The US Government’s Trillion Dollar Coin

This video was made possible by Dashlane. Protect your digital identity for free for
30 days by going to Hello and welcome to another episode of, “Kinda
Clickbaity Titles to Get You To Watch Something Vaguely Educational.” Today, we are going to talk about trillion-dollar
coins—but first, in order to understand why the US government would ever even consider
making a coin that’s worth more than a gold-plated Jeff Bezos, we have to talk a little bit about
the debt ceiling crisis of 2013. Now that half the audience is gone, the year
was 2013, the month was January. The number one YouTube channel was Smosh,
Macklemore’s, “Thrift Shop,” was rising up the charts, and President Barack Obama
had a problem: the US was about to hit the debt ceiling. Of course, “what’s the debt ceiling,”
says someone, so here’s how the debt ceiling works. Each year, Congress passes, and the President
signs, a budget that says how much it’s going to spend on different things. So maybe it says the government will spend
$10 billion on Big Macs, $20 billion on Doritos Locos Tacos, and $30 billion on Pepto Bismol. It’s then up to the US Treasury to buy all
those things. The Treasury gets the money to do that from
two main sources. The first is taxes, which are collected from
the American people and American businesses, unless you’re Amazon, of course. The US, you see, goes for the rare graduated
bell curve tax bracket system. Typically, though, that tax money isn’t
enough, so the Treasury will make up the difference by borrowing money, which is done by issuing
something called a treasury bond. Basically what happens is the Federal Reserve,
which is the central bank of the United States, says to everybody, “hey kids, if you give
me $100 right now, I’ll give you this super cool piece of paper, which is called a treasury
bond,” and what this piece of paper says is, “In exchange for your $100, a year from
now, I’ll give you back your $100 plus a little bit extra. Or, if you want to wait longer, like 3 or
5 or 30 years, I’ll toss in a bit extra for your trouble.” So, people buy these bonds, the Fed takes
their $100, puts it into the bank account of the Treasury, and now, just like magic,
the government has a brand new $100 that they didn’t have before. As time has gone on, the US government has
issued more and more treasury bonds, and thus taken on more and more and more and more and
more debt—seriously, like a lot of debt. The debt ceiling is an arbitrary number that
Congress sets as the maximum amount of debt the US is allowed to take on. In 2013, the number was $16.394 trillion. So if the debt were to pass $16.394 trillion,
then the Fed wouldn’t be allowed to borrow any more money, which means the Treasury wouldn’t
be able to buy all those crucial things in the budget. Normally, when the debt approaches that number,
Congress just raises the debt ceiling, which means they just set a new, higher number as
the limit, and historically, this was a pretty uncontroversial, bipartisan process. But in 2013, the Republican-led Congress refused
to raise the debt ceiling unless Obama agreed to get rid of Obamacare. Unsurprisingly, Obama said no to this deal
because, you know, it turns out that Obama kinda liked Obamacare—that would be like
asking me to stop mispronouncing obscure words like buffet; it was kinda Obama’s thing. And so, Obama began looking for ways around
the debt ceiling. That’s where the trillion-dollar coin came
into play. The idea was, if the government can’t borrow
more money, what if they just made more money? While that may sound like the type of idea
only a drunken second grader would suggest, bizarrely, in this case, it actually made
sense. See normally, only the Federal Reserve can
create new money, and it has to be backed by bonds. In other words, if the Fed wants to create
100 new dollars, they have to sell a $100 treasury bond. This helps keep the US economy from imploding
in case some maniac ever gets at the controls. They can’t just print as much money as they
want, except, thanks to a loophole in a 1996 bill about commemorative coins, the Treasury
actually can. The law, 31 U.S.C 5112(k), reads, “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.” The intent of this law was to let the federal
government create commemorative platinum coins for special occasions, but technically, because
of the bill’s unclear language, it meant that the Treasury Secretary could make a coin,
so long as it was made of platinum, and then declare that it was worth any amount of money
they wanted. So the plan was for the Treasury to mint a
coin, declare that the coin was worth 1 trillion dollars, then deposit that coin into their
bank account at the Fed, which would make the debt, instead of being $16.394 trillion,
only $15.394 trillion—below the ceiling. Eventually, once Congress raised the debt
ceiling, the Treasury would just buy the coin back or melt it down, and in theory, it would
be like it never existed, and thus it wouldn’t cause inflation. Now I’m going to tell you something that
might disappoint you: although the trillion-dollar coin was genuinely considered by the White
House, they never went through with the plan, so no trillion-dollar coin was ever actually
minted. I know, I know—the title of the video kinda
made it seem like they actually made the coins, but you know what, the Greeks made it seem
like they were just gifting Troy a cool wooden horse. Not everything is as it seems. On the bright side, now you know a bunch about
treasury bonds and debt ceilings, which will come in handy the next time you’re on a
date and modern US monetary policy comes up, which I have to imagine happens all the time. Another thing that’s sure to impress your
dates is if you have an incredibly secure online presence, and if you’re thinking
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100 thoughts on “The US Government’s Trillion Dollar Coin

  1. Feeling sad about the fall of the Byzantine Empire? Cheer yourself up by finding and suggesting future HAI topics. If we use yours, we'll send you a free HAI t-shirt that you can use to wipe away your tears. Submit suggestions here:

  2. The treasury does not buy those things. Congress buys them, the treasury pays for them.
    The federal reserve does not make money. The treasury does. The federal reserve basically guarantees money. A private institution, federal reserve, cannot make money.
    US securities are sold by the treasury, not the federal reserve.

    The United States owns the most United States debt, not China.

  3. "Will come in handy the next time you're on a date and modern US monetary policy comes up, which i have to imagine happens all the time."

    Unironically, yes. Me and my partner have literally had dinner dates when we discuss stuff like this. We're like the lesbian version of Chidi and Eleanor.

  4. OMG was my comment about how you pronounce buffet actually big enough to make you mention it, or were there other comments? lmao

  5. Technically, Treasury Bonds are issued by the treasury, not the Fed. The Fed can buy or sell those bonds, but not issue them. It's complicated, but the Fed isn't entirely part of the government. It's technically a separate body chartered by the government to be its "official bank". This is not entirely unusual; in the UK, specific private banks have the right to issue British Pounds too.

  6. This is seriously a solution that a lazy 7th grader would come up with and end up getting detention for even suggesting, yet our own government legitimately considered it and almost used it…

  7. more than likely government did actually make more than one of these coins and just did not inform anyone at all but certain government agencies and plan on using them in case of Continuity of Government (plans) ever comes into use and the government needs to raise the debt ceiling and does not have the time to go through congress to get approval.

  8. American Debt, Tax slavery system is so sad.. No one actually owns anything but Americans think there free because the government says there free yet there enslaved to the government..

    In other parts of the world most people actually own there land/ houses 100% no debt, no bank or taxes… Crazy to think how free they are from the government and tax/debt system yet Americans claim freedom and are truly closer to being like north Korea then any other country (just fooled into thinking your free)….

    Very sad to think as the USA economy and system is failing.. Its not sustainable, America has bery little products and imports more then it exports..

    MAIN exports used to be music and movies (no one pays for these and other countries are now producing there own entertainment)

    Our other main resource is cars, yet other countries don't buy America cars..

    So we are left with war.. Yes American sells guns, tanks, planes so on for war.. So that's are big export war.. The one thing we need to not have yet America would fail if there was peace on the planet..

    Oh Boeing but that's failing as they tried to be cheap and just add bigger engines to existing planes and well they dive into ground.. Software to fix a mechanical design flaw is not smart.. Very stupid.. Now all planes are not being bought as you cant trust American built things (the rest of the world don't trust American built stuff)

    I hope America stops pretending its great when its an illusion.. You can pretend to be rich but one day you have to face your not rich and figure out how to truly pay your bills but in America we need to figure out how to be self sustainable.. We are owned by China.. We buy Chinese products, Chinese cloths, china China China…

    We have sone farm industry but will warn you africa has 3-4 grow season per year and will be feeding the world soon.. So our food will soon be from africa..

  9. Imagine the MSM if it came out Trump's administration was considering it. Bet you they wouldn't treat it the same way they did when Obama's did it!

  10. I said it many times I'll say it many times more, taxation is theft.

    Fuck government, fuck men and women suits that rule over us, fuck a monopoly on violence and arbitration.

    Stateless society, let's make it happen.

  11. Man, the last time US monetary policy came up, I was so out of the loop I could hardly contribute to the conversation. Thanks for saving my social life, HAI!

  12. SAM – I HAVE A HILARIOUS IDEA FOR A HAI VIDEO. I've run it by some people and they laughed considerably. I'd love to float the idea to you if you're interested. Wanna keep it a secret though. I know you'll probably never even see this but I really hope you do because I'm quite proud of this concept and I'm not asking for anything in return.

  13. The Federal Reserve isnt federal, it is private. It was put in place kinda sneaky. The Fed is a root of evil in this system look it up for yourself

  14. Y'know…..if some ordinary Joe or Janet managed to get their hands on the coin, then proceeded to deposit it in their local bank the higher ups would either be "HOLY SHIT WE ARE RICHER!" Or would be like "OMG THE INTEREST RATES WE ARE DOOMED!"

  15. This really just makes me realize how worthless money actually is. If they can just magically make a coin worth a trillion dollars Bc they say so what’s stopping them from making any of my money not worth anything at all

  16. Landlord: you need another $400 to make rent this month

    Me: any chance you got some platinum?

    (But really I need $400 to make rent. This is a call for help. Pls venmo me, I'll pay back ?)

  17. The President doesn't actually have that much of a say in the budget except for the fact that they are required by law to spend the budget

  18. There is a better scenario for this type of coin, mint them, pay off our trade deficit with them, and a few weeks later declare that the treasury dept. was hacked, and trillion dollars coins were counterfeit. Debts paid, as holders of counterfeit money our out of luck.

  19. buys a mars bar with a trillion dollar coin

    “can I get this in change”

    “S-Sure :)”

    “ i n c e n t s “

  20. Why not mint16 of those trillion coins and erase the debt entirely? The debt owed to the Federal Reserve, a private bank, so why not say "screw you, merchants" and simply pay off the debt with 16 trillion for coins? All it would cost is whatever the value of the platinum used in the actual coins. Timr to abudh the Fed anyways.

  21. I’m detecting more sass in these videos lately and I gotta say you’re really just giving me more reason to get smart

  22. Trump plans to mint his own coin: the obverse will have him and Putin shaking hand over Biden’s body, while the reverse will have them both beating the crap out of Nancy Pelosi. Unfortunately, it will be legal tender in Russia, North Korea, and possibly Iran.

  23. the biggest heist ever can be pulled off and the prize can be put in your pocket… probably can't use it cause cops and FBI be on you the second someone sees you with it, but I mean you got a trillion dollars like apple, and like apple, you cant actually spend it.

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