It seems like somebody floats this solution every time we’re facing a budget standoff or possible government shutdown these days. That doesn’t make it any better of an idea, but I suppose the swamp creatures need to find something to do to occupy their time. The suggestion is once again being floated that the Treasury can keep the government open and the imaginary money flowing if they just mint a platinum coin valued at one trillion dollars and deposit it in the federal coffers. And as the Associated Press freely admits, the people who are talking about it are excited about the prospect that it would “drive Republicans crazy.” This is apparently how serious our policy discussions are these days. Prospects for success are not great, but it probably says something about the current state of our government that the idea is even being considered.
Some politicians think they’ve found a silver bullet for the impasse over the debt limit, except the bullet is made of platinum: Mint a $1 trillion coin, token of all tokens, and use it to flood the treasury with cash and drive Republicans crazy.
Even its serious proponents — who are not that many — call it a gimmick. They say it is an oddball way out of an oddball accounting problem that will have severe consequences to average people’s pocketbooks and the economy if it is not worked out in coming days.
But despite all the jokes about who should go on the face of the coin — Chuck E. Cheese? Donald Trump, to tempt or taunt the GOP? — there’s scholarship behind it, too. However improbable, it is conceivable the government could turn $1 trillion into a coin of the realm without lawmakers having a say.
Could they do it? Probably. Should they do it? Now we’re angling away toward Crazy Town.
It’s the same scheme that was under discussion last time. An obscure law from a few decades ago was put in place to promote a market for collectible commemorative coins. It gives the Treasury the ability to “mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”
While the ability to do this is clearly found in that law, it’s not impossible that a court challenge against such a scheme could succeed. It all comes down to the difference between the letter of the law and the spirit of the law. The trillion-dollar coin plan clearly falls outside of the latter. The statute was written to support a market for collectors of commemorative coins, and the rest of the law makes repeated references to the Secretary of the Treasury authorizing the minting of coins “sufficient to meet public demand.”
What is the public demand for this coin? We don’t have any trillionaires in this country yet. Even if you only mint one, nobody could afford to buy it with the possible exception of Vladimir Putin, and that would nearly bankrupt even him. We can’t be 100% sure that the courts would agree, but it seems like a clear abuse of the law intended to thwart the normal rules regarding the issuance of currency.
And that’s all we would have on our hands if they actually tried this. We’re just talking about more magical money with nothing backing it up. Also, how could prices and inflation not be impacted by the sudden appearance of another trillion dollars out of thin air?
Thankfully, this isn’t something the Senate Majority can push through. The issuance of such coins is strictly in the hands of the Treasury Secretary who reports to Joe Biden. And thus far I haven’t heard either Biden or Janet Yellen speaking out in support of a scheme like this. Perhaps there’s some common sense left in Washington after all.