Former Head of U.S. Mint Says Trillion Dollar Coin is Legal

[babylonsister]

http://politicalwire.com/archives/2013/01/04/former_head_of_us_mint_says_trillion_dollar_coin_is_legal.html

Former Head of U.S. Mint Says Trillion Dollar Coin is Legal


Philip Diehl, head of the U.S. Mint from 1994-2000, tells Capital New York that the minting of a trillion dollar coin to circumvent a fight over the debt ceiling is perfectly legal.

Diehl was head of the Mint when the law giving authorization for such a move was passed and says, "My understanding of how this all works suggests that this is a viable alternative."

He added: "One of the ironies in this story is that a GOP Congress passed the legislation over the objections of a Democratic Treasury, and now, today, Treasury may well be in a position to use the law as leverage to neutralize the GOP's threat to hold the debt limit hostage."

The Daily Beast has more on the possible tactic.

[derby378]

1. An interesting idea, but I have my doubts

I have a $1 trillion note from Zimbabwe at home that I purchased for a mere two bucks. Germany tried something similar during the Weimar period, but I think it was simply to keep up with runaway inflation.

If you're going to have a $1 trillion coin minted by the US, for starters, it can't be made out of platinum. Rhodium or iridium might be more suitable. And you'll need a bunch of either - I'm thinking of a coin at least the size of an Eisenhower dollar.

[KamaAina]

3. You would not be putting trillion-dollar coins into vending machines

any time soon.

The rationale behind the coin is that coins are not subject to the debt ceiling, because they're usually of such small denominations.

[Shrek]

4. Why couldn't platinum be used?

The statute seems to require it:

(k)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.

[derby378]

10. You COULD, as long as size isn't a factor

We might need some inspiration from the Yap islanders and their stone coinage:

[Shrek]

11. Why would the size be relevant?

The coin doesn't have to be minted from $1 trillion worth of platinum.

According to the statute, it can be denominated in whatever value the secretary assigns to it.

[RomneyLies]

12. The statute gives the Secretary of the Treasury WIDE LATITUDE

Denomination of the coin is 100% at the discretion of the Secretary of the Treasury.

He could make it the size of a dime, put Herbert Hoover's face on the thing, and decide the denomination is $1 Trillion.

Remember, the former head of the mint was part of a DEMOCRATIC Treasury department that opposed the bill that eventually became this law because it gave the Treasury Secretary far more power than the DEMOCRATIC Treasury department thought he should have.

[Posteritatis]

7. Zimbabwe's inflation was insane

When your currency's number-to-the-USD ratio is an exponential curve on a logarithmic scale. It peaked around one hundred sextillion percent per year.

[dkf]

2. I wonder what the rating agencies feel about this.

No checks on spending seems scary to me.

[Jim Lane]

21. "No checks on spending" would not happen, period.

The check on spending is what it has been since the ratification of the Constitution: Spending by the federal government may be made only pursuant to a law passed by Congress, and either signed (or not vetoed) by the President or passed again by Congressional supermajorities to override the President's veto.

What's looming in our immediate future is contradictory legislation: Congress passes revenue bills and appropriation bills that create a shortfall, but prohibits the President from borrowing to make up the difference. In effect, the President would be directed to make two plus two equal five.

That isn't a check on spending. It's pure political irresponsibility.

[dkf]

22. Yes they create laws with spending but not necessarily in pure dollar amounts...

Medicare spending is open ended to cover what is needed. So are many safety net items.

[Jim Lane]

23. That's not where the debt ceiling would usually kick in, nor should it.

Historically, there's been no sudden surge in obligations under Medicare and similar programs that caused the government to bump up against the debt ceiling. It's just the simple fact that the budget is generally in deficit, with the total debt growing at a fairly predictable rate. As it approaches the ceiling, Congress raises the ceiling.

I'm not sure if you're arguing that the debt ceiling is a good idea because it provides a check on spending that isn't appropriated in specific dollar amounts. For example, if a sudden economic catastrophe of some sort meant that millions of people were thrown out of work, with the result of increased safety net obligations (at a time of reduced tax revenues), would it be a good thing for the debt ceiling to kick in and put a check on that spending? In my book it would make the catastrophe even worse.

[Warren DeMontague]

5. Watch it get lost in the couch.

[white_wolf]

14. You know what I was thinking?

I hope some rich asshole tosses it to some homeless guy out of contempt thinking it's a penny or something.

[Warren DeMontague]

17. "Gee, Thanks, Mister!"

[TroglodyteScholar]

20. And thank you for making me smile

[Cha]

6. Wow, that sounds crazy but here we are.. Petition to make

it so..

With the creation and Treasury deposit of a new platinum coin with a value of $1 trillion US Dollars, we would avert the absurd-yet-imminent debt ceiling faceoff 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.

https://petitions.whitehouse.gov/petition/direct-united-states-mint-make-single-platinum-trillion-dollar-coin/8hvJbLl6

The gops were more than Fine with raising the debt ceiling for cheney-bush wars.. but, when it comes to helping the US, her citizens, and the economey.. they manufacture Con bullshit.

Thanks babylonsistah

[davidn3600]

8. Do this too many times don't be surprised when it takes a $1 million coin to buy a bowl of soup

[Poll_Blind]

9. This has come up before and it's really not that big a deal.

It's just a matter of doing it.

PB

[WooWooWoo]

13. can someone explain this to me since economics isn't my strong suit

how does printing a trillion dollar coin effect the debt ceiling?

does the treasury just print it - and like, hand it over to someone like you would a check?

[PETRUS]

16. Super short version:

The coin goes into the general account at the Fed. This means the Treasury can write checks without additional borrowing.

But try reading this if you want a fuller understanding:

http://neweconomicperspectives.org/2012/12/new-msm-trillion-dollar-coin-wave-heres-the-big-story.html

[banned from Kos]

15. Why not mint 16 of them and pay off the entire debt?

I suspect this is just an internet hoax.

[RomneyLies]

18. Big whigs on Wall Street are starting to push this option n/t

[PETRUS]

19. Names?