Sunday, January 13, 2013

A trillion dollar coin is just as preposterous as it sounds


Most people are naturally suspicious of an unexpected idea. We all recognize that thinking outside the box is a valuable problem solving skill: many old problems have been solved by adding a new perspective. But nevertheless, many remain hesitant to break out of a familiar mindset. This is especially true when we’ve been turning an issue over in our heads for a long time, such that we become entrenched in our way of seeing the problem. When we encounter a surprising approach we had not yet considered, our first reaction is usually to identify why we hadn’t considered it, as if to justify our omission and write off the new suggestion. Because of this process, it’s common for people to have an initial resistance to unconventional ideas. Sometimes, this suspicion is unfounded, and the idea turns out to be an ingenious, insightful solution to the problem at hand.

But other times, those natural suspicions serve an important purpose. Sometimes, ideas initially seem outlandish and silly because they are outlandish and silly. When this happens, our natural reluctance to embrace these ideas serves as a filter between the reasonable and the absurd. It’s important to keep an open mind, but it’s equally important to pass new ideas through this vetting process.

So earlier this week, if you heard a chorus of liberal commentators explain that the solution to America’s debt problem was to mold a cylindrical block of platinum, slap twelve zeroes on it and place it in the Federal Reserve, there was probably a little voice in the back of your head that wondered if that was really a sensible plan that should be taken seriously. If you heard that voice, then congratulations: you’re not a moron. Unfortunately, the same cannot be said for a growing group of pundits that now includes New York Times blowhard Paul Krugman.

When the White House announced it did not view ignoring the fiscal cliff as an option, but simultaneously refused to negotiate on raising it, spend-happy liberals grew desperate in their search for a way out of the legal borrowing limit. Their scouring finally paid off when they uncovered an obscure 1997 law that allows the Treasury Secretary to print off a coin of any denomination, so long as that coin was made of platinum. The idea of the original law was to further the collector coin industry. However, since there was no upwards limit placed on the value of that coin, someone cannily figured out that the  could theoretically make the coin worth massive amounts of money. By crediting the coin to the US Federal Reserve, the Secretary could therefore reduce the debt by $1 trillion, bringing the US back within the debt ceiling.

Unlike the last proposal, this idea may have actually been legal. But in their excitement to have found a constitutional avenue to bypass Congress, liberals forgot that a legal idea is not synonymous with a good idea. Anyone with even a basic understanding of economics should know that when the government has run out of money, simply creating more is not a wise or to the problem. And anyone with even a basic knowledge of how fast our debt is currently growing would know that even adding $1 trillion to the government’s pocket is not a permanent solution, as it would merely postpone the day we go over our debt limit by a few months! When that day comes, what do we do then? Simply mint another trillion dollar coin? Or, as comedian Jon Stewart noted, why not mint a $20 trillion coin?

Stewart found fodder for comedy in this idea because it made his job easy; the proposal practically ridicules itself. If the President actually adopted such a strategy, he would become the laughingstock of the entire world. Foreign leaders would laugh at him The American public would laugh at him, which would be harmful to his party’s favorable ratings in the polls and throw a life vest to the floundering Republican party. Those Republicans themselves would laugh at him the next time he asked them for compromise, such that he’d be forced to mint another coin whenever the debt ceiling was pressed again. Most importantly, investors would laugh at him, public faith in our currency would plummet and the value of the dollar would fall alongside it on the international market.

That this idea has been brought up with a straight face on almost every major news network is a testament to the left’s incredible hypocrisy. The same people who call Republicans insane for wanting to balance the budget deem it more sane to pull a stunt like this? The same people who lament the denigration of American political dialogue and who call for bipartisan compromise now think it fair for the president to bypass congress entirely on a budgetary matter? I’m sure the president’s theft of the purse strings would do wonders for fueling that reconciliation with congress. The same columnist who whined about how Republicans use obscure loopholes like the filibuster to get their way is now endorsing the use of a 1997 collector coin law to settle the budget crisis?

Thankfully, the Federal Reserve appears to have put the nix on this idea, saying they would not accept the coin as legal tender. The White House appears to have begrudgingly accepted no for an answer. The debt ceiling will have to be heeded, which is a good thing because it serves a worthwhile purpose. The fact that we’re continually bumping up against it is a continual reminder that the debt is piling up way too fast. This is not only dangerous for the economy and unfair to my generation, but simply immoral when the majority of things government is borrowing to pay for are unconstitutional in the first place. The longer we kick the can down the road, the more we postpone and exacerbate the inevitable economic downturn this debt will create. And of all the ways politicians try to kick that can, the platinum coin idea may be the stupidest I’ve yet encountered.

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