Would minting a $1 trillion coin really solve America's debt woes?
For the past few days, there's been this wild money story out of the U.S., though you'd be forgiven if you haven't read much on it.
It's a tale so crazy that few mainstream media outlets have given it note, and perhaps when we look back that will be the narrative's most resounding legacy.
But here it is, nonetheless: as the U.S. continues on mired in debt, some have taken to suggesting the Treasury Department mint a $1 trillion platinum coin to avoid hitting the debt ceiling.
No, no, take your time. We'll wait while you roll your eyes. Yet the idea of minting a 13-figure coin actually has some powerful people discussing it, and even some who suggest it could work.
First, a quick refresher on the U.S. debt ceiling. The principle of the debt ceiling seems strong -- apply a limit on how much debt America can carry at one time, and stick to it. It's the same way you'd run your own personal spending, right?
*Bing: Who owns the most U.S. debt?
But because the politics of raising the debt ceiling have become so contentious, what was once a drab, bureaucratic process has morphed into full-scale reform on fiscal responsibility.
So as America struggles with moving up its latest debt ceiling, some have taken a tiny paragraph in the U.S. statute and run with it. The statement reads:
"The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time."
The Secretary, in this case, is Tim Geithner, Obama's top finance man. In theory, the above graph appears to give Geithner free reign to print money, as he sees fit. Why not, then, mint a trillion-dollar coin, march it over to the Federal Reserve and -- presto! -- the debt ceiling crisis is averted.
Of course, this is only rooted in the literal translation of the U.S. statute. Many smart people have taken to discussing how minting a trillion-dollar coin could work -- hey, even noted economist Paul Krugman took a stance -- and how it could avoid ramping up magnificent inflation, being used instead as a short-term debt stopgap.
But certainly any interpretation of the statute that uses a functioning human brain proves otherwise. The legality of minting a magical platinum coin has been raised (and even that throws out the political suicide of Obama's administration creating a "get out of jail free" card from thin air), and I'm inclined to believe this story will pass without much more bluster.
The statute, in what must be its most accurate reading, simply applies to commemorative coins and other collector's items. As Oklahoma Rep. Frank Lucas recently described the minting of such coins, they would "(have) no cost implications whatsoever."
Indeed, Mother Jones' Kevin Drum seems to have it right: no matter the technicality in the wording of the American statute, any court to rule on minting a trillion-dollar coin would surely find that doing so would not adhere to the spirit of the law, and instead would just take advantage of the letter of it.
By Jason Buckland, MSN Money
Posted by: Ken Marlor | Jan 4, 2022 2:14:06 PM
Mint one, and I'll give you 10 bucks for it
Posted by: Owen | Jan 4, 2022 2:31:45 PM
Germany tried this trick post war. Result, people taking wheel barrows of money to the corner store to buy bread. Zimbabwe tried it too. Now you can get trillion dollar bills to buy penny candy. It just sends inflation sky rocketting. It solves nothing. Makes matters worse for the average citizen. Clearly no historians or economists in government.
Basically what Ken said, only not even a Canadian dollar in exchange.
Posted by: Rob Baron | Jan 4, 2022 2:38:50 PM
A trillion dollar coin? I'll take three thank you. Where do I pick them up?
Posted by: Sean | Jan 4, 2022 2:51:12 PM
I'm sure this should create another war of 'Peace' over money
Posted by: Tim | Jan 4, 2022 4:34:52 PM
Why not just freeze a turd and make it legal tender for a trillion save the platinum, Americas currency is basicly worth shit anyways.
Posted by: Brian | Jan 4, 2022 5:50:52 PM
Hey, why not? Several morons OUTSIDE of government have tried paying for things with million $ bills before. It was only a matter of time until the........umm, morons INSIDE government tried something similar.
Posted by: Really !!! | Jan 4, 2022 6:19:49 PM
Heyyy... why don't we ALL print our own money !! Whatever amount we need. Get out of debt fast and easy. Go back into debt... no problemo... just print some more. As they say in baseball, the (money) game is played on the field... not on paper (or a coin).
Posted by: raccoon | Jan 4, 2022 6:24:12 PM
That would require 6,250,000,000 oz. of Platinum, or would they just make it out of copper/zinc/nickel like the silver -less coins?
Is there even that many ounces of PT on the planet, maybe Bernanke plans on snagging an asteroid.
Posted by: greg fenrick | Jan 4, 2022 6:32:33 PM
Just like to remind you that you keep telling the rest of us that you are the greatest country in the world hate to burst your bubble but Cananda is and has been for along time we just are to polite to brag about it Good like with your fiscal cliff
Posted by: Nerdette | Jan 4, 2022 8:34:09 PM
Err... this doesn't look rational to me. Even if it's made of platinum, it wouldn't be worth a trillion dollars. Therefore, it wouldn't solve anything.
Posted by: Wise Woman | Jan 4, 2022 9:27:35 PM
The real answer is to just make all those super-rich Americans pay their fair share of taxes. Just because they're rich, they think they're privileged. Well, they're not! They need to pay for the upkeep of the state and its population too. If "The People" want to have roads, bridges, health care, unemployment benefits, an army/navy/air force to defend them and people to keep the economy in good shape and the country functioning properly financially, well they bloody well have to pay for it.
Contrary to what Conservatives and Republicans, rich people and business people tell everyone, pumping money into businesses does not create jobs...not real ones, at least. Real jobs come with real salaries so that employees can buy goods and services that businesses create. They also come with benefits and pensions so that temporarily unemployed people, sick people and retired people can also consume those goods and services that business produces.
Going back to the crux of the story above, a trillion dollar coin would be an illusion. It would generate inflation (as the article suggests) and cause more trouble. Don't think these guys in the U.S. don't know how to solve this problem. They do. This is all grandstanding. Suck it up, American neighbours!!!!!!!
Posted by: the man | Jan 4, 2022 10:02:48 PM
Hey Wise Woman,
It's obvoiusly not quite that simple. Their deficit is over a trillion dollars. The latest tax increase on the rich (letting the bush tax cuts expire) will cover a very measly portion of that deficit. Maybe 5% if you're lucky? Probably less. You could just take all the wealth from the wealthiest Americans to pay off the debt, and the country will soon be right back where it started because, as was once said, "The trouble with socialism is that you eventually run out of other people's money". They could let more tax cuts expire on the middle class which would help to close the deficit further, but they just plain spend WAY too much money policing the world promising to pay for future programs for EVERYONE that they just can't afford to pay for. And why not? Because everyone thinks they can just put way less into the pot than what will be required for their needs in the future. Obviously that isn't going to work. Spending is too high. Cut spending, and that will solve the majority of the problem. The country became great in the first place without the government running everything.
Posted by: CT | Jan 4, 2022 10:10:02 PM
If they mint a coin from Platinum, its weight will be roughly 1 oz. As such, this coin will likely be worth roughly $1500 + the small fee to mint such a coin. Lets say it's worth $2000.
Put this $2000 coin towards their debt of $12,000,000,000 and it will effectively do,.... nothing.
Interestingly, it won't even do this much. After all, the $2000 coin cost $2000 to produce and so the net benefit is 0.
Wow, did I actually just go through all that silliness to display the obvious..... this won't work !
Posted by: Tommy | Jan 4, 2022 10:26:21 PM
"apply a limit on how much debt America can carry at one time, and stick to it. It's the same way you'd run your own personal spending, right?"
WRONG. Your average household cannot keep perpetually increasing its debt load and certainly cannot keep increasing its debt load without severe financial repercussions, unlike the government, period.
Posted by: Owen | Jan 4, 2022 11:06:37 PM
Taxing the super rich doesn't work. Ask France. They've recently had to repeal this bill. You see, the rich, unlike the poor, have lots of money. They are not obligated to live anywhere they don't want to. So they left France once they jacked up the taxes to crazy amounts. Then the French government was taxing...uh... about as much as they made before increasing the taxes on the rich. And as pointed out, the grand total of the rich giving over ALL their assets to the US government will at most buy them a couple years before all that money is gone (assuming they don't packup and leave for a tax haven). The only countries and regions prospering right now are those that have decreased taxes so that it attracts people to spend more(they have more money) and business go where there are naturally less restrictions. Basic BASIC economics, which is apparently no longer a requirement for members of government.
Posted by: big al | Jan 4, 2022 11:11:55 PM
Heard this several weeks ago on Sean Hannitty's radio program........Besides the eye rolling stupidity of it,I 'd check the fine print on the diplomas of some of the so-called "experts" trying to say just how well this could work............You really should round up all the Yale and Harvard grads in the poli-sci, economics ,law ,and anything other then science and medical degrees and keep them in a soft ,padded room with finger paints and crayons.
Posted by: scubaguy | Jan 5, 2022 12:20:08 AM
Of course, US. Government could print or, create electronicly, any amount of money they'd wish.
However, they would first have to take that power away form Federal Reserve (private central bank) that now creats it out of thin air for a fee.
Posted by: DKS | Jan 6, 2022 3:10:21 AM
As a Canadian,..The last part of the last sentence,...is how We see You folk and Yer Gun Issue.
.......adhere to the spirit of the law, and instead would just take advantage of the letter of it......
Just like you really do push that envelope with your need to own all those guns !!
WHY,......Besides because You can ??
Posted by: rollie | Jan 6, 2022 4:17:33 PM
You just know this wouldnt happen, the vending machine industry would go nuts!
Posted by: backbaconnbeer | Jan 6, 2022 5:04:12 PM
In Canada back in the 70's and 80's The Rhino Party ran on the promise of paying Canada's debt with a credit card.
Posted by: ROB JAMES | Jan 6, 2022 5:39:01 PM
sure make one, it would be like rest of the crappy coins out there,not even worth the material they are made out of.no it wouldn"t help the economy(who would buy the stupid things?).bring minimum wage up & lower prices of big ticket items,then more people would start spending money..that would help economy.that"d my 2 cents.well maybe 1.25cents worth
Posted by: nexus-1 | Jan 7, 2022 9:59:16 PM
Legalize weed. The government would enter a "golden age" with so much newly generated revenue, then they would just mismanage that too probably, at the taxpayer's expense of course. The government doesn't lose, the people do, every time. Stick that in your political pipes and smoke long and hard.
Posted by: nexus-1 | Jan 7, 2022 10:02:13 PM
About minting the coin, this is the stuff that created the word "stupidity"
Posted by: Martin De Ruijter | Jan 8, 2022 10:41:03 PM
it is called inflation