Somewhere, buried deep in London and Edinburgh, they lie, in locked boxes that are in locked boxes, in climate-controlled vaults. Sometimes they are moved from one vault to the next, down a corridor, attended by a phalanx of guards. They dwell in the netherworld. They are … the Titans. They are … Scottish banknotes.
Yes, deep in the bowels of, oh well I said that bit, look, here’s the weird thing: somewhere in the British banking system there’s a number of one hundred million pound notes. Not a hundred notes of a million pounds each (though there’s those too), but a number of notes with a denomination of 100,000,000 pounds each.
There’s forty of them in existence. Their purpose? Scottish and Northern Ireland pound notes are issued by seven separate banks, with different designs on each (try spending them at any London pub being tended by a Polish barmaid who just got off the coach from Wrszyczyrlsz and see how far you get). So they have to be backed by physical notes.
No one outside the bank knows what they look like and no one from the bank will say anything about them. Some people say they’re printed up like old fold-up UK five pound notes. Others say they’re just computer printouts. Are they moved around? They used to be, but may no longer be so.
And before you fire up that Final Draft screenplay software — that was money well spent wasn’t it — for a caper comedy about a bunch of lovable misfits who hatch a crazy plan to heist a Titan and find that the only thing they steal is each other’s hearts, hold off because: a) I’ve already written it down and b) there’s a great Ronald Neame/Gregory Peck movie called The Million Pound Note on the same thing.
Now it may have a sequel, with suggestions that President Obama should issue a trillion-dollar coin. The proposal — initially humorous, now taken with increasing seriousness — is a bizarre response to the next stage of the ongoing US financial crisis. Casual viewers may have been under the impression that the “fiscal cliff” of $110 billion in automatic cuts and tax rises (or “sequestrations”) had been staved off by a deal between Obama and a deeply reluctant Republican House majority.
So it had, but only for two months. The bill that passed the House had been preceded by a bill in the Senate, passed 89-8, which created a deal to delay the sequestration for two months, thus delaying the awful moment when the Republicans had to vote for tax increases to multi-millionaires. However, the rescheduling of sequestration talks coincides with the debt ceiling coming round again.
Remember the debt ceiling? It’s the pointless limit Congress put in place during the First World War that would allow them to make one vote on government borrowings — and authorising the President to do the actual borrowing — rather than successive votes that would make them look profligate. The ceiling has been raised hundreds of times since — until last year, when the Tea Party caucus among the Republicans used it as a rallying point.
Since the number was eye-watering — $14 trillion — it was easy for them to grandstand to the general public about out-of-control borrowing by the Muslim-Weatherman government. The Republican leadership eventually lifted the ceiling, but not before the kerfuffle caused the credit rating of the USA to be downgraded. That was widely seen as a disaster for both Obama and the Republicans at the time. However, after Obama’s re-election, it is the GOP House leadership that is wearing the blame for anything that goes wrong.
“That’s not statesmanship, that’s a Wizard of Id strip, and I doubt that Obama will go for it.”
There was talk, at the time of that showdown, that the President didn’t need the vote. Instead he could use the 14th amendment, section four — “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned” — to override Congress. But that is not watertight, and would go to the Supreme Court.
The trillion-dollar platinum coin is, bizarrely, a more straightforward option. In the 1990s, a law was passed allowing the Treasury to issue coins of irregular denomination in platinum, for commemorative purposes. The most popular have been the American eagle platinum bullion coins, with a face value of up to $100. They’re legal tender, though try spending … actually most Americans would accept a photocopy of money as legal tender.
Since the intent of the law was purely to create a commemorative coin earner for Treasury — like issuing government bonds — no denomination ceiling was ever placed on the coins. So Treasury can now use them to expand the money supply. Issue a trillion-dollar coin, deposit it in the Treasury account of the Federal Reserve, and pay down a trillion of debt with the coin as backing.
To say that the idea is a little Leftfield would be an insult to tiresome electronica — the platinum coin idea was first floated on the whacky Caifornia liberal site Firedoglake, at the start of 2011. The last go round everyone was focused on the 14th amendment option. Democrats and liberals who despaired of Obama’s cautious approach before the 2012 election had wanted him to assert his power in relation to Congress in that fight and were dismayed when he ducked it.
Given his subsequent victory, some are a little more circumspect now — but others believe that the President now has a free hand to do what he likes, at a time when the Republicans are beaten down and seen as intransigent, negative and divided. Paul Krugman has been the most vocal of a range of people arguing for the coin option, arguing that it would be a very visceral demonstration of the foolishness of those who argue that expansion of the money supply would be inflationary.
Indeed, he seems to suggest that the very materiality of the coin would expose the occult ideas of the austerity freaks who have created a liquidity trap that has kept the US in recession.
However, Krugman’s appears to be a minority opinion. The move may still be unconstitutional — it’s argued that the platinum minting law was always an unconstitutional delegation of powers, but was never challenged because the matter was too minor — but more importantly it may breach what your correspondent likes to call “the Heath Robinson principle”.
The Heath Robinson principle, after the well-known machines, states that no new product, strategy etc will succeed if the machinery is more visibly complex than previous versions, even if it is more efficient. This principle has applied so far to electronics, exercise equipment, laptops and prosthetics, and it would certainly apply if the man with the nuclear codes was to mint a coin to save the economy.
That’s not statesmanship, that’s a Wizard of Id strip, and I doubt that Obama will go for it. Which is a pity really, not merely ‘cos the existence of the Titans means that it would not only be possible to spend the coin but that you could also get change. And of course there’s the scene where Joe Biden accidentally gives it to a panhandler, and in getting it back, learns how the real America live.
“My fellow Americans,” he tells a tearful Senate, “there’s only one side to this coin, and that’s people. People are both sides of the coin.” Tell me that isn’t a Chevy Chase comeback …