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View Diary: Magic tricks, loopholes, government shutdowns and the debt ceiling (158 comments)

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  •  "[T]he legislative history of coin minting..." (0+ / 0-)
    Some say that when the case reaches the Supreme Court, it will ignore the legislative history of coin-minting legislation, uphold The Coin Trick and abide by the strict language of the law.
    Note that coins are the only dollars that are not bank-issued interest-bearing money.  For those interested in that history, I strongly recommend this recent article by Ellen Brown.
    •  There's not much legislative history on this. (0+ / 0-)

      The provision is Title 31 U.S.C. Sec. 5112 (k):

      (k) The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time.
      It is in a section of the law dealing with the physical specifications of coinage. It and earlier provisions have been passed by Congress as part of commemorative coin legislation such as the US quarter series, so the US mint could get some of the value captured by commemorative  coinage issued by private mints (like Danbury). That specific provision was part of an act passed to authorize the Treasury to produce American Platinum Eagle bullion and proof coins.

      As Reuters reported last week, "'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,' said Treasury spokesman Anthony Coley in a statement."

      And, it would not put market turmoil or a political confrontation to rest. Indeed, it is as likely to make them worse and escalate as much as any other alternative (e.g. relying on the 14th Amendment, which I prefer) other than starting to close down spending. Which Congress seems to want to pin on tis administration one way or another.

      I think the point is if all the Treasury needs to do to evade the debt ceiling is to mint a big valuable coin and put a lot more money in circulation, creditors will see it as a reactive ploy, just too easy an out. After all, President Obama wants to hold Congress's feet to the fire, a fire which Congress and Congress alone - with its predecessors - created.

      2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

      by TRPChicago on Sun Jan 20, 2013 at 02:20:27 PM PST

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      •  You've missed a couple of things. (0+ / 0-)
        It is in a section of the law dealing with the physical specifications of coinage. It and earlier provisions have been passed by Congress as part of commemorative coin legislation such as the US quarter series, so the US mint could get some of the value captured by commemorative  coinage issued by private mints (like Danbury). That specific provision was part of an act passed to authorize the Treasury to produce American Platinum Eagle bullion and proof coins.

        The bill's coauthor, Philip Diehl, claims that he intended it as a blank check.

        Also, your wrote:

        As Reuters reported last week, "'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,' said Treasury spokesman Anthony Coley in a statement."
        But it is the GOP who have been "avoiding an increase in the debt limit."  

        The point is that  the Treasury has been paying a portion of the government's bills with coined money for over 220 years --- that can't be illegal.  And, 31USC5112(k) simply gives the Treasury permission to mint larger coins for the purpose of paying the government's bills, whether or not the debt limit gets raised.  

        Finally, Ellen Brown indicates that Congress did not impose limits on the amount of money the Treasury could mint until 1982, which she implies was a result of lobbying by the banks:

        That may have been true then, but in legislation initiated in 1982, Congress chose instead to impose limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes.

        [...]

        Philip Diehl , former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender:

        In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8).

        •  I can't find that Diehl was a member of Congress. (0+ / 0-)

          The quote about the debt limit was to the Treasury spokesman. And with respect, Ms. Brown's history, credible as I accept that it is, isn't legislative history, only lobbying history ... which would open a quagmire of analysis if courts started accepting that as part of the law.

          I respect your advocacy. But I don't think the Magic Coin is a viable legal, political or sensible idea (three potentially different things).

          I'd prefer straight out confrontation, with Congress being inconsistent with itself, based on the 14th Amendment (to continue spending) or the necessary cut back (so as not to save the willful GOP from itself).

          2014 IS COMING. Build up the Senate. Win back the House : 17 seats. Plus!

          by TRPChicago on Sun Jan 20, 2013 at 04:47:18 PM PST

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          •  He was head of the Mint and "coauthor" of the bill (0+ / 0-)

            Diehl is commonly cited as "coauthor" of 31USC5112(k). Per Reid Pillifant:

            Diehl said ... he worked closely with Republican Rep. Mike Castle, who was chairman of the House Financial Services Subcommittee at the time, and eventually got the bill through the Republican-controlled House with what Diehl called a "blank check."
            That quote from that Treasury spokesman is the only thing  from the Obama administration that I've seen construed as a claim that minting platinum to pay the nation's bills would be illegal.  Maybe they said something more direct elsewhere.  If so, I'd appreciate a reference.

            I don't know about "viability."  What's clear is that for 220 years we have been minting money and paying bills with the proceeds.  And, although the denominations were specified, the quantities have been left to "the Secretary's discretion."  If I understand correctly, we minted about $10 billion in 2011.  For platinum coins, the denomination is also left to "the Secretary's discretion,"  and you're trying to tell me that Congress can't do that.  

            Now you may thing that the amounts defy all legality, but note that using powers delegated to him by Congress, Ben Bernanke loaned seven trillion U.S. dollars, which are a liability of the United States to various banks around the world.  Why is that "viable" and the minting of a high-value platinum coin is not?

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