If there was a countdown of the idiocy of the punditocracy of this country, the discussion over the $1 Trillion platinum coin would be the number 1 story. As I previously explained, which it is feasible for the U.S. Mint to strike a $1 Trillion coin, the question remains, “Who will buy the coin?” In order for the U.S. Mint to gain from the seigniorage that would come from minting and selling this coin.

If the coin is has to be paid for by a depositor before it can become legal tender, who will buy a $1 Trillion coin?

How could the coin be used to reduce the debt? If the coin is just deposited with the Federal Reserve, there will be a $1 Trillion liability on the government’s balance sheet. In order to make the books balance, the Department of Treasury would have to sell debt bonds to make up the difference and that would add $1 Trillion to the national debt.

If the coin is bought by the Federal Reserve, then the Fed will have to pay $1 Trillion to the U.S. Mint for the coin reducing its overall working capital by $1 Trillion. Paying for a $1 Trillion that could not be used will just transfer the debt from the general treasury to the Federal Reserve. Since the Federal Reserve is in charge of managing the country’s money supply, the net effect will be to reduce the money supply by $1 Trillion that will cause the economy to shrink—any time you artificially remove money from the economy it will shrink which will also weaken the buying power of the U.S. dollar.

Transferring the debt away from the general fund might look good on paper but the effect will shrink the economy and cause more problems than even considering the constitutionality of doing this.

The bottom line is that regardless of what the U.S. Mint sells, there has to be a buyer. If there is no buyer then all the government would do is transfer balances from one balance sheet to another without any net gain.

Heritage Auctions asked the public to proposed design for the coin trillion dollar coin.

Dallas-based Heritage Auctions, held a mock contest on Facebook for the public to design a potential $1 trillion coin. The concept of a coin was even a joke to the folks at Heritage whose mockup included famed Mad Magazine “pitchman” Alfred E. Newman.

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