On the trillion dollar platinum coin
ONE of the stories you might start hearing about soon enough is the American trillion dollar (yes, trillion, that’s one thousand billion) platinum coin. It;s actually possible that they might go ahead and mint one.
Bit difficult to get change for it but….yet still, here is your handy cut out and keep guide to what is going on.
Yes, the US government has a large debt. It is also running a large deficit: so that debt is getting bigger all the time. So far so damn like every other country at present. However, in the US they also have something called the “debt ceiling”. This is the maximum amount that congress has said that the Federal Government can borrow.
Now, they can raise this number whenever they want: as they have done multiple times in the past. But there’s always a certain amount of haggling when they do so. Various Senators who might vote against it are promised new defense plants for their states, that sort of thing.
The Feds hit that debt limit last weekend. But Congress hasn’t yet passed the bill allowing more borrowing.
One more bit: the Mint, part of the Treasury, is allowed to print money. That’s not a problem. And to make coins. In copper, gold, silver and so on. So they could just buy more paper, print more dollar bills and beat that debt limit that way. Except, well, they can’t. The deficit is just too huge to be able to do that.
There’s one little wrinkle in the law though. The executive (the bit the President controls) is allowed to make platinum coins of any value that they like. So, the idea is, make a platinum coin, say it’s worth $1 trillion and….then give it to the Treasury or the Federal Reserve and say, well, lend us the more money we need to cover the deficit.
Because this is an asset that they are borrowing against, not borrowing from the general public subject to that limit, this would be legal.
All of which, in the end, really only shows how crocked US politics is. That they really might make a friggin’ $ 1 trillion platinum coin.
It’s the Million Pound Note all over again:
Posted: 7th, January 2013 | In: Key Posts, Money Comment | TrackBack | Permalink
