account
search
search

Economic Outlook: A pretend solution

By ANTHONY HALL, United Press International   |   Jan. 14, 2013 at 9:43 AM
Bad news: The U.S. Treasury Department said it would not mint a trillion-dollar coin to keep the government from overspending its limit.

The argument on raising the U.S. debt ceiling is looming once again as the leverage Republicans will use to force spending decisions to go their way. Again this puts the hypothetical crisis of too much government debt as the No. 1 driver of budget decisions, which has a potential to ignore -- face it, it does ignore -- the favorite Republican strategy of how to really solve the federal deficit, which is something like a Star Trek version of economic reform: "Live long and prosper," as Dr. Spock would say.

Trimming back a few line-items in federal spending will not change the national debt trajectory any more than raising taxes for individuals earning over $400,000 will make a describable dent in the nation's overspending.

The trillion-dollar platinum coin is one of those out-of-left-field ideas that can be used to explain to a middle school math class the relationship between the money supply and national debt, except that a trillion coin has an odd and separate symbolic value in that it would not add to the money supply simply because nobody could make change for it. If it can't be used practically, it's like writing a check with a billion zeros on it. It only looks like it's worth a lot. In reality, it's worthless and we have to live in the real world, after all.

"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," the Treasury said in a statement.

There is an argument that it is legally feasible to mint a platinum coin and to stamp it with a value of $1 trillion. It came about because of a provision in the 1997 Omnibus Consolidated Appropriations Act that was intended to allow the Treasury to produce platinum coins for coin collectors. Inadvertently, there was no ceiling on value written into the provision, so the same law that allowed the government to make coins of very little value also allowed them to make coins of enormous value, The Washington Post reported.

It truth, the platinum coin would represent, symbolically, Washington's favorite pastime of the past four years, which is to avoid painful decisions. If a trillion-dollar coin was ever produced, the suggestion here is that the image stamped on it should be a can flying off the toe of a boot.

Politically, it would sink President Barack Obama on any number of levels, as it would be seen as a clownish solution to the national deficit. It would strike many as simply pretending the problem wasn't there.

In international markets the Nikkei 225 index in Japan rose 1.4 percent and the Shanghai composite index in China added 3.06 percent. The Hang Seng index in Hong Kong climbed 0.64 percent and the Sensex in India gained 1.23 percent.

The S&P/ASX 200 in Australia rose 0.22 percent.

In midday trading in Europe, the FTSE 100 index in Britain slipped 0.07 percent while the DAX 30 in Germany gained 0.49 percent. The CAC 40 in France climbed 0.46 percent and the Stoxx Europe 600 shed 0.18 percent.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
x
Feedback