Trillion Dollar Coin

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The creation of a trillion dollar platinum coin was suggested as a possible way to circumvent the debt ceiling in 2013. The U.S. government could cash in the coin to help pay down the nation's $16.4 trillion debt.[1] The federal government hit its legal borrowing limit of $16.394 trillion on Dec. 31, 2012 and began taking "extraordinary measures" to cover shortfalls. It was estimated that, if left unaddressed, there would likely would be less revenue coming in than had to be paid out for each of the days between Feb. 15 and March 15 of 2013.[2]

The first mention of the trillion dollar coin idea has been attributed to a commenter and blogger on economics and politics blogs whose screen name is Beowulf. His first comment on Platinum Coin Seigniorage was on a site run by Brad Delong.[3] Anonymous commenters helped spread the concept to other economics blogs. The idea attracted attention from prominent liberal economists such as James Galbraith and Paul Krugman, and then from writers like Matthew Yglesias and Ezra Klein. [4]

Based on the authority granted by Section 5112 of Title 31 of the United States Code (31 U.S.C. Section 5112), the U.S. Treasury secretary is legally permitted to mint platinum coins of any level he or she wishes. The law was intended to allow the production of commemorative coins for collectors.[5][6]

A petition at whitehouse.gov asked the U.S. Mint to make the coin.[7]

While some claimed that minting such a coin would make the U.S. monetary and political system look like a farce, most were hard pressed to come up with a reason - legal or economic - that the coin should not be created.[8][9][10]

While the platinum coin option would expand the Federal Reserve's balance sheet and, ultimately, the monetary base, it would have no implications for inflation.[11]

References

  1. 'Joke' Solution to Debt Clash Gets Serious Study. WSJ.com.
  2. Debt Ceiling: 'Chaotic' choices on 100 million payments. CNNMoney.
  3. Trillion Dollar Coin: Posts on Legality and Constitutionality. Firedoglake.
  4. Meet the Genius Behind the Trillion-Dollar Coin and the Plot to Breach the Debt Ceiling. Wired.
  5. Why We Must Go Off the Platinum Coin Cliff. Bloomberg.
  6. LET’S END THIS DEBT CEILING DEBATE WITH A $1 OZ. $1T COIN. Pragmatic Capitalism.
  7. we petition the obama administration to: Direct the United States Mint to make a single platinum trillion dollar coin!. whitehouse.gov.
  8. Why The Fight Over The $1 Trillion Coin Is The Most Important Fiscal Policy Debate You'll Ever See In Your Life. Business Insider.
  9. Republican Angry at Trillion-Dollar-Coin Solution. New York Magazine.
  10. Is the Trillion-Dollar Platinum Coin Clever or Insane?. dmarron.com.
  11. Platinomics. The Economist.