No, no, no. Not THAT kind of consensual fantasy. I'm talking about government, money, and democracy, not about sex.
I have been thinking a lot about the Platinum coin option, and I think that I understand why I'm so uncomfortable with it. I'm not uncomfortable with it because it's legally questionable -- even if it were, which I doubt, it's no more legally questionable than the whole debt limit issue, after all. It's not that it's politically dubious -- I'm not convinced that we couldn't just repeat the same trick as often as we need to, until the Republicans in the House wake up to the fact that they won't win that battle. It's not even that it would almost certainly trigger an impeachment motion in the House -- I wouldn't be surprised if Boehner and company are thinking about launching an impeachment inquiry if the US goes into default.
No, it's about the problem with telling lies, and keeping them consistent.
Here's the deal: fiat money, like government itself, is a consensual fantasy. We, as a people, decide that money is worth something. It doesn't really matter what means we use to decide what any form of money is worth; that's even true for bartered goods. It's just that we have a consistent lie that it's worth anything at all.
The problem with the platinum coin solution is that it makes a mockery of that shared fiction. It's not any worse than the fiction itself -- it makes the fiction seem like a lie. Like many Platonic Great Lies, the great lie must not be treated as a lie, or its power as a unifying force falls apart. In this case, the value of money is such a lie, and calling it out would make the whole house of cards fragile.
That is a very good reason to not mint the coin. Not because it would increase the money supply -- it wouldn't. Not because it would make the US any less reliable for its debts -- it won't. But because it would call the very meaning of those debts themselves into question. In principle, when you pick up a dollar, you're picking up a fraction of the economy. If that fraction becomes radically different, then the trustworthiness of the currency is called into question, and no nation can afford that.
If you think about it, the lie of money is like a lot of other lies, particularly the lie of government (we govern ourselves, no matter who rules. Saying "the government has a monopoly on force" is like saying "the guy in the mirror has a monopoly on shaving my reflection". Its true, but sort of pointless.) As long as we believe that the Constitution means something, it means something. Stop believing that, and the Constitution means nothing.
So, in this case, I think Geithner was right, and the rest of us were wrong. The platinum coin is clever and legal, and would solve the debt ceiling issue. But, as a pragmatic matter, it would create a far worse problem than the debtg ceiling argument would fix.