A rush of pundits, experts and media sources are advocating that the U.S. mint a trillion dollar platinum coin to pay the federal deficit, reports Business Insider.
In the last few days, the idea of a one-of-a-kind coin has been featured prominently by and endorsed by a bevy of respected voices, including Paul Krugman, U.S. Representative Jerry Nadler, Bloomberg’s Josh Barro, The Huffington Post, and even the German newspaper Süddeutsche.
The concept, which began circulating on finance blogs about 18 months ago, calls for the U.S. Treasury Department to take advantage of legal technicality. Although the Treasury can’t print money specifically to pay its bills, there is a detail that gives the Treasury the option to mint platinum coins of any denomination. Because of this, it would appear to be perfectly legal for Tim Geithner to have a single coin minted, then deposit that legal tender in the Treasury’s bank account.
While the idea was put forth early on by was Cullen Roche's Pragmatic Capitalist and backed shortly thereafter by Business Insider and others, it never gained traction as any other than a lark. However, as fears about the fiscal cliff resolution arose at the close of 2012, and concerns about the actual agreement reached in early 2013, emerged, the trillion dollar platinum coin seems to have found legs once again.
“Basically, the trillion-dollar coin would just allow the Treasury, which pays the country's bills, to keep writing checks regardless of what Congress does with the debt ceiling,” explained Henry Blodgett, editor-in-chief of Business Insider.
Though the very idea of a platinum coin may seem random to most citizens, the truth is that the U.S. Mint (a division of the Treasury Department) has actually been minting platinum coins, called Platinum American Eagles, since 1997. The coins come in four sizes and are actual legal tender in the United States. The coins have face values of $10, $25, $50 and $100 and weigh from 1/10 Troy ounce to 1 Troy ounce.
"The metal content of the 1 (Troy) ounce coin is worth more than $1,600 at today's market price," explains Dave Williams, president of the United States Gold Bureau. "These coins are acquired by investors as a way to play the bullion (commodities) market all the time."