Though Platinum Coin Seigniorage might sound like a disease only Ebenezer Scrooge should worry about, it has become central in a debate about the federal debt ceiling and the United States economy.
Platinum Coin Seigniorage is the difference between the cost of minting a platinum coin and its designated monetary worth. Thanks to a law allowing the minting of commemorative platinum coins, such as those with presidential silhouettes, many are saying President Barack Obama could get around congressional deficit fights and solve it by minting platinum coins that receive whatever value is chosen.
A trillion dollars has become the agreed-upon amount for advocates of the platinum solution.
The idea seems far-fetched, though it appears to have legal footing and is receiving real responses by national politicians, including Oregon Rep. Greg Walden, R-Hood River, in advance of the possible Feb. 15 deadline for raising the debt ceiling.
Walden announced this week he would introduce legislation to stop the Treasury from minting platinum coins “as a way to pay down the debt."
Andrew Malcolm, the representative’s press secretary, said Walden intends to introduce the bill on Monday, the first day of the House’s new session.
The reason for the legislation is a bizarre standoff between Republican deficit hawks, who have threatened not to raise the debt ceiling for a second straight time, and their Democratic opponents who are calling this a bluff.
When the debt ceiling, which sets acceptable limits for federal debt, wasn’t raised before the 2011 deadline, it had two important consequences. First, the U.S. lost its AAA debt rating from Standard & Poor’s, leading to economic ripple effects amidst an already weak recovery. Second, Republicans were largely seen by the American people as the architects of this unpopular action.
Since then, the U.S. has continued to claim AAA status because of unchanged ratings by Wall Street’s other two top credit agencies — Moody’s and Fitch — though this good credit is also at risk with the second round of debt ceiling negotiations, according to The Washington Post. Until 2011, the debt ceiling had never been a significant point of debate.
An online petition to mint a trillion dollar platinum coin had 6,619 signatures as of Tuesday, about 18,000 short of the 25,000 signature threshold that would cause a response by the White House.