The Trillion Dollar Coin Solution, Or One Coin To Rule Them All: An Idiot’s Guide

The Trillion Dollar Coin Solution, Or One Coin To Rule Them All: An Idiot’s Guide.  Reblogged from Huffington Post, 7 January 2013

For those who may not have been following closely, Mark Gongloff provides the Idiot’s Guide to the latest twist in the budget/debt ceiling soap opera.  What’s your take on this?  Here’s Gongloff’s…

If you’ve watched business TV or read Paul Krugman lately, you may have stumbled across a strange and maybe frightening debate among policy wonks and pundits about something called a trillion-dollar coin.

What is this coin, and why should you care about it? The second part of that question is harder to answer, but the first part is easily explained. It’s a gimmick that, as Krugman wrote on Monday, President Obama could and possibly should threaten to use as a solution to a potentially devastating fight with Congress over the debt ceiling. Here’s how it–

Wait? Debt ceiling? What is that?

The debt ceiling is the maximum Congress lets the government borrow. Back in ancient times (World War I), Congress started setting a big old debt limit so that it wouldn’t have to constantly approve new borrowing, its job under the Constitution. This gives Congress the power to vote on whether to let the government borrow more money to pay off its old debts and other stuff for which it’s on the hook, including stuff it may regret now, like that unfortunate leather sofa it bought at Raymour & Flanigan, or Iraq.

Usually this is no big deal. Congress is constantly having to boost the debt ceiling. But the historically terrible 112th Congress darn near let the ceiling be breached last year, trying to wring spending cuts out of Obama. That meant the government was nearly unable to pay its debts, which would have been an economy-destroying default by the world’s biggest borrower and one of its soundest credits. The whole fiasco led to the U.S. government getting its credit-rating downgraded by Standard & Poor’s, and it set the stage for all that fiscal-cliff nonsense we just went through.

Related articles

• Krugman Supports ‘Silly’ Solution To Debt Ceiling (huffingtonpost.com)
• The trillion dollar coin solution to the debt ceiling (boingboing.net)
• #MintTheCoin: Can social media and a trillion-dollar coin solve the US debt? (theverge.com)