The Trillion Dollar Coin

“‘It’s pretty wild,’ Mr. Weisenthal said of his campaign’s success, saying the point was to expose the ‘absurdity’ of the debt ceiling debate in the first place. ‘If you think the trillion-dollar coin is silly, you should think the debate over whether a rich country would fail to pay its bills is silly.'”

The reason that money and religion provide so much fodder for crazy theories is because they are at one and the same time so fundamentally important and so unknowably abstract. They are the sand that we erect our biggest edifices on.

In some ways, money is even more mysterious than God. Nonbelievers and believers alike are wary of cultists and false prophets; even religious fanatics purport to know what God isn’t. But if someone tells us something nutty-sounding about money, we need all sorts of other context before we can tell whether they’re a crank or the president of a bank, the Speaker of the House, or the Secretary of the Treasury.

Look at anything closely enough and it turns out you can’t understand it. Samuel Johnson famously kicked a boulder to refute Berkeley’s idealism–but when you examine that same boulder on a quantum level, it turns out to be even more contingent than Berkeley could have imagined. Berkeley never denied that a rock was a rock, after all; he just said you can’t know it objectively. Quantum physics reduces that same boulder to random motions of particles and waves.

Money by definition is a standard of value, but monetary value is no less volatile than a cloud of quarks. And when you look at money really closely, it turns out to exist only because someone says it does. A Confederate dollar can only buy you something as long as there’s a Confederacy (and Confederate merchants trust its specie). This is as true for gold and silver as it is for paper and promises.

As a token of value, a trillion dollar coin is no more or less meaningful than a paper dollar or a $100 gold piece you might purchase from Glenn Beck’s Goldline. As a political gambit, it might or might not have real weight. But it’s also turning out to be something of a touchstone, in that it exposes how little some politicians, particularly of the Republican persuasion, seem to know about economics. The quote that opens this post comes from Ann Lowrey’s piece in yesterday’s New York Times, A Trillion Dollar Coin Brings a Jackpot of Jests. She also quoted Congressman Greg Walden.

“Greg Walden, Republican of Oregon…said he would introduce legislation to close the loophole and end the debate once and for all.

“My wife and I have owned and operated a small business since 1986. When it came time to pay the bills, we couldn’t just mint a coin to create more money out of thin air,” Mr. Walden said.

But Greg Walden and his wife aren’t a sovereign government. You’d think a Congressperson would know the difference between a household, a business, and a state.

“The National Republican Congressional Committee, which mocked up a fake trillion-dollar coin with President Obama’s face on it, noted the absurdity of the idea by saying that the amount of platinum it would take to mint a trillion-dollar coin would sink the Titanic.”

If a substance like platinum had a constant value, then we wouldn’t be having this conversation, would we?

And these are the people who say that returning us to the gold standard will fix all our problems. At least I have the wisdom to know that I’m an economic ignoramus.


4 thoughts on “The Trillion Dollar Coin

  1. Arthur, you are penetrating the illusion. Be careful or you’ll float off to the Buddha realms. Since you mention the dependent conditions of matter, i.e. quantum physics, you might want to investigate David Bohm’s theories of implicate and explicate order. Bohm challenged that even quantum mechanics — which has yet to be satisfactorily reconciled with the general and special theories of relativity, and therefore cannot be chalked up to mere randomness — can be considered to have an unlimited domain of relevance.

    This view is one of undivided wholeness. Therefore the idea of property or wealth is conceptual, and not of itself, real.

  2. Many people do not understand the concept of fiat money at all. There is also massive confusion about why the Trillion Dollar Coin would be created. People seem to think that it is being done to “fix the deficit”, as shown by the idiotic prattlings of Greg Walden et al. It has nothing to do with the deficit, it is an attempt to finagle a way around the debt limit.
    The stupid, it abounds.

  3. The US has “printed” nearly the full amount of the US national debt in recent years (used for the bailouts, stimulus and “lending” to the banks at almost 0% intereest) and it has done nothing to either inflation or to the value of the currency. We are not post World War 1 Germany (when money was still tied to precious metals and Germany’s productive capacity had largely been destroyed during the war) nor Greece (that does not control it’s own currency and thus cannot print money to help restore economic growth — though, as some have advocated they could go to a dual currency system which would do much the same thing and is a far better alternative to the austerity they are now implementing). So, there is simply no credibile argument or evidence that minting a $1 trillion dollar coin to deal with the debt ceiling will do anything to either inflation or the value of the dollar. In fact, as Ellen Brown has shown, the money supply in ciruculation is still significantly less than it was before the crisis hit meaning that the global economy can still absorb trillions more being put into that supply before we even need to think about inflation/curre ncy devaluation. This isn’t the same world or the same economy as it was when money was ruled by precious metals. Time for all of us to understand these changes and what it means as far as accepatble economic/fiscal policies.

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