The stakes surrounding the plan to mint a platinum coin to circumvent the debt ceiling continue to rise.Now Wall Street is clearly getting interested.
Ethan Harris at Bank of America is out with a new note titled The Trillion Dollar Tooth Fairy, which blasts the idea:
If this trillion dollar idea sounds a bit too good to be true, it is. First and foremost, it may not be legal. The idea effectively rests on a loophole in a law that allows platinum coins to be issued by the Treasury – but for commemorative, not fiscal, purposes. Opponents suggest that the courts would strike down this plan since it is not the intent of the original bill. Others have questioned its constitutionality: they argue that Congress cannot (and did not intend to) delegate fiscal decisions to the Treasury. That is, the Treasury must implement the spending and tax – and debt limit -decisions of the Congress, not override them. However, opinions are mixed as to whether these criticisms would be enough to invalidate the trillion dollar coin idea in a court of law. Whether legal or not, it would almost certainly provoke a bitter court battle. And at least one Republican representative, Greg Walden of Oregon, has said he would propose legislation to preclude the trillion dollar coin plan. While the Obama administration so far has not commented on the idea, in 2011 it rejected on legal grounds the idea of invoking the 14th amendment to avoid a debt limit battle. However, in early January House Minority Leader Nancy Pelosi said she would be willing to invoke the amendment”in a second.”
The note goes on to say that such an action would probably worsen the crisis.
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