Minting a trillion-dollar coin is harder than you think
The trillion-dollar coin is an idea for one way that Democrats could get around Republican threats to throw the United States into default. (There are other options, including standing on the 14th Amendment clause that says “the public debt… shall not be questioned”.)
The basic idea is this: The Department of the Treasury has the authority to direct the US Mint to produce a platinum coin at any denomination they see fit. The value of such a coin is its face value—that is to say, whatever it says it is. So when the Republicans start throwing around threats like “you need to cut off services to these groups of people or else the government is going to run out of money!!!”, as they have been, one option is to simply literally make more money—in enough of a quantity that it will pay for all the US Government’s expenditures for the next year or so and take a lot of the hostage-takers’ leverage away.
I’m not qualified to debate the policy or economics of it, and most likely, neither are you. But what I can do is think of any number of ways that someone—intentionally or otherwise—could fuck it up.
Mis-striking the coin
The last step of the process of producing a coin is called “striking” it. That’s the part where the design gets pressed into the faces of the (hitherto) blank.
Normally coin production is a mass-production process; the country’s mints produce up to tens of thousands of coins per minute. In this case, we’re talking about a one-off, so I don’t know whether they’d do the process differently or just run the machine for a very, very short amount of time.
Either way, it’s certainly possible for the coin to be mis-struck, or otherwise produced in a way that it is obviously defective. This has happened in a variety of ways to nearly every type of coin, and normally, mis-struck or otherwise defective coins are worth significantly more than face value.
What does that look like when the face value is $1,000,000,000,000?
Most likely, the mis-struck coin wouldn’t stay that way—they’d melt it down and try again. (After all, platinum ain’t cheap.) We might never know that there was a mis-struck trillion-dollar coin in existence for some short amount of time.
Composition
The specific section of the US Code that authorizes this stunt says:
The Secretary [of the Treasury] may mint and issue platinum bullion coins 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.
The trillion-dollar coin wouldn’t be a bullion coin, which is a coin defined by its amount of some precious metal—that would be a “this much platinum” coin, not a coin with a dollar denomination. So the trillion-dollar coin would be a proof coin.
The Mint regularly issues platinum proof coins, such as this coin for this year. That coin contains 1 ounce of platinum, and has a face value of $100, but is sold at a price dependent on the value of its platinum content, which is somewhere between $1,000 and $2,000—ten to twenty times its face value.
So, for a trillion-dollar coin, how much platinum would they need? Does there need to be a particular ratio, or could they make a zinc coaster with 1 oz of platinum mixed in?
Or does it even matter? Could they make a 1-oz platinum coin, not much different from the ones they’re already making, and just add ten more zeroes across the back of it?
Speaking of which…
The design
There’s at least one artistic rendering of what such a coin could look like, but it’s just one artist’s conception and not an official rendering from the US Mint.
Presumably they’re not going to just type in “ONE TRILLION DOLLARS” in Impact and call it good. This is The Coin! It’s got to look like something.
On the flip side, this whole idea is an emergency measure. They’re not going to have time to go through the usual processes for coming up with new coin designs—not when the US Government could reach the statutory debt limit in… not even a couple of weeks at this point.
Hopefully they’re coming up with a design now that they can have ready to go if and when it’s needed. (And make absolutely sure it has no typos in it.)
Of course, having the design ready to use at a moment’s notice gets into issues of…
Operational security
It’s easy to say “the Mint should do this” or “Treasury should do that” but it’s worth remembering that these are granfalloons, in the sense in which Don Lancaster used the term (slightly different from Kurt Vonnegut’s original meaning):
tactics secret—beware the granfalloon, my son
A granfalloon is any large bureaucratic figment of people’s imagination. For instance, there’s really no such thing as the Feds or the General Veeblefeltzer Corporation. There are a bunch of people out there that relate to each other, and there’s some structures, and some paper. In fact, there’s lots and lots of paper. The people sit in the structures and pass paper back and forth to each other and charge you to do so.
All these people, structures, and paper are real. But, nowhere can you point to the larger concept of “government” or “corporation” and say, “There it is, kiddies!” The monolithic, big “they” is all in your mind.
If the Mint produces a trillion-dollar coin, it’s because people designed it and people fabricated it. If Treasury deposits the coin into the Federal Reserve, it’s because someone from Treasury personally visited the mint where the coin was struck, took possession of it, carried it to the Federal Reserve, and deposited it.
There are so many ways that could go wrong.
Every person involved in this would need to be vetted sixteen ways to Sunday. No foreign allegiances, no debts, not even a whiff of past criminal activity.
And you’d need a significant number of people. Nobody gets to go alone; you’d need multiple people monitoring each other, all with bodyguards, while also trying to remain as inconspicuous as possible and not look like they’re carrying the most valuable single object in the country.
Assuming, of course, that it remains a single object. I mentioned above that the production run would be a one-off. It would be supposed to be, at least—but as soon as the die exists, it’s theoretically possible to strike a second blank and make another trillion-dollar coin. Either a counterfeit, if it doesn’t actually contain the platinum, or a duplicate if it does.
You could argue that theft or counterfeiting are not actually as big of a concern with this project as they might be with, say, one-dollar coins. Supposing you stole the trillion-dollar coin, or struck a duplicate—what could you even do with it? Nobody will accept it as tender. No commercial bank or credit union will accept it in deposit; they’d immediately phone up the Secret Service and be like “yeah we found your coin”. What could you do, put it on eBay?
Small things, easily lost
Even barring any acts of malice or greed, what if the Custodian simply… lost it?
Coulda sworn it was in that pocket.
Did it fall out when I was paying for lunch?
Hope it didn’t roll into a storm drain…
But let’s say none of that happens and the Custodian makes it to the Federal Reserve with the solution to the debt ceiling crisis safely on their person.
Then what?
When you deposit hard currency—including coin—at your local banking institution, they put it in their drawer and mark up your account. From that point, the physical coins you left behind are then eligible to hand out to any other customer in service of a withdrawal, or to be transferred between tellers or between branches. They are fungible; the bank has hundreds or thousands of them and there is no particular reason to care about the location of any single one of them.
The trillion-dollar coin would be an extremely different situation.
To be fair, it is a (mostly) solved problem. The New York Federal Reserve stores gold and other reserves on behalf of various governments, including the US. It may also be that other Federal Reserve Banks around the country offer similar services. The trillion-dollar coin would likely end up at any of those locations.
Buuuut there are some differences.
First, it’s not a stack of gold bars. It’s a coin. Its value wouldn’t derive from its scrap metal value (as noted above, somewhere in the 1- to 2-kilobuck range) but from its denomination.
A stack of gold bars is hard to exfiltrate. Maybe a thief could remove a bar or two (if they somehow got past all the security) without anybody noticing. It’d be an extremely high-stakes game of Jenga. (Don’t ask me for tips; everything I know about this sort of crime I learned from heist movies, and I haven’t watched many heist movies.)
A coin is, well, a coin. People regularly carry dozens of them on their person without anyone noticing. When you go through a metal detector, you dump your coins into a pile in a little plastic tray and nobody looks at it.
Where would they even keep The Coin? Do they have little safety deposit boxes at the New York Fed?
That leads to the other problem: Keeping track of it.
Somewhere there needs to be a record of where, in the New York Fed or wherever else, the coin is kept. It needs to be in a place where (theoretically) someone from Treasury could retrieve it if there were ever a need to do so, not to mention a place that could be checked if there were suspicion of theft. Of course, that would also be sensitive information; you wouldn’t want anyone in the whole organization to be able to look up where the USG’s trillion dollars is.
Some of this is, again, solved problems or otherwise not worth worrying about. It’s a bank; not a normal bank but still a bank that (one hopes) has a means to keep even something as small as a single coin in a safe place, remember where that is, and guard access to both that location and the knowledge of it. And, as I mentioned above, theft is of limited concern for a coin that there is (or should be) only one of and that no place will accept.
On a more serious note
None of this is to say that they shouldn’t do it; that’s more of a policy and economics question. Government works on hard problems all the time, and usually does better than we give it credit for. (Especially better than libertarians give it credit for.) Success is the expectation, and I’d argue it is actually the norm, but we don’t notice it and don’t appreciate it. Failure stands out, and certain actors are ideologically motivated to spotlight it. I’m more interested in anticipating failure as a means to ensuring success.
A lot of the difficulties I’ve outlined arise from the unique nature of this particular minting job. It’s a singular coin of exceptionally high face value. Processes that are normally routine become high-stakes; hazards that are normally negligible become serious concerns.
I really hope the folks at Treasury have thought about this more than the couple of hours I put into this blog post. Because with less than a couple weeks left of “extraordinary measures”, if the Republicans keep trying to hold the country hostage by threatening to throw it into default, we might need this to go from “wild idea” to “thing we are actually doing” in a hot second.