Coin collecting intersects with a number of other interests – art and design, history, geography, and politics, to name a few. Lately the “trillion dollar coin” controversy has been the main discussion where politics and collecting collide. Recently the Treasury and the Federal Reserve both have indicated that a trillion dollar coin will not be produced. However, as a Grand Rapids coin dealer, we view this improbable political battle as a chance to delve into the numismatic feasibility of the trillion dollar coin.
For those who may have missed the debate, the short history is that some bloggers advanced an idea that, should Congress refuse to raise the debt ceiling, the president could erase the national debt by authorizing the Treasury to create a trillion dollar coin as legal tender. The idea initially sounded preposterous to many, but the media and politicians began to investigate, and sure enough, there appeared to be a legal loophole that would allow such a banana republic strategy to be enacted.
Normally the Treasury is not allowed to print money on its own, because the Federal Reserve Act limits that power to the Federal Reserve. However, the Coinage Act contains some provisions related to minting commemorative coins. The part that allows minting platinum coin is Section (k) of 31 USC § 5112, which spells out that the United States Secretary of the Treasury “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.”
The Coinage Act defines in detail the denominations, composition, size, and design of the U.S. penny, nickel, dime, and other coins that the Treasury can mint, as well as specifications about commemorative coins. The section of the law allowing the Secretary of the Treasury to mint platinum coins is generally intended to allow the Treasury to make a little money by issuing commemorative coins, taking advantage of seigniorage – the difference between the value of money and the cost to produce and distribute it. One detail that is confusing to many in the general public is that the reason the “trillion dollar coin” must be platinum is that coins from other metals allowed by the act are limited in terms of denomination, composition, size, and design, but the Secretary of the Treasury is specifically allowed a little latitude to define and issue platinum coins.
Another common public misconception, which has been perpetuated in blogs and some media commentaries, is that a trillion dollar coin would be huge. The assumption is that the coin would be minted from the amount of platinum bullion that would be valued at one trillion dollars. At around $1630 per Troy ounce for platinum, such a coin would weigh somewhere in the neighborhood of 614 million Troy ounces. It would be about the size of a 747. But all the platinum ever mined comes to less than 25 cubic feet. And more importantly, the same way there is not dollar’s worth of metal in a Sacagawea dollar, there would not be a trillion dollars’ worth of platinum in a trillion dollar coin. That is the very definition of seigniorage.
Some of the coins authorized by the Coinage Act of 1999, apart from the state quarter series and the presidential dollar series, are commemorative coins that are appealing to many outside the coin collecting hobby, and they are often given as gifts. These modern commemoratives include coins paying tribute to Boy Scouts, Disabled American Veterans, the Marine Corps, and First Flight, and other subjects. Commemorative coins are available directly from the Mint for a limited period of time.
So, do we ever expect to see the trillion dollar coin? Well, not in this Grand Rapids coin dealer’s shop. If you are interested in some of the real commemorative coins authorized by the Coinage Act, though, contact your Grand Rapids coin dealer, Mullen Coins, at 616-272-4402.
