Mint the $1 Trillion Coin - Save the Economy

Maybe you've heard the latest wisdom to save America from its debt crisis - "just print money."

In this case, however, it's not a common mistake made by countries like Mexico or Zimbabwe that have led to hyperinflation and nearly worthless currency.  It's a theory based on a 1996 law that allows the Treasury Department to print coins of "any denomination" to be deposited in the Federal Reserve for payment of debts incurred.  It has gained steam in recent days and now it's getting some mainstream press on NBC.   Basically, the Treasury would mint a single coin of platinum worth $1 trillion to cover the country's ability to pay its bills.

The issue might seem patently absurd, unethical, illegal, or even unconstitutional.  However, it was given credibility in recent days as Nobel-prize winning economist Paul Krugman somewhat endorsed the idea to avoid the debt ceiling fight with Republicans.  And, strangely, a Republican congressman actually gave the issue more clout by introducing a bill to prevent the Treasury Department from doing it.  If Congress has to pass a law to stop it, it must be currently "legal," right?  Well, that might be one for the courts to sort out later.

Theoretically, the Executive Branch could do this if the Congress refuses to raise the debt ceiling to pay off debts already incurred.  The printing of the $1 trillion platinum coin does not allocate any new spending, and obviously a $1 trillion coin wouldn't be put into circulation.  Thus, it is no risk for inflation, and it doesn't violate the Constitutional constraints on the authority to borrow and spend money.  Fascinating little trick that I haven't actually heard a strong argument against.  A $1 trillion coin.  Hmmm.

This could get interesting.