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Obama could go platinum

Dec. 7, 2012 at 2:56 PM   |   Comments

WASHINGTON, Dec. 7 (UPI) -- U.S. President Barack Obama could have two $1 trillion platinum coins minted to solve the debt ceiling problem, some economists and legal scholars suggest.

Theoretically, if Congress chose not to raise the nation's debt ceiling again, as could be necessary by February, the president could have the coins minted and deposited at the Federal Reserve, which would then move money into Treasury's accounts, alleviating the need to issue new debt, The Washington Post said Thursday. Under the theory, such a move would not trigger inflation since spending would be kept at existing levels, the newspaper said.

Jack Balkin, a law professor at Yale Law School, floated the idea during last year's debt-ceiling debate, pointing out current law there is no limit on the number or denomination for platinum coins as there are for paper currency and other coins.

The Post notes Congress could contend the law concerns only commemorative coins, not legal tender. There also would likely be a great deal of political fallout should Obama try to circumvent Congress through this maneuver or others, such as declaring the debt ceiling unconstitutional under the 14th Amendment or, as Gagnon suggests, by having the Treasury Department sell off the country's gold reserves, the Post said.

Balkin, who says such actions "could lead to complicated litigation," said shutting down the government would be "much more straightforward."

Chris Krueger, a policy analyst at Guggenheim Partners, said in a recent report such schemes "are very low probability options."

Topics: Barack Obama
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