The national debt currently stands at $16.4 trillion and some change. Some folks are talking seriously of adding to the change a $1 trillion platinum coin to slip into the national piggy bank via a legal loophole.
One of the proponents of such a coin is Paul Krugman, the economist who writes a column for The New York Times. Krugman has been soothingly assuring us that a little debt ain’t all that bad. It’s the same argument Miss Peggy uses when she wants to add a few hundred to the family credit-card balance.
The trillion-dollar coin concept is a byproduct of the battle between those who want to continue paying the nation’s bills by floating debt and those who want the country to cut its losses by refusing to borrow more cash.
Here’s how it would work:
The federal government functions under a self-imposed borrowing limit. When it hits the debt ceiling, it faces two options: Increase the debt ceiling or stop paying the bills.
Congress has periodically increased the debt ceiling. The Republicans, who control the House of Representatives, want to keep the ceiling where it is. That would bring the government to a standstill.
The government would have no money to pay Social Security checks or to pay federal employees, including the men and women in uniform. Things would be a mess.
You’d think the government, which owns the money-printing presses, would simply start them up and print out a couple of trillion dollars’ worth of big bills to tide it over. But the law forbids that.
Every dollar printed has to be backed by something of value. That “something of value” can be a wad of Chinese money paid in exchange for a national IOU. But if we’re up against the debt limit, we can’t borrow any more from China, or from anybody else.
Enter the trillion-dollar coin.
As Krugman noted, there’s a law on the books allowing the Treasury to mint platinum coins in any denomination it chooses. The law was intended to allow the minting of commemorative coins, which could then be stashed away among your souvenirs, or sold at market value. But, as Krugman noted, that’s not what the letter of the law says.
Conceivably, Treasury could mint a coin in any denomination and slip it into circulation through that loophole.
And, Krugman writes, “by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling – while doing no economic harm at all.”
So here’s the idea: Take a little bit of platinum, strike it into a coin and engrave upon it, “United States of America, In God We Trust, E Pluribus Unum, One Trillion Dollars.”
Then the U.S. Treasurer could put it in his pocket, take it to the nearest Federal Reserve bank, fill out a deposit slip for $1 trillion in cash, and immediately start writing checks on it.
I can see a few problems with that.
For one thing, there’s no way you could pack $1 trillion worth of platinum into one pocket-size coin.
The price of platinum on the world market has been hovering around $1,650 per troy ounce, which comes to about $1,485 per regular ounce. That means a pound of platinum will bring about $23,760, which is more than I normally carry in pocket change but nowhere near a trillion dollars.
A platinum coin worth a literal trillion dollars would have to weigh 21,000 tons. I don’t know whether Brinks has trucks big enough to haul that kind of stash, but I know it would tear a hole in my pockets.
Fortunately, the letter of the law doesn’t require the coin to contain enough of the metal to fetch the face value on the world market. Treasury could print a coin the size of a penny and fix its value at $1 trillion. So what size should it be?
I believe a trillion-dollar platinum coin should be at least as large as an Eisenhower silver dollar. That might be too big to go into a vending-machine slot, but so far they’re not asking a $1 trillion for a Baby Ruth or a bottle of Evian, though the trend is in that direction.
What frightens me is what might happen to the platinum coin on the way to the bank. Neither Timothy Geithner, the current treasury secretary, nor Jack Lew, the man nominated to succeed him, is in the trillion-dollar income bracket. How great would be the temptation to detour to the Cayman Islands and open a bank account in his own name?
I’m sure neither man is larcenous enough to do anything like that, but if they’re like me, their pants often develop holes in the pockets before they’re aware of it.
Suppose the trillion-dollar coin slips through a hole in the pocket and disappears down a sidewalk grating. Or suppose the secretary stops to buy a hotdog from a sidewalk vendor and mistakenly pays for it with the trillion-dollar coin instead of a Sacajawea dollar.
A coin the size of the Ike dollar would certainly be less likely to slip through than one the size of a quarter.
Whose picture should go on it?
Krugman suggested a mug of John Boehner, the speaker of the House, whose fight against taxing and spending inspired the idea of the trillion-dollar coin.
I think a better idea would be to sell the space to the highest bidder, say Donald Trump. We could live with a picture of the Donald on a coin if it helped us trump the debt problem.
Readers may e-mail Gene Owens at WadesDixieco@AOL.com.
Gene Owens is a retired newspaper editor and columnist who graduated from Graniteville High School and now lives in Anderson.