No coin for you

Well, so much for the trillion dollar coin.

The idea, in case you missed it, was to avert the coming debt ceiling crisis by using a loophole in the law on commemorative coins.

That loophole restricts the value of gold and silver coins but not platinum coins and could authorize the U.S. mint to go ahead and strike a platinum coin with a value of one trillion dollars.

It would then become legal tender, and be deposited at the Federal Reserve, instantly putting a trillion dollars in the U.S. Treasury’s checking account. Allowing it to write checks without borrowing money, thereby inoculating it from the debt debate.

It would have been a monetary flu shot. Once the debt ceiling was raised, the coin would be liquidated, and everything would be back to normal.

I spoke to Philip Diehl, the former director of the Mint who helped write the coin measure.

“I’ve been watching the White House on this proposal very closely over the last week or so and (the president) has not ruled this out,” said Diehl.

That was Friday. By Saturday the Federal Reserve which would have to recognize the value of such a coin for the scheme to work, said, no way are we taking your coin. And just like that, the idea was dead.

And you can see why. It would reflect too casual an attitude toward large amounts of money. It would be taking something with no real value and trying to pretend it was a real asset – something no real financial institution would ever do.

Well – they wouldn’t do it any more.