Kevin Drum
Can the Treasury Department create a platinum T-bill?
In any case, as long as we’re all spitballing about this, here’s something else to think about. There’s no requirement that a treasury bond be printed on paper. If the government wanted to, I imagine that treasury bonds could be etched onto metal plates. In fact they could be etched onto small, round, metal plates. Round platinum plates, for example.
In other words, I wouldn’t be surprised if you could make a case that a $1 trillion platinum coin is really just a $1 trillion treasury bond. It serves precisely the same purpose, after all. And if Treasury isn’t allowed to deposit a $1 trillion bond at the Fed, why would they be allowed to deposit a $1 trillion coin?
Blowback
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Don’t worry the Republicans in Congress will stop all this madness./
Flange on January 10, 2013 at 4:16 PM
Because, it the coin was 40 feet across, 3 feet thick, and weighed 22,700 tons of actual platinum, it would be worth face value!
michaelo on January 10, 2013 at 4:18 PM
If I were to acquire said coin, could I exchange it for a trillion in gold? Or a trillion in platinum bullion?
Charlemagne on January 10, 2013 at 4:26 PM
This idea is absurd. Why would the Treasury print a bond to be held by itself on deposit at the Fed?
Printing and selling the bond would obligate the Treasury to pay the face value of the bond to the holder of the bond, which would be the Treasury in this case. Would the Treasury pay the Treasury for the bond now so that the Treasury would repay the Treasury when the bond matures? And how would any of this create any more funds for the federal government to use?
steebo77 on January 10, 2013 at 4:30 PM
The Treasury isn’t allowed to just “deposit” a $1 trillion coin at the Fed. The Fed has to print $1 trillion to pay for the coin in order to put it into circulation – which means for it to be used for anything.
The $1 trillion coin insanity is a matter of the Treasury instructing the Fed to print money without any backing (unlike gold and silver coins that are backed by their metal construction at no less than the face value, which the Fed has to print money for when the Treasury deposits them.
In short, the Treasury is not allowed to direct the Fed to print money. That power lies only with Congress, which put it with the Fed and is supposed to be overseeing the Fed and its actions – though Congress also gave the Fed that insane dual mandate that allows the Fed to do pretty much anything it wants. The Executive branch, however, is most certainly not allowed to direct printing of money. Period. There is nothing to discuss about this and the Congress cannot go against the Constitution and give this power to the Executive even if they wanted to. The Constitution can only be changed by amendments, not by legislation.
Everyone who argues for the alleged legality of this insane $1 trillion platinum coin should be thrown out of government or fired from any job that requires they be taken seriously.
ThePrimordialOrderedPair on January 10, 2013 at 4:33 PM
The first part simply isn’t true. SCOTUS has ruled that payments from entitlement programs are made at the discretion of Congress and can be (paraphrasing) “modified at any time.”
This “Commitments to seniors! Both options are illegal!” story is going to be their next gambit in the debate. People shouldn’t fall for the hook.
The only commitment that Congress has made is to TAKE money from people. There is no legal obligation to ever pay any of it back.
jr.ewing.78 on January 10, 2013 at 4:37 PM
Whew. I feel better now. Thank you, Flange!
CycloneCDB on January 10, 2013 at 4:45 PM
This reminds me of that great line in the Hunt for Red October. Jack Ryan asks, “Could you launch an ICBM horizontally?” and his friend replies, “Sure. Why would you want to?”
Browncoatone on January 10, 2013 at 4:47 PM
Also, seeing as Treasury bills, notes, and bonds are DEBT obligations of the federal government, how would printing another trillion dollars of DEBT not automatically place the nation about a trillion dollars past the statutory debt limit?
That would be illegal.
Kevin Drum is an idiot.
steebo77 on January 10, 2013 at 4:49 PM
Drum’s argument is pretty sound.
Subtitle of article should be “can Treasury DEPOSIT a trillion dollar bond”.
That is his point about why the coin idea is a silly gimmick.
connertown on January 10, 2013 at 5:26 PM