The best version of the hypothetically least-bad last-ditch solution Greg Ip has the single best post on the economics and logistics of the Platinum Coin option that we've come across. It includes a solution that involves two of our favourite topics from 2012: the expiration of the Transacton Account Guarantee and the safe asset grab (even throwing in a bonus Gary Gorton reference). Here's how Ip closes: There is a way around this problem that preserves the Fed's independence. That would be for the Treasury to issue the coin to the public, instead of the Fed, thereby leaving the Fed's balance sheet, and its control of monetary policy, alone. Of course, no one would want a $1 trillion coin. But Gary Gorton, an economist at Yale University, suggests there might be demand for a bunch of $50 million coins. He notes the financial system still craves safe, liquid assets. Corporations in particular are desperate for a safe place to park cash now that unlimited federal deposit insurance has expired. Including fees, many bank accounts now sport negative yields, as at times do Treasury bills. Money market mutual funds may float their asset values. Platinum coins would represent a risk-free, liquid way to store cash with no risk of negative yields. Of course, if the CFO lost one down a sewer grate, it would be a disaster. So instead, the Fed could simply keep the coins in a vault with their owners" names affixed. When one owner wants to settle payments with another, the Fed could simply switch labels. In the meantime, Treasury gets the equivalent of an interest-free loan from the public and a reprieve from the debt ceiling. Not quite a free lunch, but close enough. The idea here is that because these investors already had their money in accounts that paid no interest, switching to $50 million platinum coins minted by the Treasury would be a close substitute to preserving the expired guarantee. We continue to think that any option requiring unilateral executive action should be a last-minute, last-ditch solution in the event that negotiations have broken down, Congress has refused to raise the debt ceiling, and default really is imminent. Indeed we suspect that many of those arguing in the coin's favour would still prefer a negotiated solution, though we're less certain of this than we were just yesterday. But if we do get to that point and the administration deems that coin-minting is the least-bad of those executive workarounds, then Ip's idea makes a lot of sense. Related links: "Misunderstanding Financial Crises," Q&A with Gary Gorton - FT Alphaville Money markets close to getting unTAGged - FT Alphaville The game theory of #mintthecoin - Felix