With the Treasury Department’s account at the Federal Reserve approaching the debt ceiling, it almost sounds like the next (il)logical step, and seemingly last resort, would be to create the world’s heftiest coin and drop it right into the account, problem solved. Thanks to a 1995 bill drafted by former Delaware Rep. Mike Castle and passed by Congress, the possibility isn’t as far-fetched as it sounds.
When Castle took over as head of the House Financial Services subcommittee on domestic and international monetary policy in 1995, one his greatest and most well-known accomplishments was the 50-state quarter program. In addition, he also drafted the Commemorative Coin Authorization and Reform Act of 1995, which included a provision allowing the Secretary of the Treasury to mint and issue platinum coins at his or her discretion. By minting coins worth more than they cost to produce, the government would profit from the investment collectors would make on the coins.
Though it didn’t pass in the Senate, the bill’s provisions were included in the Omnibus Consolidated Appropriations Act for 1997, which gives the Secretary (currently Tim Geithner) discretion on the designs, specifications, quantities, and denominations of platinum coinage. Essentially, Geithner can stamp out a trillion-dollar coin or two, drop it in the bank and the Treasury, rather than issuing a new debt, can make sure its checks clear against this money.
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According to Business Insider, there’s little need to worry about hyperinflation. Since the money would be dropped into the Federal Reserve and not directly into the economy, government spending takes place exactly as normal. Furthermore, minting the coin isn’t about stacking up spending money, so you wouldn’t find Geithner approving a $15 trillion coin. The government must stay within the law while getting around the technical problem of the debt ceiling.
A WhiteHouse.gov petition to move the argument is currently about 23,000 votes away from eliciting a White House response, and even Castle himself most likely won’t be signing his name. According to comments given to the Washington Post, Castle says the plan is “so far-fetched and so black helicopter-ish a type of methodology of trying to resolve something like this that I think the public would totally scoff at it… It would be an artificial way of trying to create money and I think everybody will see that.” His argument is for the government to raise the debt ceiling using typical measures while cutting the deficit.
The American Eagle Palladium Bullion Coin Act of 2010, proposed by then-Rep. Denny Rehberg (R-MT) and signed into law by President Obama on Dec. 14, 2010, would also authorize Geithner to mint $25 palladium coins at his discretion. So will it be a trillion-dollar coin or two or tens of billions of palladium coins, or will it be neither? Analyst Chris Krueger from Guggenheim Securities’ Washington Research Group asserts that of the government’s four money-management options, which include a traditional Congressional raise of the debt ceiling, a raise by Congressional disapproval and a unilateral raise of the debt ceiling by President Obama, the platinum coin option is among the lowest of the four options (along with the unilateral raise) and its effects on the currency market and inflation are “unclear to say the least.”
Whether a Castle-influenced option is chosen or not, time is running out on this hefty chunk of change. Visit WhiteHouse.gov to learn more about the petition or search #mintthecoin on Twitter.
This article was written using sources from The Washington Post, Business Insider and the Guggenheim Securities’s Washington Research Group.
More about Former Rep. Mike Castle (R-Del.) from DelawareToday.com:
- Former Delaware Congressman Mike Castle: Life Out of Office (December 2012)
- Michael N. Castle, Political Icon (April 2012)
- Castle vs. Coons (July 2010)
