Tuesday, January 8, 2013


We could even put Reagan's face on it to please Republicans

I have little to no knowledge as to how the Treasury of the United States works and what regulations control the minting of coins and printing of bills.   I have sometimes (briefly) wondered why the government could not just print more money when deficits loom.

At one time our money was worth face value: a fifty dollar gold piece was actually worth fifty dollars in precious metal and a one dollar silver certificate was redeemable for one dollar worth of silver.  

Those days have long gone, and now our money is not backed up by hard collateral, but is worth its face value only because the government says it is.   Foreign governments and our own population have no idea how much paper money or how much coin currency is in circulation.   Therefore, an increase in the supply would not change the value of the currency – again it has value only because the government says it does.  

In 1996 a law was passed by Congress allowing the Treasury to mint commemorative coins ‘in any amount.’   Since 1996 the mint has made a profit of between six-hundred-million and eight-hundred-million dollars annually minting commemorative coins, and these profits go to the General Fund.    

When the government borrows money it incurs interest, and when it posts government bonds it must pay interest.   However, the Secretary of the Treasury has the authority from the Constitution to create money without debt.   In other words printing money is debt neutral.

Thus the musing of some people that the government should mint a trillion dollar coin and deposit it in the general fund to solve the debt crisis.  

This has absolutely no chance of actually happening; however, in true Republican conspiracy fashion a Republican Congressman is putting together a bill that would forbid the President from having the Treasury issue a trillion dollar coin.  

I am sure that many people have much grater knowledge of government financing and money printing than I do – so I stand to be corrected.

But you have got to admit, it is an intriguing idea.

the Ol’Buzzard 

1 comment:

  1. I'm tickled enough by the idea of a trillion dollar platinum coin that I imagine it being something like the size of a Walmart store but coin shaped. People could come and visit it to have their pictures taken.

    Of all the money in the world only a very small fraction is in cash.


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