The countdown clock to the Debtpocalypse now stands at four days, give or take. Soon, the Treasury will start receiving bills it cannot pay, and the United States will fall delinquent on billions of dollars in promised payments to Social Security recipients, government contractors, and so on. Congress remains deadlocked. So, the chattering classes have started getting creative. If you cannot lift the debt ceiling, maybe you can vault over it.
One option is coin seigniorage—aka, the "really-huge-coin workaround." The United States has a statutory limit on the amount of paper money in circulation, but no such limit on coins. The Treasury secretary has the authority to mint certain coins of any denomination, with no need for the value of the metal to equal the value of the coin. (It gets a bit technical.) But the idea is that Secretary Timothy Geithner could order the Mint to make a, say, $5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt.
The idea originated in the lefty blogosphere; FireDogLake writer "beowulf" wrote about this "escape hatch" or "subway tunnel" all the way back in January. Most commentators dismissed it as fanciful. But it does seem to be entirely legal, and is getting renewed attention and a wee bit of credibility as the negotiations drag on. Yale constitutional law professor Jack Balkin floated it as an option in a CNN op-ed this week.
http://www.slate.com/id/2300428/
