What would be the difference if it was say ...gold?
Would using platinum deflate the value of hoarding gold?
Should we start buying platinum?
And would that move us from a fiat standard to a platinum standard and really screw-up all the other countries that have been hoarding gold?
“What would be the difference if it was say ...gold?”
It wouldn’t be valid, because the loophole only applies to platinum.
“Would using platinum deflate the value of hoarding gold?”
No. In fact, if they pull this scheme, the value of the dollar versus gold will drop, effectively inflating the price of any gold you already own.
“Should we start buying platinum?”
Not unless you were already planning to. This won’t affect the price of platinum, except through inflation, like it will for any other valuable commodity.
“And would that move us from a fiat standard to a platinum standard and really screw-up all the other countries that have been hoarding gold?”
No, the coin may be platinum, but it is still a fiat currency. It will not be minted with one trillion dollars worth of platinum, that would defeat the entire purpose (to create money out of thin air). So, it’s no different in that respect than having fiat money made out of copper, zinc, or nickel.
The difference is that gold and silver are regulated where as platinum is not.
So the treasury could not mint a trillion dollar gold coin because it would have to have trillion dollars worth of gold in the coin.
Effectively this would fix the price of platinum in the US at hugely high levels. Thus, it might be a good idea to buy some now because you could be a trillionaire with a couple of thousand dollars investment
However, doing this would make the dollar worthless. So you’d have a trillion of them an be able to buy a loaf of bread. This would in effect, exponentially devalue the dollar.
The people who should really be upset about this are the holders of US debt like the Chinese and Arabs. It would mean that the Arabs had given the US all that oil because they sold it in 1990 dollars which are now worth 0.000001 of the value at the time.
So in a perverse way this would not only get rid of the deficit problem but the trade imbalance as well.
It would in my view probably lead to war but the very least wold mean no country would import goods to the US, from the US or buy the government bonds. Ask yourself; “If someone owed you money and said they were going to pay back 1/10,000,000 of it would you be happy? Would you do something to prevent that.
If Geitner does this the entire financial system of the US will collapse.