Another debt ceiling debate is just weeks away. Once a fomaility, in 2011 it became a battleground, bringing the government to the brink of defaulting on what it owes to Treasury bond holders. After the fiscal cliff debate, folks weary of Congressional brinkmanship are looking for a magic bullet to make this whole recurring debt crisis go away. They think they’ve found it, in a platinum coin worth a trillion dollars.
Here’s the idea, which even supporters admit sounds pretty goofy: Using power from an obscure law, the Treasury mints a platinum coin — or several — with a $1 trillion face value. That gets deposited at the Fed and, just like that, there’s plenty of money to pay the bills, and the debt ceiling doesn’t matter.
No matter how ridiculous a trillion dollar coin may sound, its fans say it’s not any crazier than the debt ceiling debate. Calling attention to the absurdity of the Congressional fight is part of why the platinum coin campaign is catching fire online.
“Given the helplessness that perhaps people feel about the politics of it, I’m actually not surprised that people are excited about this idea,” says Joe Weisenthal, Business Insider’s deputy editor and one of the coin’s most vocal cheerleaders.
The trillion dollar coin rolled into the dialogue about the last debt ceiling debate. But this time, the idea has gone beyond the online romps of finance wonks. New York Democratic Congressman Jerrold Nadler said this week that the trillion dollar coin idea is worth considering.
Plus-sized coinage brings to mind the hyperinflation of Zimbabwe or Weimar Germany. Trillion dollar coin supporters dismiss this, saying any platinum coins won’t enter circulation.
“It doesn’t increase the outstanding money supply,” says Cullen Roche of the investment advisory firm Orcam Financial Group, and, through his website Pragmatic Capitalism, one of the earliest trillion dollar coin supporters. “It literally is just an accounting change.”
There are other objections to the trillion dollar coin trick, from an unknown currency market reaction to a likely legal battle.
Once a silly hypothetical and still overwhelmingly unlikely, the trillion dollar coin concept is no longer merely academic. Seething anger at broken politics is helping a nutty idea about a magic platinum coin gain mainstream currency.
“The odds of this happening are not zero, but they are very close to zero,” says Chris Krueger, senior policy analyst at Guggenheim Securities in Washington. “But the odds should be zero. The idea that this is even possible speaks to how serious this crisis could become.”