This Is How the Trillion Dollar Coin Could End Debt Ceiling Fights for Good

important aspect of journalism is impartiality. Like you know, I don't think we should like take views on many things. We should be open minded, we should be intellectually honest, but it is not really our job to take a position on things, you know what I'm saying. Sorry, I don't know why I can't stop laughing, Because impartiality is very,

very important. I think the difficulty comes when when you I mean, in a lot of financial journalism, people have strong opinions about one topic one way or the other, and sometimes those opinions seem to be grounded in logic, and so you get frustrated if other people don't see the same logic. But yes, like we are not supposed to take sides, We're supposed to lay out both sides of the argument every time. So I I take this

responsibility as a serious Capital j journalist very seriously. But I have to admit, if I'm being completely honest, if I've been completely honest, there is one topic that I find very hard to Um, let's say, avoid showing my bias. Um, yes, okay, uh so we're talking about minting the trillion dollar coin, of which you have been an advocate for a very long time. First of all, I can't believe that we've managed to do what is it like six years of the Odd Lots podcast and we haven't yet done a

mint the Coin episode. Um, that's one thing. And then secondly, I mean, this is the one thing that I remember about your writing, or like the foremost thing about your writing before we started working together at Bloomberg. It was the big post you did at Business Insider. I think it was way back in something like that about minting the coin and the discussion people were having about it at the time. And I remember reading that and thinking

this must be a joke. This is so weird. Um, you know, I started thinking about whether or not we're in a simulation again. And and now like fast forward to one and there are actual politicians in Washington who were talking about it. It's been a really incredible decade. So yes, I am going to fully my bias. Actually admitted it to one of our colleagues the other day.

I was like, you know, I'm a serious journalist, but I have to admit that I really think the debt sailing is a very absurd law and that a very good solution is for the Treasury to mint a trillion dollar platinum coin and just end as far as once and for all. So yes, this is my bias. But you know, people, it is weird, and I will be the first to admit it's like a weird thing. Like I'm not going to deny that it's strange that it seems that it's a legal loophole, that it's a hack.

That people have lots of questions, both on the economics, the legality and the sort of like the institutional aspects of how this can be done and who is the unilaterally authority to just create a train dollar the money. I admit that there's a lot of questions and people have reason to be skeptical. Nonetheless, I think it's a good idea. Maybe you do too well, maybe you'll be convinced.

And I think though it is surprising that after all these years of the Outlaws podcast, where finally for the first time doing a coin episode, because, as you point out, I've actually been writing about this topic for really a most a decade. Yeah, so this is going to be one of the episodes where I think I sit back and learn a lot from both you and our guests, and I think I'm probably going to be representative of

maybe the average person who encounters the idea. I kind of get how the mechanics of it would work, but again, instinctively, it just seems absolutely crazy to I guess, try to fix the absurdity of American political theater with what basically amounts to more absurdity. But I have a feeling we're going to get into that there is some logic to that. So yeah, I I hope you play an active role in this conversation because we have to ask the tough questions.

Let's let's get started. So alright, let's without further ado, we have the best guest, I think to discuss it. We're gonna be speaking to Rowan Gray. He is an assistant professor of law Lambit University. He is also a longtime coin advocate, and he has in fact written what I think is probably the definitive sort of law review

article on the legality of the coin. It is extremely thorough, both in terms of talking through its economics, some of the common objections to it, and why he believes it's illegal and perhaps even mandatory route to circumvent the debt ceiling.

It is titled Administering Money, Coinage, Debt Crises in the Future of Fiscal Policy, a very serious, thorough, rigorous legal work, and in addition to advocating, he's also a bit of a sort of policy entrepreneur, having worked with elected representatives to introduce laws that would bring about the coin. So he is a scholar and an activist and an entrepreneur on the subject. So the best guest to discuss it Rowan. Thank you so much for coming on, coming back on

all lots. Thank you so much for having me. It's a pleasure to be here talking about a jointly favorite topic. Yeah, so let's let's actually just start with like the really big picture, because you know, there are still some people who are, like I encounter on Twitter and so forth, they're like, can you just point me, just like the

simple version, like, how does the coin work? Yeah, I mean the starting point is that the coin works like all coins work, which is that the Mint, which is the oldest monetary institution in the United States, predating the Federal Reserve by over a century, which is housed within the Treasury, would mint a coin of a certain value and would deposit that coin at the Federal Reserve uh, and the Federal Reserve would take that coin and then own that coin and record it on its balance sheet

as an asset like you and I would if we go to coin that someone gave us UH, and then it would credit the Treasury for the equivalent amount of dollars that the coin is worth, which is legally speaking, its face value, and that money would then be available in the Treasury's regular spending account to end in the same way as it would if it sold any other financial instrument like a Treasury bond or a Treasury note, and then it would go about the daily spending, and

this coin would work the way that all the other coins that get minted on a regular basis work, in the sense that the Mint would would issue it and then take the money in and then sweep the money back into the treasury sort of general account. It's general spending account. Um. The only difference here would be that the number of zeros on the end of the coin would be substantially larger than most other coins, and for a change, it would be made out of platinum instead

of cop rosing or whatever else. So, I mean, the idea here is that basically you would bypass all the political wrangling that we see, you know, every three or four years nowadays, I guess over raising the debt ceiling. And I'm wondering maybe just to like step back even further, could you explain why we have a debt ceiling in the first is sort of limits on the amount of debt in the US and what that's supposed to accomplish. Yeah. Thanks,

I think it's a great starting point. The starting point, at least to me, is to think about what the world was like before the debt selling, and before there was a practice where if Congress wanted to create a new spending program or or spend on a particular project, you know, a canal or a war or the postal service, it would appropriate the funds used through the appropriations process, and then usually either in a separate accompanying bill, or

sometimes in the same bill. It would direct the Treasury on how to finance that spending. So sometimes it would say, issue a bunch of three month bills. Sometimes it would say issue a bunch of thirty year bonds. Sometimes it would say issue some combination. Sometimes it would say, raise the revenue through a cuss TAM's taxes, or through a new tax, or through sign your ridge with the mint.

And it would tell the Treasury how which which sort of financing mechanism, and that financing mechanism would be specific to that spending bill. And for a long time this was the way that things worked. Each spending commitment had its own financing authority. But when World War One comes along and the United States is sort of getting bigger, and this really started probably with the Civil War with Lincoln, but it kind of reached its sort of mature form

in the twentieth century. Um it became basically logistically unwieldy, impractical to have a different spending authority, different financing authority, I should say, four different spending commitments in a way

that the Treasury had no discretion. So you would have situations where there'd be excess money left over in this financing authority, and then a different spending commitment would not have enough and the Treasury Secretary wouldn't be able to move that spending a financing authority around to make sure that it could finance everything. And so the debts in which sort of started nine seventeen and then kind of reached its mature forming in nine. But it was never

originally intended to be a limit on spending. It was intended to facilitate more executive branch autonomy and discretion and flexibility in financing practices. So so that's really interesting, and I already learned something new because I always had just sort of been under this assumption that the only purpose was to create this sort of like nominal or you know, fig leaf restraint on the amount of debt, and I hadn't realized that actually sort of served this purpose to

establish flexibility. So these days, obviously most people would agree is just an opportunity for politicians to grandstand and to say they opposed the debt, even if they rang it up. Now, you mentioned that the trillion dollar platinum coin would really be like any other coin, except that a it would have a lot more zeros at the end of it and be it would be made out of platinum. What don't you talk us about it have to be made

out of platinum. Well, this is the key thing. So Roan, what don't you talk to us about the specific law and where that law came from, where that gives legal authority to the creation of this high denomination clips. Yeah. So, you know, when you think about the debt ceiling, one way to think about it is that there's a quantitative cap. But within that cap, the Treasury Secretary has a lot

of discretion. They want to issue three months, one year, two year, ten year, thirty year, or you know, fifty year. As as Minutian was floating for a hot minute when he was the Treasury secretary. The dead ceiling is really talking about the aggregate cap. The Coinage Act has a very different set of constraints. It constrains qualitatively. That is to say, you know, if it's going to be one center has to look like this, if it's going to be made of gold, it could only be up to

one dollar, etcetera. But it has never and does not today impose any quantitative cap. There's not a point where the Mint says, oh, we produced the number of coins we can for this year, we'll have to stop shop in September or something. You know, it was a big year for coins. Nothing like that. There's been no limit on the number of coins that can be issued, but there has been these qualitative caps and so you know, we probably have seen you know, dollars, silver dollars, things

like that, and they're above a single dollar. There's commemorative usually coins, you know, twenty five dollar palladium coins, certain kinds of sort of collector coins and things. But in the nineties particularly, there was a bill that was passed that amended the Coinage Act to create a new provision on two K which granted the Treasury Secretary of the authority to Mint an issue platinum bullion or platinum proof coins.

And proof there just means a high production grade, like very very very shiny coins of whatever denomination the Treasury Secretary wished whatever they thought was useful and socially beneficial. And this was originally a bill that was sponsored by a Republican member who was the Subcommittee on Coinage is chair named Mike Castle, in very close consultation with then director of the Mint, Philip Deal, who was previously, I believe the legal director of the Senate Finance Committee. It

could be Banking Committee. I could be confusing those Mint Director Deal was probably one of the most sort of visionary MINT directors of our generation because even putting aside this provision, he transformed the internal budget of the MINT. He he made it off budget in the way that the FED is off budget. He gave it more autonomy. He created a whole range of new products and things

to bring in more revenue. And one of the reasons that Mike Castle like this was because it would bring in sign rridge revenue, that is, the difference between the face value of the coin and how much it costs to produce, and that that revenue would go into the Treasury's account and reduced the need for additional borrowing. So Mike Castle was a fiscal conservatos like this is good and from the Mint's point of view, this was a

was a pretty kind of powerful catch all provision. At the time, the aim was actually to allow the mid directed to make even smaller coins than the ones that were being sold and to give more flexibility on that end. But the way the language was written, and again Director Deal was very intentional and very smart about this. Gave

the Treasury Secretary under the plane language, complete discretion. But wanted to be a five dollar coin, want to be a five hundred dollar coin, want to be a five thousand dollar coin, Wanna be a five million dollar coin? The law said, this is within the Treasury Secretary's discretion, just like it's within their discretion whether to issue a thirty year bond or a five year bond or a

fifty year bond. That law stayed on the books, and when the regular financing system works the way it's supposed to, nobody is looking in the draw for the crazy hail Mary statutes. But the dead ceilings showdown sort of they were. They were going on in a low grade way since about the fifties, but never really to the point of kind of complete government shutdown until about the midies, and

then it really got bad with President Obama. That was when really for the first time that it looked like one party would would just not play ball at all rather than just do the regular kind of grandstanding and

grumbling and eventually pass something. And that was when a lawyer named Carlos Mitscher, who at the time was going under the internet Monica Beowulf did some digging because he had heard some people talk about, you know, coinage as a power that was under explored, and found this law on the books and said, look, you know, we could use this now and avoid the need to continue to sort of have these recurrent crisis and this law is pretty clear. This is this is a pretty clear interpretation.

There is no ambiguity here, there's no asterisks, and it would be consistent with how coinage works in general. Again, just a matter of degree, not kind. When the idea of first surfaced, like, what was the intention behind it? Do you think was it basically a thought experiment of how you could solve the dead ceiling crisis? Or was like, was it basically just like trolling by you know, some

finance nerds, a little bit of both. I think, you know, I'll let Carla speak for himself, but I think, um, he was making this comment on an MMT blog, And you know, one of the things that mmts like to talk about is the fact that the government spending limits are not on the financial side, they're on real resource

and inflationary capacity, etcetera. But to the extent that there are procedural restrictions on how the treasury spends or how you know whether the Treasury spending account can go into a negative overdraft or not. And those kinds of questions, Um, they're all self imposed. They are all things that we passed a law and could pass a different law tomorrow and change destruction. Right, They're not They're not a sort

of physical constraint. There are a socially constructed constraint. And so that was the sort of water that Carlos was

swimming in when he started looking into this stuff. This was the sort of general discussions that we were having on those blogs back in the day that was, you know, there are things like the dead ceiling, there are things like treasury bond auctions that happened, But are they because they need to or just because they're sort of a leftover of a different regime, or because they serve a

useful social fiction. And it was just one more example of showing how arbitrary and stupid and self imposed these constraints. Remember this is taking place against the backdrop of the Deficit Reduction Commission and Obama saying, you know, we're out of money now when asked when the government's going to

run out of money? And all these things. So, in addition to solving the acute problem with the dead ceiling crisis with this sort of clever legal hack that required only the President's um and I guess the Mint stamping machines, it was also a very pedagogically and and symbolically powerful way to make the point that there's a big, fat infinity sign next to how many dollars the US government has, and and that's always been the case, even if we

do create laws to obscure that fact. Let's talk a bit more about the intent behind the law and why you're doing to see that as a problem. So, Mike Castle from Delaware, the congressional author obviously was not thinking of this as a way to circumvent the dead ceiling. It was about a collectible coinage and senior edge revenue at the Mint. Philip Deal, the Mint director at the time we draft the language, He's like, yeah, this is legal, but this is clearly like not the intent of the law.

It was about creating more collectible coins for people. Why isn't that a problem? Decided It's like, look, obviously this was not their intent. This is just about creating some more options for collectible coin collectors. Etcetera. Why should we now just dismiss this as sort of like an absurd reinterpretation that's clearly not what the law is intended for. Yeah. I think there's a couple of layers. So the first layer is intent can be looked at narrowly or broadly.

The narrow intent here, the short term, immediate intent was to actually make it possible to create smaller denomination platinum coins, right. But the way that that problem was solved was not to write a law that said the maximum value of this coin is a hundred dollars or smaller. It was to say, you know what, let's get out of the business entirely of regulating what the denomination is. Let's leave

that up to the Treasury Secretary. So even if the immediate problem is one thing, if you develop a broader solution that it fixes that problem and fixes potential other problems, that's fine. The second thing is, at a broader level, the goal of this bill was to give the Mint more tools to use the sign rridge power to generate

additional revenue that would reduce the need to borrow. That's what my Castle has said, That's what Deal has said, was that the goal of these commemorative coin programs, which again remember deal kind of ramped up as the mint director was to bring in more revenue, which meant less borrowing was necessary. So in that sense, using it in this way, and again I wouldn't deny it all that there's a lot more zeros than any of the people that wrote this whatever expected to appear on a coin

like this. In a broader sense, that is still entirely consistent with what it's doing. It's minting a coin to generate revenue to reduce the need to issue additional government debt. There's another layer, which is about legislative intent, you know, And of course we're at a time now where the

politicization of the courts is pretty overt and obvious. No one would look at the Supreme Court and pretend that decisions aren't going to be, you know, impacted by the fact we have a six three court now in one way, but a number of the people on the Court have been pretty dismissive of legislative intent as something that they should look to it all. Um. So if they're consistent with their own principles, which I don't expect it will always happen. But if they were, then that shouldn't even

be an issue for them. Um. But even even sort of more progressive members of the Court have said, you know, we're all textualists now, and whatever we might look to legislative intent, we don't usually do so when the plain meaning of the statute is so obvious, when it's very very clear, when there's no room for sort of wiggle room or interpretation, there's no point where we have to sort of ask more deeply than what's being said to

us plainly to our faces. Then we don't get into that kind of messy process of trying to work out legislative intent. The fact that this is not the one narrow thing that people uginally created this law for shouldn't be fatal to it, because it's not fatal to any other law we use. We creatively reinterpret laws all the time, especially in moments of crisis, especially when the alternative is

even worse. And in this situation, that's I think that the context in which this comes up is that the alternative here is catastrophic and unconstitutional, and if we can read this on its face, take it on its face, and in doing so, of the not only a political crisis and an economic crisis, but a legal constitutional crisis.

I think that's entirely consistent, and so do constitutional scholars like Lawrence Tribe and Jack Balkan and a number of others who have far more experience with the canons of constitutional interpretation than I do. So two things here. I think I understand the legality argument, and I understand also the argument that the way the debt ceiling is currently being used, it basically seems like an ana criticism, and

it seems like it's damaging the economy. You know, increasingly frequently we have these like brinkmanship theater like events in Congress where uh, they get closer and closer to a technical default and market start to panic and it ends up feeding back into the real economy. So that's not great. But is minting the coin really the best way to solve the issue? And are there any other options on the table for permanently solving the issue of the debt ceiling?

And how realistic are those alternatives? Yeah, I mean there's some other creative accounting gimmicks, and I think it's important to acknowledge this is basically an accounting gimmick. But it's an accounting gimmick to deal with an accounting failure. And if you've ever worked in business and things, you know that's a very common way to get around a silly accounting restriction is to use creative accounting. So this isn't sort of outside the realm of normality in that sense.

In fact, one of theirs as times that we really did go to the wire with the debt ceiling was the Treasury Secretary rated the Social Security Fund there in a way that the Government Accountability Office later said was probably a violation of the Social Security Act. But you know, quote um, considering the extraordinary circumstances of the moment, it was sort of understandable. But there are sort of other alternatives.

For example, debt held by the public. Some lawyers have suggested that we could interpret that to exclude the treasury securities held by the FED. The FED is currently considered, you know, part of the public for accounting purposes for the budget, because that's how we ignore the Fed's balance sheet when doing budget analysis. People are saying, we could just not count that part, and that would give us, you know what, another five or seven trillion or something

of a breeding room. I don't find that a long term fix it just sort of staves off the inevitable, and hopefully we would you change the debt ceiling in the meantime, but it's a temporary stop gap in a way that the coin is more permanent. Others have suggested we could issue a console, which is basically a perpetual government bond, because the way that the debt ceiling statute is written is that the only instruments whose quote principle

and interest is guaranteed is under that ceiling. But consoles do not have a principle to be repaid. So this is actually another Carlos Mitcher classic, you know, shout out to him for for trying to follow up his his

debut album with some other sophomore hits as well. The only sort of categorical solution I've seen that sort of comes at the same level is just to blow through the debt ceiling and say that the alternative would be a default, and that violates Section five of the fourteenth Amendment that the public debt shall not be questioned, So

we should just do that. And I think that that's actually a much worse solution in terms of the political implications, because it requires the press talk about that a little bit because you mentioned the sort of you know, a breach of the dead ceiling and a theoretical default. It's a political crisis, it's a financial crisis because treasuries are the world's safest asset that their defaults in the pod it is kind of unthinkable what that would do to

the financial system. And then as you mentioned that, there is this constitutional crisis, and so you get this sort of question of whether a default is even legal. And I think, like I think even that Bill Clinton has said, you know what, just some people have said, just ignore the dead ceiling law, keep issuing it because you could just devoke the fourteen the Amendment, and that says you

can't question the debt. Explain to us what that that fifth section of the fourteenth Amendment says, and why you don't think it's safe or sound too. Simply ignore the dead ceiling on constitutional grounds. Yeah. So, um, and and

just give some context. My my Lawer of View article on this um is really a kind of response to another article by a lawyer named Michael Doff and an economist name Neil Buchanan in the Columbia Lawer of View called how to Choose the Least unconstitution all option lessons for the president from the debt ceiling standoff, And it's a it's a sort of constitutional theory paper, but it uses the debt ceiling to make the point. And it

was obviously very impactful in that debate. It came out around and I know people in the White House and things were reading it and considering it. And then in their argument was basically that Congress gives the treasury three directives spend a certain amount, tax a certain amount, borrow

a certain amount. And if the amount of spending net of taxes, so the deficit, the size of the deficit that needs to be financed, exceeds what is available to be borrowed or issuing treasury debt, then there is a paradox the treasure that the Congress has given contradictory directives to the Treasury. And their argument was that if you have these contradictory directors, if something has to give one of these three the tri lemma, one of them can't stand.

That of those three, spending and taxing are sort of core legislative fiscal power us. If we think of the power of the purse, which you know, the legislature has relative to the power of the pen and the power of the sword, that spending and taxing us sort of the very core of that power. And so if one of these has to be violated, it's better to violate the debt ceiling than to unilaterally have the president cut spending,

which some people are talking about. Now you know, we're going to prioritize paying interest on the debt, but not you know, social Security recipients or federal employees or something, or unilaterally raising taxes and I'm just going to appropriate people's money, and then that's how I'll finance things. Relative to those options, blowing through the debt ceiling is the least bad, because, let's be honest, it's an accounting gimmick anyway.

For the last seven or eight years at least, and certainly even before that, we were basically raising it as a pro former matter, or just suspending it entirely for extended periods of time and then sort of re enacting it for five minutes to whine about it, and then

suspending it again for another few years. So, given all of that, if we have to, if one of these has to break, let's break the debt cell And I agree with that logic on its face in the sense that yeah, absolutely, of those three we should violate the dead selling rather than you know, have the executive brand start start doing power of the purse stuff um in

the more fundamental way. But my argument was they just missed the whole fourth option, a pretty central fourth option, in fact, maybe even the most central, which is that the Treasury does not only tax and borrow money, it also creates money. And this is the kind of MMT inside right, which is that the money that gets taxed has to be created first. The money that gets borrowed is usually injected in by the Federal Reserve to the primary dealers, who then lended quote unquote to the Treasury.

And so if we start from the presumption that the Treasury only borrows and spends money out there, we're ignoring the fact that on a daily basis, it's creating money.

And nowadays we kind of forget that fact because as we have delegated a lot of that responsibility to the Federal Reserve, and we think the Federal Reserve is sort of separate to the rest of the executive branch, you know, and people who talk about unitary executive theory, including a number of justices on the Supreme Court would probably disagree

with that. Maybe, but um, the reason that we have ignored that is because, again, the mint is sort of sounds like a quaint thing from a documentary about the Founding Fathers with a tin whistle in the background or something, you know. In reality, the Mint's just been there quietly doing its job for for for decades, for centuries, and it sends hundreds of millions of dollars a year in

sign rridge revenue back to the treasury. Um. Just like the Fed generates billions of dollars in sign ridge revenue. It's the same thing at just a different scale again, just a few more zeros um. And so my argument is, if you have to choose an unconstitutional option, yeah, violent in the debt ceiling is probably the best one. But if there's a constitutional option on the table, we should

be going there first. In fact, we should be really trying to go there first, because the alternative is that the president gets to choose when they break laws that Congress has told them to. And if the reason they have to break the law is I literally have no choice, Okay, I get it. But if they do have a choice, and they just prefer not to use it. That's a very different kind of power graph. That's a very different

kind of way that the president is interpreting it. And the way that people have interpreted this is maybe this is legal, maybe I can do this, but we shouldn't why because then we would reveal to the public how money works. We reveal that printing a trillion dollar coin is the same as printing a trillion dollars in debt. There's no difference between, you know, borrowing and printing money on from an economic point of viewing things. And the

public can't handle the truth. You know, it's Jack Nicholson in a few good men. You can't handle the truth. And so we need to keep this myth alive that money is scarce, that we can only tax or borrow it. We can't talk about the big Infinity sign in the sky. And in the name of preserving that myth, where you're going to violate the Constitution. And that's why they lose me when you're knowingly advocating unconstitutional behavior over constitutional options

because you think it's important to perpetuate a lie. So my understanding of that argument isn't that it's necessarily about protecting the public from the truth and hiding the true

nature of debt. But that you know, minting the coin is basically like a large scale financial experiment and one that we don't necessarily know the consequences of, and that seems like a heavy price for the potential, you know, like maybe we would get a chance at educating the public over how government finances don't function like household finances. Like to me, it's that sort of like cost versus benefit analysis. So I don't know. I guess my question

is what's your response to that? And then be like what could go wrong if the coin was minted? Like where are the risks in this project? Yeah? I mean I think, you know, not not to sort of play burden shifting games, but I think the idea that we are going to normalize the president explicitly violating the Constitution whenever they think telling the truth is going to cause adverse social outcomes is to me, I think also a pretty big experiment. It's also pretty risky to let the

presidents say, oh, no, I'm not going to enforce that law. No, I'm going to do this thing that I'm explicitly set told I can't do because I don't like the other options available to me to achieve an outcome I think is needed. So I don't think it's a matter of what is untested and risky and the other isn't blowing through the debt ceiling, just saying stuff it, I don't care. We're just going to ignore it because there's a higher calling I've got no better option, when in reality they

know full well there's another option. They just don't want to talk about that option or don't want to try it. Is I think a real threat to having an informed electorate and having a public policy discussion based in fact, not based in what the administration feels that the public

needs to know. I think we're in the same category as you know, secret fires are courts or weapons of mass destruction when we start embracing unconstitutional behavior based on fears of how the public will react to the truth and in terms of the coin being untested, I think we have actually quite a lot of evidence of the past decade that large scale quote unquote monetization of government

debt doesn't really do anything right. Yes, there's a few middle steps in the middle there that give the impression that this is all market mediated, but the effect is if you put the Treasury and the Central Bank together, that they're running a deficit of eight billion and they're creating eighty billion dollars of new currency or new reserves every month. Um. So if there is some catastrophic economic effect,

we haven't seen it. And nobody who who I think respect on the economics says that that would that comes naturally told pregnant says, yeah, this is economically indistinguishable from issuing debt. And I just think that, you know, constitutional behavior should not be guided by preserved delusions. So I

want to keep pressing on this question. And as I mentioned, you you actually know like how things work a little bit in d C. You have worked with some members of Congress to draft laws promoting the minting of the coin. Like I said, you're, in addition to being a scholar, sort of a policy entrepreneur. You've worked with last March during the debt, during the COVID crisis, you pushed forward

some legislation, help write some legislation on minting coins. But when you know, the White House, for example, very dismissive of the coin idea. They don't even really give it the time of day. I mean, if you were to say, like ask the Press Secretary Jen Saki, you know, like what about the coin option. My impression is they basically

just laugh it off. And I'm still like I'm trying to understand why, because I guess, on one hand, I sort of get this idea that's like, oh, we have to preserve the myth of money and how like we can't just create money out of thin air, And I get that maybe some people believe that, but it also seems like probably a prevailing view is this is just silly, We're not going to talk about this, and that their dismissal is just the sort of like this is too

silly for us to even talk about. And I'm curious what your view is like when you sort of just get these like is it really because oh they all like, you know, the White House really doesn't want to let us in on the secret of money? Or is it really just they have put much started to it, except that it's too silly for them to even contemplate and

talk about. It's like a real thing they would do. Yeah, yeah, No, I don't think that the White House is sitting there necessarily going, oh, we need to preserve these myths that's that's more the general sort of intellectual community that doesn't want to entertain this. They'll entertain all sorts of creative accounting gimmicks, will entertain all sorts of kind of extremely

tenuous interpretations of the law. And remember we're talking about the same kind of financial legal commentary at that went to town on the Fed's thirteen three emergency powers and whatever the Republicans might have come back to the negotiating table back then, when John Beano was in charge and things. I think it's a very different Republican party today, and I think even Mitch McConnell is is quite overt that he's playing a very different game and he was playing

back then. And they're probably quite willing to let the US go over that cliff. Probably not, i think, for treasury securities, for the interest on treasury debt, But I think McConnell would have no problem with a few weeks of Social Security payments and government employee payments not being made, so that there was a precedent that in the future, any debt ceiling crisis would would hurt you domestic spending but not bond holders or something like that. Um and

that that was allowed within the fourteenth Amendment. But I think the short answer is that the Democrats would prefer that the Republicans come back to the table and pass this as a matter of course, and they don't want to entertain solutions that assume that strategy has failed. We don't want to entertain that we can do this on our own, because we think this is something you should keep coming to the table and working with us on.

And you know, my god, maybe it's the last institutional norm in d C that anybody genuinely believes is going to be respected. Um, but I think, frankly it's it's a form of naivety to think that the Republicans want to come to the to the table with this and and that they won't press that nuclear button. Right, we were in a post January sixth world now, And yeah, I think there's a very obvious political Yeah, there's an obvious political calculus for the White House. I just think

it's wrong today. It might have been right inven It might have been dangerous to gamble, but they successfully gambled then. But I think with ten years later and the Democrats haven't upgraded their playbook, but the Republicans have so a related topic. Then what do you think public opinion would be like if the government did actually go ahead and decide that this was something that they were going to try.

And I mean, both you and Joe have been talking and writing about this topic for over a decade now, and there's still a ton of skepticism about it, you know, even with you know, you're mostly talking to like people who take an interest in finance and are trying to understand the logic and the rationale behind actually doing this, and it's still sort of an upwards battle. So I guess I'm just curious what do you think most people

would think about this? And then secondly, is there anything that policymakers or the government can actually do to educate about how the whole thing works? Yeah? I mean I think there's sort of two different groups of people, right. There's the economists and the economic commentators who know just enough to be dangerous, right and just enough to have strongly informed opinions that may be based on faulty premises.

And those are the ones that I was really talking about before when I talked about kind of pulling back the veil of money, right, I mean, we've been talking about m m T for a lot longer even than the coin. And there are a lot of people that still think it's dangerous to admit what is I think plainly evident to people now, which is that when it matters, there's no limit to how many dollars you can you

can create and spend. But there still a lot of people that think that that's a dangerous thing to admit out loud, and we shouldn't do it. And you know where you fall on that is probably where you're going to continue to fall if you're already an adult with a PhD in economics or you're right for financial journalism, there's a living but Um, the average person, I think I probably wouldn't even notice. They would only notice two

d extent they were told by the press. So it would be a huge question of how this gets framed, And of course it gets framed differently to different people, depending on which kind of media you consume, and it gets framed differently depending on who controls the narrative initially and who sets the term of how that debate gets Frank you know, death panels was a very powerful line,

regardless of how true it was. Um and Trump did a masterful job of dominating that the news cycle by just being more outrageous every every five minutes, so that nobody could really reclaim the prior narrative because he was onto the next one, and that was the way the

public attention went. So I think the short answer, and I sort of actually made this point in my paper, is, you know, do it on a rainy Friday afternoon, just like they do when they make an announcement about a fire, as a court you know, change, or a Patriot Act amendment or any other kind of law that they don't really want the public to notice. Do it over the weekend, and then tell everyone on Monday, you know, afternoon that

it's been done. And you know what, the markets didn't collapse and the world kept on spinning, and it's done. Now you can complain about it, or you can move on and we can get back to the really important work. And I think, you know, if they did that, there would probably be a bunch of Democrats that would complain about it for a while and then fall back in line, because the alternative of reinforcing the other sides argument is armageddon, and there'll be a bunch of Democrats that would probably

be relieved to hear this is all finally over. Think it's a little bit stupid, but say I'm glad that it's done. There would be a lot of you know, financial investors and things that would go, wow, I can't

believe they did that. But again, I'm glad that payments are going to continue to be made and finally we can kind of move on from this insanity where the most powerful economy in the world that runs a global reserve currency is constantly on on the edge of tripping over its own shoelaces and falling off a cliff to its death. You know, if you did frame it the right way, right, I think there was someone on Twitter that had a good threat of you know, they could

even write Biden speech right now. You know, I'm sick of these games. This is a dumb solution to a dumb problem. Let's move on. Let's talk about what really matters. You know, I think people are going, all right, fine, it's crazy, but no crazier than people storming the capital or an orange clown being president for four years. All right, this is this is the new normal. Let's let's move on. But again, most people aren't scouring the treasury General accounts

reports on a daily basis. They only know of this stuff if a bunch of media people told them. Let me ask, actually, like one more sort of technical legal questions. So you sort of established that the Mint creates money, the Treasury has secretaries of the discretion to create high denomination platinum coins. Are there any questions about whether there would be a dilemma or a debate at the Federal Reserve itself about whether it would be compelled to accept it.

Would it have any um agency in the question of Okay, you make an argument that it's all pretty legal, but maybe there are lawyers at the FED who would say, no, this is about collectibles. This is not about replenishing the Treasury General account. Is there any dimension from the FED side of the equation? Yeah, And then this is a good question. I think that that there's there's one thing that's important to start with, which is blustering that you that something is illegal is often a good way to

ensure that the legality never gets challenged. Right, And so the FED saying we wouldn't accept it is at this point all upside and no downside risk for them. Right, if you try to make us accept it, will say no, and then you force and then you try and they're like, okay, fine, you know, but right now, yeah, they're going to say, we don't think we would have to accept it. But

the Federal Reserve Act is actually quite clear. And again this is something that Carlos pointed out, you know, back in the original formulation of this proposal, which is that there's a statutory provision that says, in the event that there is a conflict between the Treasury Secretary and the Board of Governors of the Federal Reserve regarding any powers, you know, related to the Treasury, uh, that conflict shall be resolved in favor of the Treasury Secretary. And again

that's quite unequivocal. That's quite clear statutory language. So if the Treasury said, hey, it is my statutory responsibility to mint coins, statute says that I shall mint and issue coin or whatever denomination I want, and I decided to do this, you do not have the power to tell me that my coinage power is limited in this way. This is not a Federal Reserve power. This is a

mint power and that falls squarely within my authority. And if you think you disagree with that, well I don't care and in fact, the law and Congress said we don't care either. So that's the first thing. The second thing is that right now, the FED is the is the Treasury's fiscal agent. That is to say, it provides the accounting and payment sort of settlement services on behalf

of the treasury. So for the FED to refuse to accept a coin like this would be effectively saying, um, you have come to us to try to deposit public moneies, you know, monies, and we're saying them and we yeah, we were required to be your fiscal agent. We're crying to provide these services, but we don't want to provide this one. And I again don't think there's any justification

for that. But even before we get to kind of black letter law arguments, there's just the politics of it, which is and you can see people like Bernankee over the last decade saying we will do whatever Congress needs us to do. We will do whatever needs to be done when there's a crisis. Two thousand and eight, Right, you've got Timmy Guitner or Minution or whoever it is, huddled up with the FED chair every day on the phone hours a day, right, multiple meetings, whatever, you need,

We're standing by to accommodate and support. So if there was a moment where President Biden said, I believe it is my constitutional responsibility to avoid a crisis and shutdown, to avoid putting the public debt in question, to to avoid not spending what Congress has told me I must spend that in my powers commander in chief and head of the executive Branch, I'm directing my Treasury Secretary to to mint this coin. And the FED stands up and says, no,

we preferred de fall. Well, I think that would be incredibly dangerous for the future of Federal Reserve independence. And I think no smart FED chair would do that because they would know in that moment that if this all does go haywi, if this all does go belly up, that that's that's on the head of the executive branch. That's on the head of the President and Treasury Secretary, not on them. And this isn't Paul Volker breaking the back of inflation and standing up to those dastardly unions.

This would be the Federal Reserve Chair telling the President that they are going to force a default on the government debt in a way that is in violation of the Fourteenth Amendment. And I think again, it's easy for the FED to say it would even entertain that thought now when it's a it's a speculative fiction, speculative hypothesis.

I think if the full force of the President's office in that crunch moment were to come down that way, you would be suicidal from an institutional preservation standpoint to

get in the way, as the FED. M I have one more big picture question, which is, you know, you described this as a dumb solution to a dumb problem, and I guess I'm wondering if the idea of solving absurdity with more absurdity, if that kind of poses a risk, or if there's a slippery slope there, And you know, again with your legal expertise up, I'd be curious to

get your thoughts on this. But one of the criticisms of the Trump administration was that they ignored all these previously established norms and what they were doing might not necessarily technically be illegal, but it certainly wasn't the way that the founding fathers of America had thought that UM laws and rules and things like that would be applied.

So again, like I'm curious the platinum coin discussion. Yes, it might be legal, but I don't think anyone who set up the laws around minting coins generally, as you laid out earlier, was necessarily thinking that this was a way to solve restrictions on the government budget. So I

don't know. I guess the question is, like, does this open the door to having a regime where you know, whoever can come up with the most technical, absurdist accounting loophole kind of wins the day, and you know, maybe this gets undone in four years time when someone else comes up with like a new way to apply restrictions on debt or minting coinage or something like that. I forget which economist it was who famously said it takes a theory to be a theory, but one way to

think about the coin. And we talked about this on this other podcast, Money on the Left with the a podcast with Nathan Tankas and I about the coin a few years ago. Um, if we take out the word theater and we replace the word ritual, then it starts to sound a little bit less crazy. And one of the reasons I love the coin is someone that used to be an elementary school teacher. Is it's something kids

can understand. It isn't this hyper wonky technical treasury debt auction, eleventh dimensional chess bond holders and all these steps that nobody can understand, which to me has a tinge of anti democratic, technocratic elitism. That we stamp a coin the coin has the face of dead presidents and it's worth as much as we say it is because that's what the law says. Is something I can teach to a seven year old and it has the benefit of being true.

If we do have to replace the ritual we have today with another ritual, then you know, putting putting the coin in the hand of a five year old calling the future of America and walking it from the mint to the Fed maybe is a better symbol for one century fiscal politics than you know, the primary dealer system and the Federal Reserve backing up the secondary market with repo and reverse repo operations and things. Um, that's a very kind of Larry Summer's deregulation of derivative metaphor to me.

And of course we're at a point in history when a huge amount of the public is being introduced to monetary politics through the metaphor of digital coins, right, one of other Joe's one of his other you know campaigns around doge coin. You know, we we meet, we create coins all the time. Now, this idea of coinage been kind of forgotten, was true twenty years ago and increasingly less so now, not because the government has revived coinage,

but because private actors using cryptographic techniques of revived coinage. So, you know, one of the things I in my paper on is maybe we should have a kind of you know, resurrection of of coinage and re centering of the mint in our fiscal politics as a way to kind of reset the board and make things no more complicated than they need to be so that average people can get

in on the game. Sociologist Jacob Finding, a friend of mine, has this great line that he uses this great term which he calls monetary silencing, and he says, whether it was the Founding father Revolutionary era, or Andrew Jackson and the Bank of the United States, or Lincoln and the green Backs, or William Jennings Bryan and the populists, or you know, Wilson and the Federal Reserve or f DR and the floating of the dollar, or Nixon and the

floating of the dollar. That monetary politics have been at the center of the American political experiment since the start, and we go in way eaves where monetary issues sort of come to the forefront and then recede back and come to the forefront and recede back. Um. And this is a moment where whether it's crypto on one hand, or central bank digital currencies or this debt ceiling crisis,

that monetary politics are coming back to the forefront. And and one way we can do that is with a form of monetary silencing where we tell average people this stuff is all too complicated for you. You're dumb, you shouldn't understand this stuff. This is for people who are smart and who have degrees in finance and economics and macroeconomics, um. And we tell average people that this is not a space for them to have opinions, or we try to

make it accessible to people. We try to tell stories and build institutions that you can understand, like people carry a pocket constitution around. And I think that's that's the pedagogical and symbolic and ritualistic element of the coin. And in my opinion, now it's no more silly than judges wearing robes rolland there a great place to leave it.

And you know, I said at the beginning that I was a fan of believer in the coin of Solution, and I am even more so by a high degree of believer in the coin solution after talking to Thank you so much for coming on, od Love, Thank you so much for having me as a pleasure. Thanks Ron, that was really good. All right, So are you a coiner now? I am maintaining my journalistic integrity by not taking sides and continuing to monitor and describe and write

and think about this in a neutral way. That's a total cop out question, but it Ruined laid out a really rational explanation of how this would work, why you would do it UM, And I think his is probably like the most convincing explain nation that I've heard UM

over the past ten years or so. But on the other hand, part of me is just screaming inside that, like, there must be another way and why can't we just do this like normal people rather than go down a route that you know, I know it's serious now, and I know it was grounded in serious UM discussions and thinking about MMT in the nature of debt, But I really don't think it's started in a serious manner, and I'm not entirely sure people thought or intended it to

get this far. And yet, nevertheless, because of everything that's happened in recent times, here we are talking about a trillion dollar platinum coin being the solution to politicians in d C not being able to get their act together and play ball in a fair way in order to you know, benefit all of the United States. It's all, it's all crazy, and I kind of hate it. So, I mean, obviously, like I said, it was found it

very convincing. But what beyond that, Like, what I really found extremely compelling was Okay, yes, the coin is silly, it's weird. You know, we all sort of agree with that. But actually the number of serious ideas that Rowan brought up there, sort of like bolster the legal and philosophical case, I was like truly impressed by that and thinking about, you know, the fact that although it's much smaller, that the mint is a source of senior revenue for the Treasury,

or thinking about these sort of like institutional relationships. He put it at the end, you know, why can't we change the rituals to make the more accessible somehow in the coin conversation there is actually just like really profound and important uh questions that gets sussed out from having it, and so I was I was really happy to hear them fleshed out. Well, this was your initial framing of

the coin debate. I think you said it was like the most important UM fiscal policy discussion ever UM, which a lot of people thought was hyperbole, But your point was because the discussion was about the nature of money. And again that's something that that Rohan talked about, and it's one of the reasons I asked him about what

he thought the public reaction might look like. I have to say, like, maybe I spend too much time on social media, but Rohan probably is a lot more optimistic about how people would react to this, or the ability of people to sort of think logically and rationally about it UM than some other people might be. But it's an interesting experiment and like it's definitely one of the more interesting discussions that we've had in a while. Well, I guess hopefully, I don't know, I really want to

see it happened. Other people would say, yeah, this is the thing, Like can you hope for it to happen like, because then that means that, okay, all right, yes, I to see it happened all right. Well, you know, by the end of the month you might have your answers. So I guess the good news is you don't have to wait too long. Should we leave it there? Yeah, let's leave it there. Um. This has been another episode of the All Lots Podcast. I'm Tracy Alloway. You can

follow me on Twitter at Tracy Alloway. And I'm Joe Wisenthal. You can follow me on Twitter at the Stalwart. Follow our guest on Twitter, Rowan Gray. He's at Rowan Gray, and you should definitely check out the paper that he has written on the subject, extremely thorough, very clear. Follow our producer on Twitter, Laura Carlson. She's at Laura M. Carlson. Followed the Bloomberg head of podcast Francesca Leavi at Francesco Today, and check out all of our podcasts at Bloomberg under

the handle at podcasts. Thanks for listening to