Interesting article by Paul Krugman of the NY times has been doing the rounds. As he points out there is this absurd situation in the US political system, where Congress can vote for a budget where the numbers simply don’t add up, i.e. award generous pork barrel spending to their respective special interest groups, give their rich friends a massive tax break. The president’s powers to overrule this budget are very limited (he can either refuse to sign and veto the whole thing, or accept that shutting down America is too costly swallow his pride and sign it anyway).
Then a few weeks later the very same politicians who passed a budget that is guaranteed to run a deficit can pull out their Tea Party Patriot costumes, refuse to raise the debt ceiling and blame the black guy for reckless spending and dump the inevitable mess that will follow if the US were ever to default on its debts on the President. Now in any other country this sort of behaviour would be quickly labelled stupid and stopped, but not the US.
However, Krugman points out a loophole the White House could use to get around this. The Treasury department can mint a coin of any denomination of their choosing. So in theory, there’s nothing to stop them minting a Platinum coin, assigning a value of say $1 trillion to it, and handing it over to the Federal Reserve to use as collateral. Thus effectively pumping an extra trillion into the economy and bypassing congress. Krugman even suggests they put Republican house leader John Boehner face on the coin, though I vote for George Bush (who is largely responsible for the current economic mess) and the slogan in debt we trust.
Of course the Tea Party Republicans and libertarians have been sent into a tizzy over this one. Of course I find this odd, libertarians are forever trying to promote the idea of a reintroduction of the gold standard and getting people to buy into their various scams involving gold or sliver coins. All Krugman proposes is that Uncle Sam should do the same on a much larger scale. Again, I suspect conservative demonstrate yet again, that they don’t understand the concept of irony.