The Year of Magical Thinking
Remember the platinum coin idea? The ideat that the POTUS could, under law, authorize a non-commemorative coin worth a trillion dollars and just tell the Congress to suck it on the debt ceiling? People with advanced degrees who think they are lawyers still think this would work because the law says so, that's why:
I'm glad the Fed can choose to cooperate or not.
The platinum coin statutory language is not ambiguous. It's completely clear. Intent doesn't matter.
Here's the argument that is in reference to:
The coin is a clever, nifty idea but it has problems. The one that gets overlooked the most is it wouldn’t actually make everything normal after it was invoked. It would be subjected to all kinds of challenges and litigation. As a straightforward matter the Federal Reserve wouldn’t give Treasury a trillion dollars for that coin. We looked carefully at it, but for both practical and legal reasons, the legal reason being the law obviously wasn’t meant for anything like this and the practical reason being that the Federal Reserve would need to cooperate and wouldn’t, it wouldn’t work.
Not looking to start a blogfight here,but the former Treasury guy is right, and the former Econ professor, who makes as poor a lawyer as I would an Econ professor, is wrong.
First, such a coin would be subject to all sorts of challenges and litigation, because intent does matter. The first mistake a freshly-minted lawyer makes is thinking the statute says it, and that settles it. Lawyers quickly figure out that what settles it is what the judge says, and sometimes that means "Statute be damned!" And intent, especially legislative intent, means one helluva lot when it comes to interpreting statutes.
Insisting the coin is legal tender because the statute says so and because the Fed "does this all the time" won't keep you out of court or put the imprimatur on your idea. You still have to get the world to accept it.
Consider: it may be the US Government who creates money by saying coinage and fancy paper is actually of more value that the materials which compose it; but everyone else agrees that this value exists. It doesn't exist because the POTUS says so, or the Fed says so, or the law says so. The value exists because the world accepts that it is so. If the world doubts the value of this coin (or coins), you can scream at them that the statute says it's real money. Your screaming won't make any difference. Kinda like the old adage that if you're explaining, your losing: if you're waiting for a court to declare your coin valuable, it ain't. So I guess you can tell the Fed it is a real coin with real value, but if they don't agree? You read the statute to 'em? In a loud voice, if necessary?
Of course, the coin idea is really no more ludicrous than Rand Paul's idea:
“I’m for taking default completely off the table and for promising to the American people and the markets, to Wall Street, that we will always pay the interest on the debt as a priority,” he said. “You know how we do that? We bring in $250 billion in tax revenue every month. The debt payment is about $30 billion. We just promise that we’ll always pay it. “Mind you, Ezra Klein explains in detail why the Federal government isn't physically set up to do that, law or no law. But Klein has sold his soul to the Beltway dweebs; he has no vision, no moxie! See, all the President has to do is say "We will never default," or "This coin is worth $1 trillion," and hey, presto-changeo, problem solved! Financial markets reassured, order in the universe restored, puppies and unicorns for everybody!
“We should pay our interest and we shouldn’t scare the markets, so if I were in charge – I’ll say, absolutely we will never default,” Paul said. “I would pass a law saying that the first revenue every month has to go to pay the interest.*”
He's got the Presidential seal, and the Presidential podium! If that's not good upon 'change, I don't know what is!
And I'm sure his momma loves him like a rock; that's gotta be worth something, too!
*And he'd pass that law because he would be King! Hey, long as we're engaging in fantasy.....