THE TRILLION DOLLAR COIN
In a financial world composed essentially of complete absurdity, a new idea has been floated to create a new USD 1 Trillion Platinum coin.
The US treasury cannot print its own money but can in exceptional cases mint a coin. The idea is that Mr Geithner gets the US Mint to mint the coin, worth USD 1 Trillion, and then goes the the Federal Reserve to deposit it in the Treasury bank account, thus reducing the overdraft and avoiding the debt ceiling. So far so good ???
There is a small technical problem, that Platinum is an extremely rare element, with an annual production in 2010 of 200,000 Kg. With a current market price of USD 50,000 per Kilo annual production equates to approximately USD 10 Billion.
Hence a USD 1 Trillion coin would represent 100 years of future Platinum production.
This idea has been lauded by Nobel prize winning Keynesian economist Paul Krugman.
This idea should inspire other countries, economists and Central Bankers. Amongst the variants on a theme which spring to mind are:
The EU could create a new Platinum coin and call it "Democracy" as they would be delighted to deposit that deep in the ECB vaults for generations to come.
France could mint their Platinum coin in the form of a sacred cow and call it "Entitlements" and place it in La Place de La Republique, awaiting the next revolution.
The UK could mint a Platinum coin with inscriptions in Urdu, Romanian and Polish so the population could understand what is was.
The Swiss could mint a Platinum coin called "Banking Secrecy" and throw it into the deepest part of Lake Zurich.
The Club Med countries could announce they were going to mint a Platinum coin called "Bail-out" just as soon as Germany sent them the metal.
Germany could mint a Platinum coin, but they won't, because they are solvent, and more important they are not that bloody stupid.