The $5 Trillion Coin

[J. J.]

Putting $5T in the system, in platinum, would essentially be buying back some deficit.  The markets might not react too badly, if it is backed up with platinum.  It would take a half billion Troy ounces of platinum to meet that.

Also, since Congress can regulate the power to coin money, they could easily remove the power to create the coin.

[J. J.]

If Obama took advantage of the loophole to mint fiat platinum coins, do you think the Democrats in the Senate would stop him?

Besides, it shouldn't be a single $5 trillion coin.  They should be $1 billion coins with Senator Everett Dirksen on the obverse.

Yes, because the markets would react badly.

[J. J.]

i'm sure the markets would just love the idea of a 5t coin

I'm sure the markets would just love a second, even worse recession.

which is exactly what a 5t coin would give us. 

Please Elaborate.

if I have to elaborate, then there is no need to explain it.  but if you need an example, try it yourself:  get some cement and make yourself a concrete round coin stating that it is worth $100k and walk down to your local BMW dealer and try to buy a 7 series with it.

Oh, I forgot that the United States has the authority of a dude who wants to buy a car.

If the treasury says the coin is worth $5 trillion, the coin is worth $5 trillion.

And the markets say the collective US currency is worth $5 trillion less.  Understand this, the government is not making the decisions on this.  The market is.

[J. J.]

...$5 trillion coin. It could then use the coin to buy back and extinguish debt from the Fed, pushing the country back under the ceiling. Or it could deposit it, and the Fed could counteract the inflation by selling government debt.

What inflation?  How could there be any inflation under this scenario, because all you would be doing would be disappearing debt that is held by the Fed, which already has no effect on the 'real' economy?

Its a brilliant idea, and should be implemented immediately.

1.  The value of the money in circulation drops.  It is like a pie cut into 5 pieces.  If you cut it into it into 8 pieces, each piece is smaller.

2.  I'll be happy to take any gold off you hand that you have left over at January 3, 2011 prices.