Apparently, the US Treasury, though they don't have the authority to print money, do have the authority to mint whatever denomination of coins they want, in platinum. The law was designed to allow the treasury to issue collectible coins, but that law clearly states that those coins are legal tender. The reason we can't just print money to solve the debt problem outside of this weird scenario is that the federal government doesn't actually print money, the Federal Reserve does. The Federal Reserve isn't a branch of the US government, it's a private bank that prints money, which it then lends to the government at interest, which the government then distributes into the economy.[1. There are a lot of economic premises in this post that I don't really understand. One of them is the fact that all the money that the US has is created paired with an identical debt, but the debt accrues interest while the money doesn't. It seems like this guarantees that debt will never, ever be settled entirely -- which is probably a good thing, because complex mutual debt is a good way to stop people murdering each other -- but it still seems like a weird system.]
The Debt Ceiling, the thing we hear almost constantly debated lately, is the number Congress says is the most that the President is allowed to borrow in a term. If the government needs to spend more money than they have, and the Debt Ceiling prevents them from borrowing new money to pay off old money[2. I'm certain it must be better to owe lots of money to the Fed than to default on loans to other countries.], the US government defaults on its loans, which could be really, really bad for us.
So if we buy loads of debt back from the Fed, we can borrow as much as we need from them and keep everything running smoothly.
Apparently there are no good economic or legal reasons this wouldn't work. I'm having trouble finding sources that can explain why, because it seems catastrophically irresponsible to me, but I guess all the commentators agree that it wouldn't damage the economy and isn't against the law.
On the other hand, I agree with all the reasons Felix Salmon at Reuters offers that printing a platinum coin would be psychotic on the political level.
Granted, my opinion is formed based on a bunch of late-night googling, so I'm not exactly a well-informed expert.
Still, a lot of people seem weirdly serious. I first heard of this when I was scrolling through the Daily Kos, which actually has a petition asking President Obama to order the minting of the coin. There's also a petition on We the People, at about 7 thousand out of 25 thousand necessary signatures to demand a response from the Obama adminsitration.
One of the first articles I saw when I started googling, Trillion dollar coin: The new nuclear option, by Aaron Blake, described the coin like this:
Just as with reforming the filibuster, the trillion-dollar coin idea presents all kinds of potential unintended consequences, including opening the door to other practices that have thus far been off the table. And while that would benefit the Democrats in this particular instance, there will be a day when the roles are reversed (the filibuster being case-in-point).
“It isn’t just a nuclear option, it is opening up the Book of Revelation,” GOP consultant Dan Hazelwood said of the trillion dollar coin. “Laws, Constitution and common sense merely cease to exist.”
And regardless of whether you think it’s a good idea, the trillion dollar coin would undoubtedly further poison the political well of a federal government whose well is already downright toxic.
At this point in our political climate, I don't feel like the trillion dollar coin is an entirely implausible event. I do think, however, that if we mint it, we are even closer than I would have guessed to the end of America as established by the founding fathers around the time of the American Revolution.
Which, I mean, good riddance. This is a country founded upon the central value "We don't want to pay our taxes." As a world power,[3. Which we probably wouldn't be anymore, anyway.] we can do better.