WEBVTT - This Is How They Could Literally Mint a Trillion Dollar Coin 0:00:10.960 --> 0:00:15.320 Hello, and welcome to another episode of the odd Locks Podcast. 0:00:15.400 --> 0:00:21.200 I'm Joe Wisenthal. Unfortunately, my colleague Tracy Elloway is off today, 0:00:21.239 --> 0:00:25.040 and I say it's unfortunate because a it's always unfortunate 0:00:25.079 --> 0:00:27.320 when she's off, but be today we are going to 0:00:27.400 --> 0:00:31.240 be speaking about her favorite topic, which is minting a 0:00:31.280 --> 0:00:35.239 trillion dollar coin. Being a little facetious about that, I'm 0:00:35.240 --> 0:00:40.600 not it is her favorite topic, but that big said. 0:00:40.960 --> 0:00:45.519 A few weeks ago, we interviewed Rowan Gray, assistant professor 0:00:45.560 --> 0:00:49.680 at well LAMTT Law School, and she definitely came away 0:00:50.000 --> 0:00:53.880 from this topic. I would say more coin curious coin 0:00:53.960 --> 0:00:57.760 pelled open to the trillion dollar coin idea than she 0:00:57.880 --> 0:01:00.800 had been. For anyone listening today, I would definitely suggest 0:01:00.880 --> 0:01:04.640 listening to that conversation first. And it's about this idea 0:01:04.760 --> 0:01:08.160 that were we to get into a debt ceiling impass 0:01:08.319 --> 0:01:13.680 that there is a statute in the law that says that, 0:01:13.760 --> 0:01:16.600 in theory, the Treasury Secretary of the Treasury can mint 0:01:16.800 --> 0:01:21.160 proof platinum coinage and people have argued, including Rowan, that 0:01:21.240 --> 0:01:24.720 this would allow the government to continue financing even in 0:01:24.760 --> 0:01:27.399 the event that it isn't allowed to take on more debt. 0:01:27.680 --> 0:01:29.920 So again, I would encourage everyone to listen to this, 0:01:29.959 --> 0:01:32.000 but it's a big topic and so in the m 0:01:32.440 --> 0:01:35.960 In the meantime, the dead ceiling question has been punted 0:01:36.440 --> 0:01:40.480 to December. They got ten Republican votes to essentially go 0:01:40.600 --> 0:01:42.880 for about two more months, so the question isn't going 0:01:42.920 --> 0:01:46.679 away in the meantime. Since then, we've also heard Secretary 0:01:46.720 --> 0:01:49.560 of the Treasury Jenny Yellen go on National TV and 0:01:49.640 --> 0:01:53.560 dismissed the coin idea again as a gimmick. Still there 0:01:53.600 --> 0:01:57.320 is opposition to it. Nonetheless, it is still important, and 0:01:57.360 --> 0:01:59.600 I think we're going to get to a point in 0:01:59.720 --> 0:02:02.720 this member where I'm not predicting the colina will be minted, 0:02:03.160 --> 0:02:05.520 but I do think we will come up against another 0:02:05.560 --> 0:02:09.800 deadline again and the question will not go away. It 0:02:09.840 --> 0:02:12.360 will it will again be tight of what how this 0:02:12.440 --> 0:02:14.560 is going to get raised and how the US will 0:02:14.600 --> 0:02:18.200 avoid a possible default. So I am very excited to 0:02:18.240 --> 0:02:21.840 do a follow up because we have two guests today. 0:02:21.880 --> 0:02:25.840 So we have rowing his back, Rowan Gray, Assistant Professor 0:02:26.080 --> 0:02:29.960 Lammet Law School, the foremost legal authority or the has 0:02:30.040 --> 0:02:36.360 written extensively on the coin and extremely excited that you know, 0:02:36.560 --> 0:02:40.240 we have as our guest Philip Deal, who is the 0:02:40.280 --> 0:02:43.400 thirty five head of the U. S Mint, and he 0:02:43.560 --> 0:02:47.320 was ran the U S Mint from two thousand and 0:02:47.600 --> 0:02:53.400 was one of the drafters essentially of the legislation that 0:02:53.960 --> 0:02:57.160 allowed for the platinum coin. He's currently the President of 0:02:57.160 --> 0:03:00.000 the US Money Reserve. So we don't have to spare 0:03:00.000 --> 0:03:04.000 alculate on what the intention of the thinking of the 0:03:04.040 --> 0:03:08.640 creators of this law were intending, because we have the 0:03:08.639 --> 0:03:12.440 actual one of the creators here right now on odd lots. 0:03:12.560 --> 0:03:15.200 Very excited to bring both of those guests, Rowan and Philip. 0:03:15.320 --> 0:03:18.040 Thank you so much for joining us. Thank you for 0:03:18.080 --> 0:03:23.160 having me my pleasure. Philip, This is a real treat because, 0:03:23.200 --> 0:03:26.720 you know, I feel like often, you know, whether as 0:03:26.760 --> 0:03:30.320 we're talking about some constitution or something, we are like 0:03:30.680 --> 0:03:34.000 forced to wonder what was going on in the mind 0:03:34.400 --> 0:03:36.280 of the person of a person who has involved in 0:03:36.360 --> 0:03:38.960 the drafting of this thing that's become very controversial. So 0:03:39.000 --> 0:03:42.840 it was a real treat to have you. Obviously, multiple 0:03:42.920 --> 0:03:46.600 people may have been involved in writing this law, but 0:03:46.640 --> 0:03:49.000 it is a real treat to have you on. But 0:03:49.120 --> 0:03:52.120 before we do that, before we really get back into 0:03:52.200 --> 0:03:56.280 the law itself, I want to just talk about mechanics. 0:03:56.480 --> 0:04:00.200 For a second, Let's imagine in some world yell And 0:04:00.440 --> 0:04:04.280 is forced to mint the coin, the trillion dollar coin. So, yeah, 0:04:04.400 --> 0:04:07.760 what happened as the speaking as the former director of 0:04:07.760 --> 0:04:10.320 the U S Mint, if you get the call we 0:04:10.400 --> 0:04:12.920 have to mint the trillion dollar coin to avoid a 0:04:13.000 --> 0:04:16.400 dead ceiling fiasco. Why do you look, Walker is through? Like, 0:04:16.839 --> 0:04:20.520 what would happen operationally at that point, Well, almost certainly 0:04:20.520 --> 0:04:24.599 what would happen is there'd be preparation before the order 0:04:24.640 --> 0:04:27.760 came down, and the order would come from the Secretary 0:04:27.800 --> 0:04:31.039 of the Treasury, and of course that will have been 0:04:31.560 --> 0:04:34.159 discussed with the President, probably with the Chairman of the 0:04:34.160 --> 0:04:37.560 Federal Reserve, and it'll all be set up. So before 0:04:37.600 --> 0:04:40.839 the order came down, there would be preparation in order 0:04:40.920 --> 0:04:44.080 to make sure that the coin was struck at the 0:04:44.200 --> 0:04:48.680 last minute and could be transported to the Federal Reserve 0:04:49.320 --> 0:04:54.120 and arrive on time before the dead limit was hit. 0:04:54.440 --> 0:04:57.440 So the way that would happen is a decision would 0:04:57.480 --> 0:05:02.360 have to be made on what the coin design would be, 0:05:02.360 --> 0:05:05.400 because a mold will have to be produced, and then 0:05:05.440 --> 0:05:10.240 that mold will be converted to another mold, and then 0:05:11.200 --> 0:05:14.760 a die will that will be used to strike the 0:05:14.880 --> 0:05:18.880 coin will be produced, and so there's a number of 0:05:18.920 --> 0:05:23.320 steps that have to be done. Now, undoubtedly they'd want 0:05:23.360 --> 0:05:27.359 to short circuit this process as much as possible, and 0:05:27.480 --> 0:05:32.080 already in fact created by this coin by this legislation, 0:05:32.880 --> 0:05:37.760 is the Platinum American Eagle, and they would take the 0:05:37.920 --> 0:05:41.320 one ounce coin design and all they'd have to do 0:05:41.880 --> 0:05:46.599 is replace one trillion dollars trillion spelled out, not with 0:05:46.640 --> 0:05:52.000 all the zeros, and replace one hundred dollars on the 0:05:52.080 --> 0:05:56.600 obverse of the coin. And that would be a very 0:05:56.680 --> 0:06:01.719 simple and straightforward alteration in the current design of the coin. 0:06:02.440 --> 0:06:06.040 And then those molds would be created and the dye 0:06:06.080 --> 0:06:11.719 would be carved, and then everything would be prepared. Once 0:06:11.800 --> 0:06:16.560 the order came down, a blank, a platinum blank, one 0:06:16.560 --> 0:06:19.400 ounced blank would be taken off the shelf and west 0:06:19.400 --> 0:06:23.920 point where the platinum Eagle is struck, and it would 0:06:23.960 --> 0:06:29.719 be struck multiple times, and that coin at that point 0:06:29.839 --> 0:06:33.680 will be minted. From West Point, it would could be 0:06:33.760 --> 0:06:37.680 flown by a helicopter to the Federal Reserve Bank in 0:06:37.760 --> 0:06:42.040 New York, and the moment that coin is accepted at 0:06:42.040 --> 0:06:47.120 the Federal Reserve, it registers as a trillion dollars in 0:06:47.360 --> 0:06:52.760 what is called senior ridge. Your your sense of the timing. Okay, 0:06:52.839 --> 0:06:56.600 so if you established they have the blanks, the only 0:06:56.640 --> 0:06:58.400 thing they really they don't even have to put all 0:06:58.440 --> 0:07:01.159 the zeros on the coin and they literally just have 0:07:01.320 --> 0:07:04.840 to write it on one thing. What is in your sense? 0:07:05.200 --> 0:07:07.719 I think I saw you give a brief interview with 0:07:07.760 --> 0:07:10.440 Actually you think this could all be done in the 0:07:10.480 --> 0:07:14.880 span of a few hours. Yea, So well, assuming that 0:07:15.000 --> 0:07:20.200 all of the preparation, the changing of the design very simple, 0:07:20.600 --> 0:07:25.080 the molds and then the carving of the doe die 0:07:25.440 --> 0:07:30.120 is done several days beforehand, and that might take a 0:07:30.160 --> 0:07:34.040 few days of preparation. At that point, once the order 0:07:34.080 --> 0:07:37.480 comes down that that blank goes into the press, it 0:07:37.720 --> 0:07:43.880 struck and transported to the New York Federal Reserve. And yes, 0:07:44.040 --> 0:07:49.880 that's a few hours. It's absolutely extraordinary. The the idea 0:07:49.960 --> 0:07:52.720 that like money, you know, could be created like this, 0:07:53.200 --> 0:07:55.240 and I think like one of the things, and you know, 0:07:55.600 --> 0:08:00.679 talking to both of you Rowan and Philip, is things exist. 0:08:00.880 --> 0:08:04.440 We still use them, use quarters of fair amounts. Sometimes 0:08:04.440 --> 0:08:07.200 people will find them annoying. Sometimes people talk about things 0:08:07.240 --> 0:08:11.240 like phasing out the penny, etcetera. It feels like in 0:08:11.280 --> 0:08:16.160 the modern discussion about money, there's just very little talk 0:08:16.240 --> 0:08:19.200 about you know, we talked about the FED printing money, 0:08:19.280 --> 0:08:22.000 or we thought talked about QUI or these theoretical concepts, 0:08:22.280 --> 0:08:24.720 But in the modern discussion of money, there is just 0:08:24.880 --> 0:08:28.000 not a whole lot of discussion about a the role 0:08:28.040 --> 0:08:32.800 of coinage at all, and be certainly not the operational 0:08:33.360 --> 0:08:39.400 aspects of producing coinage. Yes, that's right, and so much 0:08:39.440 --> 0:08:43.400 of it is just taken for granted. We're very utilitarian 0:08:43.480 --> 0:08:45.679 in the United States. This is one thing I really 0:08:45.720 --> 0:08:48.280 discovered when I was directed the ment. I really didn't 0:08:48.280 --> 0:08:50.680 know that much about coinage. I was not a collector 0:08:51.559 --> 0:08:55.720 when I was growing up or afterwards. And because we're 0:08:55.720 --> 0:08:59.760 so utilitarian about coinage, we really just think of them 0:08:59.760 --> 0:09:04.280 as round disk of metal and you know, and that 0:09:04.480 --> 0:09:10.359 we exchange in commerce. Thomas Jefferson and the founders understood 0:09:10.679 --> 0:09:16.000 that coinage is an expression of the sovereignty of a people. 0:09:16.800 --> 0:09:20.359 So about the same time Jefferson was writing the Declaration 0:09:20.440 --> 0:09:25.360 of Independence, he was laying the conceptual foundation for American 0:09:25.440 --> 0:09:30.480 coinage that would come to fruition with the creation of 0:09:30.480 --> 0:09:32.680 the United States. Men. I think it may have been 0:09:32.720 --> 0:09:36.600 one of the first agencies that was created under the 0:09:36.679 --> 0:09:41.240 new constitution, and then the production of a coinage and 0:09:41.480 --> 0:09:47.920 that symbolism of the sovereignty who and what we celebrate 0:09:48.120 --> 0:09:51.760 on the on the face of a coin you know 0:09:51.920 --> 0:09:56.840 that has been tremendous, has been recognized as tremendous symbolic 0:09:57.080 --> 0:10:02.240 value going back four thousand years. Can I ask a question, Philip, 0:10:03.200 --> 0:10:05.400 you mentioned, you know, it would take a few days 0:10:05.480 --> 0:10:07.920 to to set up the new dies and things, and 0:10:07.960 --> 0:10:10.760 then only a few hours to strike the coin um. 0:10:10.840 --> 0:10:14.360 But when it comes to the Platinum Statute, it seems 0:10:14.360 --> 0:10:16.040 to me and we don't sort of spend that much 0:10:16.080 --> 0:10:18.760 time talking about this because we usually focused on the 0:10:18.800 --> 0:10:23.360 fact that the statute provides for almost unlimited discretion on 0:10:23.400 --> 0:10:27.839 the denomination, but it also specifies pretty much unlimited discretion 0:10:27.880 --> 0:10:31.480 on the design and specifications of the claim. So if 0:10:31.520 --> 0:10:33.360 if a call came down and said, you know, we 0:10:33.400 --> 0:10:36.840 need this out in three hours from now, is there 0:10:36.840 --> 0:10:41.640 actually anything legally preventing using the existing hundred dollar die 0:10:41.800 --> 0:10:43.679 as it is, and then you know, crossing it out 0:10:43.720 --> 0:10:46.040 in sharpie pan or something. I know, it's a bit 0:10:46.200 --> 0:10:49.800 untooth and and and doesn't really kind of have the 0:10:49.840 --> 0:10:53.680 gravitas of of the symbolism that we might like in 0:10:53.720 --> 0:10:57.280 a pinch. Is there anything actually that legally requires the 0:10:57.360 --> 0:11:00.120 number on the coin to be the number that we 0:11:00.120 --> 0:11:03.040 we kind of call it with you know, the legal purposes, 0:11:03.360 --> 0:11:05.480 or if we really had to, is that another fiction 0:11:05.559 --> 0:11:08.640 we could just indulge in along with you know, the 0:11:08.679 --> 0:11:12.280 nominal value itself being something that's declared by law, by 0:11:12.360 --> 0:11:15.360 feat that we could simply declare its its face value 0:11:15.360 --> 0:11:18.280 even if it was a smooth, flat disc with no 0:11:18.360 --> 0:11:22.559 inscription on it, Well, there's no precedent for that. And 0:11:23.040 --> 0:11:28.120 on something that is this high profile, you want to 0:11:28.200 --> 0:11:33.040 definitely ground uh, your policy and your action on the 0:11:33.120 --> 0:11:37.199 policy on not only the law, but two hundred years, 0:11:37.480 --> 0:11:41.600 two hundred and thirty years of precedent. And in that, 0:11:41.800 --> 0:11:48.400 we really have two ways of evaluating the value of coin. 0:11:48.520 --> 0:11:54.079 One is the face value, which is unrelated to any 0:11:54.160 --> 0:11:59.080 intrinsic value of the coin. Once we say as a 0:11:59.200 --> 0:12:02.760 government it is worth a hundred dollars, it's worth a 0:12:02.840 --> 0:12:07.080 hundred dollars. That's the nature of fiat currency. The other 0:12:07.160 --> 0:12:10.480 way with with bullion coins, and this is what we 0:12:10.600 --> 0:12:15.640 do with the platinum egual bullion coin is its price 0:12:15.760 --> 0:12:19.720 based on the spot price of platinum at the time 0:12:19.960 --> 0:12:23.600 of sale, and those are the two primary ways in 0:12:23.720 --> 0:12:29.840 which the widely recognized traded coins in the United States 0:12:29.840 --> 0:12:35.480 are priced. There's also these collectible coins and commemorative coins 0:12:35.480 --> 0:12:40.080 that had more discretion. But I have really one of 0:12:40.080 --> 0:12:42.880 the points I've wanted to make, because so many of 0:12:42.880 --> 0:12:45.680 the opponents of the coins and others who have sort 0:12:45.720 --> 0:12:50.319 of brought into the mythology of the reading of that statute, 0:12:51.240 --> 0:12:56.080 is that the coin that is authorized by this legislation 0:12:56.800 --> 0:13:01.520 is a niche collectible that all the you know, a 0:13:01.640 --> 0:13:04.840 small portion of the American public would have any interest in. 0:13:05.640 --> 0:13:09.480 That simply is not true. And as a matter of fact, 0:13:09.520 --> 0:13:12.600 this is I know this is unusual for the head 0:13:12.640 --> 0:13:18.160 of an agency to write the legislation, but I wrote 0:13:18.200 --> 0:13:23.320 that legislation, and I mean it didn't take rocket science. 0:13:23.640 --> 0:13:28.120 It's very short, and I knew exactly what I wanted 0:13:28.200 --> 0:13:31.000 and what my people wanted to do with this, and 0:13:31.080 --> 0:13:34.800 that is to authorize a bullion coin that we could 0:13:34.800 --> 0:13:39.800 take into the world and compete worldwide. And the reference 0:13:39.880 --> 0:13:44.600 to proof does not negate that. But it also opened 0:13:44.600 --> 0:13:48.640 the door for us as a byproduct of the bullion 0:13:48.760 --> 0:14:09.920 going to produce a collectible coin. So everywhere else in 0:14:10.679 --> 0:14:14.720 coinage law seems to be highly prescribed and there's like 0:14:14.920 --> 0:14:18.520 very clear clear designs on the quarter and the dime 0:14:18.600 --> 0:14:22.680 and the nickel, etcetera. And even within the amendment there 0:14:22.720 --> 0:14:27.120 are restrictions elsewhere. And when the mint as you were 0:14:27.160 --> 0:14:30.040 involved in, then maybe we'll get into this does something 0:14:30.080 --> 0:14:34.680 new with coinage such as the collectible fifty State quarters endeavor. 0:14:35.200 --> 0:14:39.720 You know, there's very strict rollout rules, etcetera. And again 0:14:39.800 --> 0:14:43.480 all very clearly prescribed how it's going to work. And 0:14:43.560 --> 0:14:45.960 so that I guess that is why the platinum coins 0:14:46.000 --> 0:14:48.520 section k in this That's why it even stands out 0:14:48.880 --> 0:14:52.680 because it's so explicit in its lack of rules, which 0:14:52.720 --> 0:14:55.640 is unusual for coins. So can you just talk us 0:14:55.680 --> 0:15:01.840 through why platinum and why specific there's one subsection of 0:15:01.880 --> 0:15:04.800 the law. You made it a point in your drafting 0:15:04.800 --> 0:15:08.840 of it to create maximum flexibility. We I was doing 0:15:08.840 --> 0:15:13.240 a complete transform leading a complete transformation of the United States. 0:15:13.280 --> 0:15:20.040 Meant it was a it was a race car up 0:15:20.080 --> 0:15:23.880 on blocks in somebody's backyard when I came in in 0:15:24.080 --> 0:15:29.320 ninety four, and I I saw the potential of the 0:15:29.440 --> 0:15:34.239 US meant. At that point, I told the Secretary Treasury, 0:15:34.320 --> 0:15:37.400 Lloyd Benson, who I had worked for in the Senate. 0:15:37.520 --> 0:15:40.360 I had been his first chief of staff at Treasury. 0:15:40.560 --> 0:15:43.840 I told him, guess I'd like to have that presidential 0:15:43.840 --> 0:15:47.240 appointment because I think I can do something. And over 0:15:47.320 --> 0:15:52.520 the next two years we made some major transformations of 0:15:52.560 --> 0:15:56.160 the MINT that led me to believe that we were 0:15:56.240 --> 0:16:01.000 prepared to compete in international markets in a way that 0:16:01.040 --> 0:16:04.960 the US men had never done before. And part of 0:16:05.000 --> 0:16:08.880 that was because we had already built an international distribution 0:16:08.960 --> 0:16:13.800 network for a World Cup commemorative coin when the US 0:16:13.880 --> 0:16:17.040 hosted the World Cup in ninety four, and then for 0:16:17.120 --> 0:16:22.440 the n and nineties six Olympic coin programs, and those 0:16:22.520 --> 0:16:26.720 three years had those two programs over three years had 0:16:26.840 --> 0:16:32.800 tremendous international sales potential, and we went out and built 0:16:32.880 --> 0:16:40.280 the most extensive international numismatic sales network ever anywhere in 0:16:40.320 --> 0:16:44.440 the world. And we had also we had six continents covered. 0:16:45.040 --> 0:16:50.240 I told my director of marketing, what's wrong with Antarctica, UH, 0:16:50.760 --> 0:16:53.400 why can't we have a sales contract there? And he 0:16:53.480 --> 0:16:59.239 went to to the National UH Atmospheric and Oceanic Commission 0:16:59.480 --> 0:17:04.920 and actually got a distribution contract with them, and that 0:17:05.080 --> 0:17:10.560 year's annual report had a photograph of a scientists holding 0:17:10.680 --> 0:17:15.240 up our coins at the South Pole. So we we 0:17:15.240 --> 0:17:20.280 were very intent on making this a very wide distribution 0:17:21.200 --> 0:17:24.240 and we had great success with that program, and I 0:17:24.320 --> 0:17:28.160 wanted to build on that success and but move out 0:17:28.200 --> 0:17:32.080 of the collectible market into the bullion market, which is 0:17:32.119 --> 0:17:37.640 a worldwide, highly competitive market with about six or seven 0:17:38.400 --> 0:17:42.639 ments national mints that compete in that market. And the 0:17:42.800 --> 0:17:46.960 two big markets that I had targeted were Japan in 0:17:47.040 --> 0:17:49.879 the United States, and I felt like we could go 0:17:50.000 --> 0:17:53.240 in and of course in the US we immediately seize 0:17:53.359 --> 0:17:56.879 that market away from our competitors, but within six months 0:17:56.880 --> 0:18:00.800 we had taken the about six of the Happanese market 0:18:00.840 --> 0:18:04.680 as well, and that was really important to me, not 0:18:04.800 --> 0:18:07.879 just for bragging rights. I'm a native Texan and that 0:18:08.000 --> 0:18:13.280 has value, but also because I was already setting my 0:18:13.480 --> 0:18:17.439 sights on the next program, which was the Fifty States 0:18:17.560 --> 0:18:22.960 Quarters program, and I felt like if we demonstrated that 0:18:23.000 --> 0:18:27.240 we were capable of competing in international markets, would be 0:18:27.840 --> 0:18:32.440 building competence in Congress to get that enacted. And it 0:18:32.600 --> 0:18:35.479 was ever a point where anybody said, do you stop. 0:18:35.560 --> 0:18:38.600 You're making too many coins. You're you're earning too much 0:18:38.680 --> 0:18:42.800 sign yourge, you're returning you're returning too much profit on 0:18:42.880 --> 0:18:45.240 a net basis to the Treasury. You know, we're not 0:18:45.320 --> 0:18:48.800 able to borrow as many Treasury securities because you're making 0:18:48.840 --> 0:18:53.639 it unnecessary for us to issue. Nobody ever told me 0:18:53.720 --> 0:18:56.600 to start to stop making profits, uh, And that was 0:18:56.640 --> 0:18:59.560 a real bragging point for us. In fact, one of 0:18:59.600 --> 0:19:05.080 the things says I was able to work with with 0:19:05.200 --> 0:19:10.639 the chairman of my my sub committee to pass the 0:19:10.960 --> 0:19:16.080 fifty State Quarters Act over Adam and opposition by Treasury 0:19:16.119 --> 0:19:20.159 at the highest levels of Treasury. And one of the 0:19:20.200 --> 0:19:24.639 way I sold it to him, Michael Castle, and we 0:19:24.880 --> 0:19:28.040 sold it to other people on the hill, was that 0:19:29.000 --> 0:19:35.520 conservatively we had projected that the fifty State Quarters program 0:19:35.600 --> 0:19:39.760 over ten years would create two point six billion dollars 0:19:39.760 --> 0:19:44.560 and senior ridge profit, you know, producing coins for the 0:19:44.680 --> 0:19:50.280 purpose of provide scenerdge to the Treasury Department, over and 0:19:50.320 --> 0:19:54.439 above what the baseline would be dates back, you know, 0:19:54.760 --> 0:19:58.399 to that fifty State Quarters program. And so the fact 0:19:58.440 --> 0:20:01.639 that we would do it with a trillion dollar coin 0:20:02.200 --> 0:20:06.639 in principle is no different whatsoever. I mean sure, it 0:20:06.680 --> 0:20:10.159 has a couple more zeros behind it, but it's the 0:20:10.200 --> 0:20:13.960 same thing. So this is something I'm really struck by 0:20:13.960 --> 0:20:16.159 and kind of fascinated by. Which is the sort of 0:20:16.359 --> 0:20:20.200 I guess it would be agency entrepreneurialism. Like you had 0:20:20.200 --> 0:20:25.040 this vision for the fifty State Quarters project, but you 0:20:25.200 --> 0:20:27.320 also had this idea of, like to build up to that, 0:20:27.359 --> 0:20:30.680 you needed to execute on something before that, to build 0:20:30.720 --> 0:20:34.880 up credibility so that Mike Castle and others would want 0:20:34.920 --> 0:20:38.240 to even like, you know, think about further coinage legislation, 0:20:38.280 --> 0:20:40.560 put an effort into it. Can you talk a little 0:20:40.560 --> 0:20:45.119 bit about that mentality of like building up goodwill within 0:20:45.280 --> 0:20:49.520 Congress and the idea of, like, let's execute on something straightforward, 0:20:49.600 --> 0:20:53.120 expanding our share in the platinum bullion market with the 0:20:53.200 --> 0:20:57.080 idea of then gaining additional powers for the mint, and 0:20:57.280 --> 0:20:59.360 like you're sort of like I guess, I would say, 0:20:59.359 --> 0:21:03.960 working the inside game of expanding the discretion and power 0:21:04.000 --> 0:21:08.000 of the Mint. So I was sworn in. I went 0:21:08.040 --> 0:21:12.520 into the United States Men in September of of ninety three, 0:21:13.040 --> 0:21:19.800 and my Republican predecessor, David Ryder gave me a great orientation. 0:21:19.880 --> 0:21:22.520 We overlap for about three or four months. He gave 0:21:22.560 --> 0:21:27.400 me a great orientation. We have remained friends over all 0:21:27.480 --> 0:21:31.560 these years. And so I went into the MINT months 0:21:31.680 --> 0:21:36.359 before I was even nominated, formally nominated, and then in 0:21:36.600 --> 0:21:41.280 June I was sworn in after a Senate confirmation. I 0:21:41.320 --> 0:21:47.399 was sworn in by Secretary Benson. So immediately one of 0:21:47.440 --> 0:21:51.359 the first acts I took because of the analysis that 0:21:51.520 --> 0:21:55.800 I had done with David, was we saw that the 0:21:55.920 --> 0:22:01.600 MINT was balkanized by too many political appointees. Each the 0:22:01.680 --> 0:22:06.480 head of each MINT was headed by a presidential appointee. 0:22:06.680 --> 0:22:09.359 These are the regional mets you're talking about. Oh, yes, 0:22:09.680 --> 0:22:13.840 San Francisco, Denver, kind of like the regional Feds. Yes, 0:22:14.040 --> 0:22:19.280 that's right, San Francisco, Denver, Philadelphia, New York. And of 0:22:19.320 --> 0:22:22.560 course those people got their job not from the Director 0:22:22.600 --> 0:22:24.879 of the Men, not from the Secretary of the Treasury, 0:22:25.520 --> 0:22:29.080 not even I mean they were formally nominated by the president, 0:22:29.280 --> 0:22:34.600 but they got their jobs from the senior senator of 0:22:34.680 --> 0:22:39.240 the president's party in each state. They certainly didn't feel 0:22:39.280 --> 0:22:42.439 like the Director of the Men was their boss, you know. 0:22:42.560 --> 0:22:46.480 So these are little fiefdoms. And one of the first 0:22:46.480 --> 0:22:50.720 things I came to realize was that's a huge problem 0:22:50.800 --> 0:22:53.600 in the management of the men, and it was the 0:22:53.760 --> 0:22:57.439 source of multiple problems that we saw. So one of 0:22:57.440 --> 0:23:01.080 the first things I did is I went over Treasury 0:23:01.160 --> 0:23:06.000 and said, I want to eliminate nine political appointees. And 0:23:06.119 --> 0:23:09.280 there are several people, of course, the Secretary I didn't 0:23:09.320 --> 0:23:11.679 go to him first, but there were several people who 0:23:11.840 --> 0:23:14.439 laughed at me and said, there's no way you'll be 0:23:14.480 --> 0:23:17.400 able to get the White House to agree to this 0:23:17.640 --> 0:23:21.679 because their prime patronage positions. People don't even need to 0:23:21.680 --> 0:23:24.640 go to Washington and just stay stay home and do 0:23:24.720 --> 0:23:29.040 those jobs. But the Secretary weight in. I made the 0:23:29.119 --> 0:23:31.080 case to him that you know, if we're going to 0:23:31.160 --> 0:23:32.919 turn this place around, this is going to be one 0:23:32.960 --> 0:23:36.080 of the first things we do. And he agreed. In 0:23:36.160 --> 0:23:40.640 the White House lonebole agreed not to fill those positions. 0:23:41.440 --> 0:23:46.080 Now that's temporary, that could be changed at any moment. 0:23:46.760 --> 0:23:53.360 I went over to Stinny Hoyer, who had had constituents 0:23:53.760 --> 0:23:57.879 who worked at the Mint, and he said, yes, you know, 0:23:58.000 --> 0:24:00.840 and I found a sponsor for the and we were 0:24:00.880 --> 0:24:07.200 able to move legislation that eliminated permanently those positions. Well. 0:24:07.440 --> 0:24:12.840 November nine, of course, is the gen Rich Revolution. And 0:24:12.920 --> 0:24:17.160 when I go in to meet with my new Republican 0:24:17.320 --> 0:24:21.600 chairman in the House, I walk in the door with 0:24:21.760 --> 0:24:26.879 the credential of deep politicizing the US meant by that time, 0:24:26.920 --> 0:24:31.199 I'm sure they were the only nine political positions that 0:24:31.320 --> 0:24:34.919 had been administered that had been eliminated by the administration. 0:24:35.760 --> 0:24:39.919 So I walked down the door with tremendous credibility on 0:24:39.960 --> 0:24:44.560 the Republican side that I meant business. The reality is 0:24:44.560 --> 0:24:48.400 is that I've been a Democrat all my life, from 0:24:48.440 --> 0:24:52.880 being a young teenager. But I had built this rapport 0:24:53.520 --> 0:24:56.639 and this level of trust. It was very fortunately I 0:24:56.680 --> 0:25:02.119 had to committee subcommittee chairs who I immediately made a 0:25:02.160 --> 0:25:06.400 connection with, and they were willing to carry a series 0:25:06.440 --> 0:25:10.880 of reform legislation. You know, one thing that's really striking 0:25:10.920 --> 0:25:13.879 to me, and you know, you talked about for the 0:25:14.040 --> 0:25:16.800 for the beginning of coinage for sure, but also just 0:25:16.840 --> 0:25:21.160 going back to Thomas Jefferson, this idea of coinage as 0:25:21.200 --> 0:25:23.439 this sort of like expression of the state. And we 0:25:23.480 --> 0:25:26.480 talked about Fiat money and row and you know, coming 0:25:26.520 --> 0:25:29.280 from the M M T perspective, obviously, you know, we 0:25:29.359 --> 0:25:33.320 talked about money as a sort of inherent state phenomenon. 0:25:34.040 --> 0:25:36.160 You know, even though I sort of early on talked 0:25:36.160 --> 0:25:39.520 about we don't really think about coins very much in 0:25:39.560 --> 0:25:43.280 the modern day. Generally speaking, it is one of the 0:25:43.480 --> 0:25:49.040 few times in which people are regularly interfacing with something 0:25:49.280 --> 0:25:53.360 clearly created by the government. I mean, the government obviously 0:25:53.400 --> 0:25:56.479 permeates many aspects of our lives, the regulation and laws, 0:25:57.040 --> 0:25:59.240 but there aren't many times the day I guess the 0:25:59.240 --> 0:26:02.560 other one of the bills or maybe postage stamps, although 0:26:02.560 --> 0:26:04.920 those are used less and less in which were literally 0:26:05.000 --> 0:26:10.320 interfacing and using an express creation of something that the 0:26:10.400 --> 0:26:14.080 government made in a very straightforward way where there's no 0:26:14.119 --> 0:26:18.080 ambiguity about who created it. How much did you it 0:26:18.160 --> 0:26:20.800 was that something that you thought about as this idea 0:26:20.800 --> 0:26:24.199 of like delivering a service to the public that was 0:26:24.240 --> 0:26:28.600 clearly recognizable as something that like we want kind of 0:26:28.600 --> 0:26:31.520 like constituent service, customer service, Like how much of that 0:26:31.640 --> 0:26:36.120 framework did you take to the job? Oh, that was crucial, 0:26:36.160 --> 0:26:39.280 In fact, it was. It was the first major project 0:26:39.320 --> 0:26:44.040 that I took on United States. Meant sells these commemorative 0:26:44.080 --> 0:26:49.840 and collectible coins to a pretty large population of collectors, 0:26:50.240 --> 0:26:54.200 mostly in the United States. So we'd take these orders 0:26:54.240 --> 0:26:59.520 and we'd deliver the product within six to nine months 0:27:00.160 --> 0:27:03.240 is how long it took to deliver a product. And 0:27:03.400 --> 0:27:06.080 of course, unless you have a monopoly on a product, 0:27:06.160 --> 0:27:08.920 you have very committed customers. Nobody puts up with that. 0:27:09.600 --> 0:27:13.960 So one of the things we did immediately was to 0:27:14.160 --> 0:27:18.200 make a commitment, and we ended up making a series 0:27:18.320 --> 0:27:21.560 of commitments to the point in which we were delivering 0:27:21.560 --> 0:27:26.840 about of all products within one week. That was the 0:27:27.080 --> 0:27:32.320 camel's nose under the tent from me for beginning to reform. 0:27:32.400 --> 0:27:39.040 The ment was too and I made a commitment before 0:27:39.400 --> 0:27:43.320 I had gotten endorsement from my people because I wanted 0:27:43.359 --> 0:27:45.399 to hold our feet to the fire, and I also 0:27:45.480 --> 0:27:49.000 wanted them to know you said it, stretch objectives, and 0:27:49.080 --> 0:27:52.520 even if you don't meet them, if you make major 0:27:52.600 --> 0:27:57.600 progress and then renew the effort, people begin can believe you. 0:27:58.560 --> 0:28:01.480 And I all so felt that one of the things 0:28:01.520 --> 0:28:05.920 that's really crucial in federal government agencies they become so 0:28:06.200 --> 0:28:11.760 insulated from their publics and from their customers or clients 0:28:12.440 --> 0:28:20.440 because they have been dehumanized really for forty years, where 0:28:20.960 --> 0:28:24.560 those Washington bureaucrats are always the enemy of the people, 0:28:24.920 --> 0:28:29.040 and their funding is cut and oftentimes their political appointees 0:28:29.040 --> 0:28:33.680 are hostile to the mission. So I was very much 0:28:33.800 --> 0:28:38.520 supportive of public employees and also believed in the mission 0:28:38.560 --> 0:28:41.960 of the organization was committed to it. So in that case, 0:28:42.040 --> 0:28:45.280 to break the old habits, I believe it was necessary 0:28:45.320 --> 0:28:50.000 to strip the installation off the organization to put people, 0:28:50.400 --> 0:28:54.880 either figuratively or literally, face to face with their customers, 0:28:55.240 --> 0:28:59.880 whether the customer was an external customer or an intern 0:29:00.000 --> 0:29:04.280 a customer in which someone was supporting somebody's else activity 0:29:04.280 --> 0:29:09.440 in the agency. So that was crucial to me. Now, Joe, 0:29:09.920 --> 0:29:14.080 there are two pieces. You've talked about. One piece and 0:29:14.120 --> 0:29:18.960 that is how many people produce a product that is 0:29:19.080 --> 0:29:24.200 touched by every American. It was a unique aspect of 0:29:24.240 --> 0:29:27.720 the United States meant. But then there's the other side 0:29:27.720 --> 0:29:32.040 of it, and that is coins are works of art, 0:29:33.120 --> 0:29:37.080 and sometimes the art isn't very good, and sometimes the 0:29:37.360 --> 0:29:43.320 art is spectacular, and those works of art are likely 0:29:43.360 --> 0:29:45.080 some of them are going to be in museums two 0:29:45.080 --> 0:29:50.080 thousand years from now. So what other job can you 0:29:50.160 --> 0:29:57.880 work at that has those two counterbalanced values and where 0:29:57.920 --> 0:30:02.280 you trace the history and the legacy back to Jefferson 0:30:02.320 --> 0:30:07.080 and Hamilton's So all of that was crucial to me 0:30:07.800 --> 0:30:14.040 really energizing an agency that become very demoralized. I think 0:30:14.040 --> 0:30:16.760 I think there's also another layer there, which is that 0:30:17.440 --> 0:30:21.600 for a long time, you know, minting coins and for example, 0:30:21.720 --> 0:30:26.680 issuing bonds meant something very different in the monetary regime, 0:30:26.960 --> 0:30:32.040 where bond issuance meant maybe you have a targeting international 0:30:32.080 --> 0:30:36.200 money markets, maybe you don't have to have any pressure 0:30:36.360 --> 0:30:39.720 on your metal reserves if you're under a gold standard. 0:30:40.360 --> 0:30:44.880 But nowadays, of course, the coins that we issue are 0:30:44.920 --> 0:30:49.760 not sort of tied closely to underlying market fluctuations in 0:30:49.800 --> 0:30:53.600 the in the metal value, unless you're selling to bullion investors. 0:30:53.720 --> 0:30:58.160 And of course the coin itself can become, you know, 0:30:58.520 --> 0:31:02.680 with any denomination, much more something like the high high 0:31:02.800 --> 0:31:05.400 value money that it might have been in the early Republic, 0:31:05.520 --> 0:31:10.280 again but without any linkage to underlying metal content. But 0:31:10.320 --> 0:31:12.480 the other part of it is that the coins are 0:31:12.560 --> 0:31:17.040 very private, even more private than notes with barcodes. And 0:31:17.640 --> 0:31:19.600 in this world now where there's a sort of war 0:31:19.720 --> 0:31:23.880 on cash and there are these increasing questions about digital 0:31:23.920 --> 0:31:28.800 privacy and digital data collection, what the mint represents is 0:31:28.840 --> 0:31:32.560 not just small value or you know, hearkening back to 0:31:32.640 --> 0:31:35.160 a different era where metal was more important in money, 0:31:35.160 --> 0:31:40.280 but also a different design principle compared to central banks 0:31:40.280 --> 0:31:44.880 with their balance sheets and their account based framework. And 0:31:45.320 --> 0:31:48.200 your story of kind of the entrepreneurial mint getting getting 0:31:48.320 --> 0:31:51.320 larger is one that to me, you can fit into 0:31:51.360 --> 0:31:54.440 a larger story of institutions rising and falling. You know, 0:31:54.480 --> 0:31:57.080 there was a period where before the Federal reserved, there 0:31:57.120 --> 0:32:00.000 was an independent treasury that had its own set of accounts, 0:32:00.400 --> 0:32:04.200 the Federals of coming into existence, the postal service offering 0:32:04.240 --> 0:32:06.360 banking at one point, and they're not offering it, and 0:32:06.400 --> 0:32:09.120 now people are talking about it coming back. But you 0:32:09.120 --> 0:32:12.160 could imagine a moment, you know, maybe in the nineties 0:32:12.200 --> 0:32:16.080 when you were presidently thinking about these questions of digital money, 0:32:16.200 --> 0:32:19.040 or now today with the debates over the issuance of 0:32:19.040 --> 0:32:21.800 a digital dollar, where the mint, you know, it comes 0:32:21.880 --> 0:32:24.600 into a high degree of prominence and what may be 0:32:24.760 --> 0:32:27.840 considered you a rounding era in the federal budget now 0:32:27.880 --> 0:32:32.000 and sign yourridge becomes a much more central way that 0:32:32.040 --> 0:32:36.280 we designed the accounting for how new money gets issued 0:32:36.280 --> 0:32:38.800 and spent. So I just wanted to get any thoughts 0:32:38.800 --> 0:32:41.440 about that, just that idea that kind of the mint 0:32:41.520 --> 0:32:44.600 might be considered a very junior partner with the FED today, 0:32:44.760 --> 0:32:48.560 but that over time, those those dynamics change and involve, 0:32:48.920 --> 0:32:52.400 and they're not fixed right now. The kind of dynamic 0:32:52.440 --> 0:32:54.680 we have today isn't the only one that could ever 0:32:54.720 --> 0:32:59.360 exist again in the future. Now, that's that's very true 0:33:00.400 --> 0:33:02.840 from my experience. When I went in the door of 0:33:02.880 --> 0:33:07.360 the first day of the Clinton administration in January, the 0:33:07.560 --> 0:33:12.400 very first briefing I got was on the counterfeiting of 0:33:12.440 --> 0:33:15.959 the one dollar bill, and I won't go into the 0:33:16.040 --> 0:33:20.320 details on it, but what was absolutely clear, So this 0:33:21.720 --> 0:33:24.680 and the counterfeiting of the one dollar bill went back 0:33:24.680 --> 0:33:29.400 over a decade in which the Secret Service at that 0:33:29.440 --> 0:33:33.680 time part of the Treasury Department knew that this super 0:33:33.800 --> 0:33:38.280 one note that was virtually indistinguishable from the real thing 0:33:39.520 --> 0:33:42.560 was a problem. And at the end of the briefing, 0:33:43.760 --> 0:33:48.960 I said, why hasn't this been dealt with before? And 0:33:49.080 --> 0:33:51.800 they didn't have an answer for me, And before long 0:33:51.840 --> 0:33:57.240 I understood nobody at the Treasury wanted to tackle that. 0:33:58.200 --> 0:34:02.720 And currency in coinage. People go to the Treasury Department 0:34:03.120 --> 0:34:06.920 to make big policy and they don't want to be 0:34:07.120 --> 0:34:14.160 weighed down by little stuff like massive counterfeiting bill. And 0:34:14.920 --> 0:34:18.440 I and It really helped me to understand that point 0:34:18.480 --> 0:34:21.320 of view from Treasury when I went over to become 0:34:21.400 --> 0:34:26.040 director of the MEN, because it told me something very important, 0:34:26.320 --> 0:34:29.759 and that was in terms of my reform strategy, and 0:34:29.880 --> 0:34:33.600 that is fly below the radar as long as you can, 0:34:34.640 --> 0:34:40.359 because the way Treasury sees it is coinage currency all 0:34:40.440 --> 0:34:43.839 that has trouble on it. And that was really kind 0:34:43.840 --> 0:34:47.760 of a hangover from the Susan b Anthony disaster from 0:34:48.480 --> 0:34:51.719 thirteen years earlier. Can you actually talk? You have a 0:34:51.760 --> 0:34:54.720 blog and I and I've read a few of the posts. 0:34:55.040 --> 0:34:59.080 What was the Susan b Anthony disaster? Um? And this 0:34:59.160 --> 0:35:02.200 was something that aim well before you were the head 0:35:02.239 --> 0:35:04.000 of the US. But when you refer to that to 0:35:04.080 --> 0:35:06.080 there is the Susan b Anthony, I think it's a dollar. 0:35:06.520 --> 0:35:09.719 What was the what happened with that endeavor? Well, there 0:35:09.719 --> 0:35:13.959 are two levels in which it was a disaster. One 0:35:14.239 --> 0:35:19.600 was as a product. It was a little bit larger 0:35:19.640 --> 0:35:23.319 than a quarter, and it was the same color, the 0:35:23.360 --> 0:35:28.560 same silver color as a quarter, and so people initially 0:35:29.719 --> 0:35:33.360 confused them and it was the sort of thing and 0:35:33.400 --> 0:35:36.279 if you reached in your pocket, you'd pull out one 0:35:36.320 --> 0:35:39.160 of the one of the Susan B. Anthony's thinking it 0:35:39.280 --> 0:35:42.240 was a quarter or whatever. In reality, if you carry 0:35:42.280 --> 0:35:45.600 them around in your pocket very long, then you can 0:35:45.800 --> 0:35:49.279 tell the difference by size, but and also by the 0:35:49.400 --> 0:35:52.480 reading or the lack of it on the on the edge. 0:35:53.080 --> 0:36:00.960 But it was a disaster because Americans didn't want to 0:36:01.120 --> 0:36:06.600 carry a heavier coin. There was that resistance. Second, there 0:36:06.680 --> 0:36:10.120 was a lot of criticism of the design of Susan 0:36:10.160 --> 0:36:14.440 B Anthony itself. There was a claim that it wasn't 0:36:14.520 --> 0:36:18.680 an attractive design. I mean, you know, it was petty, 0:36:18.719 --> 0:36:22.520 but it was subject to criticism in that respect. But 0:36:23.080 --> 0:36:27.640 at the political level, the coin was launched in ninety 0:36:27.760 --> 0:36:32.200 nine and so there was this rumbling of dissatisfaction about it. 0:36:32.920 --> 0:36:37.759 But in the presidential election in which Jimmy Carter was 0:36:37.840 --> 0:36:44.040 running for re election, inflation had spiked and Ronald Reagan, 0:36:44.080 --> 0:36:47.480 of course was running against him. Small government government can't 0:36:47.520 --> 0:36:51.360 work because you know the big government as the enemy. 0:36:51.400 --> 0:36:57.200 It came to be called the Carter Quarter, really emphasizing 0:36:57.200 --> 0:37:01.000 the inflation and the confusion between when the Susan B 0:37:01.120 --> 0:37:05.040 Anthony in the quarter, and it was a shock at 0:37:05.040 --> 0:37:08.399 the United States meant, like you said, I didn't come 0:37:08.440 --> 0:37:11.759 in until thirteen years later, but it was as though 0:37:11.880 --> 0:37:16.800 it had happened yesterday there and as a matter of fact, 0:37:16.880 --> 0:37:20.759 right after the Gingrich Revolution in January came around, the 0:37:20.800 --> 0:37:27.800 Republican leadership proposed a new dollar coin, and my attitude was, sure, 0:37:27.960 --> 0:37:30.120 let's talk about it, let's but let's don't make the 0:37:30.120 --> 0:37:36.800 same mistakes, and legislation was filed completely replicating that mistake, 0:37:37.800 --> 0:37:42.000 this whole series of mistakes, and so I ended up 0:37:42.440 --> 0:37:47.600 doing a campaign, public campaign and testifying Congress opposing the 0:37:47.640 --> 0:37:52.560 new dollar coin. And after we defeated that, a few 0:37:52.640 --> 0:37:55.520 years later we came forward with the plan for the 0:37:55.560 --> 0:37:59.560 sack of Jeweeah coin, which did not suffer those kinds 0:37:59.640 --> 0:38:03.520 of of weaknesses because that one is actually a different uh. 0:38:03.600 --> 0:38:07.600 That one's gold color. That's right, that's right. And it's 0:38:07.680 --> 0:38:12.000 viewed as being a failure because ultimately it was. It 0:38:12.120 --> 0:38:15.919 was a failure in that it didn't replace the dollar bill, 0:38:16.920 --> 0:38:21.160 but it was an enormous success when we issued it. 0:38:21.960 --> 0:38:26.440 The Federal Reserve doesn't like coins, and without admit director 0:38:26.480 --> 0:38:29.640 and I left in two thousand, we launched a few 0:38:29.680 --> 0:38:34.520 months before my term was over, and without a director 0:38:34.800 --> 0:38:38.680 who would take on the feller reserve to ensure its 0:38:38.719 --> 0:38:42.920 success than had died on the vine. Basically, you know, 0:38:43.000 --> 0:38:47.800 you just talked then about the FED not liking coins 0:38:48.000 --> 0:38:50.759 and the idea that sort of the often works best 0:38:50.760 --> 0:38:53.319 when it's under the radar. It seems to me that 0:38:53.400 --> 0:38:57.160 there is a bit of kind of into agency servianism. 0:38:57.719 --> 0:39:00.759 Either way. The coin is discussed when we talk about 0:39:00.880 --> 0:39:03.680 kind of budget gimmicks, you know, reading the Social Security 0:39:03.680 --> 0:39:06.560 Trust Fund or something is that is the Treasury Secretary 0:39:06.680 --> 0:39:09.560 in the eighties. That's an acceptable budget gimmick. The use 0:39:09.600 --> 0:39:13.240 of Section thirteen three authority into downs in and nine, 0:39:13.360 --> 0:39:16.560 all these special purpose vehicles and lending facilities the FED 0:39:16.640 --> 0:39:20.279 does where the Treasury provides the underlying capital, so the 0:39:20.320 --> 0:39:23.080 first losses are borne by the Treasury, but it's leveraged 0:39:23.080 --> 0:39:26.200 by the FED. Those are acceptable accounting gimmicks because they 0:39:26.239 --> 0:39:29.560 sound complex, They sound like the kinds of things that 0:39:29.640 --> 0:39:32.760 you would do in a Wall Street trading firm or something. 0:39:33.280 --> 0:39:37.920 But this gimmick it almost defends the sensibilities of the 0:39:38.040 --> 0:39:41.560 kind of high finance, high high minded types because it's 0:39:42.000 --> 0:39:44.680 it's sort of giving power to this lowly agency to 0:39:44.760 --> 0:39:47.320 save the day when all of the the big boys 0:39:47.360 --> 0:39:49.640 couldn't do it. Do you experience any of that? I 0:39:49.680 --> 0:39:51.719 know you were actually kind of high about the Treasury 0:39:51.719 --> 0:39:55.400 and you were in the legislature before that, But do 0:39:55.719 --> 0:39:57.960 you experience any of that kind of chauvinism with your 0:39:58.040 --> 0:40:05.640 agency interactions something like that? We certainly experienced it with 0:40:06.440 --> 0:40:12.960 the Sacka Joia dollar coin. We did extensive market research 0:40:13.360 --> 0:40:16.080 on what is it going to take for this coin 0:40:16.120 --> 0:40:21.520 to be accepted enthusiastically by the American public. We also 0:40:21.760 --> 0:40:26.239 did market research in depth with the banks, because the 0:40:26.320 --> 0:40:29.520 banks are our channel to get the coin into the 0:40:29.560 --> 0:40:33.040 hands of the public, our channel first through the Federal 0:40:33.120 --> 0:40:38.440 Reserve and then through the banks. So we had several 0:40:38.719 --> 0:40:42.640 meetings with banks, bankers, and the Federal Reserve was there, 0:40:43.360 --> 0:40:47.880 and basically they laid out this catch twenty two for us, 0:40:47.920 --> 0:40:52.080 and that was, we will order the new dollar coin 0:40:52.160 --> 0:40:55.479 as soon as we know that the American public will 0:40:55.520 --> 0:40:59.640 accept it. Our response was, how are we supposed to 0:40:59.680 --> 0:41:02.440 do that if we can't get it into the hands 0:41:02.440 --> 0:41:05.280 of And we showed them the market research that showed 0:41:05.880 --> 0:41:08.279 that there was a really good chance that when we 0:41:08.400 --> 0:41:10.919 launched this coin that would be big demand for it, 0:41:11.800 --> 0:41:16.160 and the Federal Reserve just didn't weigh in despite the 0:41:16.200 --> 0:41:21.799 ment congressional mandate to produce and circulate this coin. And 0:41:21.960 --> 0:41:29.080 at the time, I've always been suspicious of concentrated economic power, 0:41:29.160 --> 0:41:34.759 in particular political power to but concentrated economic power. And 0:41:34.800 --> 0:41:37.560 I've seen over and over and over again over the 0:41:37.600 --> 0:41:42.040 years through my career, both outside the government inside the government, 0:41:42.520 --> 0:41:47.520 how agencies are captured by the people they regulate or 0:41:47.760 --> 0:41:52.240 you know, the institutions they served. And what I saw 0:41:52.320 --> 0:41:58.720 there was the Federal Reserve acting as an advocate for 0:41:59.120 --> 0:42:05.319 the banks that they were supposed to regulate. And and 0:42:05.640 --> 0:42:08.200 what my thought about that was a lot of people say, well, 0:42:08.239 --> 0:42:12.160 you know, that's penny any that's opinion, you know, bun Inton. 0:42:12.880 --> 0:42:16.319 My what my thought was, if on something that is 0:42:16.400 --> 0:42:20.080 so small, that has so little impact on the banks, 0:42:20.120 --> 0:42:24.640 that the FED will be their representative within the government, 0:42:25.280 --> 0:42:27.640 what is the chance that the Fed won't do that 0:42:27.719 --> 0:42:30.200 on the things that are really crucial to the health 0:42:30.239 --> 0:42:33.560 of the banks. So what I in order to overcome 0:42:33.640 --> 0:42:39.400 that problem, I went to the new lobbyists for Walmart, 0:42:39.719 --> 0:42:43.279 who had been a distributor of our Olympic coins in 0:42:45.520 --> 0:42:48.680 and said, I'd like to launch this coin through three 0:42:48.719 --> 0:42:54.640 thousand locations across the country in your stores, all on 0:42:54.680 --> 0:43:00.319 the same day, January two thousand and they said sure, 0:43:01.320 --> 0:43:05.080 and it was a huge success. Within a matter of 0:43:05.640 --> 0:43:10.040 hours or days, the stores exhausted their supply. So when 0:43:10.120 --> 0:43:13.239 their customers said, oh, well, we didn't get the dollar coin, 0:43:13.360 --> 0:43:16.279 what do they do? They call the bank? Banks don't 0:43:16.320 --> 0:43:19.399 have them, so because they didn't order them and they 0:43:19.440 --> 0:43:23.120 resisted it. So who do they call? Well, the FED? 0:43:23.680 --> 0:43:26.920 And who does the FED called? The Secretary of the Treasury. 0:43:27.040 --> 0:43:29.640 So I you know, I hear from the Secretary of Treasury, 0:43:29.680 --> 0:43:50.799 but my job was to fade the heat. I loved it. 0:43:50.840 --> 0:43:53.080 I mean, it's funny how many of these conversations seem 0:43:53.160 --> 0:43:56.399 to come full circle. And of course even today there 0:43:56.440 --> 0:44:01.480 are recurrent conversations about a company like Walmart into retail 0:44:01.520 --> 0:44:04.160 banking and fierce opposition, and so it's interesting to hear 0:44:04.200 --> 0:44:06.960 that in that example. But also I want to go 0:44:07.000 --> 0:44:09.399 back to like the point also that Rohan is making 0:44:09.400 --> 0:44:11.600 about like it's kind of like what gets called a 0:44:11.640 --> 0:44:14.560 gimmick or not is very strange because when we heard 0:44:14.600 --> 0:44:18.279 from Secretary Yellen recently and she called the trillion dollar 0:44:18.360 --> 0:44:21.640 coin very dismissively a gimmick. But if Rohan has pointed out, 0:44:21.960 --> 0:44:24.799 you know other things that are like extraordinary measures are 0:44:24.800 --> 0:44:28.320 okay and weird things where the Treasury provides financing for 0:44:28.360 --> 0:44:30.839 the Fed, of the Fed provides leverage, you know, those 0:44:30.880 --> 0:44:34.359 don't get called gimmicks. It seems to me that there 0:44:34.480 --> 0:44:39.120 is nothing less gimmicky than a coin that on some sense, 0:44:39.320 --> 0:44:42.359 coins have existed for over three thousand years. Paying for 0:44:42.440 --> 0:44:45.400 things with coinage is about one of the oldest traditions 0:44:45.600 --> 0:44:48.960 there is, putting a number on a coin and saying, 0:44:48.960 --> 0:44:52.000 as you established that that is the value of that coin. 0:44:52.560 --> 0:44:55.279 It almost is like of all the things we talked 0:44:55.280 --> 0:44:58.520 about in financing, there's almost to me it's a sense 0:44:58.560 --> 0:45:01.560 of like creating a coin might be the least gimmicky 0:45:01.760 --> 0:45:06.239 form of public fundraising there is. Yeah, well, that's exactly right. 0:45:06.680 --> 0:45:09.440 The concept of scene ridge that we talked about earlier 0:45:10.000 --> 0:45:15.400 is an ancient concept. It goes back thousands of years, 0:45:15.440 --> 0:45:19.239 almost as old as coinage is itself. The concept of 0:45:19.320 --> 0:45:22.520 senior is real simple, and that is it is the 0:45:22.560 --> 0:45:27.520 difference between the cost of producing a coin and it's 0:45:27.600 --> 0:45:32.440 face value, and that margin represents a form of profit. 0:45:32.560 --> 0:45:35.920 It's not treated that way anymore, but it used to 0:45:35.960 --> 0:45:40.560 be a way of funding the crown. So there'd be 0:45:40.640 --> 0:45:45.520 this small difference between the gold and a coin and 0:45:45.640 --> 0:45:48.600 the face value on the coin, and that represented a 0:45:48.719 --> 0:45:51.520 profit that went to the king. And if you were 0:45:51.560 --> 0:45:56.080 a mint director who produced those coins and you shaved 0:45:56.120 --> 0:46:00.719 a little bit of metal off that and base, that's 0:46:00.760 --> 0:46:06.000 where the concept debasing coinage or your currency comes from. 0:46:06.640 --> 0:46:11.319 Then if you were discovered, you were beheaded. And fortunately 0:46:11.360 --> 0:46:15.360 ment directors don't have to go through that anymore. But yes, 0:46:15.520 --> 0:46:18.920 that's a very old concept. It seems paying for things 0:46:19.000 --> 0:46:21.520 with coins of the state, paying for things with coins 0:46:21.520 --> 0:46:24.600 of the state, saying that the coin is worth this 0:46:24.760 --> 0:46:27.120 much because we say it is because we ascribed it 0:46:27.239 --> 0:46:30.880 into the blank, seems like a very old concept. In 0:46:30.920 --> 0:46:36.239 a way. It feels very on gimmicky. That's right, to 0:46:36.440 --> 0:46:39.440 go back to your the whole question of about about 0:46:39.440 --> 0:46:42.160 whether or not the trillion dollar coin is a gimmick. 0:46:42.880 --> 0:46:45.960 As we're talking about the concept of coinage, the concept 0:46:46.000 --> 0:46:50.319 of scene ridge, I mean, it is so deeply embedded 0:46:50.360 --> 0:46:54.640 in human history that it's hard to call that a gimmick. 0:46:55.080 --> 0:47:00.280 But I've said that the trillion dollar coins suffers a 0:47:00.360 --> 0:47:06.040 branding problem, and that is it's too simple, I mean 0:47:06.280 --> 0:47:11.839 quantitative easing. You know that sounds really sophisticated. People say, oh, 0:47:11.920 --> 0:47:14.960 I can't conceive of that. But also what I'm discovering 0:47:15.120 --> 0:47:18.560 is that tree and dollar coin that that also has 0:47:18.600 --> 0:47:22.960 a brand advantage, and that is that people understand what 0:47:23.000 --> 0:47:26.480 that is. And if we get in front of it 0:47:26.680 --> 0:47:32.640 and explain away all the mythology and misinformation and disinformation, 0:47:33.320 --> 0:47:38.040 then I think there's an opportunity for it to overcome 0:47:38.080 --> 0:47:41.960 the negative aspects of the brand. Yeah, it seems to 0:47:42.000 --> 0:47:44.600 me a lot of people say, well, we should do 0:47:44.680 --> 0:47:48.960 this other alternative that would be functionally equivalent, but that 0:47:49.160 --> 0:47:52.680 would would not you know, suffer the simplicity that actually 0:47:52.719 --> 0:47:55.840 causes people to understand it. So in their view, you know, 0:47:56.080 --> 0:47:59.600 much more complicated, giving things that that you know, involves 0:47:59.640 --> 0:48:02.960 seven layers of jargon and all this kind of thing. 0:48:04.040 --> 0:48:06.960 It's a feature, not a bug that they're so complicated, 0:48:07.000 --> 0:48:10.080 because then people don't actually understand what's going on. Their 0:48:10.120 --> 0:48:12.960 their eyes grew cross eyed. They sort of tune out 0:48:13.000 --> 0:48:15.879 before you finish describing all the steps, and that's that's 0:48:15.920 --> 0:48:18.640 a good thing for them, and you know, whatever your 0:48:18.719 --> 0:48:21.880 views are about whether or not the public should be 0:48:21.920 --> 0:48:26.400 able to understand how money works, it seems like that's 0:48:26.440 --> 0:48:29.000 actually the real disagreement here. It's not the ones a 0:48:29.040 --> 0:48:31.040 gimmick and one isn't a gimmick. It's that do you 0:48:31.080 --> 0:48:34.680 want a gimmick designed to obscure or does it a 0:48:34.719 --> 0:48:37.640 gimmick design to clarify? One sense? You know, if we're 0:48:37.640 --> 0:48:40.520 going to call the coin of gimmick at all. And 0:48:40.560 --> 0:48:42.319 it seems to me that we almost spend a lot 0:48:42.360 --> 0:48:45.440 of time stepping around that that that we that everybody 0:48:45.480 --> 0:48:47.960 wants to frame it as though one is serious and 0:48:48.040 --> 0:48:50.720 one isn't, or one is more sort of in line 0:48:50.760 --> 0:48:52.919 with the spirit of existing law and one isn't, when 0:48:52.960 --> 0:48:55.960 really it just boils down to whether or not we're 0:48:56.000 --> 0:49:00.399 trying to educate and enlighten or sort of you are 0:49:00.560 --> 0:49:04.279 and pull the wooloiver in the proceeds. Yeah, that's a 0:49:04.600 --> 0:49:08.719 that's an excellent point. And if and if we've discovered 0:49:08.760 --> 0:49:10.880 anything in the last five years, and a number of 0:49:10.880 --> 0:49:14.640 things we've discovered, one is that there is a deep 0:49:14.880 --> 0:49:22.120 suspicion of ex so called expertise and real expertise jargon, 0:49:22.719 --> 0:49:28.719 which is associated with certain kinds of expertise are suspect 0:49:28.920 --> 0:49:35.520 in American culture. So quantitative easing. Yeah, you know, people say, 0:49:35.600 --> 0:49:38.359 I don't know what that is, but I don't, you know, 0:49:38.560 --> 0:49:41.760 I suspect what it is. Trade your dollar coin. People 0:49:41.800 --> 0:49:44.879 get that, they understand it, and so, and really the 0:49:44.920 --> 0:49:50.799 concept behind it is it's not that difficult. So let 0:49:50.840 --> 0:49:54.279 me finish here with that. It's a kind of a 0:49:54.400 --> 0:49:57.520 hypothetical or maybe it's an impossible question to answer. But 0:49:58.280 --> 0:50:02.040 the dead ceiling has always been this sort of political 0:50:02.120 --> 0:50:06.440 trip wire, but we've only really had extreme dead ceiling showdowns. 0:50:06.719 --> 0:50:08.640 We talked about this with Rowan a couple of weeks 0:50:08.640 --> 0:50:12.480 ago on the show. Really since really it's already getting 0:50:12.560 --> 0:50:16.719 very intense under the Obama here an after the big 0:50:16.760 --> 0:50:21.680 Republican victory, and so you know, some of these questions 0:50:21.719 --> 0:50:24.200 about this sort of like, wow, we might really default. 0:50:24.239 --> 0:50:28.640 We don't really know much about how past Treasury secretaries 0:50:29.160 --> 0:50:32.279 might have dealt with this, but it is a hardball move, right, So, 0:50:32.440 --> 0:50:35.080 like there is this norm that it's like, okay, obviously 0:50:35.360 --> 0:50:37.960 yelling or whoever else would be Treasary secretary would like 0:50:38.000 --> 0:50:40.600 to just raise the dead ceiling in the conventional manner 0:50:40.640 --> 0:50:43.640 and then ideally forget about it in a few years. 0:50:43.640 --> 0:50:46.319 But to invoke the coin and or to say, you 0:50:46.320 --> 0:50:49.080 know what, we're not going to play games, We're not 0:50:49.120 --> 0:50:51.800 going to let you all hold the economy hostage, whatever, 0:50:52.640 --> 0:50:55.560 is a hardball political move, you know, it's that would 0:50:55.560 --> 0:50:57.480 be it's outside the norm. It's not it's not the 0:50:57.560 --> 0:51:00.960 norm of how these things typically go down. Do you 0:51:01.000 --> 0:51:05.520 think there are like Treasury secretaries of the past who 0:51:05.560 --> 0:51:09.080 may have had more of an appetite for the the 0:51:09.120 --> 0:51:13.160 hardball of this option. I mean, obviously from a legal standpoint, 0:51:13.160 --> 0:51:17.279 it's only been open since with with the amendment to 0:51:17.320 --> 0:51:18.839 the coin in Jack that you got passed. But in 0:51:18.920 --> 0:51:22.000 terms of like the appetite to say, you know what, 0:51:22.440 --> 0:51:25.360 don't come to us with the negotiation, don't stall. We 0:51:25.440 --> 0:51:26.880 have a coin that we can mint and we're not 0:51:26.880 --> 0:51:29.560 going to talk about this. Are there is this something 0:51:29.600 --> 0:51:31.879 that in different environments maybe there would have just been 0:51:31.920 --> 0:51:35.680 more willingness to roll over the opposition by invoking the 0:51:35.760 --> 0:51:43.040 Colin option earlier Alexander Hamilton's it's the only one that 0:51:43.120 --> 0:51:47.239 comes to mind. I don't know if any secretary who 0:51:47.600 --> 0:51:52.160 would have wanted to pursue this option unless his or 0:51:52.200 --> 0:51:56.000 her back was to the wall, and if it comes 0:51:56.080 --> 0:51:59.800 down to the nation to falling on its debts or 0:52:00.120 --> 0:52:03.200 many a triion dollar coin, I think there are a 0:52:03.239 --> 0:52:06.080 lot of Secretaries of the Treasury who would have considered it, 0:52:06.560 --> 0:52:10.880 and if it was the only viable option, it's just 0:52:11.440 --> 0:52:15.919 the estimate is the defaulting on the debt would eliminate 0:52:16.040 --> 0:52:22.759 fifteen treeion dollars in wealth in this nation. Now, if 0:52:22.760 --> 0:52:26.880 that's a choice or a treeion dollar coign easy choice, 0:52:27.080 --> 0:52:29.879 And I think a secret treasury would do the same thing. 0:52:30.520 --> 0:52:33.600 And I think it's an easy decision, fift trillion dollars 0:52:33.600 --> 0:52:36.160 of wealth created or a coin that's a little gimmicky. 0:52:36.360 --> 0:52:38.400 You would not think that that is a hard choice, 0:52:38.440 --> 0:52:42.080 at least I wouldn't, But apparently, you know you think 0:52:42.120 --> 0:52:44.479 that's an easy call. Well, it's not an easy call. 0:52:44.840 --> 0:52:47.840 If there's no other option, there are There is another 0:52:47.880 --> 0:52:50.359 option that I think is a viable option, and that 0:52:50.560 --> 0:52:54.640 is the fourteenth Amendment. I think the fourteenth Amendment is 0:52:54.760 --> 0:52:59.000 a clear option here. And you know, I don't think 0:52:59.080 --> 0:53:01.960 the usually I don't think the trillion dollar coin is 0:53:02.000 --> 0:53:08.920 a gimmick, but it is subject to criticism as a gimmick. 0:53:09.640 --> 0:53:12.800 The Constitution of the United States and the fourteenth Amendment 0:53:13.280 --> 0:53:16.920 is has no vulnerability to that. It has other weaknesses 0:53:17.000 --> 0:53:23.000 and vulnerabilities, but that's not one of them. You know. 0:53:23.160 --> 0:53:25.920 We could go on forever, and honestly, this is so 0:53:26.080 --> 0:53:28.480 this is such a fascinating discussion to me, because even 0:53:28.560 --> 0:53:31.080 beyond this sort of politics right now, and even beyond 0:53:31.320 --> 0:53:34.319 the sort of legal dimension, just thinking about like the 0:53:34.480 --> 0:53:37.919 history of money and the actual operation of how does 0:53:38.000 --> 0:53:41.280 money get made and then how to the public essentially 0:53:41.280 --> 0:53:44.920 to me like an under disgusted and under examined topic. 0:53:45.280 --> 0:53:47.440 We could go on forever, but this was such a 0:53:47.480 --> 0:53:49.680 treat Rowan, it was great to have you back and 0:53:49.960 --> 0:53:53.520 Mint director deal so great to hear from your perspective 0:53:53.600 --> 0:53:56.279 as having a been involved in the right of the law, 0:53:56.320 --> 0:53:58.919 but just seeing how this all works. Thank you both 0:53:58.960 --> 0:54:01.839 so much for coming on a lot. Thanks for having me. 0:54:02.520 --> 0:54:17.759 Sup pleasure to thank you well. Obviously Tracy wasn't here, 0:54:18.000 --> 0:54:20.920 so I can't banter with her as I would normally do, 0:54:21.480 --> 0:54:24.359 but I strongly suspect, you know, I really do think 0:54:24.400 --> 0:54:27.400 after our first Mint the coin episode, that Tracy was 0:54:27.440 --> 0:54:30.799 getting fairly coin pilled, and I am convinced that after 0:54:30.920 --> 0:54:34.360 this one and hearing from former MINT director Deal himself, 0:54:34.800 --> 0:54:36.960 that she would be fully on board. Maybe that's a 0:54:37.000 --> 0:54:39.200 little presumptuous of me to say, but I really think 0:54:39.200 --> 0:54:41.480 she would have been sold. Like I said kind of 0:54:41.480 --> 0:54:43.759 at the end, there are so many like aspects of 0:54:43.800 --> 0:54:46.960 that discussion that I find like genuinely fascinating. Like, you know, 0:54:46.960 --> 0:54:48.839 there's something I've been thinking about. It doesn't even really 0:54:48.840 --> 0:54:53.000 relate to money per se, but the idea of agency 0:54:53.160 --> 0:54:58.919 and sub agency entrepreneurialism and the idea of as um 0:54:58.920 --> 0:55:02.799 Philip Deal was talked, think about, let's do this simple thing, 0:55:03.120 --> 0:55:07.080 Let's do this straightforward thing of expanding our share in 0:55:07.120 --> 0:55:10.160 the bullion market so that then we can get congressional 0:55:10.640 --> 0:55:15.280 support for something more ambitious, the fifty State Quarters project. 0:55:15.480 --> 0:55:17.640 Even like thinking about that and how like our sort 0:55:17.640 --> 0:55:21.880 of government operates super interesting. Also really interested in this 0:55:21.920 --> 0:55:24.759 idea that, like you know, people add Treasury might be 0:55:24.800 --> 0:55:28.200 interested in like big ideas, like big reforms of tax policy, 0:55:28.239 --> 0:55:31.000 but it's something sort of like simple and operational, like 0:55:31.280 --> 0:55:34.960 how do you avoid counterfeiting the d dollar bill is 0:55:35.000 --> 0:55:37.839 not something that people in the government maybe gets so 0:55:37.880 --> 0:55:41.080 excited about because it's not as you know, the ideas 0:55:41.080 --> 0:55:44.840 aren't as big anyway, so many interesting things from that discussion. 0:55:45.000 --> 0:55:47.239 It is a real treat to hear from both of them, 0:55:47.280 --> 0:55:50.520 so that further Ado and I there. This has been 0:55:50.560 --> 0:55:54.560 another episode of the Odd Lots podcast. I'm Joe Wisn't 0:55:54.560 --> 0:55:56.920 thought you could follow me on Twitter at the Stalwart. 0:55:57.239 --> 0:56:00.720 Follow my co host on Twitter, Tracy Alloway at ac Alloway. 0:56:01.000 --> 0:56:04.600 Follow our guests on Twitter. Rowan Gray He's at Rowan Gray. 0:56:05.080 --> 0:56:08.239 Follow Mint director Deal Philip Deal. He's on Twitter at 0:56:08.320 --> 0:56:11.040 Philip and Deal. Although he hasn't tweeted in a while, 0:56:11.080 --> 0:56:13.160 I think you should get back to tweeting. Yes't tweeted, 0:56:13.160 --> 0:56:16.680 Since he should, he should get a little more public, 0:56:16.719 --> 0:56:20.239 in my opinion. Follow our producer Laura Carlson. She's at 0:56:20.360 --> 0:56:23.520 Laura M. Carlson. And check out all of our podcasts 0:56:23.520 --> 0:56:27.600 at Bloomberg under the handle at podcasts. Thanks for listening.