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January 16, 2013 / Admin

On Platinum

 

What’s all this about a platinum coin worth $1 trillion?  Get Fisher Investments’ insights on that and more on the debt ceiling – Thomas Ek, Vice President, Fisher Investments

The Fed’s Commemorative Coin Collection

By Fisher Investments Editorial Staff

With another go-round of the debt ceiling debate already in the offing, some creative solutions are being floated. Like the increasingly discussed idea of minting a commemorative coin for the debt ceiling. Now, the coin isn’t meant to be sold to the public to honor the debt ceiling’s great contributions to America. Rather, the purported aim is to expressly solve it.

Across the web, advocates and opponents are debating the possible creation of a $1 trillion platinum coin to fund the government without issuing more debt—an end-run around (yet another) debt ceiling debate. As the theory goes, the Treasury, thanks to a loophole allowing the creation of platinum coins in any denomination, could mint a couple of coins worth $1 trillion each and deposit them at the Fed. In turn, the Fed would then write checks against the coins to cover the government’s bills. No more debt ceiling. No more debt ceiling debates.

You might ask: Why platinum? Why $1 trillion? Which are, of course, excellent questions. But we have another: Why bother in the first place?

To revisit, the debt ceiling is primarily a political machination, used now mostly as a wedge issue for politicians looking for (re)election. It’s effectively window dressing, allowing politicians to argue they’ve “restrained” debt. The debt ceiling, however, doesn’t limit anything at all. Exhibits 1 through 105 of that principle are the debt limit increases since 1917—not exactly the disciplined debt brake politicians would have you believe.  Full article: The Fed’s Commemorative Coin Collection

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