35th Director of US Mint emails Daily Kos about the trillion dollar platinum coin

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I’m the former Mint director and Treasury chief of staff who, with Rep. Mike Castle, wrote the platinum coin law and produced the original coin authorized by the law. Therefore, I’m in a unique position to address some confusion I’ve seen in the media about the $1 trillion platinum coin proposal.

* In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary’s authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8). What is unusual in this case is that the law gives the Secretary discretion regarding all specifications of the coin, including denominations.

* The accounting treatment of the coin is identical to the treatment of all other coins. The Mint strikes the coin, ships it to the Fed, books $1 trillion, and transfers $1 trillion to the treasury’s general fund where it is available to finance government operations just like with proceeds of bond sales or additional tax revenues. The same applies for a quarter dollar.

* Once the debt limit is raised, the Fed ships the coin back to the Mint, the accounting treatment is reversed, and the coin is melted. The coin would never be “issued” or circulated and bonds would not be needed to back the coin.

* There are no negative macroeconomic effects. This works just like additional tax revenue or borrowing under a higher debt limit. In fact, when the debt limit is raised, Treasury would sell more bonds, the $1 trillion dollars would be taken off the books, and the coin would be melted.

* This does not raise the debt limit so it can’t be characterized as circumventing congressional authority over the debt limit. Rather, it delays when the debt limit is reached.

* This preserves congressional authority over the debt limit in a way that reliance on the 14th Amendment would not. It also avoids the protracted court battles the 14th Amendment option would entail and avoids another confrontation with the Roberts Court.

* Any court challenge is likely to be quickly dismissed since (1) authority to mint the coin is firmly rooted in law that itself is grounded in the expressed constitutional powers of Congress, (2) Treasury has routinely exercised this authority since the birth of the republic, and (3) the accounting treatment of the coin is entirely routine.

* Yes, this is an unintended consequence of the platinum coin bill, but how many other pieces of legislation have had unintended consequences? Most, I’d guess.

Philip N. Diehl

35th Director

United States Mint

http://www.dailykos.com/story/2013/01/08/1177211/-Co-author-of-platinum-coin-law-weighs-in-on-trillion-dollar-coin

[Mr. Big Dog 10,747]

I like this trillion dollar coin. It's just as nuts as a Congress racking up bills and then refusing to give the executive branch the authority to pay those bills. So if Republicans want to bring the debt ceiling to the negotiating table, Obama should bring Geithner and that trillion dollar coin with him. Opening statement is simple and clear: Drop the debt limit nonsense and I will have Timmy here get the coin melted. Don't drop it and I will have Timmy go and deposit the coin. You must hit the Republicans with their own weapon: insanity. The Republicans won't understand any other language.

[The Nature Boy 4,224]

I like this trillion dollar coin. It's just as nuts as a Congress racking up bills and then refusing to give the executive branch the authority to pay those bills. So if Republicans want to bring the debt ceiling to the negotiating table, Obama should bring Geithner and that trillion dollar coin with him. Opening statement is simple and clear: Drop the debt limit nonsense and I will have Timmy here get the coin melted. Don't drop it and I will have Timmy go and deposit the coin. You must hit the Republicans with their own weapon: insanity. The Republicans won't understand any other language.

Yes sir , continuing to burden our nation with trillion in debt is a great idea. It's only up to 53,000 per person. Debt limit nonsense ? Your trolling again right ? Those crazy Pubs wanting to limit the debt. Shame on them.

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Yes sir , continuing to burden our nation with trillion in debt is a great idea. It's only up to 53,000 per person. Debt limit nonsense ? Your trolling again right ? Those crazy Pubs wanting to limit the debt. Shame on them.

Only Congress can spend. You know that. What the Republicans are trying to do here is spend the money and then prohibit the Executive from paying the bill.

[Mr. Big Dog 10,747]

Yes sir , continuing to burden our nation with trillion in debt is a great idea. It's only up to 53,000 per person. Debt limit nonsense? Your trolling again right? Those crazy Pubs wanting to limit the debt. Shame on them.

You need to understand what the debt ceiling is. Once you do, you will find that the debt ceiling is NOT what actually creates the debt. If Congress fails to raise the debt ceiling, it would be the same as you telling your wife to go and spend on that credit card and then you yank the checkbook so your wife can't pay the bill when it comes due. If you want to reign in the spending, then you need to quit telling your wife it's okay to spend money on Lord knows what. Congress has yet to do that.

[quote name=' timestamp='1357670224' post='5909953]Only Congress can spend. You know that. What the Republicans are trying to do here is spend the money and then prohibit the Executive from paying the bill.

Exactly. I start to think that the Tea Party blowhards really don't understand these things.

Edited January 8, 2013 by Mr. Big Dog

[james&olya 1,121]

I like this trillion dollar coin. It's just as nuts as a Congress racking up bills and then refusing to give the executive branch the authority to pay those bills. So if Republicans want to bring the debt ceiling to the negotiating table, Obama should bring Geithner and that trillion dollar coin with him. Opening statement is simple and clear: Drop the debt limit nonsense and I will have Timmy here get the coin melted. Don't drop it and I will have Timmy go and deposit the coin. You must hit the Republicans with their own weapon: insanity. The Republicans won't understand any other language.

Brilliant solution to the inane tactics of the GOP! I propose putting GWB on the face and John Boehner on the back!

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Brilliant solution to the inane tactics of the GOP! I propose putting GWB on the face and John Boehner on the back!

No, they should take this opportunity to piss off the right and put Tupac on the coin with the inscription, "American poet".