January 10, 2013
The US Congress is contemplating minting a $1 trillion platinum coin under the authorization of Timothy Geithner, US Secretary of Treasury. These platinum coins would be used to pay off the $16.4 trillion debt accrued by US government spending. The US Treasury would keep the coins in its account at the Federal Reserve Bank in Washington, DC.
Legally, under Title 31 of the USC, Section 5112, the US Treasury would give the platinum coin any monetary worth, such as $1 trillion, and then deposit into the Federal Reserve Bank to be added against the National Debt.
Subsection K reads: “The Secretary may 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.”
This would have long term effects of high inflation in the near future.
In 1995, then House Representative Michael Castle, who was also head of the House Financial Services subcommittee on domestic and international monetary policy, began working with coin collectors to draft legislation on the issuance of coinage which began a 50-state quarter program as well as a bill entitled, the “Commemorative Coin Authorization and Reform Act of 1995” that stated as a provision: “Notwithstanding any other provision of law, the Secretary of the Treasury may mint and issue platinum coins in such quantity and of such variety as the Secretary determines to be appropriate.”
Castle enabled the US Treasury to print collectable platinum coins in various sizes for investment purposes. In the bill, Castle outlined that prfits could be taken from the difference between the worth of the coin and the cost of printing which could be used to reduce the deficit. Castle explains: “We saw it as an opportunity to make money for the Mint and the Treasury.”
Although the bill never made it passed the Senate, portions of it were revived in 50-state quarter HR 3610 in 1997 which became Public Law 104-208: “The Secretary may mint and issue bullion 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.”
Castle “never intended” for his drafted bill to become the justification for the $1 trillion platinum coin scheme. Castle says that this irresponsible proposal is “so far-fetched and so black helicopter-ish a type of methodology of trying to resolve something like this that I think the public would totally scoff at it…It would be an artificial way of trying to create money and I think everybody will see that.”
In 2011, the proposal was raised and most recently, a formal petition on the WeThePeople.gov website has been addressed to the Obama administration with 500 signatures asking that this idea be used to avert another fiscal cliff. Before Obama is prompted to respond to this petition 25,000 signatures are required.
The petition reads: “With the creation and Treasury deposit of a new platinum coin with a value of $1trillion, we would avert the absurd yet imminent debt ceiling face-off in Congress in two quick and simple steps! While this may seem like an unnecessarily extreme measure, it is no more absurd than playing political football with the US – and global – economy at stake.”
House Representative Jerrold Nadler says that the platinum coin would “stick a fork in the coming debt crisis before it begins.” Nadler were on to say: “It sounds silly but it’s absolutely legal. And it would normally not be proper to consider such a thing, except when you’re faced with blackmail to destroy the country’s economy, you have to consider things.”
Another House Representative, Greg Walden, will introduce a bill to stop the minting of “high-value platinum coins to pay the federal government’s bills.”
Walden asserts: “This scheme to mint trillion dollar platinum coins is absurd and dangerous, and would be laughable if the proponents weren’t so serious about it as a solution. I’m introducing a bill to stop it in its tracks.”
According to economist Paul Krugman, the idea is worth consideration; however he feels it is also a gimmick, “but since the debt ceiling itself is crazy, allowing Congress to tell the President to spend money then tell him that he can’t raise the money he’s supposed to spend, there’s a pretty good case for using whatever gimmicks come to hand.”
Mainstream media is suggesting that the platinum coin would be Obama’s “trump card in his back pocket” that would resolve the debt ceiling issue and help him gain control over the situation with Congress.
The platinum coin scheme could allow Obama to effectually ignore the debt ceiling by promising to use the coins to continue to pay off debt as it mounts up.
But more importantly, if the federal government could just print a coin at any demonization it chose and deposit that coin into a bank account to be redeemed for that value, then the US government would be doing the same thing the technocrats like Ben Bernanke do when they print fiat Federal Reserve Notes without a solid basis in actual monetary worth.
By right of the US Constitution, the Congress is charged with the power to limit government spending and borrowing. In fact, our government is empowered to print its own money without having to use the central bankers for that purpose and therefore our currency would not need to be imbued with debt because it is borrowed by a private banking institution.
Jim Pethokoukis, economic expert states: “There are limits on how much paper money the U.S. can circulate and rules that govern coinage on gold, silver, and copper. BUT, the Treasury has broad discretion on coins made from platinum. The theory goes that the U.S. Mint would create a handful of trillion dollar (or more) platinum coins. The President would then order the coins deposited at the Fed, who would then put the coin(s) in the Treasury who now can pay all their bills and a default is removed from the equation. The effects on the currency market and inflation are unclear, to say the least.”
Comedian Stephen Colbert, of the Colbert Report remarked that: “We should have known a coin was Obama’s solution to everything. It was right there in his slogan: ‘Change.’”
Colbert went on to point out that: “Our nation’s debt is $16 trillion. And we can’t make a $16 trillion coin. That’s just silly.”