An additional point borrowed from Andy Harless about dealing with the debt ceiling by minting platinum coins, is that with a little bit of good sense from the Federal Reserve, you could pull this off without anything disastrous happening. The way it would work is that you mint two trillion dollar coins, and walk them over to the Fed. Then the Fed says there’s $2 trillion in extra cash in the Treasury and thus plenty of money to write checks on.
Now the only problem is that we’ve created a ton of additional money. Personally, I think that might be stimulative and constitute a perfectly good idea. But if the Fed doesn’t want congressional gridlock to create looser money, all they need to do is reflect on the fact that two rounds of quantitative easing have left them owning over $2 trillion worth of securities of various kinds. If they sell $2 trillion worth of securities to investors, then $2 trillion will be sucked out of the economy to replicate the $2 trillion worth of platinum coins the mint cooked up.
Now I don’t think that would be enough money to get you all the way through to Rick Perry’s Inauguration Day, but it would buy us a bunch of time. It sounds totally crazy, and it’s definitely a worse option than congress doing the right thing. But I think it’s more legal and more sensible than having the government just unilaterally stop paying some of its bills.