabilization Fund” with the magic coin? Who could argue with that?
@billmon points out that Fed has to cooperate with any solution, mine, bmaz’ and any other besides just shutting down.
I don’t see how the Fed can move the unauthorized bonds through the system, which, as @billmon says, requires cooperation of the primary dealers. The risk is on them, and I can’t see why they would participate.
I think it was Keynes who described money as a convention. I would take that as an acceptable definition of a “shared illusion.” Money has value because people all accept that it has value even when you present as plastic or just write up an IOU like a check. The trillion dollar coin idea would work if everybody was on board with it. If everybody is not on board with it, it won’t work. End of story.
Assuming that Obama does not opt for the coin, as both you and I consider that he will not, do you imagine that whatever he does, that it will reflect protecting the Constitution, not just the letter, but the spirit, which includes protecting “the people” and civil society … or will he use the “occasion” to further erode trust and bolster the too-big-to-jail perspective?
At some point, when the president, any president, fails to observe “enough” of the necessary protections, does not the nation cease to be
a Constitutional entity, a legitimate government and become something else, perhaps a “captured” creature, owned by the few and answerable ONLY to those few? In fact, a tyranny hiding behind a cheap (or very expensive, yet tawdry) facade of democratic “procedures” and empty “patterns” of “participation” and meaningless “checks and balances”?
How close do you imagine, given those “many areas” which you mention, are we to total sham, to Franklin’s concern about what we might, or might not, be able to “keep”?
DW
When you look at a one hundred dollar bill, don’t you pretend that it’s worth a hundred dollars? It’s a bit of paper with a bit of ink. No more. Why is it OK to pretend that bit of paper has value many thousands of times the value of the materials it is made of? The answer is because it’s worth what the face value says it’s worth.
Money is a fiction and every bit of it (since it is not backed by anything) is created out of thin air. Go check Chapter 7 and Chapter 8 of Chris Martenson’s Crash Course. They deal with money creation and the Federal Reserve.
The trillion dollar coin may boggle some minds, but minds are boggled anyway when they understand just how it is that money is created. Minting the trillion dollar coin would be basically no different than what we already do.
Wonderful! So,the magic coin will work if we all say “IT WILL WORK”. Now, how to convince the American people it was that simple and why we didn’t do it 5 yrs. ago. Or should we keep quiet and not upset them. They are restless.
Well, vis a vis the authorization by the Congress for purpose intended, that is a flat out false statement.
With this or any Congress, isn’t it ” what’s true is false and what’s false is true ? How can we be sure with the secrecy that is so rampant in D.C. ?
Very informative thread.
THANK YOU Massacio and THANK YOU Bmaz, as your back and forth really highlights some of the things that have been missing in the coin discussion so far.
Very very good and much food for thought here. And that’s what I’m gonna do, think about it from top to bottom again.
Thanks again to all. It’s threads like this that make The Lake such a great place to learn.
One comment I did want to make though, is that when the President can assassinate American citizens without due process and disappear them even on American soil without habeas corpus, the possible Constitutional transgression of this coin pales in comparison.
Not saying two wrongs make a right, just saying let’s keep in mind the ere we’re working in here. I find Bmaz’s arguments compelling and am going to think more on this issue, but I do absolutely want to say that this coin idea is no more a joke than indefinitely detaining American citizens without charges/counsel/habeas corpus.
Honestly why are they making it out of platinum. Rubber. Nuf said.
good post and comments.
mahalo!
peas!
Here is the thing to keep in mind though. The violations of Due Process and Habeas occasioned in the Bush and Obama Administrations, occurred to a large extent through unchecked and unrestrained power of the Executive. Congress and the Courts have failed to oversee and restrain an ever more powerful Executive Branch. When Bush and Cheney were in office we used to refer to the “unitary executive” to denote this concept of an all powerful, dominating of the other branches President.
How does that come to be? Exactly by constant usurpation and accumulation of power by the Executive Branch from the other branches. Now, maybe not in terms of life and death of individuals is the instant issue of the power of the purse as facially significant, but to the health and construct of the Constitution itself, it arguably is every bit as fundamental and important. These are the types of decisions that create the power in one branch, and corresponding vacuum in others, that germinate other, later abuses down the road. It matters.
You’re so right! It’s like going to the college i never attended back in ’72. I went to work instead. Needed money. Now. Living and working in lower middle class these many years has not taught me as much as FDL has in the last 4 yrs. Thanks again to all. So much critical thinking is required. I’m more than willing to try. What i do know is that the real life situation for us on the ground is not good and we need help. Not a handout; just a hand up. Do we possibly have enough money for that ? Not according to some, and it’s truly sad. PEACE
Then we’d need to call it ‘crapitalism’, DW. ;o)
Yes. You have well laid out the reality.
Yet the pristine Constitutional purity of Obama’s unwillingness to be, in any way, “creative” as regards the debt ceiling, ruling out every conceivable possibility of ending the charade, of refusing to stand against the money games so blatantly now being “played” on the people, is not noble, it is crass political deceit. Pragmatic opportunism writ large.
Much of this current political “confrontation” is directly traceable to Obama’s own “making”, to his creation of the narrative of “debt” and the “moral” necessity of crushing austerity, a “shared austerity” which will have profoundly negative impact upon the many. It suits him, politically, now and in the longer term, personally, to allow the nation to suffer huge and devastating economic “exposure”.
We agree, you and I, that the executive has long sought, and very much succeeded in the “usurpation and accumulation of power” from the other two branches. This apparent “capitulation”, bmaz, however, is part of the larger “game”. For quite some time, years in fact, we have been having a discussion about the, to both you and I, EVIDENT patterns of successful executive overreach … patterns which the other two branches, in the persons who “man” or “serve” in those branches, apparently cannot or will not see, will not recognize and certainly will not admit, for such admission would reflect badly and clearly upon them. Instead, the Legislative and Judicial Branches affect a stance of necessity, primarily around war and the “policies” and “legalities” of waging war, that now permanent and endless war, and the ancillary “aspects” of “national security” and the formation of the political fiction, the “Homeland” and ALL of the “security” and secrecy which such an overtaking entails and requires.
My concern, long expressed, is that legal analysis, such as you engage here, while, as I said, impeccable and thorough, so far as it goes, suffers from the needless, in my view, and dangerous, in my concern, narrowness of a form of tunnel-vision, a very necessary perspective under normal legal circumstances, for then it is a specific and limited examination of very exact considerations. Yet, given the very abnormal legal circumstance of executive primacy, of executive disdain FOR the Constitution, which we have both witnessed for many years, but most appalling so during the Bush years and continuing, with a vengeance, as it were, in this Obama administration, it seems a broader approach and appreciation of consequence, an accounting of both the history of usurpation and its very likely consequences, is now necessary.
I do not offer these concerns and that hint of a suggestion as criticism, bmaz, for you are among those legal thinkers whose words and perspectives I greatly appreciate, but as an encouragement, as an example to the entire legal profession, the profession much at the center OF the assault upon the Constitution, as I perceive it, and a profession in very great and dire need of inspired example and principled spokespersons. If informed and courageous members of that profession, such as you are, do not, very soon, begin to speak out with authority and conviction, then the many, then civil society, and the nation may, in fact will, face a home-grown tyranny of destructive arrogance and brutal capacity, the one capacity which it will strut and the other which it will use, making those years from 2000 until the present moment appear gentle and “compassionate”.
That is my opinion. It is also my very deep concern. Perhaps yours differs, bmaz, and, if they do, I should very much like to hear what future you see, “looking forward”, as they say, given what you understand and what you might dare imagine or speculate.
DW
Indeedy so, wendy.
Ludwig is well remembered, as he fully deserves.
Long may it be so.
;~DW
This whole situation is just the Terrorism Watch List re-engineered. Apparently, We the People weren't responding emotionally to CODE ORANGE: DEATH AND MURDER IMMANENT SOMEWHERE IN THE US!!!!! any more.
Pretty soon the fiscal cliff won't work either. Then what?
I wish there were a way to ask for Ludwig’s account to be reinstated, but most avenues are closed to us lest we risk being banned ourselves. His comments on masaccio’s last post were actually helpful to me; he’d gotten better at communicating more fully, and often…more pithily, which may not actually be a word. ;o)
That reminds me of Cohen’s Law:
X2, WD Thank you. PEACE
Per constitutional law professor Laurence Tribe of Harvard:
Obama was a student of Tribe.
Note that the Platinum Coin Option 31USC5112(k) insures the legality of the Debt Ceiling 31USC3101(b), which Obama agreed to and signed into law. And thus the legality of Debt Ceiling means that the 14th Amendment Option involves the violation of a visibly constitutional federal law 31USC3101(b).
Obama, by all appearances, doesn’t know or understand dick about Constitutional law. I’ll see your Larry Tribe, and raise you Professors Erwin Chemerinsky, Michael Dorf and Neil Buchanan. All say the coin is quackery. Oh, and by the way, there is little chance Tribe’s student in the White House thinks the coin is anything but a joke. There may already be some sort of OLC opinion on it.
And, yet, the coin would still be patently unconstitutional. Maintaining the validity of the debt ceiling in the process is not a positive element.
It could take years to settle this in court. I say use the magic coin, put millions of people to work and see what happens. Who are the ONLY ones hurt by not putting people back to work? Everyone, of course, the “trickle-up” theory.
If we take your first and last sentences, bmaz, and combine them: “Obama, by all appearances, doesn’t know or understand dick about Constitutional law … There may already be some OLC opinion on it.” Well, that about covers “it”, on a wide range of Constitutional “issues” …
Yoo think?
;~DW
You’ve a delightfully devious mind, mtquinn.
Everyone must share the sacrifice, according to their “means” …
Carry on, please.
;~DW
That is one of the problems, there is unlikely to be a court that would ever entertain the merits of such a case because due to a concept known as the political question doctrine, they do not involve themselves in truly political disputes between the branches. That is one of the real problems.
You are the attorney. But I just don’t see it. So were it me I would take the shot.
Still, I agree Obama will not use this or any other option. That could result in yet another recession. So perhaps all this talk is just that, talk.
Welcome, mtquinn. Another sad loss of a colorful character in a string of them. Homogenization of denizens.
To your 99: Sublime-side economics?
Some of us never left the last recession. If he doesn’t use any and all options to get us back to work, there WILL be hell to pay. Don’t forget, “idle hands are the devil’s workshop”.
Glad to be here,WD. Just simple, common sense economics,which seems to be in short supply lately.
Unfortunately, the courts don’t even realize when the Supreme Executive is putting the judiciary into a wee box and screwing down the lid, which is precisely what secret law does.
ALL of these things ARE connected. To imagine that they are not, that the withering of the Legislative and Judicial branches is merely episodic and peculiar to each branch on its own, is to miss the severe pruning that has been ongoing for many decades.
“Political disputes” between the executive and the legislative branches, that destroy the viability of the Rule of Law, the stability of civil society, and the well-being of “the people” are “truly” and intentionally adolescent, if not infantile, and ought to have some “check” to “balance” criminal fraud, selfish and profitable privatization of the commons and the calculated financial hemorrhage of endless and privatized war, a war not merely upon human beings but upon reason, conscience, principle and justice … which ought to, somewhere, fall into the purview of the judicial branch, should anyone ever have the “standing” to bring it successfully to the attention of that withering, and ever more rotten “branch”. Justice may well need to be blind, but the principal officers of the court have little excuse to pretend either poor eyesight of the deafness of privilege.
If, “officially”, members of the courts may do nothing, even when peril approaches, at least we might hope that they could summon the courage to warn the many of looming disaster.
Whatever constraints their education, “responsibility”, and “job” might well put upon them, they are foolish in the extreme if they imagine that they shall be and remain untouched and unfazed by calamity and social collapse.
Unless we are to imagine that the pillars of status will hold them safe above the confusion and fray, that they may survey the damage aloof and beyond either worry or consternation … It comes to the old questions; are they, those who claim the wisdom of the law, complacent, complicit, or simply confoundedly stupid?
It must be a wonderful thing, that unassailable “separation”, up there, on Olympus, far from the madding crowd, untouched by the cruel vicissitudes of unkindly fate, protected by the crown of professional distance and immaculate circumspection.
Yet one must assume, that in the important ways, putting pants on, one leg at a time, and so forth, they are not terribly different from anyone else?
Yet officially they “see nothing”, not unlike a famous sergeant. And, again quite like that sergeant, if they did, perchance, happen to “see” “something”, they are constrained, by their very “position”, from doing anything about it.
It must be “nice” to see, or not to see, with such clarity.
A rare thing, indeed.
Ah, well … bmaz …
The burdens of high office …
;~DW
This is nothing new, the courts have never been much for true political questions. that, too, is part of the Constitutional design and implementation of separation of powers.
Actually, we did do that five years ago and the American people did buy it. The problem is now how do we balance the books to make it all legal looking. A platinum coin could work to accomplish this in some fashion if it keeps the lights on.
There are some truly magnificent commentaries taking place here in the last few days, among them those on education and this one as well. I am reminded of way back in the days when I actually watched Charlie Rose instead of flipping on and off to see who is left to talk to him – absorbing a dialogue about economic chicanery, who was getting away with advantages on Wall Street. It was early, early days folk were still proud of doing that, gaming the system I guess it is called.
They said that the whole point was to create an environment that was so complex even those in the midst of being part of the engineering of it wouldn’t really be able to grasp what was going on. They did this deliberately so that what was happening would be impossible for the masses to grasp; even as it was impossible for the players, who simply did not care how what they were creating worked, so long as they could game it. And game it they did.
This trillion dollar coin stuff is part and parcel of doing this, as they have done now with so many aspects of ordinary culture. You can’t unravel these Gordian knots, as I think many on this thread are pointing out. Fortunately, though, we don’t need a conquering Alexander to come and cut through it all – the rope itself is rotten!
We might just be able to laugh them all into oblivion. Personally, I’m greatly in favor of that tactic. And meanwhile, let’s us concentrate on actually educating the coming generation, the ones who are only just starting to wonder. Let’s let them know what fun it is to learn stuff! That’s what I see in my grandkids. Under the radar, they are starting to stir. Wow! Green shoots and crocus flowers!
Which clause would it violate?
We didn’t really have a choice, did we? I thought with others it should have been much,much larger. Maybe 3 Trillion. Americans barely can handle the word Billion. Trillion would have been quite a shock. Watching the hearings in Congress afterwards, i remember them talking about the “dark market”. Some said 600 Trillion. I only heard that figure once or twice, then silence. Those are numbers to start a revolution in my book. I appreciate what stimulus came our way to keep us working. I also made a point of letting the public know,too. They didn’t have a clue. If something isn’t done soon, it’ll be LIGHTS OUT.
They’re like the Wizard of Oz in that respect, DW. They truly, (and in this we are all alike) don’t know how it works! And the balloon floats off – will he ever be able to land the thing? We never find out.
Ah, there’s the rub.
Would slavery, then, long have been held to be a “true political question”? Or Jim Crow “laws”?
Does torture or questions around due process fall into that same category?
Do things not often move from the strictly (ahem) “political” to the pressing moral moment … when society can no longer tolerate peculiar institutions?
Is that not, in fact, the nature of the “evolution” of the law, itself?
What is tolerated and “tolerable” becomes onerous and oppressive beyond rational bearing … and then things change, the law changing, as well?
Is that not a part of the Rule of Law, bmaz, the rational and reasonable progression to greater equality BEFORE the law, or are we now largely “stopped” and in danger of backsliding?
Does that also not happen to the law, to society, to humanity?
Is that not when principle and courage of conscience become most necessary and valuable, become indispensable … even as “political” pragmatism argues against those things, opting for convenient and “safe” solutions that little discomfit the ruling interests?
DW
A truly superb and extremely insightful yet ultimately hopeful comment, juliania, and much very appreciated.
The cut of your jib is exquisite and most deft through the perilous winds of enforced oppression and intentional bemusement.
Delightful, amidst the pitiful bewailing and the challenging chagrins of stark exceptionalism gone quite amuck.
DW
Thanks DW, were you a poet in your previous life? Because you’re sure as hell one now!
Hereby announcing the most mutual of Mutual Admiration Societies, Monty Python style!
There will be no “Platinum Coin”. The Obama Administration just killed it once and for all. None of them thought it was appropriate, including the Treasury Department and the Fed.
For once, the Constitution prevails in a time of demand for efficacy.
Obama’s predilection for cutting the social safety net has “prevailed”, bmaz and, if the Constitution has not been sullied by efficacy, this time, we may trust that the people will be burdened with the expediency of elite greediness masquerading as “shared austerity”, which, if you noted the results of the “fiscal cliff’s” much vaunted “settlement”, somehow always seems to favor the pocketbooks of the most wealthy, including those fictitious beings whose “history” you have somewhat shared, the corporations.
Hooray for the Constitution! May it long prevail, not merely sometimes, when it profits the king to find that limitations must be embraced, honored, and followed, but ever and always, even if should retrain the excesses of irrational exuberance for wealth or power. Amen.
While some may have been counting on the use of the coin, to “save” … “something”, be it “capitalism”, “fiscal sanity”, or whatever might “save” the many from brutal austerity, I must admit to not being, ever, the least bit, convinced that meaningful reason around what Obama wants would, or could, “prevail”.
What Obama wants, we all must now and henceforth note, Obama gets …
What might he want next, do you suppose?
DW
bmaz thinks that it violates the separation of powers principle that is embedded in the Constitution. I don’t exactly disagree. As my post and the law professors I cite say, the legislature has passed several laws that are in conflict, and that place the President in the position of violating one of his Constitutional obligations, to take care that the laws are faithfully enforced.
In this setting, the problem is to find the least bad solution. Bmaz thinks the least bad solution is to let default occur, then determine that the debt ceiling law is unconstitutional.
I don’t think that’s right. I think this is a miserable solution, because it moves a stupid ideological fight between the clown party and the spineless party into the real economy, damaging a lot of humans who just want to live their lives. With the TDC, we keep the fight in the less troubling political arena.
Bmaz also thinks that the President should do the debt ceiling thing in the open, and base it of legal opinions of experts, leading to an open discussion and a political decision. The same thing could be done with the TDC, using this debt ceiling problem as a teaching moment. That would be really useful, I think.
I don’t think there is a good solution. There is only a least bad solution. Different people will evaluate this issue differently. We should assume that our President will choose some politically expedient solution, not the least bad.
Bmaz thinks the TDC is a stunt. I don’t.
And as we learn the Treasury is going to go the partial shutdown route. Thanks, bmaz. Might as well punish the citizenry rather than the clowns who can’t govern.
My friend, THAT is exactly how you punish them. You hang this shit like a cement collar on them. Which is precisely consistent with what Billmon argued in the article linked above. No it is not clean, it is messy and harmful. Sometimes government is. But if you believe in the Constitution and attempt to do the least harm to it, that is the way you play it.
A “cement collar”.
Why, bmaz, I really like that fragrant image.
However, if the media, which is also part of the political class, successfully persists in its misrepresentations, stenography, and deceit, then it shall be very hard for the many to avoid the partisan trap.
Messy and harmful to the Constitution AND the people, as ONLY the government, the bipartisan government, can be?
Thank you for your many contribution to this thread.
DW
Per Ezra Klein at 3:30 this afternoon:
But nobody has suggested the production of platinum coins “for the purpose of avoiding an increase in the debt limit.” Rather it has been proposed to avoid a failure to increase the debt limit. Duh!
Also, such a coin is legal tender and the Treasury take precedence over the Fed in all disputes, so the Fed does not have the option of rejecting it.
Which ‘them’, bmaz, and how? What leverage is there now that so many of you voted to re-elect Obomba?
Bummer but no surprise.
Bollocks; avoiding the debt ceiling is the ONLY thing the magic coin was contemplated for.
Exactly! And, “avoiding the debt ceiling” is something quite different from “avoiding an increase in the debt limit.”
Not in this equation it is not. That is a semantical distinction without difference constitutionally, or legally, for that matter.
Speaking of the trillion dollar decision maker, for anyone who has fantasies about Jack Lew being named treasury secretary, as I did until recently, here is a good low-down from William Black and Matt Taibbi:
http://www.democracynow.org/2013/1/11/failure_of_epic_proportions_treasury_nominee
I said:
And you replied:
If the debt limit is increased, there’s no need for the seigniorage option. And, otherwise, the seigniorage option is a (possibly unconstitutional) way around it.
Can you understand the distinction between obtaining a legal abortion and avoiding the legalization of abortion?
That’s exactly parallel to avoiding the debt limit and avoiding an increase in the debt limit.
It’s not a subtle semantic distinction.
The platinum-coin option avoids the debt ceiling (by avoiding the need for further borrowing), while the GOP are avoiding the legalization of further borrowing by avoiding an increase in the debt ceiling.
In other words, the foolishness of the American legal system and the political and economic interests of its banksters will prevail over the recommendations of economic scientists.
And it’s not even clear that minting a $100T coin would be unconstitutional. But if it were unconstitutional and if the MMTers are right about the economic rationale of this coin, then one may conclude that the constitution is, in essence, a suicide pact for most Americans. But, then again, the founders were committed to the quack metaphysics of ‘sound money.’