Blog In the News | What is the ‘Trillion-Dollar Platinum Coin?’

In the News | What is the ‘Trillion-Dollar Platinum Coin?’

It’s not too often that precious metals take center stage in world news, but we are thrilled to contribute our expert commentary when it does!

The trillion-dollar platinum coin idea has circulated for a decade as an answer to the U.S. government’s recurring debt ceiling issue. Some financial experts have written it off as a gimmick. But you’d be surprised by how many politicians and public figures currently support the idea. This article explores the trillion-dollar coin debate, from its inception to its role in current budget dialogues.

Platinum is a silvery-white metal that’s the rarest of all the popular precious metals. Like gold, silver, and palladium, platinum has a wide range of uses.

The Trillion-Dollar Platinum Coin Idea

Minting a trillion-dollar coin was a concept first introduced in 2011 as an alternative measure to raising the U.S. debt ceiling. Some high-profile figures publically endorsed the idea at the time, including Paul Krugman, a Nobel Award-winning economist and columnist for the New York Times.

Ultimately, Congress avoided the debt catastrophe in 2013 and the Treasury Department and Federal Reserve rejected the trillion-dollar coin idea.

The reasoning goes that the U.S. Mint could authorize the production of a platinum coin without any restriction on its face value. Most #MintTheCoin proponents focus on a $1 trillion value, but technically, it could be as high as $100 trillion.

The Trillion-Dollar Platinum Coin Explained

Minting a single, trillion-dollar coin would mean creating the most valuable piece of currency in history, something that would be worth more than the GDPs of most nations. Were this to take place, it would likely follow this progression:

  •  The U.S. Mint would produce it, and then it would appropriate it to the Federal Reserve;
  • The Federal Reserve would deposit the coin in the Treasury, where its value would reduce the U.S. national debt and forego the necessity to raise the debt ceiling.

Advocates of the trillion-dollar coin proposal argue it is legally feasible and basically a creative accounting trick. To advocates, the issues that could arise from this strategy greatly outweigh the risks associated with a U.S. default. But trillion-dollar coin opponents say minting a coin of such a massive size would set a dangerous precedence and be severely short-sighted. 

You may be interested to know that platinum is part of a group of precious metals known as the Platinum Group Metals (PGMs). The PGMs are six metal elements that are chemically and anatomically similar.

The Legality of the Trillion-Dollar Platinum Coin

Legally, a trillion-dollar platinum coin is plausible. Paper currency issued by the U.S. is subject to various accounting and quantity restrictions, but platinum coinage is not.

According to a 1996 Treasury law, the U.S. Mint may produce platinum bullion coins in any denomination, unlike gold or silver coins, which are restricted to denominations between $50 and $1.

The U.S. Mint already produces a one-ounce Platinum Eagle coin and has no shortage of platinum blanks in stock, Axios reports.

And because the value of the U.S. Mint’s platinum is not counted when calculating the federal budget, a loophole exists that allows it to be used to balance the budget.

This process, known as seigniorage, is commonly used as a method to fund daily treasury operations. Using seigniorage to solve vast debt issues on the federal level has never been attempted, and some skeptics doubt whether it should be. 

Could the Trillion-Dollar Coin Happen?

The deadline for U.S. debt default was pushed back to December 3, 2021, after President Biden signed legislation that temporarily raised the government’s borrowing limit.

Because of renewed interest in the idea, it is likely that when budget talks resume, the trillion-dollar-coin will continue to stoke passionate debate.

Stay tuned!

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Also, stay tuned to Garfield’s blog for more interesting and helpful insights about precious metals, such as articles like 5 Tips for Choosing a Gold Refinery Near You, 3 Fun Facts About Platinum, and Will the Silver Price Keep Going Up?