Trillion Dollar Patinum Coin

The minting of a trillion, or multi trillion dollar platinum coin to resolve the national debt is discussed here.

This is an idea of Joe Firestone, website Corrente.  He is an original outside of the box thinker.  I have looked at his ideas before and like them for their original thinking.

A fascinating idea that takes advantage of Treasury ability to mint coins to any face value and receive the difference between whatever the face value is and the actual cost to mint the coin.  It would solve the national debt problem withing the context of the existing debt money system.  It is one way to skin the cat. 

This is not a new money system replace the debt money system we have now except to dramatically focus on the basic fact that government finance does not run a the same model as household finance.  The government can create money out of nothing for which there is no corresponding debt.  It can do this to reduce existing debt.

It is an interesting academic exercise that teaches something about how the current system works and how to resolve the National Debt problem by working within the framework of the current system.

The system I propose really is a new system not simply an exercise in making the current system work better by eliminating the restrictions and impediments to government creation of money through seigniorage.  An unfortunate name that really conveys nothing in itself and few could readily define what it is.  It looks like a word that could win, or lose a spelling bee contest.  Even my spell checker tells me it is not a real word.  It is making a coin out of some metal then giving that coin any arbitrary value.  The difference between the cost of the metal to make it.  (it could as well be lead as platinum since the coin itself is never put into circulation but held in a Treasury vault).  Platinum sounds better.  Maybe make it out of Unobtainium.

Unlike one coin for a trillion or multi trillion dollars the new money system concept that I have dreamed up produces trillions of serialized digital dollars on a computer all with a value of one dollar and puts those dollars into circulation by a combination of government spending and retiring all existing debt as the existing debt is paid off.  For each dollar of existing debt paid off a new digital dollar enters the money system and the bank reserve ratio for lending is increased by one dollar.

I would have to think about it but it appears that a trillion dollar platinum coin itself as well as the digital money value it introduces into the system would exist forever.  Never to be retired by paying of any debt.  There is no debt to pay off!  In this case it is exactly like all coins produced today.  They (for all intents and purposes are real 100 % money with no corresponding debt relationship money) exist forever.

 This is the part I have to think about:  The trillion dollar coin system could or would ultimately lead to a 100% real money system.  Could is more likely than would depending on how the system was designed or intended to be controlled.  Eventually, if all government spending was derived from seigniorage there would have to be some control on the total money supply growth probably done by increasing the bank reserve ratio for fractional reserve lending.  Increasing it to 100% if necessary, certainly a desirable goal.