The platinum option

In addition to declaring the debt ceiling unconstitutional under the 14th Amendment, Jack Balkin at Yale University Law School suggests two ways that President Obama could work around the debt ceiling in the event that an agreement isn't reached by next week.

One:

Sovereign governments such as the United States can print new money. However, there's a statutory limit to the amount of paper currency that can be in circulation at any one time.

Ironically, there's no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.

This seems right to me, with the caveat that there is no legal limit that I am aware of on the amount of paper currency that can be in circulation. Maybe he means to refer to the amount of Treasury bonds issued? To the extent that the Fed issues reserves by purchasing mainly Treasury securities, and banks buy paper currency with reserves, this puts a practical limit on the amount of currency in circulation. But it's not a legal limit. Anyhoo, the Treasury does have an account at the Fed from which it pays its bills, and if it deposited $2 trillion in platinum doubloons into that account it would be good to go.

Two:

The government can also raise money through sales: For example, it could sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days. And there are probably other ways that the Fed could achieve a similar result, by analogy to its actions during the 2008 financial crisis, when it made huge loans and purchases to bail out the financial sector.

Sure, why not? The Fed is a powerful agency, with extraordinary powers it can deploy in an emergency (see 2007-09). If the Fed can make loans to Bear Stearns or AIG in an emergency, why not the Department of the Treasury?

But of course the time for the Administration to drop hints that it was considering doing this kind of thing was months ago, not the weekend before debtmaggedon. Doing so months ago would have deprived the Republicans of the soap box that they've used to take over the political debate and would have assured financial markets and businesses that the government wasn't going to throw nails onto the road to recovery.