Ten Miles Square


January 08, 2013 5:53 PM Harvard Law School Professor Laurence Tribe on the Legality of #mintthecoin

By Ryan Cooper

I talked with Professor Tribe today over email, asking him two questions. One, would it be legal to exploit the platinum coin “loophole,” (my word) and two, would reaching the debt ceiling obligate the president to use said seigniorage power, since he would be caught between the conflicting obligations of being legally forced to spend money by the budget process but not allowed to borrow the money to finance that same spending?

He graciously allowed me to reprint his response in full. Here it is, unedited save for the added link to the statute:


I don’t think it makes sense to think about this as some sort of “loophole” issue. Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins. First, the statute itself doesn’t set any limit on coin value. Second, other clauses of 31 USC §5112 do set such limits, but §5112(k)—dealing with platinum coins—does not. So expressio unius strengthens the inference that there isn’t any limit here.

Of course, Congress probably didn’t have trillion-dollar coins in mind, but there’s no textual or other legal basis for importing this probable intention into the statute. What 535 people might have had in their collective “mind” just can’t control the meaning of a law this clear.

It’s also quite clear that the minting of such a coin couldn’t be challenged; I don’t see who would have standing.

Bottom line: This is a situation where the political and economic considerations, not the legal considerations, have to drive the decision-making about this option. It’s certainly a lot better from just about every perspective than having the nation stuck on either horn of the very real dilemma you outlined below, which I agree offers no plausible way out as long as enough leaders in Congress insist on playing Russian Roulette with our economy and risking our full faith and credit by using the debt ceiling as a bargaining chip as they are threatening to do.



Ryan Cooper is a National Correspondent at The Week, and a former web editor of the Washington Monthly. Find him on Twitter: @ryanlcooper


  • David on January 09, 2013 12:20 AM:

    Good for you Ryan!!

  • Dave Whitlock on January 09, 2013 12:19 PM:

    Excellent idea. Paul Krugman has a great analogy, likening this idea to the Treasury Secretary dressing up in a clown suit.

    I suggest that would be a great idea. Obama could appoint Paul Krugman to be Secretary for a day, Krugman could dress up in a clown suit, authorize the minting of a $1,000,000,000,000 coin, carry it in a parade to the Fed (because everyone loves a parade), deposit it and then resign.

    That way no Very Serious People have needed to do anything non serious.

  • CB on January 09, 2013 3:00 PM:

    Might not some courts, perhaps invoking the "canon against absurd results," find this statute an unconstitutional delegation of legislative power because it lacks an intelligible principle?

  • Michael Schmidt on January 09, 2013 3:47 PM:

    Dave Whitlock, that is the most wonderful plan.

  • Mark P on January 09, 2013 5:10 PM:

    CB, a court can't find unless it has a case, and Prof. Tribe doubts that anyone would have standing to bring such a case.

  • JEGlackn on January 09, 2013 7:08 PM:

    CB, if we applied your standard, 2/3 of Congressional output would be unconstitutional.

  • John on January 09, 2013 7:42 PM:

    Some people call it a loophole or a trick simple because of the magnitude of the face value and because they are not clear on the concept of a fiat currency.

  • James Carroll on January 09, 2013 9:51 PM:

    One form of malicious madness deserves another.
    "One flew east
    One flew west
    One flew over the cuckoo's nest".

  • caplane on January 09, 2013 10:24 PM:

    Mint that coin!

  • Bill Barclay on January 09, 2013 11:18 PM:

    Make it a $5 trillion coin. If the republiCONs want to play games, let's do so.

  • Tom Maguire on January 10, 2013 1:39 AM:

    After Prof. Tribe reads the statute more carefully he will see where he went awry.

    The law, my emphasis:

    (k) 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.

    Tribe focused on the Secretary's discretion without ever wondering what a "bullion coin" is. The US Mint presents the common, widely understood definition:

    "A bullion coin is a coin that is valued by its weight in a specific precious metal. Unlike commemorative or numismatic coins valued by limited mintage, rarity, condition and age, bullion coins are purchased by investors seeking a simple and tangible means to own and invest in the gold, silver, and platinum markets."

    You could look it up, even though Tribe did not. Lacking a trillion dollars worth of platinum, the Secretary does not have discretion to authorize a trillion dollar "bullion coin".

    So maybe a "proof coin"? Well, those are just enhanced, specially struck versions of the basic coin. From the Mint:

    "Proof: a specially produced coin made from highly polished planchets and dies and often struck more than once to accent the design. Proof coins receive the highest quality strike possible and can be distinguished by their sharpness of detail and brilliant, mirror-like surface."

    Details, details.

  • Ratherdrive on January 10, 2013 2:19 AM:

    Speaking of details, a "proof" coin is still legal tender, no matter how pretty it may be, or whatever metal actually is, and in whatever denomination that may be struck on its face.

    And since it is clearly differentiated from a bullion coin, the actual possession by the Gov't of a trillion dollars worth of platinum would not be required.

  • RW on January 10, 2013 2:25 AM:

    @ Tom Maguire:

    Nothing in the subsection you cite defines "bullion coin" or, as far as I can tell, requires any particular relationship between the amount of metal in any coin and the denomination of such coin. In fact, the words "in the Secretary's discretion" seem to require the opposite: the Secretary *must* have discretion to prescribe the denominations, etc. of the coin, per the statute, or else we're reading into the statute words that aren't there.

    Note that the American Platinum Eagle bullion coin is issued in denominations of $10, $25, $50 and $100 and is legal tender. By issuing these coins in denominations the Secretary is not mandating a fixed price for platinum in the commodities markets - otherwise the coins would be useless for investment purposes, since you could just hold fiat money in those denominations and achieve the same result. However, regardless of the value of the platinum in the coins the coins can be used as legal tender in the denominations thereon. Therefore, the Secretary could, if he wanted, make a very large-denomination coin (say, $1 trillion) with a very small amount of platinum in it (say, 1 troy ounce). As a store of value the coin would be worth at any time the market value of 1 troy ounce of platinum. As a fiat currency, however, the coin would be worth its denomination, $1 trillion, just like a $1 bill is worth $1.

  • ezra abrams on January 10, 2013 10:38 AM:

    prior to the SCOTUS ACA decision last summer, dozens of law school profs arrogantly made confident predictions about the result
    so why should we believe tribe now ?
    by definition, the legality of 31 USC 5112 (k) is what a majority of hte SCOTUS say it is
    diff between scholar and pundit - scholar say what he know, and gets dinged for being wronged (i the only one remember tribe wrong op ed nyt bout 10 years ago)
    Pundit, gets paid huge sums, and can be wrong again and again without ill effects

  • Michael Duff on January 10, 2013 11:34 AM:

    @ ezra adams/Tom Maguire

    Standing is not as pliable to punditry as other matters. No ACA-style intepretive wrangling re platinum bullion or any other substantive matter is possible without a qualified plaintiff to bring the suit. While there have been a few successful arguments allowing "generalized grievances" into courts, judges are very reluctant to grant standing where it is not due because of the possible ripple effects in the rest of the legal system.

  • joe on January 10, 2013 12:08 PM:

    "by definition, the legality of 31 USC 5112 (k) is what a majority of hte SCOTUS say it is"

    So by definition, SCOTUS can never find wrongly? They're like the Pope?

    There's been plenty of states where the legal truth is, by definition, in the hands of a small body or a single individual.

    Such a system, needless to say, is not terribly attractive.

  • ezra abrams on January 10, 2013 6:04 PM:

    Joe and Duff
    I repeat: prior to the scotus decision on ACA, many law school profs said all sorts of things - law school profs are good at being convincing - and they were all wildly wrong.
    so, why should we think tribe is right on any of this ?
    who knows what Roberts and Scalia will do- maybe they will let someone have standing.

    after all, think of all the 1,000s of outraged, smart, hardworking conservative/libertarians there are - you honestly think that you have thought of all the arguments these people can bring re standing ?

    as for joe: I repeat what should be obvious to anyone who is not a chowderhead: the pt coin is a desperate measure that profoundly affects our consititutional balance of power; the idea that the scotus would not take this up is unproven, and if they do, under our system, by def, they will have the final word, unless congress changes the law.

    it is just like ACA: the SCOTUS decision was accepted as ending the argument

  • ezra abrams on January 10, 2013 6:10 PM:

    I think this is a quote from tribe (the layout isn't totally clear)
    quote, LT "Of course, Congress probably didnít have trillion-dollar coins in mind, but thereís no textual or other legal basis for importing this probable intention into the statute."
    Actually, there was recently on the web a pdf of the congressional debate, and one of the senators or representatives said, i forget the exact language, something like this [pt coin] provision has no effect on overall finances...
    so yes, there is explicit congressional statements that this statute would be a coin collecting statue

    more then that, for Prof Tribe to assert that congress would give up one of its most jealously guarded perogatives - the power of the purse - is just silly.

    my analogy here is the 1st amendment; it says "no law".
    Does this mean child pornography is ok ?
    of course it does - after all, no law means no law, right.
    that is about the level of platinum coinism

  • ezra abrams on January 10, 2013 6:18 PM:

    sorry, one more thing and I will shut up
    If G Bush had been faced with a democratic congress that refused to appropriate money for torturing people at Abu Ghraib, and he proposed getting around this with Pt coinism, what do you think the response of liberal would be ?
    I think the answer is self evident: they would denounce platinum coinism in the strongest possible terms as a patently un constitutional enrun around the congressional power of the purse.

    what is sauce for the goose is sauce for the gander.

    I think 10 years from now, some bright PhD student will write about the collective insanity that overcame liberals, the mania known as Pt coinism

  • Tom Maguire on January 10, 2013 7:20 PM:

    From RW:

    "Nothing in the subsection you cite defines "bullion coin"..."

    Great point! And nothing in those sentences define "coin" either, so I guess the Secretary could exert his discretion and bring out a six-sided cube with cool designs on all sides.

    Well, he could unless words have meaning based on general usage or as terms of art, rather than requiring definition in every clause of every law. Tough call.

    Look - if everyone who works with coins knows what a "bullion coin" is, including the US Mint, Wikipedia, and every coin dealer's website, does it really require a definition in this statute? Why?

    And from ratherdrive:

    "Speaking of details, a "proof" coin is still legal tender..."

    Yes, but legal tender at what face amount? Coiners need to demonstrate that the clear language of the text only points one way. To get to that result, they need to pretend that "proof coins" is interchangeable with "coins".

    But if words have meaning, maybe we should challenge ourselves to discern that meaning. There are multiple references to "proof coins" in the other parts of the law on coins; nowhere are they a stand-alone concept. They are often paired with 'uncirculated' counterparts, for example. Or the Mint offers Silver Proof versions of the prosaic quarter - market value of, e.g., $10 but a face value of $0.25.

    But nowhere in the law or the practice at the Mint can I find examples of non-circulating proof coins struck with a face value above the value of a bullion coin. There are collectible proof State Quarters made of the regular bronze and copper but looking great; obviously there is seignorage there,but the face value is controlled by the law about quarters, dimes and so on.

    So now Coiners need to pretend that, although "proof coins" presumably means something, and in every other instance it seems to mean 'especally pretty and maybe more valuable version of an otherwise conventional bullion or circulating coin', it is still logical to argue that the only reasonable interpretation of "proof coin" is "whatever the Secretary wants".

    That is not construction, that is fantasy and projection.

  • Stephen on January 11, 2013 12:16 AM:

    I think if we are still looking at coins we are looking at the wrong answer.


  • Tom Maguire on January 11, 2013 1:30 AM:

    Yeah, I think we are moving on to IOUs.

  • ratherdrive on January 11, 2013 6:11 PM:

    Tom: "legal tender at what face amount?" The statute clearly states that the Secretary gets to select the denomination, whatever denomination he chooses, as words have meaning, right? :-)

    And the words go on to note both bullion coins and also proof coins may be minted, so discussed separately, presumably because they are different, one in appearance and the other in bullion backing. Both characteristics do set both apart from normal currency, but both coin types are nonetheless legal tender.

    No one ever said platinum PROOF coins had to have bullion backing at current prices, just that they be made out of platinum. It would function exactly like our paper currency which certainly has no bullion backing, just a printed number.

    The point of a proof coin is to be pretty, words having meaning and all; not to be backed by bullion. Just as the point of a bullion coin is to be backed by bullion, not to be pretty.

    And to remove all doubt, for present purposes the Secretary has the authority ("...and inscriptions...") to add the words "Proof coin, not a bullion coin" on the face of the new coin.

    And "...need to pretend that 'proof coins' are interchangeable with 'coins'?" Pretend? All they need to understand is the difference between proof coins and bullion coins, no pretending required. Right? Just read the helpful memo right on the coin. :-)

    But to be candid, this coin idea just a silly but do-able temporary solution to an even sillier (but committed anyway) problem of an artificial debt ceiling blocking a budget already authorized by the exact same Gov't body.

    Not to mention, the cash which the Federal Reserve gives to the Treasury when it buys either Treasury bonds or trillion dollar coins is all pretend cash anyway, which they just created ten seconds ago. Its not like the Fed has vast underground vaults full of cash, saving for a rainy day. Whether the FED buys bonds or coins, the result is exactly the same. The whole issue of coins is moot to begin with.

    Do we suppose the rest of the world has any remaining "full faith and credit" regarding our collective maturity? :-)

  • Neale Hutcheson on January 13, 2013 6:06 AM:

    I'm not sure what I think of the legal analysis here. The problem is that the statute read literally gives rise to an absurdity. Therefore this is not a case for literal interpretation, it is a case for interpretation according to the golden rule of interpretaiton.

    (1) Identify the absurdity
    (2) Interpret the statute so as to limit the absurdity

    This could very easily be done in the present statute by reading 'of any denomination' as 'of any reasonable denomination.' The court could then read the statute as limiting printing to sums reasonable in the context of the Act.

    Moreover, I do think that a litigant could get standing in order to challenge the Act. Given the widespread effect that this administrative decision would have, I think that the court would be willing to develop the law to deliver standing (along the lines of World Development Corporation from British Admin law).

    A bolder route would be to challenge it on the grounds that it is taking 'private property for public use without just compensation' - but the court would not want to extend the protections of the 5th Amendment into these grounds (because even trivial increases in currency might be subject to review).

    It would fix the standing problem though.

  • ratherdrive on January 14, 2013 1:24 AM:

    Neale: Several layers of absurdity even, to respond to yet more layers of absurdity. Seems oddly appropriate, in some unsettling way.

    But it certainly would fix the problem though, wouldn't it, after the laughter dies down a bit?