Tuesday, August 02, 2011

Trillion Dollar U.S. Platinum Coins

In a recent post I talked about how a bill had been submitted to Congress to cancel the Presidential dollar program and therefore lose the half billion in seigniorage from the coins currently piling up in Treasury vaults.

Since then a new idea has been making the rounds in the media that takes seigniorage to the extreme.

The idea is for the U.S. Mint to produce two new platinum coins and to give them each a face value of 1 trillion dollars. Since seigniorage is simply the difference between the "value" of money versus the cost to produce it, the government would then have 2 trillion dollars that it can do with as it pleases.

Sound far fetched? Maybe but the reality is that it could be done.

Apparently there is a statutory limit to the amount of paper currency that can be in circulation, but there is no limit  on the amount of coinage.

The one problem that arises is that generally a coin must circulate for the government to capitalize on its seigniorage. It's when banks order the coins, or when you and I buy the coin directly from the mint. This obviously isn't going to happen. I personally don't know anyone who can make change for a trillion dollars.

The apparent solution is to have the government deposit the coins into the Treasury General Account (TGA) at face value so that the government would then be able to write checks against the balance.

As a U.S. taxpayer, I'm saddened by the fact that our politicians have let things deteriorate to where ideas like this are taken seriously, . . . but as a coin collector, the coins would be COOL!

2 Comments:

At 10:17 AM, Anonymous Collectibles said...

Of course for the collectors they'd be totally excited to get a glimpse of the coin if not possible, to have it.
But a 1 trillion dollar-coin? I find it ridiculous, and the idea of how to spend it.

 
At 7:47 AM, Anonymous Anonymous said...

If they minted a couple million coins with a one million dollar face value they might actually talk a few American billionaires into buying one, thus legitimizing the rest before depositing them. It might be fairly easy to get some uber-rich foreign playboy to pick up a million dollar coin just to show off with.

 

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