Public Law 104-208 enacted in 1996 included the following provision that is now in law as 31 U.S.C. 5112(k):
“The Secretary may mint and issue bullion 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.”
In 2000, new legislation replaced the word “bullion” with “platinum bullion coins.”
The specifications for which coins the U.S. Mint is authorized to produce is contained in 31 U.S.C. 5112. All coins other than platinum specify the denominations of the coins authorized to be issued. Only platinum coins do not have designated denominations.
The U.S. Mint began issuing platinum Eagles in 1997, with $10 1/10-ounce, a $25 1/4-ounce and a $50 1/2-ounce platinum Eagle uncirculated and proof versions being struck through 2008. The $100 1-ounce platinum Eagle in uncirculated and proof versions have been issued annually since 1997.
A political crisis erupted in 2011 over the U.S. government’s borrowings closing in on the authorized debt ceiling. As a patchwork solution, the idea of the U.S. Mint issuing a $1 trillion platinum coin was raised. Philip Diehl, the director of the U.S. Mint when the platinum coin legislation was enacted, and Rep. Michael Castle, who was co-author of the platinum coin law, both concurred that such a move would be permitted by statute, although Castle said such a use was never intended.
The possibility of issuing a $1 trillion platinum coin was abandoned at the beginning of 2013 when the concept was rejected by both the Federal Reserve Bank and U.S. Treasury.
Although the ultimate legality of such an action was never taken to court, legal scholars came down on both sides of the issue as to whether issuing such a coin would be lawful.
Here’s how the mechanics of issuing a $1 trillion platinum coin would work:
Since fiscal year 1996, the U.S. Mint has operated under the United States Mint Public Enterprise Fund legislation (31 U.S.C. 5136). Under this law, the Mint is required to tender all of its profits to the U.S. Treasury General Fund on at least an annual basis. The U.S. Mint strikes coins (other than cents and nickels) where the face values of the coins are higher than the production costs for raw materials, labor, and overhead. This excess of face value above costs is called seigniorage. Similarly, the U.S. Mint issues numismatic coins that also sell for prices above production costs.
Were the U.S. Mint to issue a $1 trillion platinum coin to the U.S. Treasury, virtually all of the value would eventually be returned to the U.S. Treasury General Fund, thereby reducing the need for the Treasury to borrow funds by the same amount. Voilà! Debt-ceiling problems would be at least temporarily resolved.
The idea of the U.S. Mint issuing a $1 trillion platinum coin was resurrected in March 2020 by Congresswoman Rashida Tlaib as part of her proposal to fund $2,000 monthly stimulus payments for the duration of the COVID-19 pandemic. No action was taken on this specific proposal.
However, this week, Congress is once again faced with the U.S. Treasury shortly reaching the current debt ceiling. So, once again, the idea of having the U.S. Mint issue a $1 trillion platinum coin has resurfaced.
Under the U.S. Constitution, only Congress can authorize the federal government to borrow. Until 1917, every specific debt issue was specifically authorized by Congress. To help provide flexibility in paying for the costs of World War I, the Second Liberty Bond Act of 1917 modified the process to establish an aggregate debt ceiling in place of approving individual debt issues.
Although there has been political wrangling and posturing over the years, Congress eventually approved a raise in the debt ceiling every single time it needed to do so in order to avoid default on interest payments and debt repayments. It is almost certain that, this week, the politicians in Washington will once again repeat the pattern, despite claims by some that they will not support an increase in the debt ceiling.
Having the U.S. Mint issue a $1 trillion platinum coin would be a sleight-of-hand maneuver to bypass the Constitution’s Article 1 Section 8 requirement for Congress to maintain control and oversight of federal government debt levels. In my judgment, abrogating this legal requirement would result in worse fiscal practices by the government, resulting in a faster decline in the purchasing power of the U.S. dollar. Besides, Congress eventually has always raised the debt ceiling when asked, so there really is no need for such a coin to be produced.
Interesting side note: The provision where U.S. Mint’s “excess revenues” are returned to the U.S. Treasury General Fund is the reason why the government never ordered the melting down of the more than $500 million in Susan B. Anthony dollars that were never needed for circulation purposes. The U.S. Treasury did not want to take the financial hit to the budget if the coins were destroyed.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2020), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).