The Trillion Dollar Coin Option

The idea of using a legal loophole to mint a trillion dollar platinum coin and avoid the debt ceiling, is gaining some steam in the form of a petition to the president. The basic concept is that the treasury orders the minting of a trillion dollar platinum coin, which they are arguably allowed to do under a reading of 31 USC sec. 5112 (k):

The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time

This is kind of crazy legally and politically. But if the U.S. government minted the coin, deposited it with the federal reserve, was credited by the Fed with a trillion dollars, and said they would ensure that they would buy the coin back in 10 years and then destroy the coin (or put it on display), it would really be no different economically from borrowing in their own fiat currency.

The loophole here is a legal one, not an economic one.