The question to ask about the call to evade the debt ceiling by issuing a platinum coin of $1 trillion is  — why platinum? The idea, which surfaces with each crisis of the debt ceiling, was put forward most recently on Saturday in the New Republic. The scheme, based on a 1997 law allowing the Treasury to mint platinum coins in any denominations, is for the coin to be deposited at the Fed, allowing it to create more money.

No one, mind you, is suggesting depositing $1 trillion worth of platinum in the Fed’s vaults. So why not make this $1 trillion coin out of wood, or papier-mâché, or moon rocks? The question with the platinum coin idea is not so much the legal gimmickry — or the flouting of the Constitution — behind it. The problem is the complete disconnect from the whole concept of specie, such as gold or silver or even platinum. 

For much of its history the dollar was actually defined in specie — a fixed weight in gold or silver. In 1965, President Lyndon Johnson signed a new coinage act, stripping silver out of our most widely used coins and substituting base-metal slugs with no more actual value than a bottle cap. It was a shocking default, and in short order the government broke the promises LBJ, in a speech at the Rose Garden, had made to maintain the value of the coins. 

Then, in 1971, President Nixon closed the gold window, ending America’s obligation — entered into at Bretton Woods — to redeem at a 35th of an ounce of gold dollars presented to our Treasury by foreign governments. In 1978, when the Senate ratified the IMF Treaty amendments, America and other signatories were even barred from defining the dollar in terms of the classical basis of monetary value.

America was thus launched into the age of fiat currency, in which the dollar has shed nearly all its value in gold, plunging below a 1,900th of an ounce of gold. At the same time, the national debt has soared to its current level over $31 trillion, some 120 percent of the economy, from its level in 1971, when, at $412 billion, it was but 35 percent of the national output. Such debasement would not have been possible under the gold standard.

That’s because a system of honest money, like the gold standard, disciplines the government — and the Federal Reserve. It puts a brake on government spending and borrowing. Under our current system of fiat currency, the Fed calls into being billions of dollars with strokes of a keyboard, or the Treasury could try to pretend that a $1 trillion coin is real. We are happy to see that Secretary Yellen is resisting this scheme.

No one, after all, is suggesting that the Treasury would place with the Federal Reserve 948 million ounces of platinum, which is what a $1 trillion would involve at current prices. No, the trick would pay merely homage to the idea of a specie standard by using a metallic coin as the workaround. This is why Secretary Yellen has characterized the coin trick as a “gimmick” that would be “equivalent to asking the Federal Reserve to print money.”

Goodness gracious, though, that’s what we’re doing now, without the blasted platinum coin. The New Republic sees the trillion-dollar coin as a way  to banish “the constant fear of a GOP-precipitated debt default for the next year.” Economic sage Paul Krugman has similarly backed the move even if it involves “violating the spirit of the law.” We doubt the Nobel laureate really means that, but welcome to the Age of Fiat Money.