Economics, Pethokoukis

Former boss of US Mint on trillion-dollar platinum coin: ‘Good luck with that’

An earlier blog post of mine quoted the 35th director of the US Mint on the idea of a trillion-dollar platinum coin. Said it was legal and doable. But the 38th director, Edmund Moy, has big doubts (via CNBC):

First, it may be legal to mint a platinum bullion coin with a $1 trillion face value, but it’s not legal to pass it off as actually worth $1 trillion if there isn’t $1 trillion of platinum in it. That’s because it’s a bullion coin and not a legal circulating coin. The face value of a bullion coin has no relationship with the metal content because the value is in the metal, whose price fluctuates daily.

Second, for a coin to be worth its face value, it has to be made as a circulating coin.

Here’s how a circulating coin is made. Congress needs agree on the metal content, dimensions, the designs on the heads and tails sides, weight, and other details. Then they have to pass legislation to create a $1 trillion circulating coin. The President needs to sign it. Then the Mint would have to design it get the design approved, procure whatever new materials they need, make the dies, test production, and then make one. Then a bank would have to order one because a business customer needed it to make change. The Fed would pay the Mint face value for the coin. After deducting the cost of the coin, the Mint would return the balance to the Treasury. All this needs to be done before we run out of money. Good luck with that.

 

8 thoughts on “Former boss of US Mint on trillion-dollar platinum coin: ‘Good luck with that’

  1. “Then [the Houses of Congress] have to pass legislation….”

    The thing is the relevant law was already passed and signed into law years ago. Read the statute for yourself:

    (k) The Secretary 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.

  2. I just love seeing someone say “Read the statute for yourself”, in a way that indicates he has NO idea what the words of the statute, or the post, actually mean.

    So, let’s check out the words from the statute: “The Secretary may mint and issue platinum bullion coins and proof platinum coins”.

    Now, let’s consider what the former head of the Mint said:
    “First, it may be legal to mint a platinum bullion coin with a $1 trillion face value, but it’s not legal to pass it off as actually worth $1 trillion if there isn’t $1 trillion of platinum in it. That’s because it’s a bullion coin”

    Get that? The Secretary may make a platinum “bullion coin”, but such a coin is only worth the metal value.

    Now, what else did the former director say? “Second, for a coin to be worth its face value, it has to be made as a circulating coin.”

    Go look at the text of the statute. It does NOT say “The Secretary may mint and issue platinum circulating coins”. So to do THAT would require a new law, which Congress isn’t going to pass.

    So unless the 38th director, Edmund Moy, is wrong about
    1: Bullion coins are only worth their metal content, regardless of their face value.
    or
    2: Only circulating coins (and not proof coins) are worth their face value.
    or else the $1 trillion platinum coin trick won’t work.

    You got any proof he’s wrong on either of those points?

    • I have to say I got a little happy reading this. I”m going to a party tonight and share my new-found expertise with the office libs.

      • @Greg Q: Point number 2 is wrong. You claim “Only circulating coins (and not proof coins) are worth their face value.” This is false, because 31 USC 5112(h) provides that “The coins issued under this title [i.e. title 31 of USC] shall be legal tender as provided in section 5103 of this title.” Section 5103, in turn, simply provides that “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.” Neither of these sections is limited to “circulating coins” as opposed to “proof coins.” Instead, these statutes clearly provide that all coins issued under the authority of title 31 of the United States Code are legal tender, irrespective of whether they are “proof coins,” are legal tender. Therefore, a $1 Trillion platinum proof coin issued under 31 USC 5112(k) would be legal tender.

        • Which is fine; it can be circulated, but to originate as a bullion coin it still has to contain $1T worth of its commodity metal(s).

          • Where do you see that requirement in the U.S. Code? The metal value of bullion coins is typically higher than their face value, but I don’t see any legal prohibition on coins with a face value higher than the metal value.

  3. You miss the point entirely. Coinage has value because the government says it does. Money has value BECAUSE it is backed by the full faith AND credit of the US. THAT is what messing with the debt limit ACTUALLY endangers. Both the above statute as well as the 14th amendment ensure that faith AND that credit stating that the debt shall not be dismissed, effectively saying We’re good for the money, we will NOT default on it. The republicans are dead set on THAT course.
    In the face of such foolishness, following the law CANNOT be a mistake.

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