Forget Bitcoins, let's talk Trillion Dollar Platinum coins

IIRC, the reason they can do this is based on a loophole in a statute. I think that's the right statute anyway.The statute is about commemorative coins. The statute lays out the specification for various coins (including things like silver dollars), and says how much those coins are worth. It also says:

So a plain reading of the statute is that the Secretary can mint and issue a platinum coin of any denomination, including one worth a trillion dollars. It can't be paper currency, because that wouldn't fit inside the terms of the statute.

... what does happen to the platinum coin after it's deposited? I mean, it would be the single most valuable object in the entire world. There'd be no end to the insane, roundabout schemes that wouldn't be worth the expense required to steal it. You could spend a billion dollars on a rocket that pierces the building and spews thousands of tiny platinum-seeking spider droids, and still turn a profit.

Are we seeing a coming age of supervillainy? Will the world of James Bond or Carmen Sandiego finally be ours?

Re why not print dollars: normally new money comes from the Fed, not Treasury. Exception: seniorage.

What happens to coin: sits in Fed vault until Treasury purchases it back, then it gets melted down. A new generation has grist for the caper flick mill.

Note that if Fed will take it as collateral, you can just give them a plate for a trillion bucks. Trick w coin is that Fed has to play ball.

Basically Congress enacts the laws that define what can be used to represent legal money and how much debt the Federal Reserve can take on in its operations. Paper currency is printed merely as a physical representation of money that the Reserve has and is sold to the Reserve by the Treasury at manufacturing cost, but coins are sold to the Reserve by the Treasury at face value. You couldn't do this with paper currency because paper currency is just the banknotes the Fed uses to represent one aspect of its cash reserves and hence would be limited by the debt ceiling - they couldn't issue the debt to imbue that much currency with its face value so having the physical paper printed would be meaningless.

The coin is an end-run around the debt ceiling, because Congress authorized the Treasury to be able to produce coins at their discretion and to the Fed coins (unlike paper) are worth their face value. The Secretary of the Treasury is not limited by the debt ceiling and could issue such a coin (effectively taking on sovereign debt to cover its value) and then the Fed would have to accept it at face value and could use it to balance their books.

Why is reality so relentlessly dull?

But thanks for answering, I was genuinely curious. The span of time between deposit and buying it back, is this a matter of days or is it until the unlikely date that America actually starts paying down its debt?

Not according to Wired.

That's up to Fed/Treasury. If assume any debt ceiling deal would ultimatelyake that determination.

Well duh. You can't even spend money you steal from a bank because it's identifiable by serial number and they'll know it's stolen. How the hell could you expect to spend a one-of-a-kind coin? The most you could do is sell it to a private collector, but given the lack of title and the fact that they couldn't resell or even display it, probably not for that much (though it might be enough to recoup the cost of the van, at least).

Actually, what if you used the coin in a vending machine? Just make sure it's one that can give change in dollar coins -- you wouldn't want all those quarters.

Economically, there is no difference between coins or paper. The treasury also CANT print paper currency ($1 or $1 trillion), the federal reserve does that.

HOWEVER, there is a random piece of legislation around which lets treasury mint platinum coins. It was intended to allow treasury to continue making collectors coins, like the American Eagle coin and similar. http://en.wikipedia.org/wiki/American_Platinum_Eagle

(here in Australia the Perth mint does the same). The legislation however does not put any limit on the face value of the coin. So treasury can mint a platinum coin of whatever face value it wants.

I think it is far more likely that Biden would just spend it playing the slots.

Is "haw haw haw Biden would just lose the coin doing <insert white trash stereotype>" the new "Democrats and Republicans drive off the Fiscal cliff" meme?

OK I'm not on my iPhone replying. So here's a more expanded answer.

The US Treasury cannot print money. Creating new money is the domain of the Federal Reserve. The Fed creates money by buying up assets; e.g., that whole QE3 program that's in the news? That's a program wherein the Fed buys up financial assets in exchange for new money. The Fed can also destroy money by selling assets; the money you give to the Fed in exchange for, say, one of those MBS's ends up vanishing into the ether. It's monetary magic, and it makes the heads of various goldbugs spin.

Like I said, the one trick about this is seignorage. Seignorage is a concept wherein you print a coin with a nominal (face) value that exceeds the value of the metal in it. The US Treasury has been practicing seignorage for a long time; all those commemorative coins you see are basically a moneymaking scheme by the U.S. government. I believe that seignorage generates a few hundred million in profits for the government every year.

The trick with the platinum coin is a loophole in the statue that doesn't provide an upper bound on the nominal value of the coin. The coin is - by definition - legal tender; everyone in the United States must accept it as payment. Including the Federal Reserve. The United States Treasury has an account at the Federal Reserve, they could deposit the coin - which could be printed in any denomination; one trillion is just the number people came up with - and at that point the government has an extra trillion dollars in its bank account to draw on.

The assumption is that eventually the debt ceiling mess would be resolved, at which point the US would borrow a trillion (or however much) from the markets and give it to the Fed in exchange for the coin, which would then be melted down. Much to the chagrin of supervillians everywhere.

No, we just adore Biden.

Am I a horrible person for getting rid of the L in the third from last word, and changing the O to a U in the last one?

I honestly think the biggest problem with the coin is that it will become our constant companion in republican ads during every election cycle until it is "paid off."

It may even get a speaking part.

Ah, so I finally found the idiocy where people are claiming it would have to be a trillion dollars worth of platinum. A few libertarians are reading the statute to say that they can only mint bullion coins (which is to say, value is the amount of metal in it) of any denomination. Everyone else is reading it to say that they can mint bullion or coins of any denomination.

But that's where Fox and Co are running with the idea of it having to be a giant coin and completely ignoring the system of currency we use. Given the values assigned to collector's coins, I'm going to go with the libertarians reading the statute wrong in an attempt to find a reason it's not technically legal. But let's be honest here: we're trying to end run around the GOP by being That Guy in your D&D game.

But what would the real world value of that coin actually be. A single coin wouldn't have 1 trillion worth of platinum in it and no one would give you 1 trillion for it. The very fact that it couldn't be used means it's real value would be the actual value of the platinum ($5,000?) plus whatever premium collectors would be willing to pay to get it.

FTFY. A super secret private collector would set a price irrespective of the value of the metal itself, since they obviously wouldn't plan on melting it down. If that's less than the value of the metal (unlikely), or if selling to a private collector is difficult to impossible (extremely likely), then you'd settle for the value of the metal itself, which is the minimum that you could get out of it. Not exactly worth figuring out how to pull probably the most difficult heist in history, though.

The lives of everyone involved in stealing it. There is no scenario in which you steal a trillion dollars from the government that doesn't end with a bullet or a cell.

Jerri Blank's Wired link above pretty much explains that, yeah, it's not worth a trillion, even in the hands of V.I.L.E. I was mostly curious as to where it goes afterwards, because it's a very unusual artifact. It's one coin that represents more money than anyone can imagine.

It seems like a ridiculous idea that ought to have ridiculous consequences.

The only reason it sounds ridiculous is that it's a solution to a ridiculous problem. I don't find it strange that the government has the ability to mint currency in whatever denomination it wants, retain possession of it, and destroy it when it is no longer needed. I find it strange that there's a practical application for such a thing.

Your question gets into some hilarious blending of real and nominal values.

From one perspective, the real value of the coin is one trillion dollars. It's legal tender; deposit it at a U.S. bank and they're obliged to credit your account with 1tn.

Realistically though, since there's only one coin possessing it would be possession of stolen property. So while you might try and waltz up and deposit it, you'd very quickly get arrested and the coin would be confiscated. In that sense, its real value is significantly less.

As a result, it's real value is whatever anyone would pay you for it. I guess I could imagine a world where Russia might pay you several hundred billion, and then deposit the coin on behalf of the Russian government. Would the U.S. potentially provoke a war over 1tn dollars? Who knows!

i would totally start a war over a trillion dollars and vote for anyone who does so. note: this is different than starting a war and losing a trillion dollars.

I think y'all are missing the point and ignoring the underlying motivations of evil villains worldwide. It's a minority who actually steal and destroy for the sole purposes of material wealth. They obviously just want to keep the coin in a perspex container guarded with lasers and snakes and prominently displayed in their Evil Headquarters for bragging rights with the other evil villains they have over for tea, as a testament to their own superior resources and intellect to the ends of achieving eventual world domination. The actual monetary value of the relic is inconsequential. You guys don't know anything.

Oh well, it was an interesting concept. But:

Awww, that sucks.

Meanwhile, the actual "value" of the contained metal in the coin being far lass than the decreed face value is nothing new - in fact its kind of the point:

http://www.coinflation.com/

Godfuckingdamnit wouldn't have wanted to get any leverage out of it, no, not if there was a moment's risk of looking less adult or serious than... fucking Congressional Republicans? FUCKING DEMOCRATS MAN.

Well, the hostage negotiator is usually at a disadvantage in negotiations with the insane/stupid since they know the negotiator won't do something crazy.

Here is why Tim Duy is an economist and I am not. Tim points out that at the zero bound, there's really no difference between a government issuing cash and issuing debt. As a result, there is no reason not to simply monetize the debt. Politically our country is heavily committed to the importance of deficit reduction now, monetizing the debt (via the platinum coin) with no negative consequences would reveal just how foolhardy that would be.

So since the trillion dollar coin has been sadly killed, can we maybe mint a trillion bitcoin coin at least?

What leverage?

The trillion dollar coin was a bad plan for Democrats. It's the equivalent of saying to the GOP, "Go ahead, try to crash the economy. I'm pretty sure we could fix it." How is that a disincentive to the GOP?

The only thing that's going to the stop the GOP from trying to crash the economy is the prospect of being endlessly blamed for it. The tentative steps made by Obama in this regard are somewhat encouraging.

Uh, no thanks I'd rather have a functioning economy, please.

You do know the GOP's goal isn't to actually crash the economy (though some may not actually care if that happens or not), it's to use the stupid debt ceiling crap to gain political leverage. The coin eliminates that leverage making the threat of destroying the economy toothless.

Honestly though the GOP members should be fucking crucified for even suggesting they hold the economy hostage as means of gaining a political advantage and why they're not is beyond me.

There's no way to stop the GOP from crashing the economy except for giving into their demands. The Democrats, Obama notable among them, will never just go for the "Blame the GOP after they destroy everything" plan because they're A: adults and B: wimps. The trillion dollar coin was an unusually harmless way to kick the can down the road, from all the GOP would probably have succeeded in lying about what it was and what it meant.

When the GOP do their debt ceiling chicken routine it's effectively a constitutional crisis - "We're not doing our basic job under the constitution, we dare you to do it for us so we can impeach you." The coin trick had the benefit of being legal.

Me too. But here's the thing: this is a democracy. If that means anything, it means that Congress has the power to crash our economy.

I disagree. In fact, I think the GOP would have preferred the coin option. It would allow them to refuse to raise the debt ceiling, free of any consequence. And then they could spend the next three years crucifying Obama over the "power grab" that saved their ass.

That is not what the definition of a democracy is.

It would also take away their new favorite unbelievably dangerous toy permanently, at the cost of giving them another idiotic talking point about how spendy those darn Democrats are. Big deal, they have enough of those already.

Pres. had some kind of press conference yesterday about the debt ceiling, anyone watch?
He was saying something about Congress and how this is foolish to not pay the bill for money already spent.


That's all I caught while heating my lasagne in the lunchroom

Congress has the power to do a ton of stupid shit, that really doesn't have any bearing on this issue.

Disagree that the end goal of the GOP isn't to destroy the country's economy?

Well they're not so much refusing to raise the debt ceiling since it wouldn't even come to a vote with the magic coin, the issue simply goes away (for a while). They can try and crucify Obama all they like but I'm not sure it would really go anywhere.

Either way the US electorate is a fucking joke, they let the Republicans play these incredibly dangerous games with the country for absolutely no reason and people don't give a crap. Unless politics in the US changes it's only a matter of time before seriously fucked up shit happens in the name of "winning" some stupid political points.