This is a little bit late but I came across an interesting write up on the Mises blog regarding the trillion dollar coin proposal that came up a few months ago. Dr. Joseph Salerno explains that as ridiculous as the concept was, it was still by contrast a better approach than the current business-cycle inducing, FOMC-led, knee jerking of the money supply and making a U.S. Treasury-issued platinum coin would have actually weakened the powers of the Fed. Thus, the proposal was struck down. Bizarre as it may seem, it was a stupid "coin trick" but with a wise, if however small, kernel of economic truth behind it.
Salerno goes on to say:
"Giving the Treasury control over the money supply by drawing checks on deposit balances that it "borrows" from the Fed yields another benefit. It not only shuts the Fed out of financial markets and renders the money creation process transparent, it also completely cuts out the fractional-reserve bank cartel from a central role in the money-creation process. This would mitigate that process' tendency to create business cycles. When new money is injected into the economy via open market operations, as it is today, it expands bank reserves. The lending of these created reserves by fractional-reserve banks artificially reduces the interest rate below the natural level determined by the voluntary saving of private income-earners. The distorted interest rate falsifies the profit and the wealth calculations of entrepreneurs and households causing malinvestment and over-consumption and precipitating the boom-bust cycle that usually culminates in run-away asset bubbles and a financial crisis. In contrast, when the Treasury creates money it does so by writing checks for bureaucrats' salaries, for entitlement payments and to pay vendors for government purchases. This mode of money creation causes what Ludwig von Mises called "simple inflation," which does not generally perturb financial markets and systematically distort interest rates" (emphasis added).
Read the rest of Salerno's essay here. And now I have Whitney Houston's song "Million Dollar Bill" stuck in my mind ...