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Wednesday, June 19, 2013
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    What's this?
The story of the $1 trillion coin
The debt ceiling debate has led to an eye-catching topic, a $1 trillion platinum coin.
Wed, Jan 09 2013 at 3:30 PM
 3

Related Topics:

Economics, Politics, Save Money
When I logged on to check the financial news this morning, one headline quickly caught my eye, “$1 trillion coin is nuts but not $25 billion – Opinion.”  My first thought, both ideas are nuts.  Seriously, why on Earth would either a $25 billion coin or a $1 trillion coin be needed?  Oh yes, these coins could be beneficial in the game of politics.
 
Now that a fiscal cliff deal has been reached, attention has turned to the upcoming debt ceiling.  If this sounds familiar, it should.  Back in August 2011 Congress and President Obama reached a debt ceiling deal, a deal that alleviated debt repayment concerns and led to the fiscal cliff issue we just solved.
 
Although the Budget Control Act of 2011 addressed the debt ceiling problem at that time, it is cropping back up.  In about two months the nation is going to butt up against the debt ceiling again, and that means that Congress and the President need to reach another agreement.  Or do they?
 
Evidently there is some discussion of “solving” the debt ceiling concern with the minting of a single $1 trillion coin.  
 
“Treasury is forbidden from printing money to cover government deficits. Treasury must issue debt, while the Federal Reserve independently controls our nation's monetary printing press. That is exactly as it should be. But there is an arcane exception for platinum coins. To serve coin collectors, Treasury can issue platinum coins of any denomination. That creates an intriguing loophole: Treasury could bypass the collector market and mint a $1 trillion platinum coin. By depositing it at the Federal Reserve, Treasury could keep paying bills after we've fully exhausted our borrowing limit.”  Source: CNNMoney
 
Voila, problem solved!  Not really, though.  Minting dollar bills or $1 trillion coins can send inflation sky high.  Even if inflation increases could be mitigated through other measures, minting a coin doesn’t solve the problem.  Congress and the President need to reach a deal to reduce spending.  
 
If a deal can’t be reached in time, though, the $1 trillion coin may be the best choice for the nation, at least according to Donald Marron, director of the Urban-Brookings Tax Policy Center.  “If we reach the brink, however, minting million- or billion-dollar platinum coins would be better than default.”  
 
Photo: DonkeyHotey/Flickr
 

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anonymous
Robert Cogan Jan 10 2013 at 2:34 PM
One $ trillion coin won't work because only Congress has the constitutional power to coin money and regulate the value thereof. Courts would probably decide as much. How about minting 1,000 $1 billion coins, or 1 million $1,000 coins? That should sound less ridiculous, less easy for punk news pundits to dismiss. So Republicans would probably oppose this unless the coin(s) had natural value from scarcity. So consider diamonds (141.75 carats equal an ounce.) Maybe only something like highly enriched
.... More
uranium would have the requisite value. Then prohibit spending it externally! Alternatively, is it in executive power to monetize Treasuries, make them legal tender? Doutful. In any case, deposit "natural value" coins in accounts needed for expenditures. Debit or credit accounts containing these assets, as necessary. It’s high time the mainstream media stopped ignoring and started to inform Americans of other alternatives! Congress has the Constitutional power to coin ANY AMOUNT of money needed. It can even do this WITHOUT DEBT! Look up “United States Notes,” (greenbacks.) If Obama had any backbone or was willing to risk his “political capital,” he’d put the Congress on the HOT SEAT by raising the salience of this idea! We’ve had 4 years of severe DEFLATION for millions of households. Deleveraging debt is going too slow and we need CONTROLLED “reflation” targeted at unemployment and housing. Only a vast program of federal aid to small and medium sized domestic businesses and entrepreneurs and inventors to subsidize new American hires can get unemployment and consumption out of our painfully too slow “recovery.” Start with grants to companies that will recruit unemployed breadwinners in homes with mortgages or rent overdue. Obama’s lack of leadership, Congress’s corruption by banks, media cowardice to propose such banker – opposed solutions, and the public’s ignorance and apathy mean we will suffer much longer. Illegitimi non carborundum!
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anonymous
economizer Jan 09 2013 at 4:13 PM

That inflation will go up, is exactly wrong. The fed has trippled the monetary base over the last 4 years and there has been NO inflation. Miniting the trillion coin, would allow the government to pay bills and would be no different than raising the debt ceiling, other than being legal. QED

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jaxbass's picture
JaxBass Jan 10 2013 at 2:14 PM
I disagree, and truthfully find it hard to take you seriously when you misspell the word 'triple.' Prices have gone up in the nation... I know because several restaurants I frequent upped their prices in the past 2 years. What's more, a guitar I bought a little over 4 years ago at 650 is now priced at 799. The only other reason that rise would've occurred would be due to the economic crisis, but even then, that would be somewhat counter-intuitive since those crises typically result in a loss of monetary
.... More
value. Now I'm no economist by any means, but the trillion dollar coin just seems to be begging for a very inflated economy. What we need to do is cut government spending on several of its national programs, pull out of Afghanistan (why are we still there, again?) and start paying our debtors back. Of course our liberal president probably won't want to do the former... I'm all for social programs but the government seriously needs to set its priorities straight. And balancing our enormous debt should be one of our top priorities... you know your nation's got a spending problem when it keeps raising the debt ceiling for the first time in a long time. QED.
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