The Trillion-Dollar Platinum Coin Is Back

The problem that won't go away has a solution that will never die

A machine operator transports penny blanks at the U.S. Mint in Philadelphia on Feb. 25, 2010.

Andrew Harrer/Bloomberg

On Sunday, the debt ceiling returns to America. The $18 trillion borrowing limit will be reinstated after a temporary reprieve, and lawmakers in Washington will once again have to solve the problem that won't die. Many options are on the table, of course, and at least one analyst has revived talk of minting a $1 trillion platinum coin. 

For those who don't recall, some people believe that U.S. law allows the Secretary of Treasury to mint platinum coins of any denomination, without asking Congress for approval. The idea was floated several years ago, during past debt limit standoffs, that the Treasury could simply mint a single coin worth $1 trillion (or more) and then walk down to the Federal Reserve and deposit it to pay off bills. It sounds crazy, but it has received a lot of discussion, and not just in the comments sections of blogs.

A report out this morning from Guggenheim Securities reminds us that this option is still on the table. It's No. 6 in a list of possible outcomes for the upcoming debt ceiling fight. The full list of options are:

1) A "clean" vote on the ceiling attached to no other bills or issues;

2) A GOP-Obama compromise;

3) Obama make an executive action or invokes the 14th Amendment to raise the debt ceiling unilaterally;

4) Obama caves to all Republican demands;

5) No raise and the U.S. goes into uncharted territory;

6) The coin.

There are the usual caveats, of course. According to Guggenheim, "The effects on the currency market and inflation are unclear, to say the least. You would also likely trigger a wave of lawsuits similar to the Constitutional Option and create two tranches of treasuries. We do not see the platinum coin option as a viable solution."