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Could two platinum coins solve the debt-ceiling crisis?

This story appeared in a Washington Post Workblog today (Dec 7th).

I posted this before reading and digesting the whole thing, so I witheld comment.

It seemed interesting to me just because it brings up the subject of precious metals backing our currency - but there's probably nothing to it.
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Now I read it and will comment:

It's ridiculous because they would just declare the platinum worth that much (by fiat).

I first thought they were talking about having coins worth that much in actual platinum, but they would have to be very large coins indeed at platinum's current per/ounce value.

The thing I did like is that it mentions gold and begs the question about much gold the government posseses.
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Here's the story with a link...
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Could two platinum coins solve the debt-ceiling crisis?

"If President Obama wants to avoid an economic calamity next year, he could always show up at a press conference bearing two shiny platinum coins, worth… $1 trillion apiece..."

Continue here:
http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/07/c...




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"Thanks to an odd loophole in

"Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases."

lol disasterous. Where the Austrians at? I thought this was DP?!!?!?

EDIT: this isn't an "odd loophople" but rather exactly what FIAT currency always has been and always is: declaring material issued by the state to be "worth" more than the market value.

This is Austrian economics 101. Debases currency, possible/probably hyperinflation, misallocation of capital, etc.

EDIT2: as a goof I calcluated exactly how heavy the coin would have to be to not have it FIAT. I get about 32 million pounds. Even if such a coin could be made, this still doesn't solve the problem , as the government would just have to print the $1 trillion in fiat paper to then trade this paper for the platnium (the us govt doesnt have $1 trillion of platnium lying around).

Austrian here.

Don't worry - most people here know the fiat nature of the suggestion.

Good research on the weight of the coin; 32 million pounds!

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Hmmm...

"Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years — without needing to issue new debt. The ceiling is no longer an issue."

Perhaps the US Mint could make just one platinum coin, claim it is worth $16 trillion, deposit it at the federal reserve, let the fed move the equivalent amount into the US Treasury, and then declare the Fed's charter null and void, leaving the banksters with nothing but one platinum coin worth about $1,600.

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I presume they would have to be 2 very large coins but...

...Where would the government GET the platinum?

Attack a country which mines platinum and take it?

You can't just get platinum out of thin air so where would they get it?

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

You're missing the point.

You're missing the point. Under that clause, the US Mint can strike a 1 ounce platinum coin and declare it's value as anything it wants. It doesn't have to be an actual trillion dollars worth of platinum. They just say it's worth $16T and give it to the Fed in exchange for the same amount of dollars. Then, after the transaction is done, end the fed's charter and leave them with the platinum coin. I'm sure the Fed will be plenty upset to realize they are the ones stuck holding the bag instead of the US taxpayers.

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