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The United States Congress still can’t pass legislation to raise the nation’s debt ceiling, but a Yale Law professor suggests that President Obama could sidestep lawmakers and ensure that bills keep getting paid by minting platinum coins—about $2 trillion worth.
Writing for CNN, law professor Jack Balkin outlines three ways that President Obama could keep paying the bills while congress dithers.
He hypothesizes that minting platinum coins is one of them:
Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds.
Incidentally, $2 trillion could purchase about 1.1 million oz of platinum.
Picture of the American Platinum Eagle, the official platinum bullion coin of the United States
6 Comments
Common Sense
If I understand this correctly, the suggestion boils down to trying to make the gold standard the platinum standard instead. This may be short sited. Platinum, like gold, is a precious metal. However, unlike gold, 90% of the world supply of platinum comes from only two countries; South Africa and Russia. With the vast majority being South Africa. The annual world production of platinum has been estimated at 130 tons which is about 5%-6% of the gold mined in the Western World annually. Most platinum being mined is already allocated to industrial contracts. The ASX and the Aim-Listed Platinum Austria fully expects demand to out-strip supply for platinum from 2010-2016. The United States has the largest gold reserves in the world. South Africa has 80% of the world platinum reserves. So unless your objective is to make South Africa a richer country or take a long position on platinum futures I would suggest the United States mints more gold coins not platinum. What business would try sell what it does not have in stock? But that is just common sense talking!
Guest
Minimizing a financial problem by trying to plug a huge leak is short term thinking.
It’s the paper dollar that is about to crumble; it must be backed by relevant economic postions by government, companies & individuals.
Platinum is such a plug that has no relevance to the inherent financial & economic problems Obama is not addressing.
He has ignored my solution; I cannot do more for the USA than continue to being prepped for a major upheaval now occuring. Our busness & employees are now secure with our focus on our business, families & area where we live.
We will all survive.
Smoky949
1,000,000 ounces of Pt. @ $1750 an ounce = $1,750,000,000 which is 0.175% of 1 Trillion, so your comment of $2 trillion is just a little off!!!!! get a calculator.
MINING.com Editors
Ezra Klein finds some obviuos problems with this approach
http://www.washingtonpost.com/blogs/ezra-klein/post/can-a-giant-platinum-coin-save-our-credit/2011/07/11/gIQA2VAPjI_blog.html?wprss=ezra-klein
jamesont
If you are going to have a currency backed by platinum, why don’t you have one back by gold?
Anom
The suggestion is not to go to a platinum backed dollar but to mint two platinum coins of say 1 oz each and give them a face value of $1 trillion each.
Platinum is the metal of choice because unlike silver, gold and paper which have legal limits the executive has the authority to make as much platinum coinage as it wishes at whatever face value it chooses.