Speaker 1: Hello, and welcome to another episode of the odd Locks Podcast.
Speaker 1: I'm Joe Wisenthal. Unfortunately, my colleague Tracy Elloway is off today,
Speaker 1: and I say it's unfortunate because a it's always unfortunate
Speaker 1: when she's off, but be today we are going to
Speaker 1: be speaking about her favorite topic, which is minting a
Speaker 1: trillion dollar coin. Being a little facetious about that, I'm
Speaker 1: not it is her favorite topic, but that big said.
Speaker 1: A few weeks ago, we interviewed Rowan Gray, assistant professor
Speaker 1: at well LAMTT Law School, and she definitely came away
Speaker 1: from this topic. I would say more coin curious coin
Speaker 1: pelled open to the trillion dollar coin idea than she
Speaker 1: had been. For anyone listening today, I would definitely suggest
Speaker 1: listening to that conversation first. And it's about this idea
Speaker 1: that were we to get into a debt ceiling impass
Speaker 1: that there is a statute in the law that says that,
Speaker 1: in theory, the Treasury Secretary of the Treasury can mint
Speaker 1: proof platinum coinage and people have argued, including Rowan, that
Speaker 1: this would allow the government to continue financing even in
Speaker 1: the event that it isn't allowed to take on more debt.
Speaker 1: So again, I would encourage everyone to listen to this,
Speaker 1: but it's a big topic and so in the m
Speaker 1: In the meantime, the dead ceiling question has been punted
Speaker 1: to December. They got ten Republican votes to essentially go
Speaker 1: for about two more months, so the question isn't going
Speaker 1: away in the meantime. Since then, we've also heard Secretary
Speaker 1: of the Treasury Jenny Yellen go on National TV and
Speaker 1: dismissed the coin idea again as a gimmick. Still there
Speaker 1: is opposition to it. Nonetheless, it is still important, and
Speaker 1: I think we're going to get to a point in
Speaker 1: this member where I'm not predicting the colina will be minted,
Speaker 1: but I do think we will come up against another
Speaker 1: deadline again and the question will not go away. It
Speaker 1: will it will again be tight of what how this
Speaker 1: is going to get raised and how the US will
Speaker 1: avoid a possible default. So I am very excited to
Speaker 1: do a follow up because we have two guests today.
Speaker 1: So we have rowing his back, Rowan Gray, Assistant Professor
Speaker 1: Lammet Law School, the foremost legal authority or the has
Speaker 1: written extensively on the coin and extremely excited that you know,
Speaker 1: we have as our guest Philip Deal, who is the
Speaker 1: thirty five head of the U. S Mint, and he
Speaker 1: was ran the U S Mint from two thousand and
Speaker 1: was one of the drafters essentially of the legislation that
Speaker 1: allowed for the platinum coin. He's currently the President of
Speaker 1: the US Money Reserve. So we don't have to spare
Speaker 1: alculate on what the intention of the thinking of the
Speaker 1: creators of this law were intending, because we have the
Speaker 1: actual one of the creators here right now on odd lots.
Speaker 1: Very excited to bring both of those guests, Rowan and Philip.
Speaker 1: Thank you so much for joining us. Thank you for
Speaker 1: having me my pleasure. Philip, This is a real treat because,
Speaker 1: you know, I feel like often, you know, whether as
Speaker 1: we're talking about some constitution or something, we are like
Speaker 1: forced to wonder what was going on in the mind
Speaker 1: of the person of a person who has involved in
Speaker 1: the drafting of this thing that's become very controversial. So
Speaker 1: it was a real treat to have you. Obviously, multiple
Speaker 1: people may have been involved in writing this law, but
Speaker 1: it is a real treat to have you on. But
Speaker 1: before we do that, before we really get back into
Speaker 1: the law itself, I want to just talk about mechanics.
Speaker 1: For a second, Let's imagine in some world yell And
Speaker 1: is forced to mint the coin, the trillion dollar coin. So, yeah,
Speaker 1: what happened as the speaking as the former director of
Speaker 1: the U S Mint, if you get the call we
Speaker 1: have to mint the trillion dollar coin to avoid a
Speaker 1: dead ceiling fiasco. Why do you look, Walker is through? Like,
Speaker 1: what would happen operationally at that point, Well, almost certainly
Speaker 1: what would happen is there'd be preparation before the order
Speaker 1: came down, and the order would come from the Secretary
Speaker 1: of the Treasury, and of course that will have been
Speaker 1: discussed with the President, probably with the Chairman of the
Speaker 1: Federal Reserve, and it'll all be set up. So before
Speaker 1: the order came down, there would be preparation in order
Speaker 1: to make sure that the coin was struck at the
Speaker 1: last minute and could be transported to the Federal Reserve
Speaker 1: and arrive on time before the dead limit was hit.
Speaker 1: So the way that would happen is a decision would
Speaker 1: have to be made on what the coin design would be,
Speaker 1: because a mold will have to be produced, and then
Speaker 1: that mold will be converted to another mold, and then
Speaker 1: a die will that will be used to strike the
Speaker 1: coin will be produced, and so there's a number of
Speaker 1: steps that have to be done. Now, undoubtedly they'd want
Speaker 1: to short circuit this process as much as possible, and
Speaker 1: already in fact created by this coin by this legislation,
Speaker 1: is the Platinum American Eagle, and they would take the
Speaker 1: one ounce coin design and all they'd have to do
Speaker 1: is replace one trillion dollars trillion spelled out, not with
Speaker 1: all the zeros, and replace one hundred dollars on the
Speaker 1: obverse of the coin. And that would be a very
Speaker 1: simple and straightforward alteration in the current design of the coin.
Speaker 1: And then those molds would be created and the dye
Speaker 1: would be carved, and then everything would be prepared. Once
Speaker 1: the order came down, a blank, a platinum blank, one
Speaker 1: ounced blank would be taken off the shelf and west
Speaker 1: point where the platinum Eagle is struck, and it would
Speaker 1: be struck multiple times, and that coin at that point
Speaker 1: will be minted. From West Point, it would could be
Speaker 1: flown by a helicopter to the Federal Reserve Bank in
Speaker 1: New York, and the moment that coin is accepted at
Speaker 1: the Federal Reserve, it registers as a trillion dollars in
Speaker 1: what is called senior ridge. Your your sense of the timing. Okay,
Speaker 1: so if you established they have the blanks, the only
Speaker 1: thing they really they don't even have to put all
Speaker 1: the zeros on the coin and they literally just have
Speaker 1: to write it on one thing. What is in your sense?
Speaker 1: I think I saw you give a brief interview with
Speaker 1: Actually you think this could all be done in the
Speaker 1: span of a few hours. Yea, So well, assuming that
Speaker 1: all of the preparation, the changing of the design very simple,
Speaker 1: the molds and then the carving of the doe die
Speaker 1: is done several days beforehand, and that might take a
Speaker 1: few days of preparation. At that point, once the order
Speaker 1: comes down that that blank goes into the press, it
Speaker 1: struck and transported to the New York Federal Reserve. And yes,
Speaker 1: that's a few hours. It's absolutely extraordinary. The the idea
Speaker 1: that like money, you know, could be created like this,
Speaker 1: and I think like one of the things, and you know,
Speaker 1: talking to both of you Rowan and Philip, is things exist.
Speaker 1: We still use them, use quarters of fair amounts. Sometimes
Speaker 1: people will find them annoying. Sometimes people talk about things
Speaker 1: like phasing out the penny, etcetera. It feels like in
Speaker 1: the modern discussion about money, there's just very little talk
Speaker 1: about you know, we talked about the FED printing money,
Speaker 1: or we thought talked about QUI or these theoretical concepts,
Speaker 1: But in the modern discussion of money, there is just
Speaker 1: not a whole lot of discussion about a the role
Speaker 1: of coinage at all, and be certainly not the operational
Speaker 1: aspects of producing coinage. Yes, that's right, and so much
Speaker 1: of it is just taken for granted. We're very utilitarian
Speaker 1: in the United States. This is one thing I really
Speaker 1: discovered when I was directed the ment. I really didn't
Speaker 1: know that much about coinage. I was not a collector
Speaker 1: when I was growing up or afterwards. And because we're
Speaker 1: so utilitarian about coinage, we really just think of them
Speaker 1: as round disk of metal and you know, and that
Speaker 1: we exchange in commerce. Thomas Jefferson and the founders understood
Speaker 1: that coinage is an expression of the sovereignty of a people.
Speaker 1: So about the same time Jefferson was writing the Declaration
Speaker 1: of Independence, he was laying the conceptual foundation for American
Speaker 1: coinage that would come to fruition with the creation of
Speaker 1: the United States. Men. I think it may have been
Speaker 1: one of the first agencies that was created under the
Speaker 1: new constitution, and then the production of a coinage and
Speaker 1: that symbolism of the sovereignty who and what we celebrate
Speaker 1: on the on the face of a coin you know
Speaker 1: that has been tremendous, has been recognized as tremendous symbolic
Speaker 1: value going back four thousand years. Can I ask a question, Philip,
Speaker 1: you mentioned, you know, it would take a few days
Speaker 1: to to set up the new dies and things, and
Speaker 1: then only a few hours to strike the coin um.
Speaker 1: But when it comes to the Platinum Statute, it seems
Speaker 1: to me and we don't sort of spend that much
Speaker 1: time talking about this because we usually focused on the
Speaker 1: fact that the statute provides for almost unlimited discretion on
Speaker 1: the denomination, but it also specifies pretty much unlimited discretion
Speaker 1: on the design and specifications of the claim. So if
Speaker 1: if a call came down and said, you know, we
Speaker 1: need this out in three hours from now, is there
Speaker 1: actually anything legally preventing using the existing hundred dollar die
Speaker 1: as it is, and then you know, crossing it out
Speaker 1: in sharpie pan or something. I know, it's a bit
Speaker 1: untooth and and and doesn't really kind of have the
Speaker 1: gravitas of of the symbolism that we might like in
Speaker 1: a pinch. Is there anything actually that legally requires the
Speaker 1: number on the coin to be the number that we
Speaker 1: we kind of call it with you know, the legal purposes,
Speaker 1: or if we really had to, is that another fiction
Speaker 1: we could just indulge in along with you know, the
Speaker 1: nominal value itself being something that's declared by law, by
Speaker 1: feat that we could simply declare its its face value
Speaker 1: even if it was a smooth, flat disc with no
Speaker 1: inscription on it, Well, there's no precedent for that. And
Speaker 1: on something that is this high profile, you want to
Speaker 1: definitely ground uh, your policy and your action on the
Speaker 1: policy on not only the law, but two hundred years,
Speaker 1: two hundred and thirty years of precedent. And in that,
Speaker 1: we really have two ways of evaluating the value of coin.
Speaker 1: One is the face value, which is unrelated to any
Speaker 1: intrinsic value of the coin. Once we say as a
Speaker 1: government it is worth a hundred dollars, it's worth a
Speaker 1: hundred dollars. That's the nature of fiat currency. The other
Speaker 1: way with with bullion coins, and this is what we
Speaker 1: do with the platinum egual bullion coin is its price
Speaker 1: based on the spot price of platinum at the time
Speaker 1: of sale, and those are the two primary ways in
Speaker 1: which the widely recognized traded coins in the United States
Speaker 1: are priced. There's also these collectible coins and commemorative coins
Speaker 1: that had more discretion. But I have really one of
Speaker 1: the points I've wanted to make, because so many of
Speaker 1: the opponents of the coins and others who have sort
Speaker 1: of brought into the mythology of the reading of that statute,
Speaker 1: is that the coin that is authorized by this legislation
Speaker 1: is a niche collectible that all the you know, a
Speaker 1: small portion of the American public would have any interest in.
Speaker 1: That simply is not true. And as a matter of fact,
Speaker 1: this is I know this is unusual for the head
Speaker 1: of an agency to write the legislation, but I wrote
Speaker 1: that legislation, and I mean it didn't take rocket science.
Speaker 1: It's very short, and I knew exactly what I wanted
Speaker 1: and what my people wanted to do with this, and
Speaker 1: that is to authorize a bullion coin that we could
Speaker 1: take into the world and compete worldwide. And the reference
Speaker 1: to proof does not negate that. But it also opened
Speaker 1: the door for us as a byproduct of the bullion
Speaker 1: going to produce a collectible coin. So everywhere else in
Speaker 1: coinage law seems to be highly prescribed and there's like
Speaker 1: very clear clear designs on the quarter and the dime
Speaker 1: and the nickel, etcetera. And even within the amendment there
Speaker 1: are restrictions elsewhere. And when the mint as you were
Speaker 1: involved in, then maybe we'll get into this does something
Speaker 1: new with coinage such as the collectible fifty State quarters endeavor.
Speaker 1: You know, there's very strict rollout rules, etcetera. And again
Speaker 1: all very clearly prescribed how it's going to work. And
Speaker 1: so that I guess that is why the platinum coins
Speaker 1: section k in this That's why it even stands out
Speaker 1: because it's so explicit in its lack of rules, which
Speaker 1: is unusual for coins. So can you just talk us
Speaker 1: through why platinum and why specific there's one subsection of
Speaker 1: the law. You made it a point in your drafting
Speaker 1: of it to create maximum flexibility. We I was doing
Speaker 1: a complete transform leading a complete transformation of the United States.
Speaker 1: Meant it was a it was a race car up
Speaker 1: on blocks in somebody's backyard when I came in in
Speaker 1: ninety four, and I I saw the potential of the
Speaker 1: US meant. At that point, I told the Secretary Treasury,
Speaker 1: Lloyd Benson, who I had worked for in the Senate.
Speaker 1: I had been his first chief of staff at Treasury.
Speaker 1: I told him, guess I'd like to have that presidential
Speaker 1: appointment because I think I can do something. And over
Speaker 1: the next two years we made some major transformations of
Speaker 1: the MINT that led me to believe that we were
Speaker 1: prepared to compete in international markets in a way that
Speaker 1: the US men had never done before. And part of
Speaker 1: that was because we had already built an international distribution
Speaker 1: network for a World Cup commemorative coin when the US
Speaker 1: hosted the World Cup in ninety four, and then for
Speaker 1: the n and nineties six Olympic coin programs, and those
Speaker 1: three years had those two programs over three years had
Speaker 1: tremendous international sales potential, and we went out and built
Speaker 1: the most extensive international numismatic sales network ever anywhere in
Speaker 1: the world. And we had also we had six continents covered.
Speaker 1: I told my director of marketing, what's wrong with Antarctica, UH,
Speaker 1: why can't we have a sales contract there? And he
Speaker 1: went to to the National UH Atmospheric and Oceanic Commission
Speaker 1: and actually got a distribution contract with them, and that
Speaker 1: year's annual report had a photograph of a scientists holding
Speaker 1: up our coins at the South Pole. So we we
Speaker 1: were very intent on making this a very wide distribution
Speaker 1: and we had great success with that program, and I
Speaker 1: wanted to build on that success and but move out
Speaker 1: of the collectible market into the bullion market, which is
Speaker 1: a worldwide, highly competitive market with about six or seven
Speaker 1: ments national mints that compete in that market. And the
Speaker 1: two big markets that I had targeted were Japan in
Speaker 1: the United States, and I felt like we could go
Speaker 1: in and of course in the US we immediately seize
Speaker 1: that market away from our competitors, but within six months
Speaker 1: we had taken the about six of the Happanese market
Speaker 1: as well, and that was really important to me, not
Speaker 1: just for bragging rights. I'm a native Texan and that
Speaker 1: has value, but also because I was already setting my
Speaker 1: sights on the next program, which was the Fifty States
Speaker 1: Quarters program, and I felt like if we demonstrated that
Speaker 1: we were capable of competing in international markets, would be
Speaker 1: building competence in Congress to get that enacted. And it
Speaker 1: was ever a point where anybody said, do you stop.
Speaker 1: You're making too many coins. You're you're earning too much
Speaker 1: sign yourge, you're returning you're returning too much profit on
Speaker 1: a net basis to the Treasury. You know, we're not
Speaker 1: able to borrow as many Treasury securities because you're making
Speaker 1: it unnecessary for us to issue. Nobody ever told me
Speaker 1: to start to stop making profits, uh, And that was
Speaker 1: a real bragging point for us. In fact, one of
Speaker 1: the things says I was able to work with with
Speaker 1: the chairman of my my sub committee to pass the
Speaker 1: fifty State Quarters Act over Adam and opposition by Treasury
Speaker 1: at the highest levels of Treasury. And one of the
Speaker 1: way I sold it to him, Michael Castle, and we
Speaker 1: sold it to other people on the hill, was that
Speaker 1: conservatively we had projected that the fifty State Quarters program
Speaker 1: over ten years would create two point six billion dollars
Speaker 1: and senior ridge profit, you know, producing coins for the
Speaker 1: purpose of provide scenerdge to the Treasury Department, over and
Speaker 1: above what the baseline would be dates back, you know,
Speaker 1: to that fifty State Quarters program. And so the fact
Speaker 1: that we would do it with a trillion dollar coin
Speaker 1: in principle is no different whatsoever. I mean sure, it
Speaker 1: has a couple more zeros behind it, but it's the
Speaker 1: same thing. So this is something I'm really struck by
Speaker 1: and kind of fascinated by. Which is the sort of
Speaker 1: I guess it would be agency entrepreneurialism. Like you had
Speaker 1: this vision for the fifty State Quarters project, but you
Speaker 1: also had this idea of, like to build up to that,
Speaker 1: you needed to execute on something before that, to build
Speaker 1: up credibility so that Mike Castle and others would want
Speaker 1: to even like, you know, think about further coinage legislation,
Speaker 1: put an effort into it. Can you talk a little
Speaker 1: bit about that mentality of like building up goodwill within
Speaker 1: Congress and the idea of, like, let's execute on something straightforward,
Speaker 1: expanding our share in the platinum bullion market with the
Speaker 1: idea of then gaining additional powers for the mint, and
Speaker 1: like you're sort of like I guess, I would say,
Speaker 1: working the inside game of expanding the discretion and power
Speaker 1: of the Mint. So I was sworn in. I went
Speaker 1: into the United States Men in September of of ninety three,
Speaker 1: and my Republican predecessor, David Ryder gave me a great orientation.
Speaker 1: We overlap for about three or four months. He gave
Speaker 1: me a great orientation. We have remained friends over all
Speaker 1: these years. And so I went into the MINT months
Speaker 1: before I was even nominated, formally nominated, and then in
Speaker 1: June I was sworn in after a Senate confirmation. I
Speaker 1: was sworn in by Secretary Benson. So immediately one of
Speaker 1: the first acts I took because of the analysis that
Speaker 1: I had done with David, was we saw that the
Speaker 1: MINT was balkanized by too many political appointees. Each the
Speaker 1: head of each MINT was headed by a presidential appointee.
Speaker 1: These are the regional mets you're talking about. Oh, yes,
Speaker 1: San Francisco, Denver, kind of like the regional Feds. Yes,
Speaker 1: that's right, San Francisco, Denver, Philadelphia, New York. And of
Speaker 1: course those people got their job not from the Director
Speaker 1: of the Men, not from the Secretary of the Treasury,
Speaker 1: not even I mean they were formally nominated by the president,
Speaker 1: but they got their jobs from the senior senator of
Speaker 1: the president's party in each state. They certainly didn't feel
Speaker 1: like the Director of the Men was their boss, you know.
Speaker 1: So these are little fiefdoms. And one of the first
Speaker 1: things I came to realize was that's a huge problem
Speaker 1: in the management of the men, and it was the
Speaker 1: source of multiple problems that we saw. So one of
Speaker 1: the first things I did is I went over Treasury
Speaker 1: and said, I want to eliminate nine political appointees. And
Speaker 1: there are several people, of course, the Secretary I didn't
Speaker 1: go to him first, but there were several people who
Speaker 1: laughed at me and said, there's no way you'll be
Speaker 1: able to get the White House to agree to this
Speaker 1: because their prime patronage positions. People don't even need to
Speaker 1: go to Washington and just stay stay home and do
Speaker 1: those jobs. But the Secretary weight in. I made the
Speaker 1: case to him that you know, if we're going to
Speaker 1: turn this place around, this is going to be one
Speaker 1: of the first things we do. And he agreed. In
Speaker 1: the White House lonebole agreed not to fill those positions.
Speaker 1: Now that's temporary, that could be changed at any moment.
Speaker 1: I went over to Stinny Hoyer, who had had constituents
Speaker 1: who worked at the Mint, and he said, yes, you know,
Speaker 1: and I found a sponsor for the and we were
Speaker 1: able to move legislation that eliminated permanently those positions. Well.
Speaker 1: November nine, of course, is the gen Rich Revolution. And
Speaker 1: when I go in to meet with my new Republican
Speaker 1: chairman in the House, I walk in the door with
Speaker 1: the credential of deep politicizing the US meant by that time,
Speaker 1: I'm sure they were the only nine political positions that
Speaker 1: had been administered that had been eliminated by the administration.
Speaker 1: So I walked down the door with tremendous credibility on
Speaker 1: the Republican side that I meant business. The reality is
Speaker 1: is that I've been a Democrat all my life, from
Speaker 1: being a young teenager. But I had built this rapport
Speaker 1: and this level of trust. It was very fortunately I
Speaker 1: had to committee subcommittee chairs who I immediately made a
Speaker 1: connection with, and they were willing to carry a series
Speaker 1: of reform legislation. You know, one thing that's really striking
Speaker 1: to me, and you know, you talked about for the
Speaker 1: for the beginning of coinage for sure, but also just
Speaker 1: going back to Thomas Jefferson, this idea of coinage as
Speaker 1: this sort of like expression of the state. And we
Speaker 1: talked about Fiat money and row and you know, coming
Speaker 1: from the M M T perspective, obviously, you know, we
Speaker 1: talked about money as a sort of inherent state phenomenon.
Speaker 1: You know, even though I sort of early on talked
Speaker 1: about we don't really think about coins very much in
Speaker 1: the modern day. Generally speaking, it is one of the
Speaker 1: few times in which people are regularly interfacing with something
Speaker 1: clearly created by the government. I mean, the government obviously
Speaker 1: permeates many aspects of our lives, the regulation and laws,
Speaker 1: but there aren't many times the day I guess the
Speaker 1: other one of the bills or maybe postage stamps, although
Speaker 1: those are used less and less in which were literally
Speaker 1: interfacing and using an express creation of something that the
Speaker 1: government made in a very straightforward way where there's no
Speaker 1: ambiguity about who created it. How much did you it
Speaker 1: was that something that you thought about as this idea
Speaker 1: of like delivering a service to the public that was
Speaker 1: clearly recognizable as something that like we want kind of
Speaker 1: like constituent service, customer service, Like how much of that
Speaker 1: framework did you take to the job? Oh, that was crucial,
Speaker 1: In fact, it was. It was the first major project
Speaker 1: that I took on United States. Meant sells these commemorative
Speaker 1: and collectible coins to a pretty large population of collectors,
Speaker 1: mostly in the United States. So we'd take these orders
Speaker 1: and we'd deliver the product within six to nine months
Speaker 1: is how long it took to deliver a product. And
Speaker 1: of course, unless you have a monopoly on a product,
Speaker 1: you have very committed customers. Nobody puts up with that.
Speaker 1: So one of the things we did immediately was to
Speaker 1: make a commitment, and we ended up making a series
Speaker 1: of commitments to the point in which we were delivering
Speaker 1: about of all products within one week. That was the
Speaker 1: camel's nose under the tent from me for beginning to reform.
Speaker 1: The ment was too and I made a commitment before
Speaker 1: I had gotten endorsement from my people because I wanted
Speaker 1: to hold our feet to the fire, and I also
Speaker 1: wanted them to know you said it, stretch objectives, and
Speaker 1: even if you don't meet them, if you make major
Speaker 1: progress and then renew the effort, people begin can believe you.
Speaker 1: And I all so felt that one of the things
Speaker 1: that's really crucial in federal government agencies they become so
Speaker 1: insulated from their publics and from their customers or clients
Speaker 1: because they have been dehumanized really for forty years, where
Speaker 1: those Washington bureaucrats are always the enemy of the people,
Speaker 1: and their funding is cut and oftentimes their political appointees
Speaker 1: are hostile to the mission. So I was very much
Speaker 1: supportive of public employees and also believed in the mission
Speaker 1: of the organization was committed to it. So in that case,
Speaker 1: to break the old habits, I believe it was necessary
Speaker 1: to strip the installation off the organization to put people,
Speaker 1: either figuratively or literally, face to face with their customers,
Speaker 1: whether the customer was an external customer or an intern
Speaker 1: a customer in which someone was supporting somebody's else activity
Speaker 1: in the agency. So that was crucial to me. Now, Joe,
Speaker 1: there are two pieces. You've talked about. One piece and
Speaker 1: that is how many people produce a product that is
Speaker 1: touched by every American. It was a unique aspect of
Speaker 1: the United States meant. But then there's the other side
Speaker 1: of it, and that is coins are works of art,
Speaker 1: and sometimes the art isn't very good, and sometimes the
Speaker 1: art is spectacular, and those works of art are likely
Speaker 1: some of them are going to be in museums two
Speaker 1: thousand years from now. So what other job can you
Speaker 1: work at that has those two counterbalanced values and where
Speaker 1: you trace the history and the legacy back to Jefferson
Speaker 1: and Hamilton's So all of that was crucial to me
Speaker 1: really energizing an agency that become very demoralized. I think
Speaker 1: I think there's also another layer there, which is that
Speaker 1: for a long time, you know, minting coins and for example,
Speaker 1: issuing bonds meant something very different in the monetary regime,
Speaker 1: where bond issuance meant maybe you have a targeting international
Speaker 1: money markets, maybe you don't have to have any pressure
Speaker 1: on your metal reserves if you're under a gold standard.
Speaker 1: But nowadays, of course, the coins that we issue are
Speaker 1: not sort of tied closely to underlying market fluctuations in
Speaker 1: the in the metal value, unless you're selling to bullion investors.
Speaker 1: And of course the coin itself can become, you know,
Speaker 1: with any denomination, much more something like the high high
Speaker 1: value money that it might have been in the early Republic,
Speaker 1: again but without any linkage to underlying metal content. But
Speaker 1: the other part of it is that the coins are
Speaker 1: very private, even more private than notes with barcodes. And
Speaker 1: in this world now where there's a sort of war
Speaker 1: on cash and there are these increasing questions about digital
Speaker 1: privacy and digital data collection, what the mint represents is
Speaker 1: not just small value or you know, hearkening back to
Speaker 1: a different era where metal was more important in money,
Speaker 1: but also a different design principle compared to central banks
Speaker 1: with their balance sheets and their account based framework. And
Speaker 1: your story of kind of the entrepreneurial mint getting getting
Speaker 1: larger is one that to me, you can fit into
Speaker 1: a larger story of institutions rising and falling. You know,
Speaker 1: there was a period where before the Federal reserved, there
Speaker 1: was an independent treasury that had its own set of accounts,
Speaker 1: the Federals of coming into existence, the postal service offering
Speaker 1: banking at one point, and they're not offering it, and
Speaker 1: now people are talking about it coming back. But you
Speaker 1: could imagine a moment, you know, maybe in the nineties
Speaker 1: when you were presidently thinking about these questions of digital money,
Speaker 1: or now today with the debates over the issuance of
Speaker 1: a digital dollar, where the mint, you know, it comes
Speaker 1: into a high degree of prominence and what may be
Speaker 1: considered you a rounding era in the federal budget now
Speaker 1: and sign yourridge becomes a much more central way that
Speaker 1: we designed the accounting for how new money gets issued
Speaker 1: and spent. So I just wanted to get any thoughts
Speaker 1: about that, just that idea that kind of the mint
Speaker 1: might be considered a very junior partner with the FED today,
Speaker 1: but that over time, those those dynamics change and involve,
Speaker 1: and they're not fixed right now. The kind of dynamic
Speaker 1: we have today isn't the only one that could ever
Speaker 1: exist again in the future. Now, that's that's very true
Speaker 1: from my experience. When I went in the door of
Speaker 1: the first day of the Clinton administration in January, the
Speaker 1: very first briefing I got was on the counterfeiting of
Speaker 1: the one dollar bill, and I won't go into the
Speaker 1: details on it, but what was absolutely clear, So this
Speaker 1: and the counterfeiting of the one dollar bill went back
Speaker 1: over a decade in which the Secret Service at that
Speaker 1: time part of the Treasury Department knew that this super
Speaker 1: one note that was virtually indistinguishable from the real thing
Speaker 1: was a problem. And at the end of the briefing,
Speaker 1: I said, why hasn't this been dealt with before? And
Speaker 1: they didn't have an answer for me, And before long
Speaker 1: I understood nobody at the Treasury wanted to tackle that.
Speaker 1: And currency in coinage. People go to the Treasury Department
Speaker 1: to make big policy and they don't want to be
Speaker 1: weighed down by little stuff like massive counterfeiting bill. And
Speaker 1: I and It really helped me to understand that point
Speaker 1: of view from Treasury when I went over to become
Speaker 1: director of the MEN, because it told me something very important,
Speaker 1: and that was in terms of my reform strategy, and
Speaker 1: that is fly below the radar as long as you can,
Speaker 1: because the way Treasury sees it is coinage currency all
Speaker 1: that has trouble on it. And that was really kind
Speaker 1: of a hangover from the Susan b Anthony disaster from
Speaker 1: thirteen years earlier. Can you actually talk? You have a
Speaker 1: blog and I and I've read a few of the posts.
Speaker 1: What was the Susan b Anthony disaster? Um? And this
Speaker 1: was something that aim well before you were the head
Speaker 1: of the US. But when you refer to that to
Speaker 1: there is the Susan b Anthony, I think it's a dollar.
Speaker 1: What was the what happened with that endeavor? Well, there
Speaker 1: are two levels in which it was a disaster. One
Speaker 1: was as a product. It was a little bit larger
Speaker 1: than a quarter, and it was the same color, the
Speaker 1: same silver color as a quarter, and so people initially
Speaker 1: confused them and it was the sort of thing and
Speaker 1: if you reached in your pocket, you'd pull out one
Speaker 1: of the one of the Susan B. Anthony's thinking it
Speaker 1: was a quarter or whatever. In reality, if you carry
Speaker 1: them around in your pocket very long, then you can
Speaker 1: tell the difference by size, but and also by the
Speaker 1: reading or the lack of it on the on the edge.
Speaker 1: But it was a disaster because Americans didn't want to
Speaker 1: carry a heavier coin. There was that resistance. Second, there
Speaker 1: was a lot of criticism of the design of Susan
Speaker 1: B Anthony itself. There was a claim that it wasn't
Speaker 1: an attractive design. I mean, you know, it was petty,
Speaker 1: but it was subject to criticism in that respect. But
Speaker 1: at the political level, the coin was launched in ninety
Speaker 1: nine and so there was this rumbling of dissatisfaction about it.
Speaker 1: But in the presidential election in which Jimmy Carter was
Speaker 1: running for re election, inflation had spiked and Ronald Reagan,
Speaker 1: of course was running against him. Small government government can't
Speaker 1: work because you know the big government as the enemy.
Speaker 1: It came to be called the Carter Quarter, really emphasizing
Speaker 1: the inflation and the confusion between when the Susan B
Speaker 1: Anthony in the quarter, and it was a shock at
Speaker 1: the United States meant, like you said, I didn't come
Speaker 1: in until thirteen years later, but it was as though
Speaker 1: it had happened yesterday there and as a matter of fact,
Speaker 1: right after the Gingrich Revolution in January came around, the
Speaker 1: Republican leadership proposed a new dollar coin, and my attitude was, sure,
Speaker 1: let's talk about it, let's but let's don't make the
Speaker 1: same mistakes, and legislation was filed completely replicating that mistake,
Speaker 1: this whole series of mistakes, and so I ended up
Speaker 1: doing a campaign, public campaign and testifying Congress opposing the
Speaker 1: new dollar coin. And after we defeated that, a few
Speaker 1: years later we came forward with the plan for the
Speaker 1: sack of Jeweeah coin, which did not suffer those kinds
Speaker 1: of of weaknesses because that one is actually a different uh.
Speaker 1: That one's gold color. That's right, that's right. And it's
Speaker 1: viewed as being a failure because ultimately it was. It
Speaker 1: was a failure in that it didn't replace the dollar bill,
Speaker 1: but it was an enormous success when we issued it.
Speaker 1: The Federal Reserve doesn't like coins, and without admit director
Speaker 1: and I left in two thousand, we launched a few
Speaker 1: months before my term was over, and without a director
Speaker 1: who would take on the feller reserve to ensure its
Speaker 1: success than had died on the vine. Basically, you know,
Speaker 1: you just talked then about the FED not liking coins
Speaker 1: and the idea that sort of the often works best
Speaker 1: when it's under the radar. It seems to me that
Speaker 1: there is a bit of kind of into agency servianism.
Speaker 1: Either way. The coin is discussed when we talk about
Speaker 1: kind of budget gimmicks, you know, reading the Social Security
Speaker 1: Trust Fund or something is that is the Treasury Secretary
Speaker 1: in the eighties. That's an acceptable budget gimmick. The use
Speaker 1: of Section thirteen three authority into downs in and nine,
Speaker 1: all these special purpose vehicles and lending facilities the FED
Speaker 1: does where the Treasury provides the underlying capital, so the
Speaker 1: first losses are borne by the Treasury, but it's leveraged
Speaker 1: by the FED. Those are acceptable accounting gimmicks because they
Speaker 1: sound complex, They sound like the kinds of things that
Speaker 1: you would do in a Wall Street trading firm or something.
Speaker 1: But this gimmick it almost defends the sensibilities of the
Speaker 1: kind of high finance, high high minded types because it's
Speaker 1: it's sort of giving power to this lowly agency to
Speaker 1: save the day when all of the the big boys
Speaker 1: couldn't do it. Do you experience any of that? I
Speaker 1: know you were actually kind of high about the Treasury
Speaker 1: and you were in the legislature before that, But do
Speaker 1: you experience any of that kind of chauvinism with your
Speaker 1: agency interactions something like that? We certainly experienced it with
Speaker 1: the Sacka Joia dollar coin. We did extensive market research
Speaker 1: on what is it going to take for this coin
Speaker 1: to be accepted enthusiastically by the American public. We also
Speaker 1: did market research in depth with the banks, because the
Speaker 1: banks are our channel to get the coin into the
Speaker 1: hands of the public, our channel first through the Federal
Speaker 1: Reserve and then through the banks. So we had several
Speaker 1: meetings with banks, bankers, and the Federal Reserve was there,
Speaker 1: and basically they laid out this catch twenty two for us,
Speaker 1: and that was, we will order the new dollar coin
Speaker 1: as soon as we know that the American public will
Speaker 1: accept it. Our response was, how are we supposed to
Speaker 1: do that if we can't get it into the hands
Speaker 1: of And we showed them the market research that showed
Speaker 1: that there was a really good chance that when we
Speaker 1: launched this coin that would be big demand for it,
Speaker 1: and the Federal Reserve just didn't weigh in despite the
Speaker 1: ment congressional mandate to produce and circulate this coin. And
Speaker 1: at the time, I've always been suspicious of concentrated economic power,
Speaker 1: in particular political power to but concentrated economic power. And
Speaker 1: I've seen over and over and over again over the
Speaker 1: years through my career, both outside the government inside the government,
Speaker 1: how agencies are captured by the people they regulate or
Speaker 1: you know, the institutions they served. And what I saw
Speaker 1: there was the Federal Reserve acting as an advocate for
Speaker 1: the banks that they were supposed to regulate. And and
Speaker 1: what my thought about that was a lot of people say, well,
Speaker 1: you know, that's penny any that's opinion, you know, bun Inton.
Speaker 1: My what my thought was, if on something that is
Speaker 1: so small, that has so little impact on the banks,
Speaker 1: that the FED will be their representative within the government,
Speaker 1: what is the chance that the Fed won't do that
Speaker 1: on the things that are really crucial to the health
Speaker 1: of the banks. So what I in order to overcome
Speaker 1: that problem, I went to the new lobbyists for Walmart,
Speaker 1: who had been a distributor of our Olympic coins in
Speaker 1: and said, I'd like to launch this coin through three
Speaker 1: thousand locations across the country in your stores, all on
Speaker 1: the same day, January two thousand and they said sure,
Speaker 1: and it was a huge success. Within a matter of
Speaker 1: hours or days, the stores exhausted their supply. So when
Speaker 1: their customers said, oh, well, we didn't get the dollar coin,
Speaker 1: what do they do? They call the bank? Banks don't
Speaker 1: have them, so because they didn't order them and they
Speaker 1: resisted it. So who do they call? Well, the FED?
Speaker 1: And who does the FED called? The Secretary of the Treasury.
Speaker 1: So I you know, I hear from the Secretary of Treasury,
Speaker 1: but my job was to fade the heat. I loved it.
Speaker 1: I mean, it's funny how many of these conversations seem
Speaker 1: to come full circle. And of course even today there
Speaker 1: are recurrent conversations about a company like Walmart into retail
Speaker 1: banking and fierce opposition, and so it's interesting to hear
Speaker 1: that in that example. But also I want to go
Speaker 1: back to like the point also that Rohan is making
Speaker 1: about like it's kind of like what gets called a
Speaker 1: gimmick or not is very strange because when we heard
Speaker 1: from Secretary Yellen recently and she called the trillion dollar
Speaker 1: coin very dismissively a gimmick. But if Rohan has pointed out,
Speaker 1: you know other things that are like extraordinary measures are
Speaker 1: okay and weird things where the Treasury provides financing for
Speaker 1: the Fed, of the Fed provides leverage, you know, those
Speaker 1: don't get called gimmicks. It seems to me that there
Speaker 1: is nothing less gimmicky than a coin that on some sense,
Speaker 1: coins have existed for over three thousand years. Paying for
Speaker 1: things with coinage is about one of the oldest traditions
Speaker 1: there is, putting a number on a coin and saying,
Speaker 1: as you established that that is the value of that coin.
Speaker 1: It almost is like of all the things we talked
Speaker 1: about in financing, there's almost to me it's a sense
Speaker 1: of like creating a coin might be the least gimmicky
Speaker 1: form of public fundraising there is. Yeah, well, that's exactly right.
Speaker 1: The concept of scene ridge that we talked about earlier
Speaker 1: is an ancient concept. It goes back thousands of years,
Speaker 1: almost as old as coinage is itself. The concept of
Speaker 1: senior is real simple, and that is it is the
Speaker 1: difference between the cost of producing a coin and it's
Speaker 1: face value, and that margin represents a form of profit.
Speaker 1: It's not treated that way anymore, but it used to
Speaker 1: be a way of funding the crown. So there'd be
Speaker 1: this small difference between the gold and a coin and
Speaker 1: the face value on the coin, and that represented a
Speaker 1: profit that went to the king. And if you were
Speaker 1: a mint director who produced those coins and you shaved
Speaker 1: a little bit of metal off that and base, that's
Speaker 1: where the concept debasing coinage or your currency comes from.
Speaker 1: Then if you were discovered, you were beheaded. And fortunately
Speaker 1: ment directors don't have to go through that anymore. But yes,
Speaker 1: that's a very old concept. It seems paying for things
Speaker 1: with coins of the state, paying for things with coins
Speaker 1: of the state, saying that the coin is worth this
Speaker 1: much because we say it is because we ascribed it
Speaker 1: into the blank, seems like a very old concept. In
Speaker 1: a way. It feels very on gimmicky. That's right, to
Speaker 1: go back to your the whole question of about about
Speaker 1: whether or not the trillion dollar coin is a gimmick.
Speaker 1: As we're talking about the concept of coinage, the concept
Speaker 1: of scene ridge, I mean, it is so deeply embedded
Speaker 1: in human history that it's hard to call that a gimmick.
Speaker 1: But I've said that the trillion dollar coins suffers a
Speaker 1: branding problem, and that is it's too simple, I mean
Speaker 1: quantitative easing. You know that sounds really sophisticated. People say, oh,
Speaker 1: I can't conceive of that. But also what I'm discovering
Speaker 1: is that tree and dollar coin that that also has
Speaker 1: a brand advantage, and that is that people understand what
Speaker 1: that is. And if we get in front of it
Speaker 1: and explain away all the mythology and misinformation and disinformation,
Speaker 1: then I think there's an opportunity for it to overcome
Speaker 1: the negative aspects of the brand. Yeah, it seems to
Speaker 1: me a lot of people say, well, we should do
Speaker 1: this other alternative that would be functionally equivalent, but that
Speaker 1: would would not you know, suffer the simplicity that actually
Speaker 1: causes people to understand it. So in their view, you know,
Speaker 1: much more complicated, giving things that that you know, involves
Speaker 1: seven layers of jargon and all this kind of thing.
Speaker 1: It's a feature, not a bug that they're so complicated,
Speaker 1: because then people don't actually understand what's going on. Their
Speaker 1: their eyes grew cross eyed. They sort of tune out
Speaker 1: before you finish describing all the steps, and that's that's
Speaker 1: a good thing for them, and you know, whatever your
Speaker 1: views are about whether or not the public should be
Speaker 1: able to understand how money works, it seems like that's
Speaker 1: actually the real disagreement here. It's not the ones a
Speaker 1: gimmick and one isn't a gimmick. It's that do you
Speaker 1: want a gimmick designed to obscure or does it a
Speaker 1: gimmick design to clarify? One sense? You know, if we're
Speaker 1: going to call the coin of gimmick at all. And
Speaker 1: it seems to me that we almost spend a lot
Speaker 1: of time stepping around that that that we that everybody
Speaker 1: wants to frame it as though one is serious and
Speaker 1: one isn't, or one is more sort of in line
Speaker 1: with the spirit of existing law and one isn't, when
Speaker 1: really it just boils down to whether or not we're
Speaker 1: trying to educate and enlighten or sort of you are
Speaker 1: and pull the wooloiver in the proceeds. Yeah, that's a
Speaker 1: that's an excellent point. And if and if we've discovered
Speaker 1: anything in the last five years, and a number of
Speaker 1: things we've discovered, one is that there is a deep
Speaker 1: suspicion of ex so called expertise and real expertise jargon,
Speaker 1: which is associated with certain kinds of expertise are suspect
Speaker 1: in American culture. So quantitative easing. Yeah, you know, people say,
Speaker 1: I don't know what that is, but I don't, you know,
Speaker 1: I suspect what it is. Trade your dollar coin. People
Speaker 1: get that, they understand it, and so, and really the
Speaker 1: concept behind it is it's not that difficult. So let
Speaker 1: me finish here with that. It's a kind of a
Speaker 1: hypothetical or maybe it's an impossible question to answer. But
Speaker 1: the dead ceiling has always been this sort of political
Speaker 1: trip wire, but we've only really had extreme dead ceiling showdowns.
Speaker 1: We talked about this with Rowan a couple of weeks
Speaker 1: ago on the show. Really since really it's already getting
Speaker 1: very intense under the Obama here an after the big
Speaker 1: Republican victory, and so you know, some of these questions
Speaker 1: about this sort of like, wow, we might really default.
Speaker 1: We don't really know much about how past Treasury secretaries
Speaker 1: might have dealt with this, but it is a hardball move, right, So,
Speaker 1: like there is this norm that it's like, okay, obviously
Speaker 1: yelling or whoever else would be Treasary secretary would like
Speaker 1: to just raise the dead ceiling in the conventional manner
Speaker 1: and then ideally forget about it in a few years.
Speaker 1: But to invoke the coin and or to say, you
Speaker 1: know what, we're not going to play games, We're not
Speaker 1: going to let you all hold the economy hostage, whatever,
Speaker 1: is a hardball political move, you know, it's that would
Speaker 1: be it's outside the norm. It's not it's not the
Speaker 1: norm of how these things typically go down. Do you
Speaker 1: think there are like Treasury secretaries of the past who
Speaker 1: may have had more of an appetite for the the
Speaker 1: hardball of this option. I mean, obviously from a legal standpoint,
Speaker 1: it's only been open since with with the amendment to
Speaker 1: the coin in Jack that you got passed. But in
Speaker 1: terms of like the appetite to say, you know what,
Speaker 1: don't come to us with the negotiation, don't stall. We
Speaker 1: have a coin that we can mint and we're not
Speaker 1: going to talk about this. Are there is this something
Speaker 1: that in different environments maybe there would have just been
Speaker 1: more willingness to roll over the opposition by invoking the
Speaker 1: Colin option earlier Alexander Hamilton's it's the only one that
Speaker 1: comes to mind. I don't know if any secretary who
Speaker 1: would have wanted to pursue this option unless his or
Speaker 1: her back was to the wall, and if it comes
Speaker 1: down to the nation to falling on its debts or
Speaker 1: many a triion dollar coin, I think there are a
Speaker 1: lot of Secretaries of the Treasury who would have considered it,
Speaker 1: and if it was the only viable option, it's just
Speaker 1: the estimate is the defaulting on the debt would eliminate
Speaker 1: fifteen treeion dollars in wealth in this nation. Now, if
Speaker 1: that's a choice or a treeion dollar coign easy choice,
Speaker 1: And I think a secret treasury would do the same thing.
Speaker 1: And I think it's an easy decision, fift trillion dollars
Speaker 1: of wealth created or a coin that's a little gimmicky.
Speaker 1: You would not think that that is a hard choice,
Speaker 1: at least I wouldn't, But apparently, you know you think
Speaker 1: that's an easy call. Well, it's not an easy call.
Speaker 1: If there's no other option, there are There is another
Speaker 1: option that I think is a viable option, and that
Speaker 1: is the fourteenth Amendment. I think the fourteenth Amendment is
Speaker 1: a clear option here. And you know, I don't think
Speaker 1: the usually I don't think the trillion dollar coin is
Speaker 1: a gimmick, but it is subject to criticism as a gimmick.
Speaker 1: The Constitution of the United States and the fourteenth Amendment
Speaker 1: is has no vulnerability to that. It has other weaknesses
Speaker 1: and vulnerabilities, but that's not one of them. You know.
Speaker 1: We could go on forever, and honestly, this is so
Speaker 1: this is such a fascinating discussion to me, because even
Speaker 1: beyond this sort of politics right now, and even beyond
Speaker 1: the sort of legal dimension, just thinking about like the
Speaker 1: history of money and the actual operation of how does
Speaker 1: money get made and then how to the public essentially
Speaker 1: to me like an under disgusted and under examined topic.
Speaker 1: We could go on forever, but this was such a
Speaker 1: treat Rowan, it was great to have you back and
Speaker 1: Mint director deal so great to hear from your perspective
Speaker 1: as having a been involved in the right of the law,
Speaker 1: but just seeing how this all works. Thank you both
Speaker 1: so much for coming on a lot. Thanks for having me.
Speaker 1: Sup pleasure to thank you well. Obviously Tracy wasn't here,
Speaker 1: so I can't banter with her as I would normally do,
Speaker 1: but I strongly suspect, you know, I really do think
Speaker 1: after our first Mint the coin episode, that Tracy was
Speaker 1: getting fairly coin pilled, and I am convinced that after
Speaker 1: this one and hearing from former MINT director Deal himself,
Speaker 1: that she would be fully on board. Maybe that's a
Speaker 1: little presumptuous of me to say, but I really think
Speaker 1: she would have been sold. Like I said kind of
Speaker 1: at the end, there are so many like aspects of
Speaker 1: that discussion that I find like genuinely fascinating. Like, you know,
Speaker 1: there's something I've been thinking about. It doesn't even really
Speaker 1: relate to money per se, but the idea of agency
Speaker 1: and sub agency entrepreneurialism and the idea of as um
Speaker 1: Philip Deal was talked, think about, let's do this simple thing,
Speaker 1: Let's do this straightforward thing of expanding our share in
Speaker 1: the bullion market so that then we can get congressional
Speaker 1: support for something more ambitious, the fifty State Quarters project.
Speaker 1: Even like thinking about that and how like our sort
Speaker 1: of government operates super interesting. Also really interested in this
Speaker 1: idea that, like you know, people add Treasury might be
Speaker 1: interested in like big ideas, like big reforms of tax policy,
Speaker 1: but it's something sort of like simple and operational, like
Speaker 1: how do you avoid counterfeiting the d dollar bill is
Speaker 1: not something that people in the government maybe gets so
Speaker 1: excited about because it's not as you know, the ideas
Speaker 1: aren't as big anyway, so many interesting things from that discussion.
Speaker 1: It is a real treat to hear from both of them,
Speaker 1: so that further Ado and I there. This has been
Speaker 1: another episode of the Odd Lots podcast. I'm Joe Wisn't
Speaker 1: thought you could follow me on Twitter at the Stalwart.
Speaker 1: Follow my co host on Twitter, Tracy Alloway at ac Alloway.
Speaker 1: Follow our guests on Twitter. Rowan Gray He's at Rowan Gray.
Speaker 1: Follow Mint director Deal Philip Deal. He's on Twitter at
Speaker 1: Philip and Deal. Although he hasn't tweeted in a while,
Speaker 1: I think you should get back to tweeting. Yes't tweeted,
Speaker 1: Since he should, he should get a little more public,
Speaker 1: in my opinion. Follow our producer Laura Carlson. She's at
Speaker 1: Laura M. Carlson. And check out all of our podcasts
Speaker 1: at Bloomberg under the handle at podcasts. Thanks for listening.