Photo: Kevin Krejci on Flickr
It’s very exciting to see more people talking about and taking seriously the idea of minting a trillion dollar platinum coin in order to circumvent the debt ceiling, and avoid being dragged down in other economically costly standoff.Pretty much every media organisation has now done something on it, although the quality of the reporting has been uneven.
Probably the worst mistake that gets frequently made is seen in this headline from the Christian Science Monitor (which is by no means alone): Is a $1 trillion coin the solution to the debt crisis?
There is nobody suggesting that the trillion dollar coin be a solution to the “debt crisis,” whatever that means. This has nothing to do with the US paying back its national debt.
The idea of having the Treasury mint a trillion dollar coin is simply a technical way of addressing the debt ceiling, putting a coin at its bank account at the Fed, so that it doesn’t miss any obligation payments, in the event that Congress doesn’t raise the legal limit on borrowing.
This may seem like a silly quibble, but it’s actually incredibly important, since one of the biggest failures of media, in general, has been to not explain to people what the “debt ceiling” is very well. As it is, the majority of Americans tell pollsters that they don’t favour raising the debt ceiling, a position they would be unlikely to take if they new the consequences of that. But it’s understandable why they say this: They think the debt ceiling has something to do with accumulating national debt, rather than just authorizing payments made on promises that have already been made.
So in this trillion dollar coin campaign, we’re seeing it again, the media failing to draw a distinction between the coin being used to circumvent the debt ceiling, and the coin being used to pay down the debt (which its not).
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.