UPDATE: The treasury has decided *not* to mint these ridiculous coins ;)
In the span of the past hour and a half, TWO different people have emailed me articles on this “trillion dollar platinum coin” thing that’s been circulating around the world wide webs… Of which I actually hadn’t heard of yet outside these two friends emailing me about it (thanks guys!).
I do my best to stay way from politics on this site cuz people tend to get pretty heated up about that stuff (and, admittedly, I never know enough to jump in and debate with anyways! Haha…) but this story was too good to pass up. I mean, trillions of dollars AND coin talk?? It’s like a financial orgy up in here! So let’s get this party started ;)
Here’s the email that made me laugh the most:
I know you like a good coin story so I thought I would send this your way:
http://www.bloomberg.com/news/2013-01-03/why-we-must-go-off-the-platinum-coin-cliff.html
In a nutshell, the article says that in order to avoid another debt ceiling standoff at the end of February, the President could order the Dept. of Treasury to produce platinum coins. There is a loophole in the currency laws that says Treasury can assign any value it wants to a platinum coin (the original intent was to allow them to set values for collectible coins) so they could potentially issue a few platinum coins and have their values set at $1 trillion dollars each. These coins could then be used to pay off whatever debts the United States owes if Congress will not agree to pass a bill to do so.
The author also proposes that the President should offer to sign a bill revoking his authority to issue platinum coins as long as that bill also abolishes the debt ceiling which I think would be a pretty pimp move.
As any good Lannister knows, you always pay your debts.
Yeah Game of Thrones!!! Haha… That’s how you get my attention in an email, btw, in case you ever needed to know ;) Just fill it with awesome quotes and a brief summary of the point, and I’ll be much more inclined to respond quicker and happier to your lovely little notes you’ve got there. These 10 page pitches I’ve been getting recently are driving me cuckoo! But I digress…
So, trillion dollar coins. That’s pretty wild, right? Can you imagine if any of those bad boys got out into the public somehow?? You always hear stories of coins leaking hundreds of years ago that are now incredibly rare and valuable (like the 1792 “silver center” penny that was made as an experiment for the gov’t but never released to the public (there are only 14 known to exist, and are worth millions)), so I can’t even imagine what this guy would mean to the coin collecting community. Which I’m proud to say I’m officially a member of now! Just got my 1st year’s subscription to the ANA (American Numismatic Association), baby! Yeah!
Also, it would be funny as hell trying to cash in those coins :) Can you imagine trying to get change back? “Here, Company X – $674,000,000,000 I owe you. Kindly pass me over the change.” ;) They don’t even produce $100,000 bills anymore, so you’re pretty much stuck with $100’s. Unless you wanted to just pro-rate for more services to use up the rest of the trillion, thus putting us even MORE into debt! Haha… what a mess.
Anyways, I thought you guys would find this pretty fascinating if you haven’t heard about it already… Here are the two articles my lovely friends sent me:
- Why We Must Go Off the Platinum Coin Cliff @ Bloomberg
- Trillion Dollar Coins: The Ultimate Debt Ceiling End-Around? @ ABC News
I’ll leave it open for your thoughts now… Please no crazy political rants or obscenities though! I have a shiny little delete button I can use at any time, don’t forget ;) But I WOULD love some smarty pants commentary up in here, so please share your thoughts with us so we can be a little more informed today… These coins seem pretty unlikely to happen in my opinion, but ya really never know!
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PS: The cost of a normal platinum coin right now? $1,900.
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Here is another view on the $1 trillion dollar coin being unconstitutional. I don’t know how it’d affect me but I don’t think this is the answer. It’d be pretty cool to see in a museum one day though.
There is a bill in congress that was introduced to make this illegal. To me the loophole is kind of funny. The real question is, if you can mint a trillion dollar coin why not mint a trigintillion coin and never have to worry about money again(since the way platnum coin legislation is written any face value can be assigned)?*
*trigintillion = 10^93
I read a little bit about this the other day at CNN. I’m just kind of confused as to how this helps at all. I mean, doesn’t it just devalue the dollar if we do that? Maybe, I’m just in the dark.
I think it was Jim Rogers who first warned that when countries get into debt one of their first responses is just to try and print money to get out of it. Sounds like this is a case in point AND it sounds like my kids when they were young: “Dad, we’re not out of money. You still have that card….just go to the ATM and get more!”
It’s fricken STUPID. I hereby claim my poop to be worth 2 billion dollars. I’m willing to take a loss and sell it for $1,239,057,982.23. Don’t miss out!
Funnier still, if some a trillion dollar coin got out and some kid sticks it into a gumball machine.
There won’t be a such a coin so it means, it’ll have to be done the hard way, i.e; grown-ups sitting and talking about what kind of country America will be in 2100.
I expect fireworks!
This would probably end up poorly at best if they did it. You know that it would somehow get lost or end up in the wrong hands. Just remember how the US mint handled the $1 coin issue when they sold them at face value and allowed people to purchase them via credit card. These people racked up millions of rewards and then just put the coins back in the bank in order to pay off the card. Just a simple mistake and you have some nut walking around with a $1 trillion coin. Are you sure this is not a pilot for a television show?
Ill be interested to see how his plays out. I wonder if the price of platinum will go up. Thanks for sharing this info!
Only the government and politicians could come up with something so ludicrous! Seriously, they can’t handle their finances, keep spending, can’t balance a budget, etc. and now they want to make a $1 trillion coin? No wonder our economy is in such a bad state. If I was a politician I would be embarrassed to even propose such a thing, but then again, most politicians don’t feel ashamed of the poor job they are doing so I guess it is a moot point :(
I saw this on the news the other day but didn’t pay much attention to it. Thank you for the information. Admittedly, I don’t think this is the answer to our problems but I agree with Lance, it will make a great museum piece.
A trillion dollar platinum coin. Wow. It would take nearly 40 million pounds of platinum for that coin to actually be worth it’s face value!
The way I heard it was that he could authorize it to be minted, and then it would be deposited at the Fed so they could write “checks” or whatever they do to cover their debts. And that would be their was of guaranteeing it wouldn’t devalue actual money.
So my plan is to take my Monopoly money to the bank and deposit it. Because, why not? lol.
Ya, absolutely a museum piece………..why not
@Lance @ Money Life and More – Oh yeah! An insane piece for a museum.
@Brian – Haha, right? Maybe that’s just *too* crazy for people ;)
@Greg@ClubThrifty – I’m just as confused as you are… hoping someone hear can shed more light!
@AverageJoe – HAH! Yeah dad, why aren’t you doing that more?? :)
@David Hunter – I think your poop is only worth $1,000,010 actually, sorry. Way overvalued ;)
@J. Delancy – I will say they’re getting pretty creative these days though, for whatever that’ worth.
@Grayson @ Debt Roundup – Haha… I was almost one of those people who put those $1 coins on my credit card! By the time I mustered up the courage to do so though it was all changed. But every personal finance blogger and their mom was doing this before I even had my own blog… which excited me to start one, and here we are today blogging about coins again :) The world is funny sometimes.
@Janine – Oh yeah! Interesting thought indeed, I wonder too?
@Monica Clark – They’re a whole other breed. But at least someone wants to take it politics stuff or else we’d be in even more trouble! :)
@Terah@The Credit Report Chick – I’m all about summaries of things and not reading more unless I’m super interested in it – so thanks my friends for passing it along!
@Edward Antrobus – Hah!
@Stephanie – Ahhhhh yeah that would make a lot more sense, wouldn’t it? :)
@ravinder – I’d drive over to check it out :)
It’s confusing, makes no sense and would devalue the dollar even more…sounds like something they’ll be looking at in the next few weeks! ;) Make I bunch of em I say! :)
Simpson’s did an episode on this. It was called “The Trouble with Trillions”. Isn’t that ironic?
No!!!!! This is what Germany did after WWI which made their money worthless and led them into a terrible depression. People were bringing in barrels of money to buy loafs of bread.
As monetary policy, this would be inflationary, but only mildly so. A trillion just isn’t that much when you compare it with the 16 trillion we’re already in the hole for. And really, it is NO more or less inflationary than printing bills (perhaps less in the very short term).
Also, this does NOT represent currency backed a snapshot market value of the metal, but by the US government itself, same as paper money. You could make it out of an oz. of platinum (and they would). No effect on platinum value, no dumptrucks full of metal. Which is probably less cool from a coin perspective.
Near as I can tell, Congress (including Republicans, as a rule) is perfectly happy to spend money we don’t have, they just don’t like to vote for raising more revenues. And after all, once you’ve conditioned a 3 year old to unlimited pixie sticks and Dora on demand, making them eat broccoli and read books is HARD (yes, I did just compare US taxpayers accustomed to current tax rates to horribly spoiled brats).
So far this hasn’t been shot down all the way yet!! If this goes through it’ll be crazy town, haha… jeez…
@John S @ Frugal Rules – Haha… it just may happen!
@Chris – Really?? I haven’t seen that episode.
@SavvyFinancialLatina – Ew, nasty…. so sad :(
@becca – Haha… well I guess it does make sense to make the coin still out of 1 oz, but you’re right – not nearly as fun as it needing to be a billion ounces or something ;) That could be one large ass coin!
So, I’ve spent a couple of days thinking about this and here’s what I came down to:
The trillion dollar coin would not be inflationary and could in fact have a positive effect on the US. From what I’ve been reading, the trillion dollar coin would be minted and then deposited at the Federal Reserve. One of the things they could do would actually be to use the coin to pay off some of the U.S. Treasury Bonds that the Fed is holding. It has over $1.6 Trillion, so this part could work.
Now, if the Federal reserve then puts that money into the economy via the banking system, we would have a tremendous amount of inflation. BUT they don’t have to. They can just sit on it and do nothing with it. In reality, it’s just an electronic method to balance the books. If they do this then the US government reduces its debt by $1 Trillion without causing inflation, because the debt is held by itself.
I would say that this is analogous to borrowing from yourself and then just canceling the debt to yourself. Yes, you’re still out of the money you lent but you no longer have interest or loan payments.
I think the whole thing just makes my brain hurt, haha… But I love it that you’ve been thinking about this for so long :) We’ll know soon whether or not it comes to life!!
UPDATE: The treasury has decided *not* to mint these ridiculous coins ;)
http://www.nytimes.com/2013/01/13/us/politics/treasury-will-not-mint-1-trillion-coin-to-raise-debt-ceiling.html