Friday, January 4, 2013

"Sorry Folks, The $1 Trillion Coin Is Unconstitutional"

From John Carney's NetNet:
The trillion platinum coin idea came roaring back into the headlines today when the Huffington Post splashed it across its homepage.

An obscure provision of the federal code seems to give the Treasury Secretary authority to mint platinum coins worth whatever the Secretary declares them to be. A $1 trillion coin could be deposited with the Federal Reserve, which would allow the government to continue spending money even if it were barred from issuing more debt.

But can the government really pay its bills with a trillion dollar coin? Is it legal for the Treasury to create $1 trillion dollars out of nowhere?...
...The most fundamental question about the platinum coin solution to the debt ceiling is this: is it legal? Can the Treasury really do this?

The starting place for this analysis is the U.S. Constitution. Article I, Section 8 of the Constitution lists 27 express powers granted to Congress. The most important of these for our purposes is the power to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures."...MUCH, MUCH MORE
To heck with that Constitution thing, let's get down to deciding who should be on the obverse.

Arianna Huffington?
Henry Blodget?
Homer "stupidity got us into this mess and stupidity will get us out" Simpson?