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What’s All This Talk About a $1 Trillion-Dollar Platinum Coin? We Explain

Jan. 7, 2013 7:00pm Becket Adams

Noting that it’s a “gimmick,” economist Paul Krugman writes that “since the debt ceiling itself is crazy … there’s a pretty good case for using whatever gimmicks come to hand.”

Bloomberg’s Josh Barro and Business Insider’s Joe Wiesenthal support the “gimmick,” arguing that it is “less ridiculous than [a] default” and that, when compared to the other options available, it would be “less economically damaging.”

Wiesenthal & Barro (courtesy attaincapital.com)

Meanwhile, on the opposite side of the issue, Rep. Greg Walden (R-Ore.) says he will introduce a bill to block the “gimmick.”

CNBC.com’s senior editor John Carney questions its constitutionality.

So what is it?

“Anybody got an eBook on alchemy?” UBS Financial Services Director of Floor Operations Art Cashin jokes.

Whether they’re “for” it or against it, they are all talking about the same thing: A legal loophole (31 USC § 5112) that would allow the U.S. Treasury to mint a $1 trillion-dollar platinum coin to be deposited into the Federal Reserve as payment toward the national debt. This is a actual option and it’s being considered as an alternative to another fight over raising the debt ceiling.

“The Treasury secretary has the authority to mint platinum coins in the denomination of his choosing,” Reuters explains, adding that creating “the cash would … completely override the independence of monetary policy.”

Although it sounds too bizarre to be true, it’s something that could actually be done. And it is gaining some support.

The “out of the ordinary” idea could actually work, Rep. Jerrold Nadler (D-N.Y.) said in an interview with Capital New York. “I’m being absolutely serious,” he said. “It sounds silly, but it’s absolutely legal.”

While there are limits on the amount of coinage and paper Treasury can legally issue (the Federal Reserve controls the money supply), lawmakers never put a set limit on the issuance of platinum. Therefore, Treasury Secretary Timothy Geithner could issue $1 trillion-dollar coin if he wanted to. It’s either that or risk defaulting on our debt because Republicans refuse to raise the debt ceiling, supporters of the coin argue.

“It’s just a disguised new form of debt,” former Congressional Budget Office director Douglas Holtz-Eakin told FoxNews.com. “This would say (to the markets) they cannot manage their finances as a nation, they’re down to gimmicky coins.”

“It would have all the implications of near-default,” he added.

But it appears that his words may have fallen on deaf ears (9,936 to be exact) as at least 4,968 people have signed a White House petition asking that U.S. lawmakers consider the $1 trillion coin option.

“With the creation and Treasury deposit of a new platinum coin with a value of $1 trillion US Dollars, we would avert the absurd-yet-imminent debt ceiling faceoff in Congress in two quick and simple steps!” the petition reads.

“While this may seem like an unnecessarily extreme measure, it is no more absurd than playing political football with the US — and global — economy at stake,” it adds.

Again, just to be absolutely clear, the platinum coin trick is a legitimate option on the table right now.

“Only those who have no clue about the money creation process in a fractional reserve economy could be vacuous enough to suggest that an idiotic ‘fix’ such as this has any hope of working,” writers at Zero Hedge fume.

“All the proposal does, in effect, is suggest a devaluation of the currency relative to an absolute precious metal asset, which in itself is nothing new, and most recently was conducted, with great “success” by FDR in the 1930s,” they add.

Exit Question — Which seems more likely: Republicans agreeing to an increase in the debt ceiling or Treasury depositing a $1 trillion-dollar platinum coin in the Federal Reserve?

Follow Becket Adams (@BecketAdams) on Twitter

Featured image courtesy Getty Images.

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Comments (70)

J Z
Posted on January 7, 2013 at 11:31pm
Didn’t Montgomery Burns have a Trillion $ Bill on The Simpsons?

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- YAHSHUARULES
  Posted on January 8, 2013 at 3:14am
  The politics have been broke for a long time:
  
  Relentless effort since 1883 regardless of who has been in office to change this culture and country in a way that it can never be changed back again. No conspiracy just verifiable facts!
  
  Most important movie you will see on what is happening and why. Connecting all the dots. I have watched it 12X …give it 5 minutes and you won’t be able to walk away
  
  It is free on line for the moment
  
  https://vimeo.com/52009124
  
  If America goes down, the free world will go down with it and it will be finished for a very, very long time…
  
  Report this comment
- milez5
  Posted on January 8, 2013 at 3:29am
  I think this silly coin business just proves one thing. Unless or until this nation hits the wall economically many Americans, and yes, perhaps even a majority of Americans will not take our debt seriously.
  
  Report this comment
- kaydeebeau
  Posted on January 8, 2013 at 6:11am
  Doesn’t this come from the same “school of economics” as the thinkking that as as long as there are checks in the check book that you can still buy stuff?
  
  Report this comment
- Dan_o
  Posted on January 8, 2013 at 1:51pm
  The trillion $ coin is what you will need in 3 years to buy a loaf of bread.
  
  Report this comment
nothinghere
Posted on January 7, 2013 at 11:20pm
will they ever quit lying to the american public.
giethner continues his willful lying that america is going to default,and tim how many trillions of dollars,of 100.00 bills have you printed for ben over at the fed.over the last 4 yrs.,thats worked out just great for big bankers,and political cronies,i wished you would quit trying to help the lower,and middle-class they can’t afford it no more.
why don’t they just bronze one of o’bama’s turds put in in a vault.and say it’s worth $10 trillion dollars.
the same 5-6 people who are talking america defaulting,are the same people whos had unlimited,accountable access to printing,and spending,americas money for 4 yrs..
krugman says it all it’s a gimmick,but if that what it takes,do it,thats whats wrong, people who have a say,and are in charge of americas economic troubles,are looking for gimicks to fix it.
the gimick won’t fix the economy,this is another slide of hand,they don’t want to debate the debt-ceiling.they can’t,because when exposed to what the fed,treasury,and 5-6 big-banks have done with the unaccountable trillions of tax-payer dollars.americans will be outraged.
theres been zero dollars used to help lower-middle-class america,or employment,it’s been about government take-over of the finacial system.

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- drs1969
  Posted on January 8, 2013 at 12:35am
  Only Congress controls the purse strings. This coin is Taxation w/o Representation. If they get away w/ it once, they will do it continuousy til gasoline costs at least $10 a gallon. Food will go up by the same amount. This is wholesale devaluation, an illegal tax on everyone holding dollars.
  
  Report this comment
- drs1969
  Posted on January 8, 2013 at 12:48am
  Can’t find a turd, there’s too many people kissing his *ss.
  
  Report this comment
Advection
Posted on January 7, 2013 at 9:44pm
This is treason. Impeach Obama now.

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- YAHSHUARULES
  Posted on January 8, 2013 at 2:31am
  Use public policy to subvert America from inside, infiltrate and influence our culture driving us in a direction designed to destroy us. . No conspiracy – just verifiable facts! If you don’t know all this you need to find out!
  
  This is the most comprehensive, best movie I have seen pulling all this together. I have watched it 12X to absorb all that is in it…give it 5 minutes and you won’t be able to walk away
  
  Watch it. Share it. Arrange a showing in church, groups, clubs, with friends or family. Everyone who loves America needs to see this movie,
  It is free on line for the moment
  https://vimeo.com/52009124
  If America goes down, the free world will go down with it and it will be finished for a very, very long time…
  
  Report this comment
SamIamTwo
Posted on January 7, 2013 at 9:40pm
Meh, they’ll prob lose it or put it in a coke machine thinking it was a regular coin.

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BasketFullOfPuppies
Posted on January 7, 2013 at 9:19pm
Honestly. When you get to the point that the government is openly lying to itself, the game is over.

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h-schoolmom
Posted on January 7, 2013 at 9:05pm
This would be the biggest ponzi scheme in the history of the world, and the Federal Reserve is Bernie Madoff times 16 trillion. How in God’s name did we ever end up with the mob running this country at every stinking level of government? Is there any honor and integrity left in this country, on this continent, on this planet? Where the hell are the good guys??? The people running this country are TRAITORS. They took the “Oath of Office” and have violated every aspect of that oath. We need to purge Washington DC of the cesspool it has become and start fresh. What a flipping nightmare we are now living through!

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- KeystoneState
  Posted on January 7, 2013 at 9:15pm
  Hey mom, The “good guys” in this country need to send all there employees home for about Two weeks, and go on vacation, that would wake the “taker-class” up!
  
  Report this comment
- KeystoneState
  Posted on January 7, 2013 at 9:36pm
  We the People have to start thinking outside the box and realize that appealing to the source of the problems in this country for the solutions does not work anymore! Real Americans are the most innovative folks on earth and can overcome even this quagmare in DC, legally and peacefully if we put our minds together! I say that the producers take a vacation and send our employees home for about two weeks, and I bet a lot of folks will stop trying to soak the rich when they realize who actually butters their bread! You can take what the makers make, but you can’t take what the makers don’t make! Right?
  
  Report this comment
- americansfightingforcommonsense
  Posted on January 7, 2013 at 9:38pm
  Yes, try paying your debt to China or Russia with a few $Trillion dollar coin and see what happens. Idiots!!!
  
  Report this comment
TotallyNotATroll
Posted on January 7, 2013 at 8:11pm
Printing money to pay off our debt, o wait, sorry, stamping out money in the case of a coin, yeah, this is a new idea. No way paying off our debt thru printing will lead to hyperinflation, nah, we’re too cool for that.

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- sillyfreshness
  Posted on January 7, 2013 at 8:27pm
  This trillion dollar coin is just a way to default on the debt, without saying we defaulted. It would be like me writing myself a check for 1 million dollars and then me proclaiming to be a millionaire. All smoke and mirrors.
  
  Report this comment
- KeystoneState
  Posted on January 7, 2013 at 8:47pm
  What a flaming joke! At least a gnikcuf penny is worth roughly twice it’s face value! A Troy oz of platinum is worth about $1550. These people are insane, but to those who voted him in, we’ll platinum is the highest form of “bling” so it must be pretty Dope in that case!
  
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- KeystoneState
  Posted on January 7, 2013 at 9:08pm
  Maybe my math is off, but does the Fed plan on striking a platinum coin that weighs over 60,000 tons, ( half the weight of an AIRCRAFT CARRIER)?
  
  Report this comment
- KeystoneState
  Posted on January 8, 2013 at 7:38am
  My bad, it comes out to “only” 26,881 tons. Oops.
  Shucks, Barry could just give Jay-Z a holla for that little bit!
  
  Report this comment
Shenandoahvalleyminuteman
Posted on January 7, 2013 at 7:52pm
Coming to a coin shop near you! wait, how do they know where I live?

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ABO
Posted on January 7, 2013 at 7:47pm
Hyper inflation anyone?…Will this crap ever end?…How about living within your means…God I cannot stand politicians, especially Obama and progressives (sorry, regressives)…Until those who just take become the givers (which will never happen) who have things taken from them, ie taxes…this country is doomed…What will it take to change course?…TERM LIMITS for congress and a test to Vote…hate being educated on everything and have my vote wiped out by some moron who is totally clueless..

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- booger71
  Posted on January 7, 2013 at 8:09pm
  Your right, we will still have to borrow the money to pay for the coin which will further inflate our already worthless paper dollars.
  
  Report this comment
mickeyzee43
Posted on January 7, 2013 at 7:39pm
The way they are printing money we may need a bunch of those for groceries. Best make them out of tin though.

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Woggie
Posted on January 7, 2013 at 7:38pm
A one trillion dollar coin will be a lot faster mint than a trillion dollars of paper fiat-currency.

To make a true one trillion dollar platinum coin would take 641,000,000 ounces of platinum at todays trading price. This equals a 20,000 TON coin. What a bunch of clowns we have in Wa. DC.

Put pressure on your Reps. to push for spending cuts ONLY! No more taxes!
This irresponsible B.S. must end!

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- jman-6
  Posted on January 7, 2013 at 7:48pm
  To late we’ve already passed the ‘Rubicon’! We are in truly uncharted waters & if they quit printing & spending then the house of cards will collapse overnight!
  
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- fdraiden
  Posted on January 8, 2013 at 11:43am
  Is that Troy weight?
  
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0317
Posted on January 7, 2013 at 7:37pm
Someone has been riding in the choomwagon to long. Do the they honestly believe that Barry the Great can really make money appear at will. Hang on this is going to be a wild ride, all down hill.

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The-Monk
Posted on January 7, 2013 at 7:28pm
I’m going to be gone tonight… so can you good Blaze users report the ad troll when you see him?

The’ve been reported to the people that own the new server they are using so they will be gone again shortly.

Thanks

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RANGER1965
Posted on January 7, 2013 at 7:27pm
It’s a legal loophole that WILL! be used if the Republicans demand serious cuts to sign off on raising the debt limit. Since serious cuts will undermine the democrats, and make them look bad, they cannot do it. This will be done unless the Republicans cave again.

The REAL limits on spending has always been the attitude of other nations to accept the dollar in payment for real commodities. It helps that the dollar is the world’s reserve currency and it is that fact that props it up. It does not matter what WE say the dollar is worth, it only matters what the BUYER of the dollar believes it’s worth.
When the dollar’s buying power reaches low enough the American Experiment as a world power is over. A new reserve currency will be selected, and the salad days are over, and it could last for decades. We are close now. It’s time to seriously, and bitterly cling to God, Guns, and Food.

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- jman-6
  Posted on January 7, 2013 at 7:42pm
  I take it you know Russia, China, and other ME countries have agreements in place to dump the dollar.
  
  Report this comment
- Fireking151
  Posted on January 7, 2013 at 8:06pm
  @JM You mean the petrol dollar, Why do you think alot of the muslin counties are being overthrown,Syria,Iraq,etc. They all wanted to go to the gold standard…….Hmmmm
  
  Report this comment
- Walkabout
  Posted on January 7, 2013 at 8:08pm
  Jerrold Nadler is a disgusting person. He is also avaricious & stupid.
  
  Zerohedge has reported that Greece has dumped the Euro. They reported that a town in Greece is using a local currency. i.e. the people are dumping government controlled currency.
  
  Which makes sense when the government is controlled by idiots like Nadler.
  
  Report this comment
- Walkabout
  Posted on January 7, 2013 at 8:13pm
  “Guest Post: The Greeks Have Already Dumped the Euro”
  
  ” The city of Volos, 200 miles north of Athens with a population of 170,000 is highlighted in the article due to the size of its alternative money market centered around a local currency call the Tem.”
  
  http://www.zerohedge.com/news/2013-01-04/guest-post-greeks-have-already-dumped-euro
  
  Jerrold Nadler is delusional. He belongs in a mental hospital or a prison. Anyone who believes that they can negate the laws of physics or economics with a wave of a wand or legislation is delusional.
  
  I hope his grandchildren put him on their don not call list & get orders of protection against him
  
  Report this comment
gyro
Posted on January 7, 2013 at 7:20pm
no coins with our obama on the front and a jackass on the back

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- SLOWBIDEN
  Posted on January 7, 2013 at 9:58pm
  What’s the difference?
  
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freeberty
Posted on January 7, 2013 at 7:20pm
This really is a non-issue
Even when the republicans controlled the presidency, the senate, and the house from 2000 – 2003 they raised the debt ceiling.
The five years out of eight that Bush raised the debt ceiling, Cantor, McConnell, and Boehner were all big supporters.
Why would you think they would be fiscally responsible now?

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- jman-6
  Posted on January 7, 2013 at 7:32pm
  FYI- check out the spending charts and you will notice that in 06-07-08 the amount of spending skyrocketed compared to the previous 4 1/2 yrs. Geez wonder why? Hint: It starts with a D.
  
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- freeberty
  Posted on January 7, 2013 at 7:48pm
  Good point, since the House of Representative’s does control the nations checkbook.
  
  By the way, could you tell me which party has had the solid majority in the house since 2010 and how has that worked out for you? I’m sure you have those figures too.
  
  Report this comment
- drs1969
  Posted on January 8, 2013 at 12:47am
  A $1.2 trillion deficit today is a lower percentage of the economy than that same deficit was 2-4 years ago. So the bleeding has slowed under the Rep’s. I personally trashed both my Rep Congress critters in the local paper for voting for last year’s debt ceiling increase. They both voted no last week, and I’m hoping they’ll vote ‘no’ on another debt ceiling raise.
  
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South Philly Boy
Posted on January 7, 2013 at 7:17pm
The only person who can buy them is Obummer

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TIMEBOMB
Posted on January 7, 2013 at 7:17pm
I thoroughly enjoy watching my serfs scrambling about trying to stay above water as I systematically deconstruct capitalism. Your demise is imminent and and I’ll crush you with debt and the best part is you’re all in on it and you don’t even know it.

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- Stelex
  Posted on January 7, 2013 at 7:52pm
  Bammy, Bammy………I got a coin to sell you. Give me a call.
  
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- Fireking151
  Posted on January 7, 2013 at 8:10pm
  3 or 4 in your pocket and back to Hawhy? LOL
  
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RJJinGadsden
Posted on January 7, 2013 at 7:17pm
I must be about the size of a sewer cover. Would love to see both the piggy bank and the change purse that will contain them.

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- The-Monk
  Posted on January 7, 2013 at 7:25pm
  “Brother can you spare a….. trillion?”
  
  Hey RJJ,
  
  I got a job interview tonight… yep, tonight????
  
  Report this comment
DEFCON4
Posted on January 7, 2013 at 7:15pm
Heads or Tails, doesn’t matter, ‘We’ all lose……..

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- RJJinGadsden
  Posted on January 7, 2013 at 7:20pm
  This one will have an ass on each side. Guess you could call them tails….LOL!
  
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Mossy_pump
Posted on January 7, 2013 at 7:14pm
Well, hell if that’s the case lets just go ahead and mint 17 of these bad boys and “poof”!! We’re in the clear for the government to blow another 17 trillion…duh

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TRILO
Posted on January 7, 2013 at 7:11pm
USA=Banana Republic. By the time they are done at the Federal Reserve a discarded banana peel will be worth more than a dollar bill.

And people scoffed at Ron Paul. Unfortunately, the last laugh is on America if the treasury pulls this slight of hand trick.

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FreedomPurveyor
Posted on January 7, 2013 at 7:09pm
It would be the most valuable and worthless coin at the same time.

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- BODYBAG
  Posted on January 7, 2013 at 7:19pm
  Read the FULL IMPLICATIONS here:
  
  Putting A Trillion Dollars Of Platinum In Perspective
  http://www.zerohedge.com/news/2013-01-04/putting-trillion-dollars-platinum-perspective
  
  Report this comment
poorrichard09
Posted on January 7, 2013 at 7:09pm
I’ve been reading about this over the weekend. Is this from The Onion? Has anyone run it by Snopes?

It is so absurd as to be unbelievable-why not make it a $16 trillion coin? For no more that it’s worth (about $1560) it might as well be made out of wood, like wooden nickles. At least you could use them for fire starters after the SHTF!

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- Aldo
  Posted on January 7, 2013 at 7:20pm
  Too funny
  
  Ole’
  
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- Stoic one
  Posted on January 7, 2013 at 7:24pm
  IF …they do this then there will be at least one hundred of them.
  
  POOF! all that pesky debt? Solved!
  
  bathhouse barry, “Now about those tax hikes that I want”
  
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Mudd
Posted on January 7, 2013 at 7:06pm
Didn’t they already do this one on the Simpsons?

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