The other day I quoted former U.S. Mint director (1994-2000) Philip Diehl, as he made the case for minting a platinum coin to avoid a debt limit crisis. Ed Moy, Diehl’s successor, took the opposite stance, but made a fairly weak case. Diehl was kind enough to follow up, and push away a few more misconceptions about the idea.
My friend Ed Moy is very knowledgable about coinage matters and I have great respect for him. Our different points of view are hardly a family feud. But if I may, I’ll claim seniority on Ed since I wrote the law, along with Rep. Mike Castle, and went thought the entire process of producing the first platinum coin in 1997.
Consistent with the law, we determined all specifications of the coin without additional authority or review by Congress. No member of Congress, including the bill’s sponsors, ever expressed an expectation we would seek approval beyond the law itself, and no objections were raised when we proceeded without further congressional action or review.
Moreover, whether the coin is considered a circulating coin or a bullion coin, the accounting treatment is the same. Like a quarter, the difference between the face value of the coin and it’s cost of reproduction is booked as seigniorage. When the Mint ships the coin to the Fed, the seigniorage is transferred to the treasury’s general fund where it is available to finance government operation, just like the proceeds of bond sales or tax revenues.
Also, neither a bullion nor a proof coin “must be accepted at face value”. For example, the Mint’s one-ounce gold bullion and proof coins bear a face value of $100, but since gold is currently priced at around $1600/ounce, the face value of the coin is irrelevant to the value of the coin. I assure you if you used one in a commercial transaction with someone who knew it contained one ounce of gold and was worth $1600, they’d happily accept it for twice the face value, that is, if you were foolish enough to accept that value.
Finally, how many laws have been applied in ways that go beyond the original, narrow legislative intent? Countless. What matters is whether the application is within the letter of the law. In this case, there’s no doubt; Treasury has the authority to mint this coin.
And Treasury SHOULD mint this coin if the nation is again pushed to the brink of default by those who pursue an ideological agenda without compromise, irrespective of the cost to the nation.
The evolving case for the platinum coin is the only truly surprising news of 2013 so far. It’s clear that Republicans have no idea how to respond to it – look to the NRCC’s hilariously wrong attack on the concept, which assumed that a $1 trillion coin would need to be minted with $1 trillion worth of platinum. (To understand why this is wrong, take a $1 bill out of your pocket, then take a $20, then ask why the second bill isn’t 20 times larger.)