Treasury and Fed kill Trillion dollar coin scheme . 14th Amendment ploy ruled out by the White house ( so far ) . Yet the White House says it won't negotiate over raising the debt ceiling - which Congress says falls within its legislative domain.......So the next ploy from the White house or Treasury will be IOUs ? And as for issuing IOUs , the White House response - update 2 , indicates that isn't being considered at this point .....

http://www.buzzfeed.com/zekejmiller/the-trillion-dollar-coin-was-killed-by-the-fed

( Ah , the Fed wasn't willing to accept the one trillion bogus  coin ! The Fed - not Treasury and the White house killed the scam ..... this contradicts the spin put out Saturday and the spin fed to Paul Krugman..... )

http://www.buzzfeed.com/zekejmiller/the-trillion-dollar-coin-was-killed-by-the-fed

WASHINGTON -- The Federal Reserve was responsible for killing a controversial proposal to circumvent the debt limit, a senior administration official told BuzzFeed Sunday.

On Saturday the Treasury Department released a statement ruling out the only remaining alternative to Congress raising the nation's borrowing limit, which would utilize a loophole in federal law to mint a $1 trillion coin to be deposited in the Federal Reserve and ensure the federal government could pay all bills and debt obligations.

"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.

But it was the Federal Reserve that killed the proposal, the official told BuzzFeed, denying a purely political rationale for the announcement, saying the independent central bank would not have credited the Treasury's accounts for the vast sum for depositing the coin.

White House Press Secretary Jay Carney had refused to rule out the proposal on Wednesday, but said the only way to avoid default was for Congress to raise the debt ceiling.

Economist, New York Times columnist, and platinum coin backer Paul Krugman had asserted the political motive based on conversations with those close to the White House. 
http://krugman.blogs.nytimes.com/2013/01/13/by-george/?smid=tw-NytimesKrugman&seid=auto

Meanwhile, I get calls. The White House insists that it is absolutely, positively not going to cave or indeed even negotiate over the debt ceiling — that it rejected the coin option as a gesture of strength, as a way to put the onus for avoiding default entirely on the GOP.

The senior administration official agreed that the decision places all the pressure on Republicans, noting it reinforces Obama's commitment not to negotiate over the debt limit, but said the real reason was the Fed's decision not to buy into the gimmick. Congressional Republicans have said they will push for spending cuts to offset any increase in the government's credit limit.

Previously the White House ruled out circumventing the debt ceiling by arguing it is unconstitutional under the 14th Amendment.

http://hotair.com/archives/2013/01/12/heart-ache-treasury-nixes-trillion-dollar-coin/

Heart Ache – Treasury nixes trillion dollar coin

POSTED AT 7:01 PM ON JANUARY 12, 2013 BY JAZZ SHAW

 

And a great sigh was heard across the land. The dreams of a yearning nation will, it seems, be left unfulfilled. Yes, my friends, even worse than when Mighty Casey Struck Out, the Treasury Dept. has ruled out the minting of the $1T coin to solve our fiscal woes.

The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. “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,” he said.

This will surely come as a stunning blow to my friend Joe Weisenthal of Business Insider, who has been having far too much fun with the idea for days on end now. In fact, if for some reason you were watching MSNBC this morning with Chris “Uncomfortable Calling The Honored Dead Heroes” Hayes, you’d have seen Joe engaged in a lively debate on the subject. In it, both the host and the guests embarked upon an amazing exploration of why such a route, while unlikely, was actually legal and possible. In fact, the Treasury could mint … wait for it … a 100 Trillion dollar coin if they wished. Because, you see, money isn’t real.

They did eventually get around to noting that the magical creation of massive amounts of US currency could result in inflation and skyrocketing prices, but the preceding discussion was jaw dropping to say the least. In fact, Joe was so impressed that he rushed to the keyboard to publish a piece in praise of Hayes’ insightful analysis.

At long last I get it, and it’s only thanks to the creative thinking arising from these trying times. The only problem here, if I may submit my own modest proposal, is that it doesn’t go far enough. In fact, I’m feeling rather sheepish at the moment for all the years I wasted embracing conservative economic theories. What was I thinking?

The real solution is not a 1 trillion dollar coin nor, as was expressed during the show linked above, a One Hundred Trillion Dollar Coin, but a ONE KERJILLION DOLLAR COIN. Once this is deposited in the treasury, the world will awaken anew.

Think about it. Since money isn’t real, there aren’t any actual rules. With the One Kerjillion Dollar Coin safely ensconced in the Treasury, we can all quit our jobs. In fact, we won’t even have to leave our homes, except for the times when we go out to parties, restaurants or sailing on our yachts. And I don’t just mean the 1% here… I’m talking about every last man woman and child in the nation. Everyone can have limitless unemployment checks to the tune of $50K per month. Hell.. let’s make it $500K per month. We’ll all live in mansions and travel in private jets.

The only cloud I see on our horizon is that we’ll need serious immigration reform, but with absolutely no path to citizenship. You see, the citizens will be paying out the fruits of the One Kerjillion Dollar Coin to an army of documented, but non-citizen workers who will build and maintain our homes, pick up and cook our food, drive our limosenes and pilot our jets. Oh… and handling all of those daily tasks like keeping the trash picked up, fixing things, building roads and all the rest.

Yes, it’s a bright, sunny future. If only we can get Treasury to reconsider. Here’s hoping, fellow future gazillionaires.

http://www.zerohedge.com/news/2013-01-12/treasury-fed-kill-trollin-dollar-coin

Treasury, Fed Kill Trollin' Dollar Coin

Submitted by Tyler Durden on 01/12/2013 16:21 -0500

• Debt Ceiling
 
• Federal Reserve
 
• Treasury Department

And just like that the most surreal two weeks of sheer monetary idiocy is over, with the Treasury and the Fed both formally announcing the death of the trillion trollin' dollar platinum  coin idea, which was nothing but a cheap charlatan trick devised by page view-desperate media outlets to dumb down their already confused audience and distract from the fact that the US is, sadly, once again on the verge of bankruptcy.

As the WaPo reports:

The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. “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,” he said.

This is good news: at least the US monetary system will not devolve into an all out circus and parlor trick. For the time being at least. Because it is and always will be far easier to create empty, repoable "money" out of fungible electronic 1s and 0s, than an actual piece of metal.

It is even better news because one can now permanently filter out and ignore all destructive "opinions" originating from those vocal proponents of this monetary gimmick, some of whom even have awards not ironically named for the inventor of dynamite.

We won't even touch on what you need to know for the click-through and CPM loss this means for Series ZZ preferred round investors in slideshow-centric electronic media outlets located at the intersection of gossip and financial cluelessness.

Finally, and on a more serious note, this once again means that it will be once again up to the market to get the political left and right to come to a compromise, as was the case in the summer of 2011.

and......

http://www.businessinsider.com/treasury-rules-out-trillion-dollar-platinum-coin-2013-1

COINTASTROPHE: White House Rules Out The Trillion Dollar Coin Option To Break The Debt Ceiling

Joe Weisenthal | 58 minutes ago | 1,318 | 16

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Stunning news from WaPo's Ezra Klein: The Treasury is ruling out the use of a trillion dollar platinum coin to break the debt ceiling impasse.

Klein writes:

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. ”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,” he said.

With this, the White House has now ruled out the two best options for preventing a default in the event that the House GOP refused to life the debt ceiling. The White House has been quite adamant that the other alternative (invoking the 14th Amendment) is not acceptable.

So now the stakes are high, as The White House has refused to negotiate with the GOP on a debt ceiling hike.

What bargaining chips does The White House hold? Unclear.

Klein adds another incredibly salient point about the comment he receives:

The inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless.

The good news?

The whole #MintTheCoin discussion has been very helpful for teaching people economics, as was evident today on Up With Chris Hayes.

UPDATE:

Via Email, coin supporter Paul Krugman gives his take: "So, are they planning moral obligation coupons / scrip, are they willing to court disaster, or are they just hopeless negotiators? I guess we'll find out."

UPDATE II: The White House has issued a very strong followup statement.

From HuffPo:

"There are only two options to deal with the debt limit: Congress can pay its bills or they can fail to act and put the nation into default," said Press Secretary Jay Carney. "When Congressional Republicans played politics with this issue last time putting us at the edge of default, it was a blow to our economic recovery, causing our nation to be downgraded. The President and the American people won't tolerate Congressional Republicans holding the American economy hostage again simply so they can force disastrous cuts to Medicare and other programs the middle class depend on while protecting the wealthy. Congress needs to do its job."

UPDATE III: On background, a Democratic aide in the Senate says: "it's certainly a strange negotiating strategy to go out of your way to decrease your leverage by taking options off the table."