Downsides to the platinum coin, short and long term
Riffing off letsgetitdone's rebuttal of Michael Sankowski's argument against it, there are a couple points I'd like to see addressed - either by letsgetitdone or someone else.
The first is the need (shared by the anti-PCS side) to speculate on how it would be received. This quote from letsgetitdone is a good representative:
Well, it's a new use of coinage, sure. That will make it “weird” for some people; not so weird for others. Using the coin forces the Fed to add reserves to the PEF which in turn gives the Treasury the ability to fill the pubic purse with most of the face value a platinum coin. I don't find that “weird.” I think it's the way things ought to be done. What purpose is served by using the term “weird” to describe PCS?
I think it's safe to say that not only is PCS new, it would be disruptive. Whether at $1 trillion or 60 or somewhere in between, the whole point is to have a big impact. None of us can know how it would be received. To take the position that, well, it's new, but people will adapt: that strikes me as blasé. It really could freak people out. It might not of course, but it might, and I don't think that's a trivial point. It would be nice to hear a frank acknowledgment that we're talking about uncharted territory, and that going there might have some real unintended consequences.
That's not necessarily a reason not to do it; it's just a weakness in the pro-PCS argument I think it's important to acknowledge.
The second point I'd like to see addressed is the inevitable use of this by political opponents. letsgetitdone postulates a reasoned and responsible use of PCS. What in his observations of our political leaders for the last decade (minimum!) has persuaded him that PCS would be used in a reasoned and responsible way? Or that appointed leaders like Bernanke would do so as well? PCS is a thing, not a value. It could be used for good or ill. I understand proponents have their hands full just trying to get the idea accepted by the political establishment and right now are banging their heads against a wall. But political cultures can change rapidly. If the time for PCS comes, it may not come in an orderly way - and if it does get accepted then Pandora's box will be open for good. There won't be any going back. It would be nice to see some reflection on how it could be used for other ends now; that may not be a luxury we have later.
The second is the weaker of the two arguments. Long term unemployment and austerity budgeting are much more urgent and need to be addressed immediately. The ways PCS could be misused at some future date is a real risk, but again not a reason to reject PCS.
I'd like to see proponents address both though. If nothing else, a forthright acknowledgment of the risks of our own arguments are a good way to establish their credibility.