Can You Break This for Me?

There was once a time that a $100 bill was as good as having no money. A little less so the $50 bill but the reaction was generally the same; no one really ever wants to believe if you're handling them one of those bills that you haven't just rolled it off your basement printing press.

Isn't there a great Gregory Peck 1954 movie, Man with A Million, about him being an American serviceman in postwar England stuck trying to live off a $1 million pound note? There was some kind of bet between some old guys that giving someone a $1 million pound note was as good as making them destitute. The movie was apparently based on a Mark Twain story, The Million Pound Bank Note. 

What is money anyway other than something I seem to only have just enough of, while others are wallowing in it. It is a conceit invented by man so that someone comes out ahead. I'm nowhere near being in the 1%. The only 1% I'd be in is percentage of making par when I swung a golf club.

Hard to be awake these days and not hear something about the debt ceiling of the U.S. Government, i.e. how much money the government owes everybody who it ever loaned it money. I don't really know how much the country owes, but the word trillion is getting traction when sums of money are being bandied about.

Do you know how many zeroes there are in a trillion? (a dozen). Do you know that a trillion is a thousand billions, and that a billion is a thousand millions? Do you know how long it takes to pay off debt like that?

Consider the ad for the guy who tells us on TV that he owes $15,000 in credit card debt. Hardly puts him up there with Uncle Sam, but he goes on to tell us that if he pays it off at the monthly minimum it will take him 150 years!

The ad if of course for debt consolidation, a hoped for one-time loan of money at x percentage that will wipe out his credit card debt. Of course, since there is no free lunch, the credit card debt is replaced by owing someone else the money, but at perhaps less than loan shark rates.

I've never been anywhere near a course on economics. Whatever I know about money and economic theory is what I read in the papers and what I might now and then digest with a rather dull book on the subject. I know that England's John Maynard Keynes is famous for being at the Bretton Woods conference in New Hampshire in 1944. There are Keynesian economists and there are others. They are a species.

There is a mythical debt ceiling. The top level of debt that the U.S. Government can be in. There are clarion calls to raise it—again, as it has always been raised again and again.

The government needs more money to pay its bills. Don't we all? The Democrats are on the side of raising it, the Republicans are on the side of raising it, but, with some provisos about not adding to it so quickly. Spending curbs.

Thrust into this quandary is the U.S. Secretary of the Treasury, Janet Yellen, who is warning that without the debt ceiling being raised there will be no money to hand out. The gravy train, the entitlement programs, the salaries will not be paid. Default on debt obligations will happen, and trust in government will erode. All bad things.

Into this dilemma solutions are offered: The Trillion Dollar Coin. Friday's NYT carries a piece on the first page of the Business section by Alan Rappeport, "Can a Trillion Dollar Coin Break the Gridlock?" where he outlines the idea behind the Trillion Dollar Coin.

Huh? There are serious people who are advancing the solution that the Secretary of the Treasury issue a trillion dollar platinum coin, deposit it in the Federal Reserve, and start to make the country whole.

Apparently there was some legislation written not all that long ago that allows the Treasure Secretary to mint money. "There was 1997 legislation that Congress passed to help make the U.S. Mint make more money from bullion sales and gave the Treasury secretary the broad discretion to mint platinum coins of any denomination. That power, proponents of the idea say, gives the secretary a way to keep fulfilling the nation's financial obligations even if the government's ability to keep borrowing has been frozen."

No less a light than Paul Krugman, a Nobel prize winner in Economics in 2008 and NYT columnist to bluntly state: "mint the darn coin."

What would a trillion dollar coin look like? Who would be on the front and back of it? And how big would it be? At the current rate of $973 per troy ounce, a $1 trillion coin would weight 64,234,327 pounds. That's some change purse.

I have a feeling that there wouldn't really be a $1 trillion coin, just a virtual one. The problem then is would the Federal Reserve accept it? The answer is pretty much no. The Fed would have to borrow the money to pay the Treasury for the coin, therefore going into debt. Isn't the idea to get out debt, or is it to merely just keep financing it? There is a difference.

Janet Yellen feels the Fed wouldn't accept the coin. "The Fed is not required to accept it. There's no requirement on the part of the Fed."

I never heard of the $1 trillion dollar coin. But it plays into one of my wonderments about money. If a bunch of my septuagenarian and octogenarian friends got together and rented a small submarine with robotic arms from Home Depot (Rent Me For The Weekend) and found the sunken gold from the Spanish Armada that they're always talking about, wouldn't we in effect have something like the trillion dollar coin? We'd be rich, no?

Well, only if someone was willing to give us money, in any form, for the gold coins. If no one comes forward to buy our new found loot we're out the money we spent at Home Depot and the diving store.

I've often read about the money supply, M-1, the money in circulation and on deposit in bank and checking accounts. Shouldn't M-1 include buried treasure? The FASB (Financial Accounting Standards Board) probably says no.

Wasn't there a Las Vegas display of $1 million in $10,000 bills? Quick whose on the bill? (Salmon P. Chase) And what about the $100,000 bill? Who's on that? (Woodrow Wilson). Turns out the Vegas display is no longer. They hang artwork now. Trying getting change back on one of those bills at the grocery store. The dilemma Gregory Peck has with his $1 billion pound note.

And what about those guys who dove into the East River last month reacting to someone on a podcast that said there 50 tons of mammoth tusks dumped in to the East River? That would have to be worth something, no?

The 50 tons was said to be equal to a boxcar and was allegedly dumped by NYC's Museum of Natural History when they ran out of space. If those guys came up something other than spotting Citi bikes and a car down there, and came up with mammoth tusks, wouldn't they'd be rich? Well, maybe.

Yesterday's CBS morning news show did their piece of the East River expedition. Divers went down at least 60 times into water so opaque they said you can't see your hand in front of you. Apparently the river bed slopes from 20 feet down to 70 feet. No wonder, like Lake Superior that never "gives up her dead" in the song The Wreck of the Edmund Fitzgerald, the East River holds onto its past and its contents.

There were no mammoth tusks, so they guys were out the money they spent on renting the boat and the diving equipment.

The debt ceiling will I'm sure be raised. Money will be borrowed again to pay off the money that was already borrowed. There will never be a time that there will be no debt.

That is unless of course they figure out who to put on that $1 trillion platinum coin.

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