We've heard all this talk about the trillion dollar coin to solve the debt ceiling problem. But what USC professor Edward Kleinbard proposes something a little different in his op-ed for the New York Times:

Kelinbard said the idea of IOUs is just less risky than the trillion dollar coin. He said it "stands on much firmer constitutional ground" and exposes the president to a lesser risk of impeachment.

Kleinbard argues that the IOU doesn't promise to pay you any money at any particular time. The IOU would basically say "we'll pay you money but we just can't do it right now."That doesn't seem great for a 68-year-old on Social Security on the face of it -- but Kleinbard argues that government IOUs could be good for both banks and ordinary people.

"You turn around and sell it for a small discount, and the banks will say 'we'll buy it at a small discount'. Think what U.S. Treasury bills yield right now. If you bought this paper at a 1 percent discount and the issue was resolved in a month. You would be getting a return of 1 percent a month instead of 1 percent a year. The financial institutions would find this attractive," said Kleinbard.

Kleinbard said neither an IOU program nor the trillion coin are good ideas, but it's all about which plan is best to "defang an artificial crisis and enable us to have the debate we need to have about long term spending in regular order."

To read the complete article, see:Forget the trillion dollar coin: Try the IOU(www.marketplace.org/topics/economy/raising-debt-ceiling/
forget-trillion-dollar-coin-try-iou)

To read the earlier E-Sylum article, see:BANKRUPT CALIFORNIA ISSUES PAYMENT WARRANTS(/www.coinbooks.org/esylum_v12n28a17.html)