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The trillion dollar platinum coin has been proposed on other occasions, but never minted. Last I checked, platinum was trading at around 30-31 dollars a gram,
by aww_dang 5y ago
The trillion dollar platinum coin has been proposed on other occasions, but never minted.
Last I checked, platinum was trading at around 30-31 dollars a gram, roughly half that of gold. The presumption is that the coin will be 1 troy ounce or about 31g.
Hyperinflation from reckless debt monetization isn't unprecedented. When it does occur, it tends to quickly spiral out of control. Let us assume for the sake of discussion that there are some responsible people within these institutions who would like for these platinum coins to act as an actual asset, a backstop against a total devaluation of the dollar.
What would a reasonable weight of a trillion dollar platinum coin be?
- wavefunction 5y agoReasonable weight? Something that won't blow away in the wind.
- jaywalk 5y agoOur money hasn't been backed by physical metals for a very long time. The coin would be purely symbolic, being made of platinum only because the law allows platinum coins to be minted in any denomination.
- aww_dang 5y agoYes, that much is obvious. Please understand that I was posing a hypothetical.
- khuey 5y agoThe seigniorage is the entire point of the exercise.
- Geee 5y agoThe idea is to mint a worthless coin that has face value of $1 trillion. That way, the coin has one trillion dollars of seigniorage, i.e. profit for government, and the coin could be deposited to Federal Reserve treasury instead of issuing debt. In other words, they would be issuing new money by debasing the dollar, without generating debt in their balance sheet. It's like issuing one trillion worth of cash, which is backed with just one worthless platinum coin. It's not really different from just issuing debt that isn't paid back, but this way they don't have to raise the debt limit. Shenanigans like this will completely erode the trust in the value of dollar.
- aww_dang 5y agoYes, this is the obvious part of the charade. I do disagree with one key part of your analysis. >...backed with just one worthless platinum coin. Platinum is a precious metal and far from worthless. Let us pretend there are people involved in this charade who would allow that initial wealth to be extracted via Cantillon effects, but still desired the coin to act as a backstop at a later date. Given the current rate of spending and outstanding obligations, what would be a reasonable weight for a trillion dollar coin?
- gruez 5y ago>Given the current rate of spending and outstanding obligations, what would be a reasonable weight for a trillion dollar coin? Not sure why you need to factor in "current rate of spending and outstanding ", but 1 trillion divided by current platinum prices gets you 31,610 metric tons. Apparently that exceeds all platinum ever mined: >Mining experts also estimate that just over 10,000 tonnes of platinum have ever been mined by man.
- deleted 5y ago[deleted]
- aww_dang 5y agoClearly it wouldn't be practical to mint platinum coins at the current price. Instead, they would profit from the difference as they debase the dollar. Therefore the total obligations become important in the calculation. The weight of the coins would become the new USD valuation in this scenario. A 'backstop' as I mentioned above.
- Geee 5y agoI'm not really sure that you are suggesting, but if they were 'reasonable', then the coin should actually be valued at the platinum's current price. That's how money is supposed to work.
- bryanlarsen 5y ago
- jabthedang 5y ago≈ 31990 US short tons