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| Who, What, Why: Could the US get a $1tn platinum coin? | Who, What, Why: Could the US get a $1tn platinum coin? |
| (about 3 hours later) | |
| By Jon Kelly BBC News Magazine | By Jon Kelly BBC News Magazine |
| Campaigners want to prevent the US's rising debt from bringing government spending to a halt by minting the world's most expensive coin. Could this bizarre scheme become reality? | Campaigners want to prevent the US's rising debt from bringing government spending to a halt by minting the world's most expensive coin. Could this bizarre scheme become reality? |
| It sounds like the plot of some whimsical comedy - the 1954 Gregory Peck film The Million Dollar Note springs to mind - but a drive to create super-valuable loose change is being taken seriously in the corridors of Washington DC. | It sounds like the plot of some whimsical comedy - the 1954 Gregory Peck film The Million Dollar Note springs to mind - but a drive to create super-valuable loose change is being taken seriously in the corridors of Washington DC. |
| A petition urging the creation of platinum coin worth $1tn (£624bn) has attracted nearly 7,000 signatures and the support of some heavyweight economists. | A petition urging the creation of platinum coin worth $1tn (£624bn) has attracted nearly 7,000 signatures and the support of some heavyweight economists. |
| Experts say the plan would be lawful and should allow the government to keep spending if President Barack Obama fails to convince lawmakers to raise the "debt ceiling" - a cap, set by Congress, on the US government's borrowing ability. | Experts say the plan would be lawful and should allow the government to keep spending if President Barack Obama fails to convince lawmakers to raise the "debt ceiling" - a cap, set by Congress, on the US government's borrowing ability. |
| But most believe the coin is more likely to be used as a threat than ever actually come into being. | But most believe the coin is more likely to be used as a threat than ever actually come into being. |
| "When people first hear about it they think, 'Oh, it's a gimmick,'" says L Randall Wray, professor of economics at the University of Missouri-Kansas City. | "When people first hear about it they think, 'Oh, it's a gimmick,'" says L Randall Wray, professor of economics at the University of Missouri-Kansas City. |
| "But it makes you think harder about the way the government spends." | "But it makes you think harder about the way the government spends." |
| The coin owes its widely-discussed, though still hypothetical existence to the looming deadline over the debt ceiling - which, as things stand, will prevent the US government issuing new bonds and paying bills, in about two months. | The coin owes its widely-discussed, though still hypothetical existence to the looming deadline over the debt ceiling - which, as things stand, will prevent the US government issuing new bonds and paying bills, in about two months. |
| Republicans, who control the US House of Representatives, have pledged to seek spending cuts before consenting to any increase in this limit. | Republicans, who control the US House of Representatives, have pledged to seek spending cuts before consenting to any increase in this limit. |
| But opponents fear this brinksmanship could threaten the US's credit rating if the country's debt reaches or breaks through this ceiling. | But opponents fear this brinksmanship could threaten the US's credit rating if the country's debt reaches or breaks through this ceiling. |
| These mostly centre-left critics, including Democratic Congressman Jerrold Nadler, have pointed to a loophole in US law that allows the Treasury Secretary to allocate any value he or she likes to a coin. | These mostly centre-left critics, including Democratic Congressman Jerrold Nadler, have pointed to a loophole in US law that allows the Treasury Secretary to allocate any value he or she likes to a coin. |
| They say the Treasury could order the coin to be minted and then deposit it at the Federal Reserve, the US's central bank. | They say the Treasury could order the coin to be minted and then deposit it at the Federal Reserve, the US's central bank. |
| Effectively, the coin is an accounting trick, says Cullen Roche, who blogs about finance and economics at Pragmatic Capitalism. | Effectively, the coin is an accounting trick, says Cullen Roche, who blogs about finance and economics at Pragmatic Capitalism. |
| Its real purpose, however, would be political - to neutralise the threat by Republicans in Congress that federal employees would not be paid, he adds. | Its real purpose, however, would be political - to neutralise the threat by Republicans in Congress that federal employees would not be paid, he adds. |
| "It's a loophole to replace something that's totally insane with something that's slightly less insane," he says. | "It's a loophole to replace something that's totally insane with something that's slightly less insane," he says. |
| The campaign has been taken seriously by such eminent people as Nobel prize-winning economist and New York Times columnist Paul Krugman, and Philip Diehl, the former director of the United States Mint. It has also inspired the Twitter hashtag, #MintTheCoin. | The campaign has been taken seriously by such eminent people as Nobel prize-winning economist and New York Times columnist Paul Krugman, and Philip Diehl, the former director of the United States Mint. It has also inspired the Twitter hashtag, #MintTheCoin. |
| But it has attracted opposition, too. Republican Congressman Greg Walden has promised to introduce a bill to ban the government from creating high-value coins to pay its debts. | But it has attracted opposition, too. Republican Congressman Greg Walden has promised to introduce a bill to ban the government from creating high-value coins to pay its debts. |
| Walden said he feared the practice would be "very inflationary". | Walden said he feared the practice would be "very inflationary". |
| Wray disagrees. "These trillion-dollar coins are held only by the Fed," he says. "There's no increase in the money supply out there." | Wray disagrees. "These trillion-dollar coins are held only by the Fed," he says. "There's no increase in the money supply out there." |
| Supporters of the scheme also say the Federal Reserve could sell bonds, which would withdraw money from circulation. | Supporters of the scheme also say the Federal Reserve could sell bonds, which would withdraw money from circulation. |
| As yet, however, no such coins exist anywhere. And even those who believe the plan is perfectly feasible concede that it is likely to remain a bargaining chip in the debt-ceiling talks, rather than becoming a reality. | |
| "I think the president will be reluctant to do it because it undermines everyone's credibility," says Roche. | "I think the president will be reluctant to do it because it undermines everyone's credibility," says Roche. |
| Coin collectors might be advised not to hold their breath about this new denomination turning up on eBay any time soon. | Coin collectors might be advised not to hold their breath about this new denomination turning up on eBay any time soon. |
| You can follow the Magazine on Twitter and on Facebook | You can follow the Magazine on Twitter and on Facebook |