Chris NYC The problem with the trillion dollar coin is very simple.  The Treasury mints this coin.  Okay, so what.  Where does it get the trillion dollars in value?  It deposits it in the Federal Reserve, and the Fed, in turn, presses a button and credits a trillion dollars to the Treasury.  Magic!The Fed now has a trillion dollar liability on its books, but it has a material asset of, oh, maybe $1000.  So, in order to control inflation (remember inflation?), it has to shrink that trillion dollars in money supply.  Ordinarily it does this by selling or maturing its bonds.  But it has this nagging trillion dollar problem.  It can sell that platinum coin for $1000.  But how will it reign in the remaining $999,999,999,000?

Chris NYC The problem with the trillion dollar coin is very simple.  The Treasury mints this coin.  Okay, so what.  Where does it get the trillion dollars in value?  It deposits it in the Federal Reserve, and the Fed, in turn, presses a button and credits a trillion dollars to the Treasury.  Magic!The Fed now has a trillion dollar liability on its books, but it has a material asset of, oh, maybe $1000.  So, in order to control inflation (remember inflation?), it has to shrink that trillion dollars in money supply.  Ordinarily it does this by selling or maturing its bonds.  But it has this nagging trillion dollar problem.  It can sell that platinum coin for $1000.  But how will it reign in the remaining $999,999,999,000?

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