Just when you thought our Nation couldn’t be any more reckless with money, rumors of a Trillion Dollar Coin that is the potential result of a “loophole”, has now been exposed. That’s right, this Trillion Dollar Coin idea is no joke. Due to the increased probability that Congress can’t agree on anything (which could cause the US to periodically default), our brilliant citizens (currently this is being pushed by a citizens in the form of a petition) have found a loophole that would allow Tim Geithner (Treasury Secretary) to print unlimited amounts of platinum coins. For some ungodly reason, printing off an unlimited amount of platinum coins is remarkably different than just printing off money into thin air (I hope you can pick up on the sarcasm here).
So why is this even being talked about? Well, if our leaders can’t come up with a resolution soon, the US hits their debt ceiling which means they “run out of money” (I know that sounds funny for a country with a current $16 trillion outstanding debt), and they will not be able to pay their bills. Advocates of this Trillion dollar coin say that printing a trillion dollars of “fake platinum coins” will be better than defaulting. Likewise, I believe that everyone agrees that America defaulting would be a horrible, and even temporarily, a catastrophic event. However, many Americans believe this is exactly what needs to happen.
Consider a 25 year old American male who graduated college a few years ago and has jumped from job to job. He never saved any money, he has been completely irresponsible with his spending, and he now has racked up over $200,000 of credit card debt and student debt. Is it better to teach him a lesson and let him default and go through some tough times, or find loopholes on his credit card where he can keep spending and “hope” he starts making better decisions. What about a similar scenario where a 55 year old married father of 3 teenagers has taken his family to the point of default from wild spending and living way above their family means? Would it be better to keep feeding these bad habits or let him learn a lesson from them? What about a private company? Private companies have to file bankruptcy all of the time if they can’t pay their bills, act responsible, and bring in more money than goes out. Why should our government be run any differently?
It pains me to say this, but I really think the best thing that could happen to America is that it defaults if our leaders can’t reach an agreement. Why is it that we believe that we have become such a “powerful country” that we are allowed to act as ruthless with our money and debt as we want? Warren Buffet said it best that all political leaders should be given 1 year terms, and if they can’t create a annual surplus (versus a deficit which is almost become commonplace now), they are gone and will be replaced with someone that can. Our country is basically a large business and needs to be run with similar standards. If this continues, there will come a point where everyone realizes that true powerhouse countries do NOT have to create a false Trillion Dollar Coin out of nowhere just to pay their bills. What is really sad is that some innocent generation of Americans will have to pay for this reckless abuse at some point. The only question is what generation (or generations) and how bad will it have become before the wheels fall off. At this obnoxious rate of papering over all of our country’s issues, I would prefer to see us default now versus years from now when it gets worse. Just like the 25 year old who will only learn how to be responsible if he fails, we are reaching a similar point in our country.