Twitter is buzzing with plans to evade the debt ceiling with a commemorative coin loophole, and supporters are trying to get the White House to take up the cause. Since the beginning of the current debt crisis years ago, pundits and bloggers have periodically suggested that the US Treasury mint a single, massively valuable platinum coin — say, a trillion dollars — and deposit it at the Federal Reserve, paying down the national debt without changing our laws or budget. But the idea has gotten new life during debates over the fiscal cliff, and it's been taken up outside the usual circle of finance debates. Supporters have deployed the hashtag #MintTheCoin, and a White House petition was started yesterday; it's currently at about 3,000 signatures out of a required 25,000.
The idea behind minting a trillion-dollar platinum coin is based on an apparent loophole letting the Treasury print platinum coins of any denomination. Meant for commemorative products, it gets around legal limits on printing money to pay the bills. Depositing it would technically pay down US debt, buying time before we reach the limit on it (the "debt ceiling") again. It's an idea that's been discussed favorably (albeit cautiously) by everyone from Representative Jerry Nadler (D-NY) to economist Paul Krugman, who calls it a gimmick but says "there’s a pretty good case for using whatever gimmicks come to hand." Business Insider has been a particularly staunch proponent of the move, with its own explanatory video and and a post defending the coin.
"There’s a pretty good case for using whatever gimmicks come to hand."
On the flip side, there are obvious problems with printing money, even in platinum. Critics fear it would spur inflation, though others argue that because the coin won't ever be circulated, that's not a sure thing. It's also, as Krugman notes, a purely temporary solution that's theoretically equivalent to owing the Treasury a trillion dollars, and eventually spending will catch up to the stopgap it creates. Just describing it sounds insane: The Guardian pithily calls it "an elegant solution — if you are a cartoon villain given to sitting in a vast underground bunker and innovating plans for world domination." But in some ways, that insanity is the whole point.
For anyone who isn't well versed in fiscal policy (and clearly some who are), printing a trillion-dollar platinum coin isn't that much stranger than the everyday maneuvers of our banking system. Supporting the coin is also a way to draw attention to Congressional posturing. "While this may seem like an unnecessarily extreme measure," the petition reads, "it is no more absurd than playing political football with the US — and global — economy at stake." Banking on ideas that are "so crazy they just might work" is not, generally, a sound strategy. But proposing them is a way to call the bluff of Congress members who are seen as far more flippant than supporters of a platinum coin.