Fools Gold …. Or, I should say, Fools Platinum

As the political bickering regarding the debt ceiling rages on, we get a clownish idea coming from the circus that is Washington, D.C.

Philip Diehl, a former director for the U.S. Mint, told Axios that Treasury Secretary Janet Yellen could have a $1 trillion platinum coin minted “within hours” as a workaround if Congress doesn’t raise the debt ceiling.

Yellen is running around screaming that America will go into default if Congress doesn’t act, the Democrats are infighting over just how much they want to spend and the Republicans are expressing faux outrage to the debt knowing full well they’ll retreat to their cozy place of not caring about the debt once they are in power again.

Of course, as Ryan McMaken writes for the Mises Institute, the only moral thing to do is default. But, rest assured we’ll never see the moral solutions come out of the government.

“What it wants, of course, is sky-high spending, forever, and it wants to borrow huge amounts — at rock-bottom interest rates — to do it,” McMaken wrote. “A default — brought about by a stable debt ceiling — would complicate that goal. A failure to hike the debt would also limit the power of the regime, so we can expect most everyone inside the Beltway to be deeply opposed.”

For Diehl, his platinum coin scheme is an easy solution in his simple mind. He said: “Voilà, we’d have bought ourselves the equivalent of a trillion-dollar increase in the debt limit, without any impact on inflation.”

Yellen, for her part, called it a “gimmick” and has no plans on doing it. Do we trust her?

This stunt is absurd on its surface, but this isn’t the first time it’s been floated. It was last floated during the Obama administration, as noted by economist Peter Schiff.

In effect, the $1 trillion coin would be minted then given to the Federal Reserve which, in turn, would give the government $1 trillion worth of Federal Reserve notes. Platinum is currently selling for about $1,000 an ounce, give or take a few dollars, meaning the Fed now has “a $1,000 asset and they have a $1 trillion liability” meaning “this type of plan bankrupts the Federal Reserve,” Schiff said.

“The minute we go down this road, we officially make the United States a banana republic because we say the U.S. government can just issue money, can mint as many platinum coins as it wants and claim they’re worth whatever it wants and then spend whatever it wants,” Schiff said. “And then the Federal Reserve has zero ability to ever undue what is being done. They can expand the money supply, but they can never contract the money supply. And, so then, the Fed is officially an engine for perpetual inflation.”

Schiff added: “Now, unofficially that’s what it’s been the entire time. But if the Fed were to do this platinum coin maneuver, then we would drop all pretenses.”

The plan is unlikely to happen, Schiff says, because the Fed needs to keep the illusion of being an independent institution going, but also because the debt ceiling will be raised. As Schiff states, both parties are grandstanding right now as a show, and he recalled that this $1 trillion coin trick was not floated during the Trump administration. Not because it’s a stupid idea but because the GOP didn’t care about massive spending.

“I don’t remember if they talked about it during the Trump years because we didn’t really have the debt showdown during the Trump years because when Trump was president, the Republicans didn’t care about the debt,” Schiff said. “There was no political farce over ‘we’re not going to raise the debt ceiling.’ It only happens when the Republicans are out of power, and then they can get on this high horse and pretend they actually care about deficits and runaway government spending.”

It does take a society full of economic illiterates for such a dumb idea to be floated, by a director of the U.S. Mint no less. This illiteracy is aided by a propaganda media, as detailed by Tim Hartnett.

Maybe a dumbed down public is what the government needs to push forward its plans. We’ve got a rigged stock market, and massive bailouts of the banks and corporation are now the status quo. Anyone with any common sense knows this can’t keep going before a massive crash, and maybe a crash is exactly what the government wants.

“The US economy is primed to fall,” Bill Sardi wrote. “The Wall Street Journal is not going to tell you this. A humongous depression far greater than the depression of the 1930s, is planned. And in so doing, the masses will beg for the digital currency as the only way out. A date will be established to turn in paper money, maybe even at less than face value. Notice coins were tagged as carriers of the virus, to be turned back in to banks. Paper money banished as a medium of viral transmission.”

Sardi added: “Those in power make it appear they are sending Americans free money, they are rescuing you, from the COVID, from joblessness, from the sinking ship. In fact, the citizenry is being set up for a big fall. And most Americans are none the wiser.”