The Trillion Dollar Coin

Ellen Brown has (yet) another nice piece about the idea that the US Treasury could pay off government debt by minting some special platinum coins with a face value of $1 trillion ("The Democratization of Money: The Trillion Dollar Coin, Joke or Game-changer?"). The coins would be deposited with the Federal Reserve and would mean that US tax payers would no longer have to borrow money from the Fed and pay interest on the national debt.

The idea seems to be legal, since the US law on Denomination, Specifications and Design of Coins specifically states that :

"The Secretary 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."

And the idea's had support from a number of big names, including Nobel Prizewinning Economist Paul Krugman, who has posted "Be ready to mint the coin".

Unfortunately, it appears that the plan has been vetoed by the Fed. According to one report "a senior administration official told ABC News there was one key factor in making that course of action impossible: The Federal Reserve said it would not view the coin as viable.
“Since they wouldn’t view the coin as viable, the issue isn’t not wanting to do the coin. We just can’t,” the White House official said."

Now, why would the people who run the Fed (which is a consortium of private banks) view the coin as unviable? Could it possibly be that if the US government could actually create their own money free of interest charges, it would risk killing off the goose that has been laying golden eggs for private bankers for the last few centuries?

I just wonder whether governments in the Eurozone couldn't use a similar trick to pay off the debts that they have to the banks. Each country in the Eurozone can mint its own coins, under the control of the European Central Bank. Currently, the coins are limited to 2 euros. But why not mint a few hundred billion euro coins? I propose that the ECB should authorize each country to mint a number of coins that corresponded to the size of its population. That way, there would be no question of favouring particular countries. And Germany, with a population that is roughly 25% of the Eurozone, would get the largest number of coins.

Importantly, the coins could be used for one thing only - namely, to pay off public debt to the banks. However,  since the banks didn't have the money that they lent in the first place (they used the fractional reserve banking trick to create it out of thin air), I think it would be only fair to that the ECB stipulates that the banks shouldn't be allowed to actually spend the coins. But they would look very nice framed on the wall of the bank's head office.

That way, the Eurozone taxpayers could avoid paying the 286 billion euros in interest charges on government debt that was paid in 2011. Simple really.....