“Yeah, it’s a dumb idea, and not even possible since there isn’t a trillion dollars worth of platinum lying around anywhere for the taking.”
You seemed to miss the point of the platinum coin end-around. The U.S. government has the authority to declare the currency value of any piece of currency. Quarters aren’t worth 25 cents because they have 25 cents worth of metal in them: instead they cost pennies apiece to produce. Likewise, a $10,000 bill doesn’t have $10K of material in it or backing it. All of these pieces of currency take whatever value Uncle Sam assigns to them and are “legal tender” for paying debts etc.
I’m not saying the $1 trillion coin is a good idea, but as best I can tell it (unfortunately) appears to be perfectly legal. Of course, any country stupid enough to try this strategy might well find that its previous lenders quickly seek an escape exit.
Paper money is fiat currency, but coinage actually has intrinsic metal value and is not the same as paper money. The US Mint sells silver and gold coins at or near FMV. For example, a One Ounce $100 Platinum American Eagle (1997-Present) contains 99.95% Platinum, weighs 31.12 grams, has a denomination value of $100, but a current melt value of $1,557.75. Its melt value would have been between $350 and $400 in 1997.
You can actually buy a $100 denomination platinum proof coin from the U.S. Mint today for just $1,892.00 (US Mint). Imagine that, a $100 coin for $1,892. So although the government could mint a wooden nickel and stamp a denomination value of $1 trillion on its face, its intrinsic value will always be the worth of its components.
Everybody could coin their own trillion buck platinum coins ~ simply eliminate world debt!