The House Republican political committee tried to make fun of an idea that's been floating around a few weeks: minting a $1 trillion coin to avoid crashing into the debt ceiling. Unfortunately, the group revealed it doesn't know how money works. In a tweet that included the carefully crafted meme shown at right, the National Republican Congressional Committee said on Tuesday, "The amount of platinum needed to mint a coin worth $1 trillion would sink the Titanic." But as Ron Paul could have told his fellow Republicans, the U.S., like all modern economies, uses fiat money. There is not actually $0.01 worth of copper in a penny, or $0.05 worth of nickel in a nickel (however, recent increases in the cost of making the coins means the metals are now worth more than the coins' value). Our currency has value because the government says it does. (Really, that's how it would work on unless we started using gold coins, too.) That's why the $1 trillion coin would work: we allow the government to make things and say they're worth however much it wants to. Whether the platinum coin is a good idea is another story. Surely if the NRCC wants to make the case that it would be bad for our economy, it can do so with an argument that shows a basic understanding of how the economy works.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.