The Platinum Option: Could 1 Coin Solve the Debt Crisis?

Earlier this month, The Washington Post wrote that a loophole in minting law means that, technically, the U.S. Treasury could mint platinum coins, label them as being worth $1 trillion apiece, and use them to pay off the banks, nations, and individuals that hold the nation's debt. In this video, Motley Fool analysts Morgan Housel and Matt Koppenheffer discuss that while this obviously wouldn't work as a real-world solution, by being a silly answer to the problem, it does highlight how absurd the problem has now become.

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  • Report this Comment On January 01, 2013, at 4:32 PM, name7865 wrote:

    Why platinum? The US can print a banknote on a piece of paper.

  • Report this Comment On January 01, 2013, at 5:39 PM, EGTalbot wrote:

    The whole platinum coin issue related to the debt ceiling. The President cannot order banknotes printed if it results in going over the debt ceiling. The platinum coin option is constitutional, though, and it not subject to the debt ceiling, a creation of Congress.

    Imagine the situation in a couple months. Congress has passed laws requiring that the Executive branch spend "x" amount of money. They have also passed laws saying the U.S. cannot incur more than a certain amount of debt. That means if they don't explicitly cut spending or raise the debt ceiling, the Executive branch has two choices: don't spend money that congress ordered to be spent, or go over the debt ceiling it was ordered not to go over. Both options violate acts of Congress.

    The platinum coin has been given as a third option, and in fact if taken literally it is the only option that is Constitutional. Practically speaking, though, no President would ever do it. It's pretty much become accepted that when Congress fails to act, you cut spending. There's no particular basis for choosing this option of the three other than the fact that it is the only one that is not political suicide.

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