I usually don’t read Mike Kirchubel, but his Jan. 28 column, “A trillion-dollar coin makes cents,” caught my eye. The basic idea was to mint a few trillion-dollar platinum coins to exchange for currency (then spent); saving huge gobs of interest expense.
He wrote that a number of economists have recommended this solution but neglected to mention any of them by name. In economics class, he apparently slept through the explanation of what “full faith and credit” means. The world does not revolve around the Federal Reserve. The interest payments he quotes are for our entire federal debt.
Who are we going to “stiff” with the platinum coins? Who do we owe? It’s about equally divided among three categories, with a little more than $5 trillion to each: foreign investors, American investors and internal debt (Social Security, Medicare, Social Security Disability, etc.).
The one area where the coin thing might work is internal debt. We have already stolen the money. We might as well admit it and say, “Tough luck old folks and you disabled. Maybe we can continue to pay you your benefits. Maybe not. We don’t owe you anything.” This is Mike’s proposal.
What are the consequences of giving valueless coins to foreign and domestic investors in place of interest payments? The same as default. Giving a worthless coin in place of interest payments would damage the dollar beyond repair in world markets. To deny domestic investors would create havoc and would cause widespread business failures and personal financial disasters. If everyone were asked to “cash in” their on-demand coins, what would they get? Back to square one.
As long as we are going to “stiff” everyone, there really isn’t any point in wasting money on platinum. I suggest we save money by printing a trillion-dollar bill. Just as Zimbabwe did. Instead of having Ronald Reagan’s picture on it, I suggest we use Mike Kirchubel’s image.