Question of the Day|
If the Fed created a single coin worth one trillion dollars to help the federal government bypass the debt ceiling and continue spending what should be on the coin?
What should grace such a magical coin?
Part of the Caroline chain of islands Yap was first a colony of Spain before Germany took control. The island had many unique qualities, including its people, dress, caste system, and money. In fact, to this day Yap (now part of federation of Micronesian countries) is probably best known for their currency and scuba diving.
The good folks of Yap use stones ranging in size, up to 12 feet in diameter as money. These circular slates were brought in from surrounding islands, often on makeshift rafts and small boats.
Legend has it, 500 years ago after getting lost at sea a group of fisherman from Yap washed up on the island of Palau where they found themselves on the beach staring at giant slabs of shimmering limestone. They chipped off pieces in the shape of whales and returned home. Sparked by high demand the fishermen made more trips, got better at mining the stones and even figured out putting a hole in the center would make them easier to transport.
There was a period when an enterprising Irishman mined Palau and flooded the market but his coins (around 6,800 of them are currently in existence) are worth much less than older coins mined the old-fashioned way. The stone coins called Rai often aren't even moved as some are so large it takes up to 24 men to get them off the ground. In fact the honor system is such that once a giant coin sank to the bottom of the ocean in-transit but is still considered in the possession of its owner.
Other forms of day to day currency include:
Mortars & Pestles
Small twine of Pearl Shells
Longer twine of Pearl Shells (botha-ayar)
Large Single Pearl Shell (Yar-nu-berchrek)
Banana Fiber Mat (Umbul) note the art of creating these lost years ago so rarely exchanged
Large Red Shell (Thauei)
Typically economic activity between natives and traders was done with ripe coconuts. In the book The Island of Stone Money it was said the price of a large pilot biscuit was three coconuts, while a stick of tobacco with a box of Japanese safety matches set a native back six coconuts.
Island of Nuts
I bring up the island of Yap because somewhere near there must be an island of nuts (not the kind that grow on trees) where a new leader has emerged. Rep Jerrold Nadler has suggested the Federal Reserve be compelled to create a platinum coin valued at $1,000,000,000,000 and hand it over to Treasury.
Citing the fact the Fed can coin money as long as it's not gold or silver, the coin would give the federal government enough money to spend to its heart's content. Since it would be given to Treasury there would be no debt involved, making the debt ceiling debate moot.
He's also suggested the White House use the Fourteenth Amendment which says the public debt "shall not be questioned."
As ludicrous as the coin idea is, the fact is we aren't that far from such an arrangement already. Right now the Fed prints money from a magic machine and mystical rights and hands it over to the Treasury in return for bonds (IOUs). These bonds pay interest to the Fed which takes them in as profits and hands them back to Treasury. This merry-go-round keeps going on forever- or could it? Currently the Fed's balance sheet is so stretched several laws of economics have been challenged. There is no way this can continue.
In many ways we should thank Rep Nadler; he only expressed a kind of nutty idea about endless printing and the removal of laws (which includes ditching the Constitution) both man-made and based in nature. One thing is for sure, there are going to be more money grabs, more spending and more lunacy all in the name of a giant government and the old notion of socialistic utopia. We keep hearing how we're all in this together, but we are more like one big sinking ship with just one small emergency boat left to save everyone; this takes on a different meaning.