Trillion Dollar Pennies
Got a heads-up today about a notion I've heard before, but which now seems to be getting some actual attention: What if the Treasury minted a couple trillion-dollar platinum pennies?
Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.
Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years - without needing to issue new debt. The ceiling is no longer an issue.
In fact, the most disturbing aspect of this follows immediately: “'I like it,' says Joseph Gagnon of the Peterson Institute for International Economics." It's disturbing because I really, really don't trust the Peterson Institute, especially given Peterson's Fiscal Times news service. Still, I first heard of the trillion dollar penny idea from Ellen H. Brown, so I'm willing to entertain the idea.
The idea is, in fact, an old one. From the pen of Thomas Edison, in fact, we read opinions of economic activity that reveal an understanding of monetary matters far, far more developed than we find even in the supposedly informed financial press of today:
If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also. . . . Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges. . . .
I guess the real confusion might lie in the fact that the Treasury mints coin and the Federal Reserve prints money; the former are backed by, well, nothing, while the latter are backed, as Mr. Edison points out, by interest-bearing debt that saddles the country with an ever-increasing burden. Very, very few people realize this. And I doubt we'll be able to expand our economy in the future, perhaps even in the near future, so it might be more than prudent to explore a zero-growth economy. Perhaps a really, really pricey penny might be the first step in this exploration.
Thanks to an odd loophole in current law, the U.S. Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases.
Under this scenario, the U.S. Mint would produce (say) a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed then moves this money into Treasury’s accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years - without needing to issue new debt. The ceiling is no longer an issue.
In fact, the most disturbing aspect of this follows immediately: “'I like it,' says Joseph Gagnon of the Peterson Institute for International Economics." It's disturbing because I really, really don't trust the Peterson Institute, especially given Peterson's Fiscal Times news service. Still, I first heard of the trillion dollar penny idea from Ellen H. Brown, so I'm willing to entertain the idea.
The idea is, in fact, an old one. From the pen of Thomas Edison, in fact, we read opinions of economic activity that reveal an understanding of monetary matters far, far more developed than we find even in the supposedly informed financial press of today:
If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also. . . . Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges. . . .
I guess the real confusion might lie in the fact that the Treasury mints coin and the Federal Reserve prints money; the former are backed by, well, nothing, while the latter are backed, as Mr. Edison points out, by interest-bearing debt that saddles the country with an ever-increasing burden. Very, very few people realize this. And I doubt we'll be able to expand our economy in the future, perhaps even in the near future, so it might be more than prudent to explore a zero-growth economy. Perhaps a really, really pricey penny might be the first step in this exploration.