No, you didn’t read that wrong. Rep. Rashida Tlaib’s (D-Mich.) plan to help those affected by the massive corporate shutdowns over coronavirus concerns actually includes the minting of two $1 trillion coins.
In a series of tweets over the weekend, Tlaib expressed her support of the House Democrats’ relief package, while also offering a plan of her own, referring to it as a “truly universal relief proposal.”
The congresswoman went on to detail the specifics of her plan, titled the Automatic BOOST to Communities Act, which talks about how everyone in the country - including illegal aliens here for more than three months - would receive a debit card preloaded with $2000. The card would then be reloaded with an additional $1000 per month until one year after the coronavirus crisis has ended and the economy has recovered. The cards can be used online, in stores, and at ATMs to pull out cash, and the normal fees associated would be waived.
And in order for more debt to not be accrued by the government for such a program, Rep. Tlaib has a remedy: simply have the Treasury use its legal authority to create money via coin seigniorage - a statutory delegation of Congress’ constitutional power of the purse - to issue two $1 trillion coins! Congress would then instruct the Federal Reserve to purchase the coins at face value, thus crediting the Treasury with $2 trillion to cover the massive payout to the public.
As might be expected, there was quite an enthusiastic response from the Twitter group People for Bernie, energetically proclaiming that the good congresswoman’s face adorn the proposed newly minted coin.
Coming in from the side of common sense to respond to this rather far-fetched proposal, economic strategist Bruce Fenton leveled some heavy criticism.
“Rep Tlaib is proposing to make two coins worth $50 & say they are worth $1 trillion each,” he wrote. “Then for our government to have the mint create artificial money on a computer and then use it to buy the coins from ourselves. Seriously. That’s the actual plan.”
Fenton then went on to detail what would actually be required to mint a coin such as the one Rep. Tlaib was proposing from fair-value platinum. By his calculation, it would take 50,566 tons. Each.
50,566 tons.— Brrrrruce Fenton (@brucefenton) March 22, 2020
That’s how much they’d each weigh.
If the $1 trillion coins that some are proposing to finance a bailout were made from a fair value of platinum they’d weigh 50,566 tons each.
A ton is 2000 pounds. There are 16 ounces in a pound.
($1T/16/2000/$618- platinum /oz)
Tlaib's idea isn't new, the Competitive Enterprise Institute notes that Rep. Jerry Nadler (D-NY) introduced a similar measure to cover the Obama administration's debt.
Tlaib’s bill suffers from the same economic illiteracies that plagued the idea in 2013. As explained by Jaret Seiberg of the Washington Research Group at the time, 'the $1 trillion coin would expand the money supply by a considerable amount, which could spark serious inflation' and that 'this economic chaos could worsen the economic downturn, which would further weaken credit conditions and impose higher losses on banks.'