The Magic Penny

Love is something if you give it away,
Give it away, give it away.
Love is something if you give it away,
You end up having more.

It’s just like a magic penny,
Hold it tight and you won’t have any.
Lend it, spend it, and you’ll have so many
They’ll roll all over the floor.

—”Magic Penny,” words and music by Malvina Reynolds

Okay. Now it’s getting serious. Paul Krugman has blogged about it.

The “it” is what I will call, as a tribute to the great Malvina Reynolds, the Magic Penny, but what those in the know are calling Platinum Coin Seigniorage. It has to do with the Treasury Department ordering the U.S. Mint to issue, say, a $1 trillion platinum coin and then depositing it in the government’s account and using the “seigniorage profits” (the difference between the face value of the coin and the cost to produce it) to do things like, oh, pay bills.

It’s one way to get around the GOP’s willingness to wreck the economy by threatening not to meet all of our nation’s obligations.

Now, you can go read about it and make up your own mind, but here is why, if Mr. Obama is going to do something extraordinary to avoid Republican threats not to raise the debt ceiling, I prefer the option involving the Fourteenth Amendment, which I have mentioned before (and which the President obviously is reluctant, very reluctant, to use).

Here is my reason for that preference: Using Section 4 of that amendment will throw Republicans into such a tizzy that it will make their birtherism seem sane. They will thus spend all of their free time figuring out how to, first, impeach the President, then, second, how to convict him if they do. It will tie them up for months and months and bring out the crazies for all, and by “all” I mean the non-Fox-watching public, to see.

In the mean time, President Obama has absolutely nothing to fear from getting convicted in the Senate, and, as the impeachment of and failure to convict Bill Clinton demonstrates, Obama will be more popular than ever when it is all done!

It’s a real win-win!

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  1. Using “seigniorage profits” surely would fit the definition of “thinking outside the box”, but I have to say it seems manifestly false and would, in my opinion, give the entire investing world the notion that we are no longer deserving of financial respect. Using the 14th Amendment however simply affirms that we do indeed know what we’re doing and are standing behind every treasury bill issued. I’m glad to see you are embracing the idea, Duane. I don’t however buy into the idea that if Obama did it that he would automatically be impeached. It’s a question of Constitutional law and would be kicked up to the Supremes where, hopefully, they would put this debt-ceiling foolishness into a permanent grave.


  2. Bbob

     /  January 4, 2013

    Re the Magic Penny suggestion, I fall back on the old adage, if it seems too good to be true, it probably is. And I have this bridge . . .


    • Bob,

      USPS could use the Magic Penny, come to think of it. Perhaps we could persuade the President to deposit a platinum coin in the post office account! Voila! Everything is good!


  3. This may be one more case where the President does not do what he has said he will do — or, in this case, will eventually do what he now says he will not do. How else do you keep the issue out of the negotiations? He can’t just say “neener, neener, neener.”


    • Brad,

      I suspect Obama will first do everything he can to avoid having to do what he said he would not do: negotiate with the hostage takers over the debt ceiling. Eventually, though, he may have to take his case to the people at some point, with an aggressive schedule of speeches around the country or one biggie on television.


  4. Just the separation of powers would seem to suggest that congress has authorized programs, and at least a continuing resolution to fund them, but then made it illegal to do what they said. Isn’t it incumbent on the executive to choose which legislative directive to execute??? The good executive would have to do what’s best for the counry, and 14th amendment just makes that formal


    • That is exactly one idea that is floating around.

      When I was a union representative, sometimes my members would ask me, “What do I do when management gives me conflicting orders?” That would happen when on a busy day a boss would say, “Get all your work done and don’t use overtime.” but what if you couldn’t get all your work done without using overtime? Which order do you follow? Get all your work done, or leave some in order to avoid overtime?

      Some argue that Obama has been given conflicting instructions from Congress. Spend X amount of money on X, but don’t borrow enough money to do it. There are some rather silly ways out of that mess, but one of them, which would be accepted as legitimate by the American people, would be to do what Congress has explicitly authorized: pay our obligations by the means necessary. Obama could simply say, “Congress has given me a previous order to pay these bills, and I intend on doing that, unless they expressly give me an order not to.” Or he could use the Fourteenth Amendment. Either way, I think he will get a pass from the people if he follows Congress’ original, and really only, instructions.



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