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Trillion Dollar Coin

ravdin

Illuminator
ravdin
Joined
Oct 16, 2005
Messages
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I've been seeing a good bit of buzz lately about the idea of the US Treasury minting a $1 trillion platinum coin as a means of circumventing the debt ceiling debates. The White House even has a petition about it:

https://petitions.whitehouse.gov/pe...single-platinum-trillion-dollar-coin/8hvJbLl6

As best as I understand the mechanism, the Treasury would deposit this coin with the Fed and then it would go into effect as an immediate means of debt reduction. The proponents say: our debt is manageable (as long as interest rates don't go up) and this would avert dangerous fiscal cliff showdowns in Congress. The opposing view is: this is currency debasement and will lead us down the path of Zimbabwe style hyperinflation.

Thoughts on this? I have a difficult time seeing the proposal as anything other than a shell game, but it's not like the debt ceiling is serving any useful purpose for keeping our fiscal house in order.
 
Ya, this is 'Platinum Coin Seigniorage', and is basically money creation, without issuing corresponding debt; this does not need to be inflationary at all, and my thread here, has a very large discussion about this (surrounding money creation):
http://www.internationalskeptics.com/forums/showthread.php?t=250647

The discussion there is pretty dense most of the way through though, and fast moving, so it's a lot to read; my initial post gives a decent starting overview of the arguments though, with the rest mostly debating over those initial arguments.
 
It's a legal maneuver. Shell game isn't a bad description either. Since there was tangible harm from the last debt ceiling showdown with credit rating agencies not liking the brinksmanship, I can't say have a real problem with it other than a basic squick reaction to the need for a legal maneuver or shell game.
 
ehcks said:
I saw the idea first when someone said Obama should do that, and then when congress complains, suggest they pass a law that bans the use of this strategy, as long as they also repeal the debt ceiling.
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Well, the CBO has apparently changed their number from $4T to $4.6T...
we would show additional deficits between 2013 and 2022 of roughly $4.6 trillion.
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http://www.cbo.gov/publication/43835
 
Surely this coin will significantly increase money supply, and without commensurate economic growth this will have to increase inflation. At least that what I learnt when I studied economics (many years ago, I should add).
 
ravdin said:
I've been seeing a good bit of buzz lately about the idea of the US Treasury minting a $1 trillion platinum coin as a means of circumventing the debt ceiling debates. The White House even has a petition about it:

https://petitions.whitehouse.gov/pe...single-platinum-trillion-dollar-coin/8hvJbLl6
Click to expand...


Well, yes, but it isn't the White House's petition, it's a petition that someone called "Graham K" has put up on their petition site:
WE PETITION THE OBAMA ADMINISTRATION TO:
Direct the United States Mint to make a single platinum trillion dollar coin!
Click to expand...
 
ravdin said:
As best as I understand the mechanism, the Treasury would deposit this coin with the Fed and then it would go into effect as an immediate means of debt reduction.
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That's just an instant $1T of QE. What does the coin have to do with it?
 
psionl0 said:
That's just an instant $1T of QE. What does the coin have to do with it?
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There is a limit on how large a denomination the treasury can print on paper notes, but there is no limit on coins. So they could mint a couple of billion dollar coins...or a trillion dollar coin, and still be within the law. Just deposit them in the treasury fund...and boom...were out of debt...at least on paper....it really doesn't work that way.
 
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Another alternative is to produce a billion coins and sell them to collectors for $1,000 each. Have the face value say $100 so that they are not actually used. That would get rid of almost a trillion dollar debt. It also has the advantage of taking a load of surplus money out of circulation, which might be otherwise spent and create inflation.

Or raid the art gallerias. Sell a few very valuable works of art to the International market. That would raise a huge amount of funds.
 
Maybe I'm just too much of a chucklehead! lol (maybe?) but the first thought that came in my head was this coin showing up on that Pawn Stars show in 20 years and the guy goin "Yeah, it's rare....I'll give ya like twenty bucks for it"
 
rjh01 said:
Another alternative is to produce a billion coins and sell them to collectors for $1,000 each. Have the face value say $100 so that they are not actually used.
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But what about the billions of coin collectors who would miss out? :D

rjh01 said:
Or raid the art gallerias. Sell a few very valuable works of art to the International market. That would raise a huge amount of funds.
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Just be sure to only raid the international gallerias. :D:D
 
Macgyver1968 said:
7-11 won't take them....I tried.
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I had an employee try to pass of a five dollar bill with an extra 0 taped to it. He blamed it on me and was immediately released. I got a call from the treasury department but I said it wasn't mine. I guess it wasn't a felony because he was only trying to steal 45 dollars since the 5 dollar bill was real.
 
Is it just me, or does zerohedge.com appear suspiciously similar to a currency kook site?
 
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