by Nate Wooley | December 7, 2012 2:48 pm
Could a platinum coin worth $1 trillion help the U.S. avoid the debt ceiling?
Some people seem to think so.
Yes, the idea of minting platinum coins worth $1 trillion each — first proposed during the last debt ceiling fight in 2011 — is back in circulation.
It stems from a quirk in the law governing the creation of money by the federal government, The Washington Post reports. While the law places a limit on the manufacturing of paper dollars and gold coins, there is no such restriction on the minting of platinum coins. Therefore, the U.S. Bureau of Engraving and Printing could make as many as needed.
Should the plan come about, the government could mint the coins and then deposit them in the Federal Reserve, thereby creating new money which the government could spend without issuing new bonds and exceeding the debt ceiling.
The idea was originally proposed by Yale Law professor Jack Balkin during the 2011 debt ceiling fight. Balkin was the first to note that the U.S. Code allows for the minting of platinum coins without restriction. These days, however, even Balkin thinks the idea allows for too much risk.
Right now, the idea of the U.S. minting its way out of the current crisis doesn’t have a lot of weight behind it. Still, there’s no telling what the future holds if the fiscal cliff crisis and debt ceiling crisis aren’t resolved soon.
The opinions contained in this column are solely those of the writer.
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