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Tuesday, December 11, 2012

A trillion dollar platinum coin?

by Clifford F. Thies

The latest completely wackadoodle idea emanating from the left socialist progressive media is that the President should bypass the Congress with regard to the debt ceiling and exploit a supposed loophole in the law governing coinage, and issue a $1 trillion platinum coin to the Federal Reserve, no make that two $1 trillion platinum coins, and just proceed, like Allen Iverson, spending money like a mad man.

Hey, it's Keynesian economics not only come back alive from the grave, but multiplied like an army of flesh-eating zombies on bath salts.

The so-called loophole is paragraph k in the following:

Lawcornell.edu/uscode

"The Secretary 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."

As to why anybody would expect Keynesian economists to know about coins, when they confuse Obama adulation with economic analysis, I wouldn't know. While the language of paragraph k could be clearer, it is clear enough.

"Bullion coins" refers to coins sold as a store of value (not as a medium of exchange, whether or not given a legal tender value), priced at the value of the metal within the coin plus a small premium for minting, distribution and profit. Not trillion dollar coins.

"Proof coins" refers to highly polished coins sold as collectors' items (not as a medium of exchange, nor as a store of value, again whether of not given a legal tender value). The premium above the value of the metal within proof coins can be higher than that in bullion coins, but also not a trillion dollars.

Check out the following wikipedia entries:

Wiki/Bullion_coin and Wiki/Proof_coinage

In addition to the meaning of "bullion coins" and "proof coins," there is the Constitutional arrangement of checks and balances. The Constitution specifically gives Congress the power to coin money and regulate the value thereof. Congress has delegated this power to the U.S. Treasury in the matter of coins and to the Federal Reserve System in the matter of paper currency, giving to both guidance as to the exercise of this power.

Allowing the Executive to mint bullion coins and proof coins made out of platinum, to go along with the minting of bullion and proof coins made of gold and silver is not a problem. But, it would be unconstitutional for the Congress to delegate its power to coin money and regulate the value thereof by turning that power over to the Executive in the matter of platinum coins without delineating how this power is to be exercised.

The Constitution also gives to Congress to borrow money. This Constitutional arrangement would also be ruptured should the President choose deliberately to ignore the meaning of "bullion coins" and "proof coins," and claim that there's a loophole in a law with regard to platinum coins.

We find it curious that no denial of the talk of overturning the Constitution in the Washington Post and other left socialist progressive media, is forthcoming from the White House. Perhaps the President finds the prospect of assuming dictatorial powers over the finances of the country to be attractive.

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