The Platinum Coin Idea Is Officially Dead
Ezra Klein passes along the news that the Treasury Department and the Federal Reserve Board have officially shot down the idea of minting a Platinum Coin as a way to get around the debt ceiling:
The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.
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 inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless.
I’m sure that we’ll hear complaints from many on the left that the Administration should not have released this statement and instead kept the threat of a Platinum Coin hanging out there as a bargaining chip in the upcoming negotiations with the House and Senate Republican leadership. However, as I’ve noted before, I don’t think that the advocates of the Platinum Coin strategy ever had a realistic view of how Republicans, even moderate Republicans, would react to something as egregiously extra-legal as this. Instead of “solving” the debt ceiling crisis, minting a Platinum Coin would likely exacerbate it and, in the process, create a Constitutional crisis that would likely sour relations in Washington between the parties even more than they already are for the remainder of Obama’s Presidency.
Now that we’ve put that silly idea out of the way, can we please move on to the serious part where the President and Congress actually start negotiating with each other?