Sorry to disappoint Mr. Krugman but the Treasury Department has announced that it will not mint a trillion dollar platinum coin in order to bypass Congress on the debt limit.
The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.
That's the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. "Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit," he said.
The inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don't believe it's legal and would not credit the Treasury Department's deposit, the platinum coin would be worthless.
One would think that this would end the nonsense about minting a coin and pulling a King Canute - declaring it to be real money backed by the full faith and credit of the US government. Canute only wanted to order the ocean's tides from coming in. Krugman wants to order the earth to stop spinning:
If I'd spent the past five years living in a monastery or something, I would take the Treasury Department's declaration that the coin option is out as a sign that there's some other plan ready to go. Maybe 14th Amendment, maybe moral obligation coupons or some other form of scrip, something.
And maybe there is a plan.
But as we all know, the last debt ceiling confrontation crept up on the White House because Obama refused to believe that Republicans would actually threaten to provoke default. Is the WH being realistic this time, or does it still rely on the sanity of crazies?
The thing is, the coin option sounds silly, but it clearly obeys the letter of the law. As far as I can tell, none of the other options - other than outright surrender - has the same virtue. Failing to pay debt service would be a breach of contract. Paying contractors, and maybe Social Security recipients, in scrip would violate the law, which says that they should be paid - not given IOUs. Deciding that the president has the right to ignore the debt limit after all would avoid these legal breaches at the expense of another breach.
And default in any of these senses would risk a huge collapse of confidence.
So is there a plan, or will it just be another case of tough talk followed by a tail-between-the-legs retreat?
So there won't be a trillion dollar coin, nor will the president rely on some pretzel logic to invoke the 14th Amendment. And Krugman and his fellow platinum heads will have to find another hobby horse to ride.