Art Cashin On The Trillion Dollar Coin Alchemy

Tyler Durden's picture

It would appear that even the venerable Art Cashin had to rub his eyes in incredulity at the recircling of the idea of the Treasury minting a "Trillion Dollar Platinum Coin" to solve the debt-ceiling 'problem'. His brief discussion on the idea is summed up perfectly in his final six words "anybody got an ebook on alchemy?"

 

Via Art Cashin: The Mayans Weren't The Only Ones With Strange Ideas

With a debt ceiling battle about to resume, a rather bizarre idea from last year's debate has resurfaced. It appeared on a couple of blogs and concerned the minting of a "trillion dollar platinum coin". Under section K of Federal law, the Treasury Secretary appears to have carte blanche on the design and issuance of platinum coins.

 

The Treasury normally writes checks against the taxes it collects. When the tax receipts run out, they borrow money (bonds) to write checks against. That borrowing can run up into the debt ceiling, resulting in the looming confrontation.

 

The thesis claims that Geithner should authorize the coin, deposit it at the New York Fed and write checks against it, rather than selling more bonds.

 

Anybody got an eBook on alchemy?

Only those who have no clue about the money creation process in a fractional reserve economy could be vacuous enough to suggest that an idiotic "fix" such as this has any hope of working. All the proposal does, in effect, is suggest a devaluation of the currency relative to an absolute precious metal asset, which in itself is nothing new, and most recently was conducted, with great "success" by FDR in the 1930s.

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buzzsaw99's picture

if one had a trillion dollar coin why on earth would you give it to the criminal fed?

Imminent Crucible's picture

Because "Treasury" is to "Fed" as "Bonnie" is to "Clyde".

ihedgemyhedges's picture

Uhhhhhh, it's six words Tyler...........did you go out with Art last night and have as many as he did at the fermentation committee meeting?????

Fredo Corleone's picture

Seigniorage raised to the absurd.

Indeed -- I'll wager that these desperadoes try it.

Comay Mierda's picture

for friday humor - here is an ebook on alchemy  http://www.thebookofaquarius.com/

it suggests peeing into a jar, and roasting it slowly for several years, and then you get powder which you can eat to stay young forever, or you can create GOLD with it

i shit you not

and ppl think ZHers are crazy

Badabing's picture

Now hold on just a minute!

Doesn’t every dollar created out of thin air by the FED add to the debt and has to be paid back?

Now treasury on the other hand, can mint coin with whatever  face value and have no debt!

So let me think,,,,,,,,,,,,,, OK I got it! That’s the way it’s supposed to be by the constitution!

The FUCKING BANKS will never let that happen!

Badabing's picture

Thanks,

1913-2013 isn’t that 101 years?  The FED charter should be expired, BUT NO they don’t play by the rules!

Fucking banks!

Dr. Engali's picture

The fed doesn't have a charter. That is a myth. The only way the fed can be disolved is by an act of congress, or by breaking the law (of course the bankers make thw laws but that's another story). :

 

 

Sec. 4 ... the said Federal reserve bank shall become a body corporate and as such ... shall have power: ... Second. To have succession for a period of twenty years from its organization unless it is sooner dissolved by an Act of Congress, or unless its franchise becomes forfeited by some violation of law. Federal Reserve Act of 1913 (P.L. 63-43, 38 STAT. 251, 12 USC 221).

However, this 20-year corporate life was changed to perpetual in 1927 by Act of Feb. 25, 1927 (44 Stat. 1234) as follows:

Second. To have succession after February 25, 1927, until dissolved by Act of Congress or until forfeiture of franchise for violation of law.

This is codified in the United States Code, 12 U.S.C. § 341. See

http://www.law.cornell.edu/uscode/ht...1----000-.html

 

FEDbuster's picture

If they mint the $Trillion coin, who's picture should be on it?  Obama? Keynes? Krugman?  Bernanke?

cynicalskeptic's picture

How about honoring Gideon Gono - Zimbabwe's master of Trillions - hell... they put out 10, 20, 50 and 100 Trillion dollar banknotes.... (AFTER lopping a few zeros off in the previous two issuances of currency).

Doña K's picture

What if,,, creating gold has been achieved already and they are flooding the world with gold coins?

What then? Uranium

I say wild buffalo is the answer. Ted Turner has been ahead of the herd. Pun intended 

Quinvarius's picture

That would mean the moneythey are debasing would actually mean something as a claim on labor and materials.  With no other way to let off steam, every member of the Fed would be executed.

mjcOH1's picture

"What if,,, creating gold has been achieved already and they are flooding the world with gold coins?"

Those bastards might have hidden a supernova in the basement of the Fed.   Feed it paper and BOOM.....gold.

Dr. Sandi's picture

The beauty of this is that it's Federal Debt. That means it doesn't have to ever be repaid. And if you don't like it, there's a Federally Funded drone headed for your wedding party.

Sancho Ponzi's picture

I'm not sure I get the point of this. When the Treasury creates a coin or a bill, that currency is a liability on the Fed's balance sheet and an obligation of the United States. How can checks be cut against a liability? The Fed can't pay government expenses, so how does this allow for the Treasury to cut checks against the coin?

Badabing's picture

OK let’s pretend that the FED never existed like pre 1913.

Do you get it now?

Sancho Ponzi's picture

My mistake, a coin is a liability at the Treasury. The reasoning goes that Timmay could mint a $1 trillion dollar coin and deposit it at the Fed. The Fed would hold the coin as an asset and credit the Treasury $1 trillion. (liability) Then the Treasury would use their credit with the Fed to buy back $1 trillion worth of bonds, thus retiring $1 trillion of its debt.

Sancho Ponzi's picture

...so the Treasury would be purchasing and retiring $1 trillion worth of bonds with credit backed by a coin with a metal content that's worth a couple thousand dollars. What could go wrong?

cynicalskeptic's picture

well at least there's SOME inherent tangible value to a platinum coin..... paper money and T-Bills aren't even good as toilet paper.

AGuy's picture

" retiring $1 trillion worth of bonds with credit backed by a coin with a metal content that's worth a couple thousand dollars. What could go wrong?"

Or the dollar is simply devalued so that one ounce of platnium equals $1T USD. The price of Oil will be a mere $58 Billion USD per barrel. Problem solved!

 

 

socalbeach's picture

Close.

The Treasury mints a coin which the Fed overpays for, and credits the Treasury for $1 trillion.  The coin shows up as an asset on the Fed's balance sheet, and the Treasury's deposit at the Fed is a Fed liability.  The Treasury now has $1 trillion to spend without having to increase the debt by issuing more bonds.

Sancho Ponzi's picture

The original idea was to buy back and retire debt, thus keeping the Treasury under the debt limit so it could continue to pay expenses.

http://www.nakedcapitalism.com/2011/07/scott-fullwiller-qe3-treasury-sty...

laboratorymike's picture

You say that, but over in Beijing the cops busted into a wedding that my mother in law was attending just a couple weeks ago. The pastor was from one of the non-state-approved religions (which is most of them), and while permitted to carry on the wedding the cops were basically waiting for him to say something so they could have grounds for arrest.

So the police busting weddings held by their own people has happened elsewhere, and over here we do it to foreigners, so it really could happen here one day. What you said is NO JOKE to me.

socalbeach's picture

No, every Treasury bond or bill issued by the gov't adds to the debt. When the Fed creates $ out of nothing to buy Treasuries, those bonds are effectively retired until such time as the purchase is reversed, if ever.

narnia's picture

if you think printing 20 of these, deposited by the Treasury to the Fed, will solve our problems, you really haven't been paying attention

Hype Alert's picture

Timmah is just trying to get a step ahead of the Zimbabwe coinage face value problem.  At the rate we're going, exactly how long before a 1 ounce Trillion Dollar platinum coin is really worth a trillion US$? 

FEDbuster's picture

Or maybe more like the $50. face value of the 1 oz American Eagle gold coin which is now worth 33 times face value.

Silver Bully's picture

'The FUCKING BANKS will never let that happen!

So if I mint a $1 trillion dollar coin, deposit it at the Fed . . . won't they fractionally reserve that sucker into oblivion? How much debt money would that support? A quadrillion? A sextillion? Do we have to make gazillion a real word? I think any 'modern bank' would be behind that.

'Free gamblin' money, Mortimer! TURN THOSE MACHINES BACK ON! TURN THOSE MACHINES BACK ON!'

Anasteus's picture

"All the proposal does, in effect, is suggest a devaluation of the currency relative to an absolute precious metal asset."

Not really. The nominal value of the coin is that declared by the power-that-be Treasury provision and not that of metal price itself. It's somewhat similar to saying that $100 banknote automatically promotes the value of paper it's printed on. Only that specific platinum coin would be worth of the nominal value; platinum plate, dust or investment bars are different things. Or, is there any provision preventing the Treasury from minting coins with nominal value exceeding the market price of the metal? If not, the coin can be made much as well of copper or aluminium :-)) And yes, the Treasury normally writes checks against the taxes, but I think it still can issue coins at its own discretion, can't it?

And yes, it's an idiotic fix... but a shocking one. It would certainly deserve a bit more explanation on possible consequences.

BooMushroom's picture

Indeed! They could've just minted a trillion dollar coin of silver.

I wonder if they had just said "we'll just mint 64,000,0000,000,000 quarters, and deposit them, and we will have no debt at all!" if it would have been taken seriously.

Anasteus's picture

The number of quarters you're mentioning would consume 3,628,800,000 metric tons of metal. Any metal chosen for the mintage would immediately fall in the PM group.

Thomas's picture

Joe Wiesenthal endorsed the damned coin. I don't think I have EVER agreed with his analyses.

Beam Me Up Scotty's picture

Why use platinum? Why not something less expensive like aluminum, or, ....plastic?

Sheeple Shepard's picture

"Under section K of Federal law, the Treasury Secretary appears to have carte blanche on the design and issuance of platinum coins." 

 

francis_sawyer's picture

Forget about platinum standard:

~~~

- We couldn't maintain a gold standard

- We couldn't maintain a silver standard

- We can't maintain a copper standard

- We're having trouble even maintaning a zinc standard

- But 'paper'... oh yeah, we're good at that... The old saying is TRUE... Money REALLY DOES grow on trees... [as long as they're 'kosher' trees ~ for the rest of you, there's Mastercard]...

jerry_theking_lawler's picture

what about an unobtainium standard??

CPL's picture

Yeah, it's past the unicorn ranch next to the Federal Bank omsbudsman.  Flew by yesterday with my jet pack and pet Jackalope.

Silver Bully's picture

'- We're having trouble even maintaning a zinc standard

- But 'paper'... oh yeah, we're good at that...'

 

Um, give it time. Even paper becomes 'expensive' if you devalue enough. Ask Zimbabwe. Eventually everyone will have to use 'cloud coins' from an Apple iAccount because we can't afford anything else.

CPL's picture

Bingo....until electricity gets to expensive/oil runs out/coal runs out to keep the coins in a large 650 watt powered alumium/steel hybrid box made of gold, silver, platnium and pressed silica.

 

It all looks good on paper until it doesn't.

jmc8888's picture

Actually we can't even maintain a paper standard.  That's why they only print a couple percent of outstanding money into currency.  The rest are digital 0's and 1's.

But even beyond that there's roughly 1.4 quadrillion in derivatives, which of course, are 0's and 1's and completely worthless.  But while the scam is still running we are supposed to pretend that it isn't.  So add all that up and the couple of percent of money is paper becomes a few hundredths, maybe thousandths of a percent is paper.

So no, we don't do a paper standard good either.   We have 0's and 1's in a computer, and the banksters decide what worthless crap is worth.

 

rehypothecator's picture

"Under section K of Federal law, the Treasury Secretary appears to have carte blanche on the design and issuance of platinum coins." 

 

Up to and including making them out of paper?  

 

If he did indeed make them out of platinum, he could order them to be engraved "One Trillion (that's with a T) Fucking Dollerz, BITCHEZ!!"  and "Kiss the debt goodbye".  He'd only have to make 17 of them. (Today.)  

 

Then again, what does "fiat" (as in fiat currency) stand for?  That's right - fix it again tomorrow.   In which case currency fixing is like fixing your cat.  But the cat only needs to be fixed once.  Currency fixing, that's a lifetime's occupation.  

francis_sawyer's picture

Somehow ~ they'll scramble up the idea of 'PLATINUM' credit cards, with this idea... The coin will end up being PLASTIC & come with a 29.99% interest rate [+ late charges]...

Azannoth's picture

I am not an expert but wouldn't this actually fix everything ?! It would simply repudiate the debt "legally"

Dr. Sandi's picture

That's all I'm asking for. 17 little TRILLION DOLLAR platinum coins can do a hard reboot to the economy.

Go ahead, do it.

I DOUBLE DOG DARE YOU.

Silver Bully's picture

'I DOUBLE DOG DARE YOU.'

I TRIPLE DOG DARE YA, TIMES A TRILLION!

Ghordius's picture

it's a form of inflation of the money base. doesn't hurt anybody. keep repeating it

oh, and keep it secret from all foreign holders of dollars

DosZap's picture

I am not an expert but wouldn't this actually fix everything ?! It would simply repudiate the debt "legally"

 

 

Yes it would BUT,only if it was paid to the Fed, and Congress took over the job over our valutation of money.

This would KILL the Fed,and pay them off, and be done with them.The the Treasury would print/coin what Congress allowed.

Afterall all this debt is just making them(FED)incredibly wealthy.

Sancho Ponzi's picture

'Why use platinum? Why not something less expensive like aluminum, or, ....plastic?'

How about using a steaming pile of dog shit?

IvyMike's picture

Addiction is the whole reason City-Statism (Civilization) began.

How Beer Created Civilization
http://www.forbes.com/sites/frederickallen/2010/11/09/how-beer-created-c...

Know how drunks piss their pants? Just like they piss on the earth's once clean air and clean water?

Civilization (City-Statism) is ADDICTION CULTURE