FORMER U.S. MINT DIRECTOR MOY ON THE TRILLION DOLLAR COIN

The $1 trillion platinum coin is a desperate gimmick of questionable legality and doesn't even come close to solving our fiscal problems.

First, it may be legal to mint a platinum bullion coin with a $1 trillion face value, but it's not legal to pass it off as actually worth $1 trillion if there isn't $1 trillion of platinum in it. That's because it's a bullion coin and not a legal circulating coin. The face value of a bullion coin has no relationship with the metal content because the value is in the metal, whose price fluctuates daily.

Second, for a coin to be worth its face value, it has to be made as a circulating coin.

Here's how a circulating coin is made. Congress needs agree on the metal content, dimensions, the designs on the heads and tails sides, weight, and other details. Then they have to pass legislation to create a $1 trillion circulating coin. The President needs to sign it. Then the Mint would have to design it get the design approved, procure whatever new materials they need, make the dies, test production, and then make one. Then a bank would have to order one because a business customer needed it to make change. The Fed would pay the Mint face value for the coin. After deducting the cost of the coin, the Mint would return the balance to the Treasury. All this needs to be done before we run out of money. Good luck with that.

Third, the current law does allow the Mint to make a platinum proof coin and does not specify whether this applies to a bullion coin or a circulating coin. A proof coin refers to a mirror-like finish and is made for coin collectors. However, a proof coin must be accepted at face value. Some have argued that the law can be stretched to allow for a platinum circulating coin, but this would not be consistent with the intent of the original legislation.

Recently, I made a quarter "disappear" for my young daughters by using misdirection to make that sleight of hand magic trick work. Like misdirection, the notion of a $1 trillion coin directs attention away from real solutions. And it gives a false hope to those fantasizing for a painless, simple, and quick solution.

The only solutions left are the hard ones. We can raise revenue, cut spending, or do some combination of the two. Regardless, it has to be big and deep enough to matter.

To read the complete article, see: Former U.S. Mint Director: The $1 Trillion Platinum Coin Ain't Worth a Plugged Nicke (www.cnbc.com/id/100364183)

Minting such high-value coins to pay the government's bills would allow President Obama to sidestep a showdown with Republicans over the federal debt ceiling.

The proposal would involve the Treasury minting the coin and depositing it into its own account at the Federal Reserve, allowing the government to write down or cancel $1 trillion of its $16.4 trillion debt.

Economist and Nobel prizewinner Paul Krugman, one of those backing the idea, said the time had come to use any economic tools available to the Government.

Writing in his blog on the New York Times website, Mr Krugman said: ‘This is all 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.’

Will a $1 trillion coin solve the debt crisis? Plan to mint platinum currency that Treasury will pay itself (www.dailymail.co.uk/news/article-2258748/Republicans-seek
-block-Obama-administration-trying-mint-1-trillion-coin.html)

From Alan Luedeking: Who, What, Why: Could the US get a $1tn platinum coin (www.bbc.co.uk/news/magazine-20951417)

Platinomics: The economics of the platinum coin option (www.economist.com/blogs/freeexchange/2013/01/economics-platinum-coin-option)

Alan adds:

From Kavan Ratntunga White House: $1 trillion coin off table (http://www.salon.com/2013/01/12/white_house_1_trillion_coin_off_table/singleton/)

Wayne Homren, Editor

	NBS (coinbooks.org) Web