Liberal commentators, in one of their loopier ideas, argue that the Obama administration can escape the looming confrontation with the Republican House over the debt ceiling by minting a $1 trillion platinum coin. If he were to adopt this course, President Obama would only prove that, as Alexander Hamilton once described the country under the Articles of Confederation, "We may indeed with propriety be said to have reached almost the last stage of national humiliation." (Federalist No. 15).
Why? We will have reached the sad state of the Chinese at the turn of the last century, when they built a giant stone boat on the grounds of the summer palace in 1893. The Chinese legislature voted money to rebuild the navy, but the Dowager Empress opposed a modern navy, so she used the funds to build a vessel -- out of stone.
Like the stone boat, a $1 trillion coin may look like money, and may taste like money if you bite it, but it isn't a real asset -- it is fictional. It may even be as heavy as the Chinese stone boat, but the giant platinum coin will do as much to put our fiscal house in order as the boat helped China's national security.
True, there is a federal law that delegates to the Treasury Secretary the power to coin money. But simply having the giant coin doesn't mean that the money can be spent. Congress must appropriate funds before the money can leave the treasury and reach the hands of private citizens -- under President Reagan, in fact, liberals criticized the Iran-Contra diversion of funds because funds of the United States were transferred without congressional permission. You could declare a dog the equivalent of $1 trillion worth of legal tender, but it wouldn't matter unless Congress let the dog out of the Treasury in an appropriation.
Once again, liberal understanding of economics seems to be equivalent to alchemy.