Wednesday, January 09, 2013

The 1-Million Pound Platinum Bank Note

Now, I don't get around too much so I may have missed it if anyone else has covered this aspect of the arguments over minting a single, high-denomination coin as a presidential solution to the Congress's possible failure to raise the U.S. debt ceiling.

Congressional Republicans, apparently acting under the influence, very carelessly used their charge-a-plate to build up huge monetary obligations while neglecting any thought of generating income to pay for these debts. Now, as the legal limit of Federal spending for their gimcracks approaches, many of those Congressmen are threatening to let the repo man do his work and allow faith in  U.S. credit sink into the abyss, unless President Obama transfers the obligations to the elderly, sick, and poor.

Enter the notion of the Trillion Dollar Coin--a perfectly legal, albeit seemingly silly, trick to avoid default. The President can authorize the minting of an enormous-denomination coin, to be deposited at the Fed. The government would then have the cash to pay its debts. Eventually, the Treasury would buy back the coin and melt it down.

The big coin ploy could actually work better than anticipated--such an effort was documented by Samuel Clemens back in 1893. Seems he wound up in London with only a dollar in his pocket. He found himself unknowingly the subject of a bet in which he was given some money but otherwise left to his own devices. He immediately went for a meal at a cheap restaurant; only when he pulled out the banknote to pay for his meal did he discover its denomination--one million pounds--which the waiter noticed at the same time. He thought quickly, handed the banknote to the waiter and asked for his change. The small eatery could not, of course, change such a note, and so offered the meal on the house. Similarly, the former beggar advanced in society, always offering the banknote in payment and always refused, ultimately amassing a large bank account and getting the daughter of one of the bettors for his wife. (The £1,000,000 Bank-Note).

UPDATE:  At least one other has recognized the platinum coin-
£1,000,000 Bank-Note connection.



Anonymous Ethan Bruce said...

Nice post !

2:45 AM  

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