Of Trillion Dollar Coins and Fiscal Lunacy

The idea of minting trillion-dollar platinum coins has been a lunatic nostrum of the wacked out left for about a year.  Today Brad Plumer on the wonk blog at the Washington Post looks at this scam:

Enter the platinum coins. Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.

Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue.

“I like it,” says Joseph Gagnon of the Peterson Institute for International Economics. “There’s nothing that’s obviously economically problematic about it.”

Go here to read the rest.  The country is in debt sixteen trillion dollars.  By the time Obama finally leaves office we will probably be at least 20 trillion in debt.  Of course this does not take into account dozens of trillions of debt in entitlement obligations coming due over the next few decades.  We are rapidly reaching the point where it is mathematically impossible to ever pay off this debt without currency depreciation and/or hyper inflation.  This scheme is basically currency depreciation as the US currency swells by two trillion dollars in a year’s time.  If attempted I think it would lead ultimately to hyperinflation.  The left are not all loons.  Something like this will eventually be done by people who realize it is economic poison, but who are willing to do it anyway to get out of dealing with an unpayable debt.  The impact on our economy would be likely catastrophic.



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  1. Phillip,


    They can save the platinum. They don’t need to engrave two trillion bills, either. Ya’ know, it would have Saul Alinsky’s face on it!

    It’s all been 24/7 “Contol-P” at the Fed since 2008. In that time span, the Fed added approximately $2 trillion in assets and liabilities to its balance sheet.

    Now, they are in QEternity wherein each month, from now until the Second Coming of Christ, the Fed buys $40 billion in UST securities and $45 billion in MBS.

    It is all done “book entry.” The fed adds $40 billion to the UST’s checking account (liability) and adds $40 billion in UST securities to its assets. Voila!

    Weimar inflation – here we come.

    Liberals are idiots.

  2. Inflation is usually the result of currency depreciation. The Federal Reserve steals from us by printing more money causing inflation. Further, they charge the US interest on US currency that it prints. The Federal Reserve Bank is a private corporation. Why is a private corporation allowed to print money or legal tender?

  3. I’m sort-a interested in parallels between Obama’s/Geithner’s/Bernanke’s impending currency catastrophe and Weimar hyper-inflation. We may lower expectations catch up to Zimbabwe.

    In 1918, a German one mark gold coin was worth one mark. Brilliant, Shaw! Take another shot of Jameson’s.

    In 1923, that gold mark coin could be exchanged for 1,000,000,000 paper marks.

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