Hope Lives For $1 Trillion Platinum Coin Enthusiasts

White House Press Secretary Jay Carney refused to rule out the possibility of minting a $1 trillion platinum coin to solve the debt ceiling crisis. In a graphic, Republicans argue that the weight of the coin would have sunk the Titanic.

  • Share
  • Read Later

White House Press Secretary Jay Carney finally got a question today about the possibility of inventing a a $1 trillion platinum coin to magically solve the coming debt ceiling crises, an outlandish idea that the Internet loves. Despite repeated questioning, he refused to rule out categorically the possibility of minting such a coin. But he also made clear that it is not a current option under consideration.

“The option here is for Congress to pay its bills,” Carney said, after flipping to a page in his briefing book that appeared to anticipate the question. “There is no Plan B. There is no backup plan.There is Congress’s responsibility to pay the bills of the United States.”

The answer was far less direct than the answer Carney has given when asked about another controversial route for the White House to evade the debt ceiling: The unilateral raising of the debt ceiling by the President under the argument that the 14th Amendment of the Constitution grants that power. “This administration does not believe the 14th Amendment gives the president the power to ignore the debt ceiling,” Carney said in December.

Meanwhile, Republicans have begun to jump on the viral potential of the $1 trillion platinum coin, releasing this graphic over Twitter today.

TitanicCoin

Of course the graphic has little factual relation to the way modern currency works. The value of a dollar bill is not measured by the value of its paper, nor is the value of a quarter measured by the value of its copper and nickel. If the legal theory behind the $1 trillion coin has any merit (and that is a big if) and if the introduction of a $1 trillion coin does not dramatically unsettle currency markets (and that too is a big if), than the weight of the coin should not be an issue.

UPDATE: On January 12, the Treasury Department nixed the $1 trillion coin option.  “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” Treasury spokesman Anthony Coley said.

36 comments
robert.cogan
robert.cogan

One $ trillion coin won't work because only Congress has the constitutional power to coin money and regulate the value thereof. Republicans would block it. Courts would probably decide for them.

There's a twice successfully used alternative (greenbacks.) They saved the nation in the Revolution and the Union in the Civil War. And they could make an armistice in our current class war. It’s high time the mainstream media stopped ignoring and started to remind Americans about greenbacks. Congress has the Constitutional power to coin any amount of money needed. It can even do this without debt, without issuing bonds. Look up “United States Notes!" By more and more people advocating creation of greenbacks, we can turn the heat up on Congress's endless stalling act. We’ve had 4 years of severe deflation for millions of households. Paying back household consumer debt is going painfully slow. And given endless automation and offshoring of production,nothing but another bubble will return employment temporarily to normal. A big program of Shared Employment Compensation could help. Employment benefits the general welfare of all Americans. So federal aid to small and medium sized domestic businesses and entrepreneurs and inventors to subsidize new American hires could help get unemployment and consumption to return to normal. We need controlled, targeted "reflation" of housing and jobs. Greenbacks can be created in electronic form and direct deposited to bill-paying accounts of the personal shared employment recipients, the formerly jobless, his mortgage company, her student loan account. Such direct depositing will help control the inflationary velocity of physical money. Bankers endlessly terrorize people about hyperinflation. And they believe they've got Congressmen so corrupted that they could never be gotten to do this. Is there another real way out of our near stagnation? If not, we must start advocating that Congress create and distribute greenbacks.

 Illegitimi non carborundum.

dantebiz
dantebiz

Cranky people don't like Trillion Dollar Coins, but they like when the R party throws our economy into turmoil by not approving debt limit increase?  Last time I checked, it say the Constitution of the UNITED States of America, not the Constitution of Cranky White Ballot-Denying Unhappy People!  The Constitution belongs to All of Us!  Two examples:  14th Amendment--  Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. -(So this says the public debt in the US is valid and shall not be questioned by ANYONE.  Free speech, Yes.  Deny the validity of the debt, No.)  Also, here;s another great Amendment--

9th Amendment--  "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.  "  So if the Constitution allows the US Treasury to issue coins, including a Trillion Dollar coin to raise the debt ceiling, then while the Constitution will allow the Treasury Department to do that, the Constitution will not deny or disparage ANYONE smart and creative enough to issue other forms of monetary value--coupons, cards, scrip coins, scrip bills or notes, loans or any legal financial transaction.  So the Treasury Department is reserved the right to do certain things (under Federal law), the UNITED States Constuition also ALLOWS US to be VERY CREATIVE and SMART the way we engineer our finances, so long as we don't do things that are prohibited.  The 9th Amendment, gives us, the UNITED States People, some creative rightS!


dantebiz
dantebiz

Maybe a Trillion Dollar coin is the way to go for the UNITED States of America!  If the R Party proceeds on its two word platform "No" and "Benghazi" they will proceed to lose more and more elections.  Trillion Dollar coin when the Two Word  Party refuses to raise the Debt Ceiling is probably LEGAL according to the Constitution.  I live in the UNITED States of America, not the NRA States of America!  Go Trillion Dollar Coin!

VincentLovece
VincentLovece

There was a Simpsons episode that involved a Trillion dollar bill. That was absurd fiction. I hope this is too.

fitty_three
fitty_three

I think Jay Carney is pulling their leg by not pulling their leg.

The Teabaggers are that stoopid...

HeyDude
HeyDude

This article could be the most blatent case of yellow journalism I've seen in a long, long time.

Shame on you, Time.

mrbomb13
mrbomb13

MEMO TO TIME MAGAZINE EDITORIAL STAFF:

The idea of a "trillion-dollar coin" is complete and utter nonsense.  

Seriously.

It would not stand a snowball's chance in Hell of ever happening.  Other nations would howl in laughter if the U.S. EVER proposed such an asinine concept.

Sorry, but this concept does not pass muster in Economics, Finance, Government/Politics.

As such, TIME, YOUR staff should be able to smell the ridiculousness of this idea from a mile away.  Your articles should be extremely critical of this idea, because it would never, ever work.  It should be discarded in the Utter Lunacy Bin, and we should move on to more practical, realistic solutions.

Shame on your editorial staff for publishing such drivel.

JosephPijanowski
JosephPijanowski

This magic coin idea is valid.....but it does not address the root of our debt. HR2990 (The NEED Act) is a related concept BUT it goes the whole way to address our DEBT. It pays off the national debt over time, creates over 7 million jobs and rebuilds our failing infrastructure without causing inflation! Our entire country does not understand that our national debt is completely unnecessary and it is a product of our FLAWED debt based money system. HR 2990 (related to the Chicago Plan) corrects this and it is proven as a valid solution in a white paper by Michael Kumhof and Jaromir Benes. Incidentally these two are from the research department of the International Monetary Fund. http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf
AND here is another white paper which comes to the same conclusion http://monetary.org/wp-content/uploads/2011/11/DesignOpenMacro.pdf

kbanginmotown
kbanginmotown

Personally, I think Obama should mint a Platinum-plated manhole cover to drive home that we're talking about maintaining and re-building America's infrastructure!

forgottenlord
forgottenlord

BTW: can anyone figure out whether that stat is accurate?  I've gotten as far as figuring out the Titanic's portholes were only 10 feet above the waterline, but I'm having a hard time figuring out whether an extra 20ktons would drop the Titanic 10 feet.  I'm also trying to figure out how that would rate against, say, a modern warship - would a Frigate sink from an extra 20ktons?  Would a oil tanker (a full one)?  Cargo ship (also full)

BTW: Even small cargo ships would shrug off that much platinum when empty.  Those containers are built to hold >60klbs each - so 30 tons.  So you only need ~650 to get to the "platinum" coin.

grape_crush
grape_crush

I think I'm gonna multipurpose the following line:

"Of course the [insert right wing talking point here] has little factual relation to the way [whatever bit of reality we're talking about] works."

Should cover, what, about 90% of statements coming out of the Right?

bobell
bobell

An act passed during the Nixon administration requires the Executive Branch to spend all funds appropriated by Congress. The original "sequester" was a unilateral refusal by the executive to spend appropriations.  To make sure that what was appropriated was spent, Congress made it mandatory.  No more executive sequesters.  So now you have one law requiring the use of all appropriatons and another purporting to forbid borrowing to get the money to do so.  If you were president, which would you choose to follow?

Paul Krugman points out that there is no sound objection in economic theory to the trillion-dollar coin, and there's no sound objection in law. The problem is political, and when Congress tells the president to pay the bills and then tries to take away the credit card, what's the president supposed to do?

I think he'll call their bluff this time -- no discussion of the debt ceiling, Congress, no bargaining, just raise it.  Period.

MrObvious
MrObvious

At first blush this idea sound as or less stupid then anything else proposed (such as cut only) to deal with our fiscal issues.

deconstructiva
deconstructiva

Yes, #MintTheCoin is an absurd idea, though the legal loophole may be there. However, the R's / TP's intransigence and political hostage taking here is even more absurd, with genuine economic consequences. The 14th Amendment arguments could be stronger: if Congress refuses to do its job, are they questioning the public debt, which the Constitution explicitly forbids? Also remember that using the printing press is a tactical move made quite often, such as for QE. Let's hope Wall Street firms pressure TP's to knock it off since it's bad for business, literally (like WS cares about real people, but this rare accidental alliance needs to make Boehner, Cantor, and McConnell give in and get back to work).


http://www.businessinsider.com/why-the-mint-the-coin-debate-could-be-the-most-important-fiscal-policy-debate-youll-ever-see-in-your-life-2013-1

forgottenlord
forgottenlord

No wonder the Republicans want to go back to the gold standard - they seem to think that's how currency works!

kbanginmotown
kbanginmotown

@mrbomb13 The point, however, is that minting a trillion-dollar coin is legal. Silly, but legal.

Just like failing to raise the US Government debt ceiling for expenditures that have already been approved/voted-on/signed-into-law. Silly not to raise the debt ceiling, but legal.

deconstructiva
deconstructiva

@forgottenlord If the coin itself was warped into a bowl shape it could float if it displaces enough water. I remember recent Titanic documentaries pointing finger at bad steel plates / rivets, poor judgment (might've been better to ram iceberg head-on instead of scraping side), etc. ...and of course the lack of lifeboats. The PBS special after the Downton Abbey premiere briefly pointed out the class structure that made more third-class peasants die vs. first class women and children.

kbanginmotown
kbanginmotown

@grape_crush Sh!t, grape. You nailed it. You can kick back for the next 2 months (at least!), now... ;)

DrinkerOfTheRye
DrinkerOfTheRye

@bobell No,don't raise it, eliminate it.  It was a bad idea in the last century and has no relevance to this centuries fiscal environment.  Besides, at these interest rates we would be fools not to barrow as much as will be lent.

forgottenlord
forgottenlord

Not to mention the sheer logic of "we need to buy a trillion dollars of platinum so we can mint a trillion dollar platinum coin so we can pay for a trillion dollars......of platinum"

mrbomb13
mrbomb13

@kbanginmotown @mrbomb13 

First, thanks for your reply.  While I do not agree with the 'silly' coin, I do recognize that minting the coin is legal.

Even still, minting the coin would not pass Economic, Finance, or Gov't./Politics muster.  It would be considered faux currency by other nations, and would be considered akin to the old Italian Lira (before the Euro).  The lira was considered a joke, as $1 would equal 1,483 Italian Lira (as of 01/09/2013).  (http://coinmill.com/ITL_USD.html)

Raising the debt ceiling is a more complicated issue.  The key question for Democrats is, "how high is high enough?"  $19 trillion?  $20 trillion?  $200 trillion?  Should there even be a debt ceiling?

Or, should we be cutting our spending to stand a chance at, "living within our means?"

forgottenlord
forgottenlord

@deconstructiva

Sure it could displace enough water but if you stick it on the Titanic, you're going to use the Titanic's actual hull - otherwise, this entire exercise is pointless.

The bad steel was actually that the steel was structurally weak at the low temperatures of the North Atlantic.  Modern Steel used on the Titanic in the same scenario would've meant the ship would still keep going (Materials Engineering Department, when trying to convince my class to join them, absolutely loved explaining that - BTW: the prof that made that pitch was incredibly good at selling their department).  But really, it hit the iceberg hard enough to shatter the steel over 5 of the 17 bulkheads.  Regardless of whether you could've improved the steel itself, by the time you're rubbing 5 of 17 bulkheads, you've got a problem and the steel wasn't especially bad for the time period.

The portholes were actually considered the bigger problem.  When you have bulkheads, it's supposed to prevent flooding of the ship by isolating the water to the flooded section.  However, the volume that bulkhead displaced is no longer displaced - so the ship sinks a bit lower.  Now the portholes are a bit closer to the ocean.  The Titanic was rated to lose 4 and still float - it lost 5 bringing the hull down to the water level and that's all she wrote.  (Wait....that means that if you assume they're spaced evenly and we take the fact that the Titanic displaced 52ktons of water, it only needed to lose a quarter of the displaced water to drop the portholes low enough which would be about 13ktons required to sink the Titanic - so the ad is right - math is fuzzy, but the buffer is high enough that it's likely correct).  The reason ramming head on would've benefited it would've only crushed the first bulkhead and flooded that rather than the 5 that got crushed - though I've always wondered about whether it would've done sufficient damage just above the bulkhead and whether that would've been put to water because the ship would fall a bit.

That said, nobody in their right mind would have made that call - I can either guarantee damage to this ship or, considering the distance, I could probably skirt around the ice berg in time and have a very good chance of missing it with a reasonable margin - which they would have if they hadn't reversed their turbines which ensured that the rudder couldn't act the way it was supposed to.  You see, the rudder works by allowing water to push against it as its turned which subsequently, using Newton's third law, pushes the rudder one direction and the water the other.  But the Titanic's rudder was right behind the turbine output - which is great at high speeds because you can make tighter turns as you have more water moving faster thus multiplying Newton's effect.  But when they reversed the turbines, it was no longer the outtake vent and was actually preventing water from brushing against the rudder - thus preventing it from turning.  The Captain likely knew that and if he'd been on the bridge, could've probably figured that out, but the first officer clearly didn't understand this important fact when he ordered the turbines reversed.

BTW: the lifeboats, while clearly a bad decision, were not as brazenly stupid as has been popularized.  You see, the Titanic was designed for enough lifeboats for everyone and enough were there to save ~1500.  But her full compliment hadn't been delivered by launch date.  It was reasonably presumed that the Titanic was very unlikely to sink on her maiden voyage (and its return trip) and the decision was made to get the rest on when she got back.  Corporate decision?  Yes.  But far from the stupid decision everyone believes it to have been.

forgottenlord
forgottenlord

Can we get an edit button yet?

Plus, let's not forget that if the administration tried to buy a trillion dollars worth of platinum, the platinum market would skyrocket so high that the coin would no longer sink the titanic

forgottenlord
forgottenlord

@mrbomb13

Deficits:

FY 2009 (Budget passed under Bush in 2008): 1413 B

FY 2010: 1293 B

FY 2011: 1300 B

FY 2012: 1089 B

FY 2013 (projected):901 B



Deficits have decreased under Obama by ~30% and have gone down in 3 of 4 years.

forgottenlord
forgottenlord

@mrbomb13

You clearly missed my point: even if you made it so the budget is balanced (ignoring positive and negative effects of such an approach - and there are short and possibly medium economic negatives of a balanced budget - cutting 40% of the federal budget in one go will obviously do major damage), the debt ceiling would have to be raised because the budget has already been passed.  As such, it makes no sense to use the debt ceiling (which is garbage to begin with) as a marker for determining when to cut the budget - cut the budget when you're actually working on the budget.

This undermines the entire debate about the long-term consequences and fixes to spending - those should be made at budget time or as a general thing.  Tying it to the debt ceiling makes zero sense - and taking it down to the wire on the debt ceiling is insanely dangerous.

The debate isn't between Keynes and Austerity but rather between Keynes and Trickle-down theory.  Both theories advise running deficits in recessions, they just use opposing ends of the budget to generate those deficits.  Specifically, Keynes believes in increased spending to fund the middle class to encourage consumerism to start the economy back up while Trickle-down theory advocates cutting taxes to encourage investment to start the economy back up.  I will accept that the divisions between them is very strong and I have very strong opinions on which is better, but it's not relevant.  One only needs to look at Europe and watch their progressive move to austerity to watch how that makes recessions worse and causes double dip or deeper recessions

mrbomb13
mrbomb13

@kbanginmotown @forgottenlord 

@kbanginmotown:  While I appreciate you attaching that graph, I must point out that (for the duration of Obama's Presidency) the growth of the debt has generally increased.

Also, the graph ends just after January 2011, which means that years 2012-2013 are not shown.  Generally speaking, the growth of the debt has increased over those years too.

Lastly, debt reduction during the Clinton Administration was more due to 1) decreased Cold War spending, and 2) increased tax revenues due to the "dot-com bubble" of the late 1990s.  President Clinton was a clear benefactor of not having to pay for multiple wars, and an economy driven by rapid change in technology.

mrbomb13
mrbomb13

@forgottenlord @mrbomb13 

A couple of comments to your response:

1) I already knew the differences between a budget and a debt ceiling.  Given that none of my prior comments mentioned the difference between the two, I fail to see why you even brought that up.

2) I did mention the debt ceiling, within the context of starting a discussion of responsibly bringing it down.  However, that responsibility lies with Congressional Democrats and Republicans.  I think you mistakenly thought I was referring to President Obama, who has no control over the debt ceiling.

3) I am already well aware of the consequences of defaulting, but thanks for the review.

4) You have to be careful when stating the ramifications of minting the trillion-dollar coin.  In the short-run, disaster would be curiously averted with such a questionable  solution.  But, what would be the long-run consequences?  Would there be ANY meaningful action taken on spending?  Or, are we going to have more "compromises" that result in $40 dollars in taxes for every $1 in spending cuts?  Going forward, a trillion-dollar coin would only add to our gluttonous spending, and do nothing to alleviate it.  That's why it would fail the economics-based, finance-based, and gov't./political tests.

5) Your implication of "living within your means" not being good recessionary policy is akin to Keynesian economics, which advocate "stimulus measures" to boost the economy.  The problem with Keynesian-driven policy is that it drives the deficit deeper and deeper.  It essentially relies upon faith that constant currency infusions will lead to recovery.  There are deep divisions of thought on that in the economics field.  In other words, "spending money doesn't necessarily make money."

kbanginmotown
kbanginmotown

@forgottenlord Great summary, forgottenlord. I couldn't have said it better myself.

@mrbomb13 Thanks for your thoughtful reply. I'd note, however, that deficit spending is not solely a Democratic problem, and that the Clinton administration did a pretty good job of bringing it under control. As the attached graph demonstrates, the Obama administration is slowing the growth of the debt as well...

http://www.washingtonpost.com/r/2010-2019/WashingtonPost/2011/07/17/Business/Graphics/w-Debt17.pdf


forgottenlord
forgottenlord

@mrbomb13

Once again, we have someone who fails to recognize the difference between a budget and a debt ceiling.  A budget is a law that specifically says that the government (as managed by the Executive Branch and thus the President) how much money to spend and how to spend it.  It is passed by Congress and is normally negotiated in the summer for the Fiscal Year turnover in August.  It is LAW and it must be executed in full by the President until a law is passed that supercedes or modifies it.

I have yet to hear a legal analyst who claims that the debt ceiling is such a law.  As such, what the debt ceiling does is it imposes an arbitrary limit on how much money the government can borrow with no regard to the conditions set forth under the budget.  Under the Bush years, this was normally dealt with by tying the debt ceiling to the budget, thereby allowing the debt ceiling to increase as Congress passed progressively worse budgets.  To some degree, it makes sense to tie those two together - after all, Congress is telling you to spend the money, the least they can do is provide you the means to actually pay for the things you are ordered to pay for.  It's only recently that the two concepts have been separated (though it is worth noting that they weren't, IIRC, separate prior to Bush).

I have no problem with the argument that during budget talks, we should be talking about how to reduce the deficit.  I have a huge problem with the confusion between budget and debt ceiling.  Obama does not have the authority to shut down the government.  In addition, credit analysts have noted that hitting the debt ceiling without it being extended would be classified as a default because creditors would not be paid - this isn't just the people who are owed interest payments but people like your employees, the people you buy your computers from, the people you buy your military equipment from, the doctors who've filed medicare and medicaid claims for rendering services, etc.  As such, Obama can't afford to hit the debt ceiling.

At the end of the day, if it comes down to default or printing the trillion dollar coin, Obama will - and should - print the Trillion dollar coin.  Yes, it's a gimmick.  Yes, it's money that appeared out of thin air.  Yes, it will result in the world community laughing at the US.  But between the two options, it would be by far the less damaging.

(Side note: living within your means in the good times is all well and good, but living within your means during a recession tends to make the recession worse - as several European countries are discovering to the point that the IMF has acknowledged that it was a very bad idea when they built the bailout packages - it just created economic death spirals.  As the old saying goes, sometimes you have to spend money to make money.)

FredZeleny
FredZeleny

@forgottenlord Yes, obviously. It's just a dumb example for them to use (on top of a whole wealth of other dumb assumptions, of course). I was briefly overcome by pedantry.

forgottenlord
forgottenlord

@FredZeleny

Er....the point isn't that they'd go and refloat the titanic to put the coin on it or sink but that the mass was sufficient that if the titanic was floating, it would single-handedly sink it.

deconstructiva
deconstructiva

@forgottenlord I miss edit functions too. Good thing someone "coined" the term "seigniorage" since that a dollar bill does not really contain a dollar's worth of cotton, linen, and ink.