The Founding of the Mint
In 1792, Congress passed the first Coinage Act
, which founded the United States Mint, and established the dollar as the standard unit of U.S. currency. The Mint has since remained in continuous operation, producing the nation's coins and generating seigniorage revenue for the government, for over 230 years.
The Legal Tender Cases
In 1871, the Supreme Court jointly decided two cases – Knox v. Lee & Parker v. Davis
– known as the “Legal Tender Cases,” which held that requiring private creditors to accept legal tender currency not redeemable in gold or silver in payment of debt contracts did not violate the Constitution. This decision was subsequently reaffirmed thirteen years later in Juilliard v. Greenman
End of the Domestic Gold Standard
In 1933, Congress passed a Joint Resolution
to “assure uniform value to the coins and currencies of the United States,” which held that:
The Gold Clause Cases
[E]very provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy.
... Every obligation, heretofore or hereafter incurred, whether or not any such provisions is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any such coin or currency which at the time is legal tender for public and private debts.
In 1935, the Supreme Court decided a series of cases – Norman v. Baltimore & Ohio Railroad Co. & States v. Bankers' Trust Co
, Nortz v. United States
, and Perry v. United States
– together known as the “Gold Clause Cases,” which upheld the constitutionality of the Roosevelt administration’s currency reforms during the Great Depression, including the voiding of all gold clauses in public and private contracts under the Joint Resolution of 1933
In the accompanying majority opinion of Perry
, the most famous of these cases, the Court held that:
The Federal Reserve Acknowledges That Taxes Do Not Fund Spending
There is no question as to the power of the Congress to regulate the value of money -- that is, to establish a monetary system, and thus to determine the currency of the country.
...Public law gives to...coinage a value which does not attach as a mere consequence of intrinsic value. Their quality as legal tender is an attribute of law aside from their bullion value.
They bear therefore the impress of sovereign power which fixes value and authorizes their use in exchange (Quoting Ling Su Fan v. United States (1910)).
In 1945, Beardsley Ruml, then-Chairman of the New York Federal Reserve, gave a speech to the American Bar Association titled "Taxes For Revenue Are Obsolete
," in which he noted that:
The End of the International Gold Standard
The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government...
The United States is a national state which has a central banking system...and whose currency, for domestic purposes, is not convertible into any commodity.
It follows that our Federal Government has final freedom from the money market in meeting its financial requirements.
Accordingly the inevitable social and economic consequences of any and all taxes have now become the prime consideration in the imposition of taxes.
All federal taxes must meet the test of public policy and practical effect.
The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.
In 1971, President Nixon directed the Treasury Secretary to close the “Gold Window”
and suspend the international convertibility of the U.S. dollar into gold and other reserve assets.
The End of the 'Bretton Woods' Regime of International Fixed-Exchange Rates
In 1973, the “Bretton Woods” system of international fixed exchange rates, which had been in operation since the conclusion of World War II, ended and was replaced
with a system in which the value of the U.S. dollar was allowed to “float” freely against other currencies.
Expanding the Treasury's Discretion Over Coinage
In 1982, Congress passed Public Law 97-258
, amending the Coinage Act, and providing that:
Establishing the Budgetary Independence of the Mint
The Secretary of the Treasury...shall mint and issue coins...in amounts the Secretary decides are necessary to meet the needs of the United States.
In 1995, Congress passed Public Law 104-52
, establishing the U.S. Mint Public Enterprise Fund, and providing that:
The Novel and Unprecedented Platinum Coin Law
[A]ll receipts from Mint operations and programs...shall be deposited into the Fund and shall be available without fiscal year limitations;
...[T]he Fund may retain receipts from the Federal Reserve System from the sale of circulating coins at face value for deposit into the Fund;
...[A]t such times as the Secretary of the Treasury determines appropriate, but not less than annually, any amount in the Fund that is determined to be in excess of the amount required by the Fund shall be transferred to the Treasury for deposit as miscellaneous receipts.
In 1996, Congress passed Public Law 104-208
– also known as the Omnibus Consolidated Appropriations Act of 1997 – which, among other things, amended the Coinage Act to provide that:
The Secretary [of the Treasury] may mint and issue bullion 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.
One of the original co-authors of the provision was Rep. Michael Castle (R.-Del.), who at the time was the Chairman of the House Financial Services Committee’s Subcommittee on Domestic and International Monetary Policy, which had jurisdiction over matters related to coinage. According to Rep. Castle
, his goal in introducing the provision:
[W]as to enable the Treasury to put out collectable platinum coins of a variety of sizes...[in order to] produc[e] income from seignorage (that is, the profit collected by the government by minting coins or printing paper money that is worth more than it costs to produce) as a means of reducing the deficit, albeit by a small amount, without raising taxes or cutting spending.
"We saw it as an opportunity to make money for the Mint and the Treasury," he remembers.
The other original co-author of the provision was Philip N. Diehl
, who at the time was the Director of the U.S. Mint. According to Diehl
Affirming the Budgetary Independence of the Mint
When we passed this law in 1996, it was with full knowledge that it was unprecedented in the history of US coinage.
[Until then] Congress had always specified coin denominations by law."
In 2002, the United States Court of Federal Claims – in Ains, Inc. v. United States
– determined that the U.S. Mint, “[t]hrough the Public Enterprise Fund, funds all of its activities with revenues derived solely from the Mint’s operations.”
In its accompanying opinion
, the Court noted:
That Congress intended the Mint to be self-financing is buttressed by legislative history. The House Report accompanying the bill containing [31 U.S.C. § 5136] noted that the Mint would be“financed through the transfer of seigniorage.” H.R. Rep. No. 104-183, app. 6, at 23 (1995).
Significantly, the purpose of establishing the Public Enterprise Fund was to relieve the Mint of the “funding variables imposed by annual appropriations.” Id.
The House Committee on Appropriations has repeatedly noted that the establishment of the Mint Private Enterprise Fund has “eliminated the need for future appropriations to support the mission of the U.S. Mint.” H.R. Rep. No. 104–660, app. 10, at 35 (1996); H.R. Rep. No. 105–240, app. 13, at 36 (1997); see also H.R. Rep. No. 106–231, app. 15, at 25 (1999).
The above cited legislative histories are in reality redundant and unnecessary. ...The statute here is clear on its face. In establishing the Public Enterprise Fund, Congress plainly intended the Mint “to operate without the benefit of appropriated funds.”
...In fact, the Mint has never lost money and its statuary scheme contemplates continuing surpluses that will be deposited in the general Treasury as miscellaneous receipts.
This decision was subsequently affirmed upon appeal in 2004 by the United States Court of Appeals for the Federal Circuit (Ains, Inc. v. United States
The Federal Reserve Acknowledges the Federal Government Cannot Become Insolvent
In 2011, during the first debt ceiling crisis of the Obama administration, Luciana Juvenal and Brett Fawley of the Federal Reserve Bank of St. Louis published a short article in the St. Louis Fed's in-house publication, the Regional Economist
, titled "Why Health Care Matters and the Current Debt Does Not
", in which they noted that:
As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills[.]
The Birth of #MintTheCoin
In this sense, the government is not dependent on credit markets to remain operational.
That same year, a private attorney named Carlos Mucha (known online as “Beowulf
”) published an article
arguing that Treasury Secretary could use their legal authority under 31 U.S.C. § 5112(k)
to mint and issue high value platinum coins (i.e. of a face value of $1 trillion) in order to avoid government shutdown or breach of the debt ceiling.
The idea subsequently gained widespread public attention via the hashtag #MintTheCoin
, which was introduced by economist Stephanie Kelton
, and popularized by journalists and bloggers, including Joe Weisenthal
and Joe Firestone
. It was also endorsed by Philip N. Diel
, 34th Director of the U.S. Mint and co-author of the 1996 bill that included 31 U.S.C. § 5112(k).
Political Reactions to #MintTheCoin
In 2013, during the second debt ceiling crisis of the Obama administration, Rep. Jerrold Nadler (D.-N.Y.) endorsed the platinum coin option
as a means of “get[ting] around this artificial debt-ceiling which has no economic justification,” noting that it “sounds silly but it’s absolutely legal.”
In response, Rep. Greg Walden (R.-Or.) and twenty four Republican cosponsors introduced H.R. 220
- also known as the "Stop The Coin Act" - which, if it had passed, would have prohibited the Treasury Secretary from minting and issuing coins with a nominal or face value in excess of $200.
#MintTheCoin 2.0: The Automatic BOOST to Communities Act (#ABCAct)
On March 21, 2020, Rep. Rashida Tlaib (D.-Mich.) introduced a preliminary version
of the Automatic BOOST to Communities Act (#ABCAct
) to provide emergency relief to every person in America, as part of a broader response to the COVID-19 pandemic. The #ABCAct
was designed as a “money-financed fiscal program
,” similar to the House Financial Services Committee proposal for Comprehensive Fiscal Stimulus
announced by Chairwoman Maxine Waters (D.-Ca.) on March 18, 2020. However, the #ABCAct
uniquely relied on the minting of multiple trillion-dollar coins as its alternative funding mechanism.
On April 16, 2020, Rep. Tlaib introduced an updated and complete legislative version of the #ABCAct
. The bill was co-introduced by Rep. Pramila Jayapal (D.-Wash.)
, and cosponsored by Rep. Jesús G. “Chuy” García (D.-Ill.), Rep. Alcee Hastings (D.-Flor.), Rep. Eleanor Holmes Norton (D.-D.C.), Rep. Alexandria Ocasio-Cortez (D.-N.Y.), Rep. Ilhan Omar (D.-Minn.), Rep. Ayanna Pressley (D.-M.A.), Rep. Bobby Rush (D.-Ill.), Rep. Jan Schakowsky (D.-Ill.), and Nydia Velázquez (D.-N.Y.).