The blockheadchain

You may wonder why the Democrats are so worried about increasing the debt ceiling since they need no GOP votes to do it. Are they embarrassed about their insistence that spending $3.5 trillion is costless?

Who knows?

The Dems do have a Plan B. There are some ifs:
If mining and refining an ounce of platinum doesn’t release so much CO2 that AOC will be brought to tears.
If Ilhan Omar and Rashida Tlaib don’t associate platinum with Joos.
And if Liz Warren isn’t afraid that platinum jewelry competes with Navaho silver workers.

The proposal is to mint a one trillion dollar platinum coin. Here’s an artist’s conception:

You’ll note it’s a bit composition challenged. Making the font smaller and shrinking the eagle would be even worse.

People wouldn’t understand ‘$1012‘.

The coin artists could always make the coin bigger, of course, so even a relative 4 point font would be legible. More on that later.

When I first became aware of this idea (it’s been mooted since the 2011 debt ceiling kerfuffle), I wondered if I should put my plans to acquire majority control of Apple on hold and just get a trillion dollar coin instead.

There turn out to issues with this. Even aside from the fact that Apple’s market cap has gone from $400 billion to $2 trillion since 2011, and that a 2011 trillion dollar coin would now only be worth $880 million after inflation.

Here are some of those other complications:

The US Mint is currently selling a 1 ounce proof platinum coin with a face value of $100 for $1,545; while, as I write, the market price for an ounce of platinum is around $980. That Mint premium is partly because of numismatic value, but arises mostly from the monopoly the Mint holds. What the market will bear.

At that Mint proof to spot price ratio, the trillion collar coin would cost $1.58 trillion.

For comparison, the Mint wants $2,690 for a 1 ounce gold proof coin when today’s spot price is around $1,760. So, a trillion dollars in gold, at market value, would be about $1.52 trillion if purchased from the Mint. This seems a better deal to me, but there’s a problem with that, too. The United States government does not possess a trillion dollars in gold.

The United States holds 261,498,926 ounces of gold, which it values at $42.222 per ounce (Go figure. They value trans pronouns higher than that.), or a little over $11 billion ($11,041,059,957).

To buy the entirety of US gold reserves at today’s spot (market) price would set you back almost $460 billion ($459,976,611,258). And even marking it up at the Mint’s level, say 150% assuming a volume discount, you only get to $690 billion. (As an aside, can you think of people who could leverage 51% of this? Bezos? Zuckerberg? Soros?)

Anyway, as the Dems figure these things, the United States could sell all its gold reserves and make up the other 30% phantom borrowing in increased taxes… at zero cost. All we have to do is convince the rest of the world we have a ‘trillion dollar’ coin.

One advantage of the trillion dollar proof platinum coin over the equivalent in bullion is that it would be much easier to store. But there’s still a $310 million premium over gold unless you count having to also buy Fort Knox to store the gold.

Counting against the platinum coin is that it probably would not retain its uniqueness for long. I think they won’t be able to stop with just one.

Also, we’ve had platinum coins for a long time and I don’t think they are glamorous enough to command such a premium. I do think some more exotic metal would help the price for the proposed coin. Palladium is out because the Mint already does that.

What about Iridium? The novelty would add value. And it’s in the $5,000 an ounce range. Still, maybe not enough.

For real novelty, something like roentgenium might do. Like platinum, it’s expected to be solid at room temperature. We’ve never had enough atoms to be sure. This would make minting a trillion dollar roentgenium coin as difficult as making change for it.

And… the US Mint personnel might raise an OSHA complaint. Roentgenium decays through spontaneous fission, and its most stable isotope, roentgenium-281, has a half-life of about 26 seconds. I’m not saying that the short half-life doesn’t have some advantage. Any coin that clips itself is a boon to the rate of inflation needed to ‘pay off’ our debt.

So, maybe some transuranium element that’s less deadly and with a longer duration – but still takes a lot of power to produce. For transuranium elements that power usage is “proof of work” (the Bitcoin value proposition) – on the order of millions of dollars per milligram. But opposite to Bitcoin, massive inflation would be built in.

A coin made from fermium-257 would have a half-life of less than 102 days. Mendelevium-256? 77 minutes. The material used would depend on the Fed need to inflate the national debt away.

Maybe the Treasury should create a trillion dollar Non-Fungible Token. A unique picture of the decay of a few roentgenium atoms in the cyclotron. The non-fungible bit might be a problem, however. Money has to be fungible, or it isn’t money.

Since the Dems don’t have my imagination, back to buying one of the trillion dollar coins. Again, I wonder, why stop at $1 trillion?

I think the paper solution is out because the Treasury is prohibited from emulating Zimbabwe. That’s what the debt ceiling means. For a discussion of why the Modern Monetary Theorists are saying the Mint should do it, see here. It discusses why the MMT theorists insist a $1 trillion coin would have to be a proof coin, not bullion. It’s still not legal, but it makes practical sense: Beyond the legal issues, platinum bullion coin(s) would cost a trillion dollars to mint, and would present a bigger storage problem than gold.

I’m thinking the US platinum trillion dollar coin is worth twice the current $985 spot price for a 1 Troy oz platinum ingot. It’s gotta be proof quality and it’s certainly a collectors item, so that adds 50%. And round up to the nearest thousand.

That would still be a smaller percentage premium (some number divided by zero) than I paid for my Zimbabwe $100 trillion dollar bill, and there supposedly is going to be actual platinum in the coin the Democrats are toying with. There’s been inflation since Zimbabwe’s effort, and my bill might be worth nominally more than I paid. I could hope that happens with the US effort.

A trillion dollar bullion platinum coin should sell at a steep discount for storage difficulties. That new coin would weigh around twice as much as all the US gold reserves, claimed to be around 8,000 tons.

A platinum bullion coin could be like several dozen of the largest Yap Island Rai stones. The Yap money has collectible value, here’s a small (40 pounder) for $14,000. That’s about $22 an ounce. The largest Rai stone weighs about 4.5 tons and is around 12 feet in diameter.

A trillion dollar bullion platinum coin would weigh… a lot more.

Maybe I should stick with the plan to acquire Apple.

Which clueless totalitarian are you?

We need a Facebook quiz to find out which Atlas Shrugged character Alexandria Ocasio-Cortez is like.

There might not be a match. Ayn Rand’s fiction has been criticized for unidimensional characterization, but even she would find AOC unbelievable.

Here Are The Most Shocking Proposals From Ocasio-Cortez’ “Green New Deal”

Ocasio-Cortez doesn’t provide any insight into how the trillions of dollars in spending will be paid for other than claiming, “The Federal Reserve can extend credit to power these projects and investments and new public banks can be created to extend credit”. But as Ocasio-Cortez says, “the question isn’t how will we pay for it, but what will we do with our new shared prosperity”.

Provide free, mandatory classes for every citizen in speaking ‘Venezuelan?’

(Update, 12:48PM here‘s one estimate of the cost.)

Here’s a snippet from an FAQ document, published by proponents, describing the wonders of the ‘Green New Deal:’

Yes, we are calling for a full transition off fossil fuels and zero greenhouse gases. Anyone who has read the resolution sees that we spell this out through a plan that calls for eliminating greenhouse gas emissions from every sector of the economy. Simply banning fossil fuels immediately won’t build the new economy to replace it – this is the plan to build that new economy and spells out how to do it technically. We do this through a huge mobilization to create the renewable energy economy as fast as possible. We set a goal to get to net-zero, rather than zero emissions, in 10 years because we aren’t sure that we’ll be able to fully get rid of farting cows and airplanes that fast, but we think we can ramp up renewable manufacturing and power production, retrofit every building in America, build the smart grid, overhaul transportation and agriculture, plant lots of trees and restore our ecosystem to get to net-zero.

Maybe “our new shared prosperity” will pay for little solar-powered methane suction devices attached to the rear of every cow.  “Methane Disposal,” you ask?  Well, we just inject it into the natural gas supply lines…  Oh wait, natural gas will be banned.

OK.  More likely, the cow problem solves itself when meat and milk are banned.

This manifesto attracted so much ridicule that they tried to disappear it from the internet. They forgot the internet is forever. It is humorous reading.

This great leap forward is on top of universal free college education and medicare for all. So, they desperately need the tooth fairy, Santa Claus, King Midas, and the Pope (for divine intervention).

What they’ve got is Modern Monetary Theory:

MMT Sounds Great In Theory, But…

If you haven’t heard about Modern Monetary Theory your IQ is higher than it would have been if you had. It is really neither modern, nor a theory (it’s not actually testable*); and it misapprehends the meaning of the word ‘monetary.’ However, it could be in your future as a general government policy.

This theory of infinite currency printing does not admit to being limited by inflation. Any excess currency is simply taxed back. Inflation is something that cannot happen with a proper implementation of MMT.

Proper. Implementation. By the ‘best and brightest.’ Like Ms. Ocasio-Cortez.

MMT has an obvious attraction for politicians. We’ve been playing at the edges of it for quite some time.

Let’s close with a last word from Ocasio-Cortez on the “Green New Deal”:

“I think one way that the right does try to mischaracterize what we’re doing as though it’s like some kind of massive government takeover. Obviously it’s not that because what we’re trying to do is release the investments from the federal government to mobilize those resources across the country.”

Obviously! Release! Investments! Mobilize! That explains the whole thing: She’s hired a fluent Newspeak expert. ‘Obviously’ means, “If you don’t understand, it’s because you’re stupid.” ‘Release’ means, oh, I don’t know, “the vast Federal budget surplus being held hostage by Trump’s wall proposal?” ‘Investments’ means, “Impossible government spending.” ‘Mobilize’ means, “At gunpoint.”

*Proponents will say, “It is testable, but it’s never been tried.” Well, that’s what they say about Communism, too. But, let’s even ignore the actual workings of an economy and admit that MMT depends on the refined judgment of virtuous politicians zealously balancing currency flow. And if you imagine that can be accomplished, you run into an even bigger problem: To do their job, these paragons also have to possess instant, encyclopedic, perfectly accurate information about every aspect of that economy.