RefBan

Referral Banners

Yashi

Friday, July 29, 2011

Moneybox: The $5 Trillion Coin

Slate Magazine
Now playing: Slate V, a video-only site from the world's leading online magazine. Visit Slate V at www.slatev.com.
moneybox
The $5 Trillion Coin
Gimmicks the government could use to resolve the debt-ceiling debacle.
By Annie Lowrey
Posted Friday, July 29, 2011, at 4:48 PM ET

Illustration by Rob Donnelly. Click image to expand.The countdown clock to the Debtpocalypse now stands at four days, give or take. Soon, the Treasury will start receiving bills it cannot pay, and the United States will fall delinquent on billions of dollars in promised payments to Social Security recipients, government contractors, and so on. Congress remains deadlocked. So, the chattering classes have started getting creative. If you cannot lift the debt ceiling, maybe you can vault over it.

One option is coin seigniorage--aka, the "really-huge-coin workaround." The United States has a statutory limit on the amount of paper money in circulation, but no such limit on coins. The Treasury secretary has the authority to mint certain coins of any denomination, with no need for the value of the metal to equal the value of the coin. (It gets a bit technical.) But the idea is that Secretary Timothy Geithner could order the Mint to make a, say, $5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt.

To continue reading, click here.

Annie Lowrey reports on economics and business for Slate. Previously, she worked as a staff writer for the Washington Independent and on the editorial staffs of Foreign Policy and The New Yorker. Her e-mail is annie.lowrey@slate.com.

Join the Fray: our reader discussion forum
What did you think of this article?
POST A MESSAGE | READ MESSAGES

Also In Slate

How Boehner Is Using the Balanced-Budget Amendment To Save His Debt Plan


Is It Really Possible To Die From "Alcohol Withdrawal"?


Apple Is Destroying the Nintendo 3DS the Same Way Nintendo Destroyed PlayStation 3

Advertisement


Manage your newsletters subscription: Unsubscribe | Forward to a Friend | Advertising Information


Ideas on how to make something better? Send an e-mail to slatenewsletter@nl.slate.com.

Copyright 2011 The Slate Group | Privacy Policy
The Slate Group | c/o E-mail Customer Care | 1350 Connecticut Ave NW Suite 410 | Washington, D.C. 20036


No comments:

Yashi

Chitika