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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Fri, 01/04/2013 - 10:42 | 3121811 Dr. Engali
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That will have to be one big ass platinum coin..It might be a little cumbersome to carry around in your pocket.

Fri, 01/04/2013 - 10:46 | 3121829 fonzannoon
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Does it have to be a coin? Can't they create a 1 trillion dollar bill to keep the whole faith in paper thing going?

Fri, 01/04/2013 - 10:55 | 3121882 kito
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happy zh birthday year old!!!!!!

Fri, 01/04/2013 - 10:58 | 3121893 fonzannoon
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Thanks Kito. Funny thing is my name used to be fonzanooon. I got booted off here a little over a year ago and had to add a "N" to my name to get back on.

Fri, 01/04/2013 - 11:03 | 3121917 Dr. Engali
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Really you got booted? You rebel must have been bad to get the boot back then.

Fri, 01/04/2013 - 11:12 | 3121967 fonzannoon
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The funny thing is I did not think it was that bad. But yes I got booted. I will admit I went into sheer panic. It was being forced to go cold turkey. I would not have handled it well.

Fri, 01/04/2013 - 11:17 | 3121987 Dr. Engali
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LOL....I know what you mean. Those nights when I am too busy to read what's going on at the Hedge I find myself in a cold sweat.

Fri, 01/04/2013 - 12:40 | 3122384 kito
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Thats funny...i also got booted, but rather than start a new account, I sucked it up, promised to behave, and then demanded my account be reactivated..........

Fri, 01/04/2013 - 13:37 | 3122660 ZeroHour
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Wow!  What did you do that got you booted?  I've seen some pretty strange stuff that didn't get a person booted.

Fri, 01/04/2013 - 10:43 | 3121814 TerminalDebt
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Why Stop at 1 Trillion?

Just mint a few Gazillion coins and spread them around.

Fri, 01/04/2013 - 11:33 | 3122053 jerry_theking_lawler
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I say mint 5 'Gazillion' them in chocolate bars, the five winners are then entitled to a visit to uncle barry's crazy factory @ 1600 Pennsylvania St.

Fri, 01/04/2013 - 11:37 | 3122069 Dr. Sandi
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A Gazillion dollars? Now you're talking real money.

Fri, 01/04/2013 - 10:43 | 3121815 Hedgetard55
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Why even bother to mint it, just claim it exists, or just let the FED write checks without any backing, same thing.

Fri, 01/04/2013 - 11:32 | 3122048 machineh
machineh's picture

Let the MMT true believers get their skulls trepanned.

After removal, those little discs of skull make nifty 'ivory' bone coins ... while the hole in your head serves as a third eye.

Ommmmm ...

Fri, 01/04/2013 - 11:40 | 3122089 Dr. Sandi
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Nay, nay, I say. Many among us need the level of belief that only something as absurd as a platinum coin worth a trillion dollars can achieve.

It's all about show biz. Add a little glitter, a little glitz, some razmatazz and a few lovingly told lies. Voila, a real trillion dollar coin that's really, truly worth a trillion dollars. If it wasn't it wouldn't be made of platinum now would it?

Fri, 01/04/2013 - 10:43 | 3121817 Aurora Ex Machina
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Allegedly, there's only about 15 years of Platinum left, so they'd better not waste it.

Fri, 01/04/2013 - 10:46 | 3121833 TerminalDebt
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Why does it need to be platinum?

Why can't it be recycled plastic? or just cut a piece of a coke can and stamp 1 trillion on it.

Fri, 01/04/2013 - 10:51 | 3121854 optimator
optimator's picture

Or print the bills one side only to save ink.

Fri, 01/04/2013 - 10:58 | 3121864 Aurora Ex Machina
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Urk, you caught me mid edit; 42 years is if global consumption / capita equalled US consumption / capita, and 160 years is if no new uses are found, and consumption remains totally static.

That figure is if fuel cells take off: Armin Reller, a materials chemist at the University of Augsburg in Germany, and his colleagues are among the few groups who have been investigating the problem. He estimates that we have, at best, 10 years before we run out of indium. Its impending scarcity could already be reflected in its price: in January 2003 the metal sold for around $60 per kilogram; by August 2006 the price had shot up to over $1000 per kilogram [source]; I refer you to:

In a review of world platinum deposits Råde (28) found 66.5 Gg of identified platinum resources. Our independent assessment has yielded 97.1 Gg of platinum-group metals as the total resource of which 67.3 Gg containing 37 Gg of platinum remains unmined. Råde reported 90% recovery in mining and 88% efficiency in milling and smelting, which indicates that a total of 29 Gg of platinum-group metals is available for future use. Platinum is prized as a jewelry metal, but it is also a superb catalyst. It is widely used in automobile exhaust systems (1–5 g per vehicle) and in a variety of industrial applications. Suppose that the 500 million vehicles estimated to be in use worldwide in 2000 were converted to fuel cell operation operating on pure hydrogen (i.e., no reforming of fuel needed), that the platinum requirement was 0.4 g?kW, that the average vehicle power was 75 kW, that the fuel cell life was 10 years with a 90% recycling rate, and that recycling achieved 50% recovery of the platinum content. The platinum stock-in-use for these vehicles would be 15 Gg. Maintaining this stock would require a flow of new metalinto use of ?1 Gg per year. If all of the remaining lithospheric stock of platinum were devoted to operating a fleet of 500 million vehicles with fuel cells, the platinum resource in the lithospherewould sustain this fleet for ~15 years. There would be competition for this platinum for use in jewelry, stationary power fuel cells, industrial catalysts, and catalytic converters for motor vehicles still using petroleum fuel.

"Metal Stocks and Sustainability" R.B Gordon, M Bertram and T.E. Graedel. [Warning: PDF]

Fri, 01/04/2013 - 10:54 | 3121874 Zgangsta
Zgangsta's picture

Because that's the law.  They're only allowed to make an unlimited denomination with platinum coins.

A stupid law, but even stupid laws are laws.

Fri, 01/04/2013 - 10:49 | 3121843 Flakmeister
Flakmeister's picture

Your claim doesn't jive with the figure...

FWIW, R/P projections are disingenuous at best....

Fri, 01/04/2013 - 11:05 | 3121892 Aurora Ex Machina
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See the post above where I amended the claim, I got ninja-responded to as I was typing an amendment [with no pork attached].


Also note that my source is from 2005.

Fri, 01/04/2013 - 10:45 | 3121824 SheepDog-One
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Fri, 01/04/2013 - 10:46 | 3121831 Quinvarius
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It is just the same as printing our way out any other way--Which we are going to do.  I am not against the reality this is what we are going to end up doing anyway.  I am just against wasting platinum.

Fri, 01/04/2013 - 10:47 | 3121835 williambanzai7
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Fri, 01/04/2013 - 10:48 | 3121839 NoDebt
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Now THAT is awesome.  You should publish that in a newspaper, if there was such a thing any more.

Fri, 01/04/2013 - 11:16 | 3121981 Badabing
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The eagle has big balls!

Fri, 01/04/2013 - 10:50 | 3121845 otto skorzeny
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too much Freemason imagery  first thing in the morning

Fri, 01/04/2013 - 11:27 | 3122024 ebworthen
ebworthen's picture

Love the old style "S's", nice touch.

I thought this story was a joke, can't believe it was even floated; "Fiat Fornicatio" indeed!

Fri, 01/04/2013 - 10:47 | 3121836 NoDebt
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Sounds crazy now, but give yourself a year or two to warm up to it.

Remember how crazy QE1 sounded when you first heard it (then just called 'QE' because we didn't know there were going to be 15 more itterations)?  One government entity buying the debt of another government entity?  That's crazy!  That would mean they're just monetizing the debt! 

Yeah, give it time.  Give it time.  You'll get used to it, just like you're supposed to.

Fri, 01/04/2013 - 10:49 | 3121841 Never One Roach
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Bring back the $500 bills. That's a start.

Fri, 01/04/2013 - 10:50 | 3121851 Dr. Engali
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They're coming. I personally look forward to my first trillion dollar FRN.

Fri, 01/04/2013 - 11:34 | 3122056 machineh
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The trillion dollars isn't important; it's the piping hot cup of coffee it will buy.

Fri, 01/04/2013 - 10:50 | 3121848 unplugged
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Hey Orly old paper boy, you out there?  If so, please educate me on how this would factor into your 4X trading strategy.  Us metal mowrons eeegerly await your wisdom.

Fri, 01/04/2013 - 10:52 | 3121856 holdbuysell
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"All the proposal does, in effect, is suggest a devaluation of the currency relative to an absolute precious metal asset,"

Before I finished the article, I was actually going to say (though, somewhat cynically): "Ok, so take $1T and divide it by the weight of platinum in the coin, and you now have the new higher price per unit weight of platinum."


Fri, 01/04/2013 - 10:55 | 3121881 OpenEyes
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Or you have a $1T coin the size of Rhode Island

Fri, 01/04/2013 - 11:39 | 3122082 ParkAveFlasher
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Yeah but you can't eat Rhode Island.

Fri, 01/04/2013 - 11:43 | 3122105 Dr. Sandi
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Didn't Mothra try?

Maybe it was a different place. It was a long time back.

Fri, 01/04/2013 - 10:52 | 3121862 Zgangsta
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What is the big deal?  Creating a trillion dollar coin is the same thing as creating all of the electronic money that they're already constantly creating.  All this would offer is a loophole around the "debt ceiling" to go into the already agreed upon amount of debt.

Fri, 01/04/2013 - 11:12 | 3121966 Orange Pekoe
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Platinum is shiny. It's all about how things look.

Fri, 01/04/2013 - 10:54 | 3121872 jmeyer
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"devaluation of the currency relative to an absolute precious metal asset"

Actually, this is the function of gold. But the main point of the debate is that the Treasury can assign any value to any material; it could be  wooden coins; but it would be backed up with assets of value. You can do it do but you better be able to make it stick.

Fri, 01/04/2013 - 10:54 | 3121873 spinone
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Why platinum? why not paper? Why not just make a trillion dollar bill? No ones ever tried that before...

Fri, 01/04/2013 - 10:57 | 3121891 andrewp111
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The coinage act only gives the Administration discretion with regard to platinum. Mintage and denomination of all other currency and coin is strictly controlled by Congress.

Fri, 01/04/2013 - 10:55 | 3121883 andrewp111
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I want to see Obama to do the Trillion Dollar Coin (TDC) with his own face on the coin. We will call them Obamacoins, and everyone will sing the praises of Obama. If he brings 3 of those orbs over to Bernanke to fund the deficit for the next 2 years, Bernanke might be forced to actually sell some of the Fed's Treasury holdings, and interest rates would still fall sharply. We could see mortgage rates go below 1%.

Fri, 01/04/2013 - 11:00 | 3121894 magpie
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The design for the 2013 $ 100 looks nice, HuffPo readers could start planning the trillion dollar one: "To promote the general welfare"

Fri, 01/04/2013 - 11:39 | 3122078 machineh
machineh's picture

Huffpo readers overwhelmingly prefer the Eva Peron hundred:

If we adopted these as the U.S. currency, house prices would go up in a hurry!

Fri, 01/04/2013 - 10:58 | 3121895 AndrewJackson
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Someone please tell me there is no real chance of a 1 trillion dollar coin and that this is all for a good laugh. I though qe4eva was a buy signal like no other for pms, but trillion dollar coins? That would take the cake.

Fri, 01/04/2013 - 11:04 | 3121928 dark pools of soros
dark pools of soros's picture

Benny needs to be minted for his work...  maybe like jabba did solo


put Benny in the trillion dollar coin

Fri, 01/04/2013 - 16:13 | 3123531 Arthur
Arthur's picture

No coin.  The plan is to issue paper platinum certificates.


Fri, 01/04/2013 - 11:00 | 3121904 Everybodys All ...
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Tyler...Any idea how big the platinum coin would have to be if it actually represented a trillion dollars? Might be a good visual.

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