The Platinum Eagle In Fort Knox Can Fix The Deficit – As Long As We All Give Up Real Money Which Isn’t Real Anyway
Suze L. Rhys writes from Washington: The idea of a $1 trillion platinum coin to fix the US debt ceiling problem is gathering pace in Washington. If you think this is cloud cuckoo land at the US Treasury, then think again.
The difference between the White House (President Obama says there’s no real spending problem) and the US Congress (where the Republicans say there is) appears beyond any resolution. The answer? Big-bucks platinum – or so the left wing-economists say.
This is how it works: the Treasury gets to mint the thousand billion dollar coin, locks it in the US Bullion Depository in Fort Knox in Kentucky and, once the safe is closed, place the key under the Oval Office doormat. It might not be the best place to keep it but the Treasury Secretary can legally tell the President that he has enough ‘loose change’ to pay the government to keep going and to guarantee the dollar strength.
Could it really be that the President actually has the authority to go for an idea that seems straight out of an S J Perelman script for Flywheel, Flywheel and Shyster? He sure does. Under legislation drafted by the then Republican congressman Mike Castle, the Treasury Secretary can mint any coin he likes – in silver, gold and even platinum.
Now, the wisest guy I know is Ruben A. Zuckermann. Rube drives a cab. Like most in his downtown trade, Rube could fix the world if he weren’t too busy being the last American-speaking cab driver in Manhattan. So he tells me that the President is going the wrong way on this $1 trillion dollar ride. Rube is a student of the Macmahon school of economics. So was FDR – although how any economist with Irish ancestry could be taken seriously beats me.
As Rube explains it (and how FDR saw it) denominations of money are illusions that we choose to ride with because no one would ever believe mega-bucks did not exist. Rube, who as a cab driver never deals in anything bigger than a $20 bills at a time, insists Macmahon was on the money. The US economy therefore is based on a single $20 bill. That bill is passed round the whole of the United States. Everyone spends a little and gets change which, according to the laws of inflation and debt ceilings, is used to buy back the bill.
In layman’s language, this is called banking. Banking is the other illusion. It is the illusion that banks make money out of guys like Rube but in truth make money by lending to each other and then covering losses by handing us the loose change which we cannot afford to pay back so the bank shows a tax loss and gets rich. I hear you say: ‘What the hell are you talking about?’
I ask you to just accept the Macmahon economic philosophy and Rube as a working example that it holds good and that FDR was right in loving it to bits and that’s why he pulled off the New Deal – the greatest illusion in 20th century US economic philosophy.
Rube’s version is that FDR misquoted Macmahon. What Macmahon actually said was: ‘The only thing we have to fear is the $20 bill’.
So back to $1 trillion coins: it seems perfectly clear that the Treasury should scrap regular bucks, dimes and quarters. We just have the platinum dollar locked in Fort Knox. Every time we buy, we tell them to put it on The Platinum Eagle. It goes on the deficit. When times are hard, we trade and barter. You want a fence fixed? I want to update my tablet. Let’s trade.
The Platinum Eagle gets chipped away. But what happens when it’s all gone – which is basically where the US deficit economy is today? Simple: very quietly the President mints another one. No one is told.
Everyone thinks the system has to be better than the last one when the guys at the top were telling us that we, never they, were broke. Under The Platinum Eagle, no one gets broke anymore and everyone gets the fence fixed.
Illusion? Sure. But as Rube says, ‘I can live with that. I do that every day.’