Friday, January 4, 2013

It's Easier To Get Forgiveness Than To Ask For Platinum

Kevin Drum thinks the courts won't permit the minting of the trillion-dollar debt-ceiling-avoiding platinum coin.  He reasons that they'll take the purpose of the coin law seriously -- it was only intended for commemorative coins, and rule against anyone who tries to use it for fiscal or monetary purposes.

I really don't know how these things work out legally. Maybe that's how it goes. But we've got to keep in mind the political context in which these decisions will be made.  Suppose Obama plays a reasonable-looking game on the debt ceiling and mints the coin to deal with the debt ceiling, while the House refuses to negotiate with the president (whatever Boehner means by that).  With debt ceiling armageddon about to hit, the coin is minted.

Then it goes to the courts. Are they willing to throw the US into default by ruling that Obama has exceeded his authority? And what is even supposed to happen after the US is in default and can't issue more debt, after having illegally issued debt? I don't even know what you do with the post-coin debt -- is the US required to honor it? In any event, there's going to be strong pressures on the legal system to go along with what Obama did, because the alternative is to create a totally bizarre situation that nobody knows how to deal with.

No comments: