Is the Obama administration SERIOUSLY considering minting a trillion dollar coin to avert a standoff over the debt ceiling? Could anything be more absurd? Hasn't Obama heard the Billy Preston song "Nothin from nothin leaves nuthin"? How could minting a platinum coin worth one trillion dollars out of thin air be the answer to our fiscal nightmare? Are there no legitimate economists left in this administration?
I can tell you one thing, this will be one of those posts that my blog subversive woody dog won't be commenting on. The fact that it is so absurd a plan isn't lost even on him!
Naturally conservative bloggers have had a field day with this latest bit of genius from the White House, which by the way won't decline to rule the coin out according to the conservative website foxnews.com. Even the ultra liberal motherjones.comreported "The $1 Trillion Platinum Coin, Horrible, Lawless Policy". And a gentleman who I once interviewed, and who has first hand knowledge of the economy of minted coins, former U.S. Mint Director Edmund Moy said of the trillion dollar platinum coin on cnbc.com "That is a desperate gimmick of questionable legality and doesn't even come close to solving our fiscal problems.
First, it may be legal to mint a platinum bullion coin with a $1 trillion face value, but it's not legal to pass it off as actually worth $1 trillion if there isn't $1 trillion of platinum in it. That's because it's a bullion coin and not a legal circulating coin. The face value of a bullion coin has no relationship with the metal content because the value is in the metal, whose price fluctuates daily.
Second, for a coin to be worth its face value, it has to be made as a circulating coin.
And thirdly, the current law does allow the Mint to make a platinum proof coin and does not specify whether this applies to a bullion coin or a circulating coin. A proof coin refers to a mirror-like finish and is made for coin collectors. However, a proof coin must be accepted at face value.
Where is rationale in all of this Mr. Obama?