As keen observers of the national conversation know, deep thinkers have floated the idea of minting a trillion dollar coin for deposit into the United States treasury to cure the nation's deficit. This bold plan, endorsed by luminaries including New York Congressman Jerrold Nadler, Nobel laureate economist Paul Krugman, and Kai Ryssdal, host of public radio's award-winning Marketplace program, has the potential to solve America's fiscal crisis overnight, with no partisan bickering and no repercussions for world currency markets.
But can the coin (or sixteen of the coins, to be precise) be struck?
For the answer to this question, we turned to legal, numismatic, and political experts. Their answers were discouraging. Fortunately, as we'll explain, American know-how will find a way. Yes, it would be legal to strike the trillion dollar coin. Yes, it would be practical to strike the trillion dollar coin. And Yes!, an end to America's fiscal nightmare is in sight.
Background: The Politics of the Trillion Dollar Coin.
We first turned to Tom Maguire, the author of Just One Minute!, a leading journal of libertarian and conservative thought, to understand why our nation's leaders can't come together to embrace an idea so simple, so obviously right, as the Trillion Dollar Coin. And it became clear that the problem is not lack of goodwill; It's a lack of imagination.
It seems that Maguire, and his ilk on the right, don't object to the Trillion Dollar Coin on grounds of impracticality or sound fiscal policy, but because, they claim, it's against some law.
the key is the meaning of "bullion coin" in the controversial language of the law:
(k) The Secretary [of the Treasury] may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time.
People like Prof. Tribe are focusing on the Treasury Secretary's discretion in setting denominations without worrying that the phrase "bullion coin" might actually have meaning. Here we go, from the US Mint:
A bullion coin is a coin that is valued by its weight in a specific precious metal. Unlike commemorative or numismatic coins valued by limited mintage, rarity, condition and age, bullion coins are purchased by investors seeking a simple and tangible means to own and invest in the gold, silver, and platinum markets.
Well, that is the common, widely understood definition. Do words lose their meaning when Congress puts them in a law? Probably not. And that might be why people who read the law and know what the words mean realize we are talking about one large coin.
With gold, silver and palladium coins Congress specified that the sales price must be the bullion value plus a premium to cover striking and marketing costs. That language was dropped for platinum, leaving the phrase "bullion coin" to carry the meaning. We hope it is up to the challenge!
Well. On one side is Congressional intent (as illustrated by the first draft of the bill), historic practice, and the conventional meaning of the phrase "bullion coin". On the other side is a burning desire to slide past the debt ceiling. Treasury lawyers will never sign off on the sale of this coin; even if they do, Fed lawyers will never sign off on the Fed purchase.
And lest anyone hope to hang their Trillion Dollar hat on the phrase "proof coin", that won't work either – a 'proof coin' in this context is an enhanced version of the bullion coin. From the Mint glossary:
Proof: a specially produced coin made from highly polished planchets and dies and often struck more than once to accent the design. Proof coins receive the highest quality strike possible and can be distinguished by their sharpness of detail and brilliant, mirror-like surface.
My suggestion is that Prof. Tribe ask one of his students to take ten minutes to study this. Then we will get an answer that reflects the language used in the law.
And so, by Maguire's telling, we're stuck. Because Maguire, and his sort on the right, say it would be illegal for the Treasury to authorize striking the Trillion Dollar Coin unless he could scrounge up a trillion dollars worth of platinum!
Well, why not mine a whole bunch of platinum and mill a coin out of it, you ask? We turned to experts on the subject of astro-numismatics and high-chemistry physics for opinions on the practicality of mining the platinum, and their answers were discouraging. Apparently platinum, while valuable, isn't worth a trillion dollars. Or it is, but you'd need a lot of platinum. "A metric ass-ton," as one expert put it.
We calculated the weight of this "metric ass-ton" in normal people's numbers, and it turns out you'd need somewhere between thirty and forty million pounds of platinum to mint the Trillion Dollar Coin. It would be a coin the size of an Empire State Building. It would take an army to move such a thing.
Background: The Astro-Chemistry of the Trillion Dollar Coin.
Apparently platinum is not the most expensive substance in the galaxy. As it turns out, there are lots and lots of elements and particles more valuable than platinum. So we turned to The Internet for authoritative answers.
That's right. It only takes three pounds of Californium 252 to make a trillion dollars. So just dig three pounds of ore at a Californium mine, and Wingnut objections to the size and weight of the coin are swept aside.
Or so we thought.
Background: The Law of the Trillion Dollar Coin.
It turns out that the mint can't make a coin out of Californium 252. Not because of any scarcity or physical difficulty, but because dollars are made out of gold, silver, copper, platinum, and paper.
Hard to believe, isn't it?
We turned to Jonathan Adler, director of the Center for Business Law and Regulation at Case Western Reserve University School of Law, to ask him whether there would be any legal hassles in minting a coin out of Californium 252. And we were shocked by his answer:
Proponents of the [Trillion Dollar Coin made of Californium 252] point to the following language in the U.S. Code:
The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.
This statutory text plainly authorizes the treasury Secretary to have platinum coins issued in any amount or denomination he wishes so that settles the matter, right? Not really … [T]he relevant statutory language comes from the Commemorative Coin Authorization and Reform Act of 1995, which exclusively concerned the issuance and marketing of commemorative coins. This original proposal was not adopted, but it was incorporated into a later law, retaining the same exclusive focus on the issuance of commemorative coins, and then subsequently amended by …
[Blah, blah, blah, blah, blah.]
the relevant statutes and bill language always concerned the issuance of commemorative coins, and did not implicate the money supply. So while the statutory interpretation offered by platinum coin ploy proponents is superficially plausible, it is not an easy fit with the actual statute from which the relevant provision was born.
For this reason, I am quite skeptical that the platinum coin ploy would be legal.
So there you have it. The Trillion Dollar coin has to be made of platinum, and platinum only. And you can't take an ounce of platinum and call it a trillion dollars. It has to be thirty million pounds of platinum.
How would Uncle Sam carry a thirty million pound coin to the bank?
With a little help from his friends down south, that's how.
The Trillion Dollar Coin: We Get By With A Little Help From Our Friends.
On reading the analyses of Maguire and Adler, and the experts they consulted, we despaired. They quoted laws and statutes and texts.
Then we decided, maybe we can read laws and statutes and texts too. So we picked up a statute text, and after accidentally dropping it, found the solution.
Those eggheads hadn't read the whole book!
It turns out that 31 U.S.C. 5112 isn't the only "law" dealing with coins. Why, just one page ahead in the book, we found 31 U.S.C. 5111, which states:
The Secretary of the Treasury—
(1) shall mint and issue coins described in section 5112 of this title in amounts the Secretary decides are necessary to meet the needs of the United States;
(2) may prepare national medal dies and strike national and other medals if it does not interfere with regular minting operations but may not prepare private medal dies;
(3) may prepare and distribute numismatic items; and
(4) may mint coins for a foreign country if the minting does not interfere with regular minting operations, and shall prescribe a charge for minting the foreign coins equal to the cost of the minting (including labor, materials, and the use of machinery).
So even if American law requires that the Trillion Dollar Coin be made of platinum, and weigh 30 million pounds, America isn't the only country in the world. We could mint the Trillion Dollar Coin for a foreign country that doesn't have silly laws, doesn't mind a coin made out of Californium 252, and would be willing to give it back to us in exchange for something other than a trillion dollars. Something cheap. A friendly country, populated by
rich suckers friendly people willing to help a neighbor in need.
Where would we find such a people? At first we thought about China, but they'd probably want their trillion dollars back, and even if they didn't, they could use a coin made of pure Californium as a nuclear weapon. For that reason, our friends in Russia and Saudi Arabia are probably out too.
What about Mexico? They've got a trillion dollars, they're friendly, and they're not likely to have a violent revolution any time…
And then it hit us: Texas.
Texas is friendly to American interests. Texas has a lot of money. Texas has a balanced budget. And we have something that Texas wants.
All that we have to do to mint a Trillion Dollar Coin (well, sixteen of them) and solve America's deficit is to mine 48 pounds of Californium 252, and sell it to Texas in return for Texan independence. No laws would have to be changed. Everyone would be happy. And it would cost us nothing.