Trillion Dollar Coin

Trillion Dollar Coin

Ellen Hodgson Brown is a monetary-reform advocate. Per her website:

[She] developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book [updated January 2012], she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Brown developed an interest in the developing world and its problems while living abroad for eleven years in Kenya, Honduras, Guatemala and Nicaragua.

Her perspective is different from but compatible with Modern Money Theory (MMT). She writes extremely lucid articles that include a lot of historical (class-warfare) aspects of monetary policy.

Her latest article, The Trillion Dollar Coin: A Debt Solution for the People, was posted yesterday (1/17/13) at YES! Magazine. I consider it the best article yet on Platinum Coin Seigniorage and its continuing significance in our on-going class struggle:

[I]n 1862, President Abraham Lincoln boldly took back the power to create money during the Civil War. To avoid exorbitant interest rates of 24 to 36 percent, he decided to print money directly from the U.S. Treasury as U.S. Notes or “greenbacks.” The issuance of $450 million in greenbacks was the key to funding not only the North’s victory in the war but an array of pivotal infrastructure projects, including a transcontinental railway system.

After Lincoln was assassinated, however, the greenback program was quickly discontinued. Repeated popular attempts by farmers and laborers to revive it failed. They were opposed by a wave of banker activism to maintain the banks’ control over the printing of money, which had been established by the National Bank Act of 1863.

In 1872, New York bankers sent a letter to every bank in the United States. The letter, as quoted by Lynn Wheeler in Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920, read in part:

Dear Sir: It is advisable to do all in your power to sustain such prominent daily and weekly newspapers…as will oppose the issuing of greenback paper money, and that you also withhold patronage or favors from all applicants who are not willing to oppose the Government issue of money. Let the Government issue the coin and the banks issue the paper money of the country. [T]o restore to circulation the Government issue of money, will be to provide the people with money, and will therefore seriously affect your individual profit as bankers and lenders .

Bank-created money, including paper bills and now electronic money, could be rented to the people at a profit. The people’s debt-free money was limited to coins, which today compose less than one ten-thousandth of M3, the broadest measure of the money supply.

Lincoln’s assassination and the abandonment of debt-free greenbacks marked the exchange of physical slavery for what has been called “debt peonage” or “wage slavery.” Today, as a result, the American government and American people are so heavily mired in debt that only a radical overhaul of the monetary system can free us.

The point is that the only money directly issued by our federal government are coins; all paper money and electronic money is issued by the banking cartel led by the Federal Reserve. From the above quote, it is clear that for more than a century there has been a bankers’ conspiracy to minimize the amount of government-issued money that interest-bearing bank money must compete with by confining the government to the issuance of coins. But, 31USC5112(k) is a gaping hole in their plot because it allows the government to issue coins of unlimited denominations:

The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

Is it any wonder that most financial journalists are denigrating platinum-coin seigniorage as “silly,” “weird,” “juvenile,” “unserious,” “dangerous,” and “inflationary.” The bankers who understand what Ellen does are scared shitless of PCS. If you’re at all interested in this stuff, read her article.

UPDATE: Here, from Ellen’s article, is some interesting history the idea of using Platinum-Coin Seigniorage as an alternative to borrowing:

The idea of minting large-denomination coins to solve economic problems seems to have first been suggested by a chairman of the Coinage Subcommittee of the U.S. House of Representatives in the early 1980s. He pointed out that the government could pay off its entire debt with some billion-dollar coins. The Constitution gives Congress the power to coin money and regulate its value, and sets no limit on the value of the coins it creates.

That may have been true then, but in legislation initiated in 1982, Congress chose instead to impose limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes.

[...]

Philip Diehl , former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender: “In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8).”


Photo from DonkeyHotey licensed under Creative Commons