|A new $1 trillion dollar coin...?|
The issuance of Treasury Bills, on which our spending depends in large part, literally requires an act of Congress.
Sadly for the current Administration raising the debt limit to allow the US to continue spending at the prodigious rate of $9.6 billion USD per day is now under the control of the House of Representatives. This is because the House must approve any changes to law, which dictates the debt limit, just like any other legislation.
So what does the Administration do?
There is anecdotal evidence that the various agencies that issue things like Medicare, Social Security and other government funded checks have no means to stop issuing payments. In a "normal" business printing checks is a serious business which requires strict control and monitoring. In a "public" company many laws dictate how the Treasurer must account for all the funds spent according to guidelines such as FASB.
But not Uncle Sam.
No accounting of Uncle Sam's funds is really necessary because as long as the federal employees do their jobs in a legal fashion, i.e., running the check printing device or setting up wire transfers, they are not personally accountable for funds.
And since our representatives, such as the President, Secretary of State, and so on are immune in large part from any consequences of their actions they are not really "accountable" in any rational sense either.
(You and I might assume this is not the case but, as far as I can see, if the government simply printed checks and made transfers from an empty US Treasury to banks to cover them it would work regardless of whether or not there was any money in the US Treasury in the first place...)
In the olden days, when things like "character" mattered no one would question how and where US Treasury funds came from.
But no longer apparently...
According to the American Enterprise Institute (see this article by James Pethokoukis) the current Administration can simply bypass the need to go through Congress to borrow money by issuing a few platinum one trillion dollar coins.
Now there are laws in place that restrict what can be done with gold, silver and copper coinage as well as with paper currency, i.e., it cannot be created out of nothing.
But, at least according to the theory in the linked article, there are no or far few restrictions with regard to "platinum coins."
The Administration would order the US Mint to create a number of such coins, why, they could even be in higher denominations, perhaps $10 trillion or even $100 trillion. (See how quickly all our future debt problems could be simply swept away! As always, history repeats and these antics have been tried to one degree or another before such as in the Weimar Republic.)
These coins would be, under the authority of the US government, legal tender for all debts, public and private.
The Mint would then deposit these coins with the Federal Reserve bank.
The Federal Reserve, the every compliant companion of Administration's past and present, would then simply deposit these coins into the US Treasury.
Now there is an unlimited supply of money with which to pay bills - no debt required!
Is this article fantasy?
Perhaps not (see this Huffington Post article claiming Senator Harry Reid would support this option).
Though personally I find this approach, to say the least, somewhat troubling...
And, what's really troubling is that it sounds like my own seven year old child or grand children trying to bluff their way past papa into the cookie jar ("but papa, my stuffed dog Fred needs a cookie too!").
How sad it is to see that this is the type nonsense from our government and leaders.
Worse is that members of the US Senate would not flatly deny this as an option. After all, they take this oath: "I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God."
Hmm... Nothing here about finance, money, currency or even upholding the law...
I don't see a problem, do you?