As I was working my way through the series of posts beginning with this one, news was announced that Republican and Democratic Party leaders in Congress, along with the President had come to agreement on the terms of ending the debt ceiling standoff in the context of a new budget deal. Their agreement provides for suspension of the debt ceiling until March of 2017; so the immediate need to turn to unusual solutions to a pending debt ceiling crisis is now gone, and, along with it, crisis-driven discussions about the platinum coin option.
Nevertheless, even though the immediate reason motivating renewed discussions of the platinum coin option is now gone, I still have some unfinished business dealing with the issues surrounding it. Late last week I replied to a paper from Philip Wallach of The Brookings Institution with a post at Naked Capitalism, as well as a number of other sites in the blogosphere. Now, Wallach has replied to my post, which mostly presents new arguments not in his original paper.
These are important to answer for the record, since platinum coin options and debt ceiling issues are likely to return again in the future, especially if we still have divided government in 2017, a very good possibility, I think. Answering them is also important, however, because they are the kinds of arguments that will be offered by the mainstream neoliberals against using the $100 T platinum coin, as well as the trillion dollar version. This series, of which this post is Part I, will present a detailed reply to Wallach’s new paper. Continue reading