Bloomberg’s Josh Barro and Joseph Weisenthal, Deputy Editor at Business Insider, discuss the idea of minting a trillion dollar platinum coin to reduce the United States’ debt and the function of the debt ceiling. They speak on Bloomberg Television’s “Bloomberg Surveillance.”

Source: Bloomberg Jan. 7 2012

Category: Video

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14 Responses to “Trillion-Dollar Coin: Absurd or Absurdly Right?”

  1. znmeb says:

    The 14th Amendment trick and the trillion-dollar platinum coin trick are both insanity. I understand the frustration that has led to the proposals, but you deal with frustration using tools designed for dealing with frustration, not cynical games. The media have utterly failed to dig into the details and the issues, choosing instead to either take sides or to simply bank on the attention they get to sell advertising. Barro, Weisenthal and Bloomberg are wasting their readers’ time with this horseshiit.

  2. Non Sequor says:

    I think we’re all dumber for having seen that, although I guess the phrase “trillion dollar platinum coin” derails any intelligent debate.

    Fundamentally, as I understand it, the argument is that this platinum coin thing allows the executive branch to cancel debt owed to the Fed, which isn’t circulating in the economy anyway and has any profits delivered to the treasury anyway.

    So basically arguing over platinum coins is just a silly side argument. The meat of the argument what the ramifications of canceling debt to the fed or debt between federal agencies might be.

  3. A7LB says:

    “…bank on the attention they get to sell advertising…”

    It’s all about the metrics: page views, and number of posts.

    Can hardly wait for a ‘cool’ infographic…

  4. barbacoa666 says:

    The argument among so-called conservatives is, “we must implement austerity since we have too much debt.” Fine, let’s cancel that debt and move on to making the lives of the American people better via:
    1. Cash refunds of tax overpayments and/or
    2. Infrastructure improvements

    Or, move of that debt into Federal trust funds (SS and Medicare) to shore them up (send Bowles-Simpson packing).

  5. Frilton Miedman says:

    I actually looked up 31 USC 5112, thinking I could make sense of it, yeah, that was a blast.

    Using search terms, the best I could find was reference to the requirement that the Treasury must value each coin it mints at a minimum to cover material and labor costs, I could find any reference to limiting valuation, so I guess that means they can value it at anything above & beyond cost of production. (I guess)

    Anyone, please feel free to correct me –

    As for the risk, there really isn’t any, the mere presence of an additional $1 trillion has no effect on the DXY unless it’s in circulation – actually used, this would only be there in the event the debt ceiling is breached.

    Personally, I prefer the 14th amendment idea, it would be the best entertainment in years to watch the GOP attempt to over-rule Obama’s executive order, that they not shoot themselves, and the American people they claim to stand for, in the foot.

  6. Frilton Miedman says:

    EDIT – “I could find any reference to limiting valuation” was intended as “I couldn’t find any reference…”

  7. barbacoa666 says:

    This has been kicked-around a lot in the main stream media over the past few days. And much longer on various blogs and associated discussion boards (see Pragcap). I have yet to see a legal argument against it. The argument is always it’s stupid, it’s inane, etc., that to me are nonsensical.

    I’m not an accountant, but I have bought and sold various stocks over the past 15 years. In my experience, it seems to me that this debt would zero out, if you account for it as a public company’s combined financials would (an you accept the Federal Reserve as a sub to the Federal Govt). You would have to dig down into the financials to see it.

    Therefore, it seems to me that it is an inane or nonsensical argument because it should not be represented in the net Federal Govt debt at all.

  8. crawlars says:

    The “trillion dollar coin” is a talking piece….ultimately it is “deposited” onto Treasury’s balance sheet and spent into the economy.

    The idea is for the FED to create x trillion (an electronic account entry) and give it to the Treasury to pay its bills…in a sense adding liquidity to the economy. The Treasury needs help with revenue shortfalls originating from a damaged economy and tax base. Ah…who or what has damaged the economy?

    Why NOT use this as a way to basically inject “money” into the economy?

    Perhaps it would be preferable to the FED’s current methods of injecting liquidity by creating money and buying bad MBS from the TBTF commercial banks ($40+ billion per month) and buying Treasury’s debt at a clip of $40 billion a month? QEx…

    Its all crazy and difficult to grasp but the real problem is the existence of private central bank that has the congressionally mandated and exclusive power to create and allocate interest bearing money as directed by its board of directors (and Presidentially appointed Chairman)….and they are…hmmm…like J. Dimon on the NY FED’s board for example…

    On yet another level some would say the the creation of interest bearing debt IS the goal…not elimination of debt. If the creation of interest income by creating debt is the goal it gets really interesting…how does/could one create debt? Well, let me count the ways…

    (Heck, while I’m at it) why not eliminate all forms of taxation and have the FED pay the Treasury’s bills directly?

  9. mathdock says:

    I think Benedict Arnold should be cast on the obverse of this coin, should it come to pass, and the Whore of Babylon on the reverse. Lady Liberty should not be so sullied.

  10. WKWV says:

    How about 10 – $100,000,000 one pound platinum coins with Ronald Reagan on one side and Carl Sagan on the reverse.

  11. WKWV says:

    Oops, ten $100,000,000,000 coins. I need new reading glasses!

  12. Disinfectant says:

    Of course the trillion dollar platinum coin is stupid. The only reason it is being discussed is because something equally stupid, the debt ceiling, has been used as a political tool for far too long. Let’s hope that Congress puts an end to both of them next month (doubtful, of course).

  13. comet52 says:

    What, you guys never heard of seigniorage? Really, really BIG seigniorage, lol.

    Not a bad idea actually. A counterweight to the insanity of a congress that says let’s default for fun, like that would be a great thing. We print our own currency, hence we can’t default except by choice. I really want my country destroyed by a pack of idiots. I say get some platinum and mint that coin.

  14. aiadvisors says:

    What’s the difference between minting a coin to capitalize the central bank and delivering a trainload of inert gold to Fort Knox to collect dust?

    Speaking of stupid, ludicrous, insane ideas, the debt ceiling itself is at the top of the list.

    Obama should just ignore it and the Congress and make ‘em sue him and then watch the legal contortions over the constitutionality of Congress authorizing expenditures, but not the means to fund them.