Freshly reelected President Barrack Obama recently kick-started negotiations for debt ceiling. However negotiating over the ceiling amount does not seem like a preference for him! And his current stance has fuelled the prospects of the new intriguing option for paying off debts that is being hugely marketed by monetary and fiscal wonks!
The brand new proposal goes like this. In case the congress fails in extending the prevailing debt limit, Obama could in fact ask the national treasury to begin minting coins with a face value of trillion dollars! Subsequently, several of these high priced coins would be put forth for fulfilling the debt obligation if the Congress fails to undertake concrete measure. This process of platinum coin minting has been explained judiciously by Pethokoukis in his blog.
In his blog, Pethokoukis religiously explains that whereas the volume of gold, silver as well as paper currency circulation is monitored by regulatory laws, there are no clear regulations mentioned for platinum. Therefore, this could be one of the open doors for the treasury to tap on. The treasury could now instruct the American Mint to first melt existing platinum coins and remold them into a few of the trillion dollar types. The coins must then be shipped across and stored with the Federal Reserve for safe custody. They would then be duly used when it is time for bill payment.
The effects that are likely to be endured by the currency markets and inflation rates are hugely unclear. Lawsuits quite akin to the ones associated with the “Constitutional Options” could also be triggered. However, both this and the constitutional options are very low on probability. However, the more difficult section of the initiative is likely to surface once the decision for minting the platinum coins have been taken and the American Mint gears up for the job.
At that time, the people of America would be required to make a decision on the face that would be placed on this prestigious trillion dollar mintage. As has been duly warned by Genevieve Billia, the U.S. Mint Public Affairs Specialist, the specifications of the coin must be finalized through legislation and another impasse could most likely be the consequence.
It has however been decided that the sculpture must be that of a dead person. Prominent possibilities include John Keynes and Ronald Reagan.