WEBVTT - This Is How the Trillion Dollar Coin Could End Debt Ceiling Fights for Good 0:00:11.039 --> 0:00:14.880 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.920 --> 0:00:19.960 I'm Joe Wisn't Thal And I'm Tracy Hallaway. So Tracy, 0:00:20.160 --> 0:00:25.119 you know, like I'm a serious financial journalist. I'm a 0:00:25.160 --> 0:00:28.960 serious journalist and one aspect of journalism that I think 0:00:29.080 --> 0:00:31.720 is important. Why are you laughing? Sorry? I shouldn't laugh 0:00:32.240 --> 0:00:34.400 I shouldn't. I'm sorry, I just know where this is 0:00:34.440 --> 0:00:39.760 going go on. No, No, I just feel like one 0:00:39.960 --> 0:00:44.199 important aspect of journalism is impartiality. Like you know, I 0:00:44.240 --> 0:00:47.560 don't think we should like take views on many things. 0:00:47.680 --> 0:00:50.760 We should be open minded, we should be intellectually honest, 0:00:50.960 --> 0:00:52.920 but it is not really our job to take a 0:00:52.960 --> 0:00:55.880 position on things, you know what I'm saying. Sorry, I 0:00:55.880 --> 0:01:00.000 don't know why I can't stop laughing, Because impartiality is very, 0:01:00.080 --> 0:01:02.880 very important. I think the difficulty comes when when you 0:01:03.440 --> 0:01:06.399 I mean, in a lot of financial journalism, people have 0:01:06.480 --> 0:01:09.800 strong opinions about one topic one way or the other, 0:01:09.959 --> 0:01:14.480 and sometimes those opinions seem to be grounded in logic, 0:01:14.600 --> 0:01:16.840 and so you get frustrated if other people don't see 0:01:16.920 --> 0:01:19.319 the same logic. But yes, like we are not supposed 0:01:19.360 --> 0:01:21.680 to take sides, We're supposed to lay out both sides 0:01:21.680 --> 0:01:26.320 of the argument every time. So I I take this 0:01:26.440 --> 0:01:32.000 responsibility as a serious Capital j journalist very seriously. But 0:01:32.040 --> 0:01:35.360 I have to admit, if I'm being completely honest, if 0:01:35.360 --> 0:01:38.920 I've been completely honest, there is one topic that I 0:01:38.959 --> 0:01:46.600 find very hard to Um, let's say, avoid showing my bias. Um, yes, okay, 0:01:46.760 --> 0:01:50.680 uh so we're talking about minting the trillion dollar coin, 0:01:51.040 --> 0:01:53.240 of which you have been an advocate for a very 0:01:53.280 --> 0:01:56.720 long time. First of all, I can't believe that we've 0:01:56.720 --> 0:01:59.440 managed to do what is it like six years of 0:01:59.440 --> 0:02:02.280 the Odd Lots podcast and we haven't yet done a 0:02:02.480 --> 0:02:06.640 mint the Coin episode. Um, that's one thing. And then secondly, 0:02:07.600 --> 0:02:10.800 I mean, this is the one thing that I remember 0:02:11.240 --> 0:02:14.400 about your writing, or like the foremost thing about your 0:02:14.400 --> 0:02:17.320 writing before we started working together at Bloomberg. It was 0:02:17.400 --> 0:02:21.120 the big post you did at Business Insider. I think 0:02:21.160 --> 0:02:27.040 it was way back in something like that about minting 0:02:27.080 --> 0:02:30.040 the coin and the discussion people were having about it 0:02:30.120 --> 0:02:33.360 at the time. And I remember reading that and thinking 0:02:34.320 --> 0:02:37.360 this must be a joke. This is so weird. Um, 0:02:37.400 --> 0:02:39.040 you know, I started thinking about whether or not we're 0:02:39.040 --> 0:02:42.600 in a simulation again. And and now like fast forward 0:02:42.639 --> 0:02:47.120 to one and there are actual politicians in Washington who 0:02:47.160 --> 0:02:50.600 were talking about it. It's been a really incredible decade. 0:02:50.720 --> 0:02:54.240 So yes, I am going to fully my bias. Actually 0:02:54.240 --> 0:02:56.720 admitted it to one of our colleagues the other day. 0:02:57.160 --> 0:03:00.160 I was like, you know, I'm a serious journalist, but 0:03:00.240 --> 0:03:02.200 I have to admit that I really think the debt 0:03:02.240 --> 0:03:05.959 sailing is a very absurd law and that a very 0:03:06.000 --> 0:03:09.360 good solution is for the Treasury to mint a trillion 0:03:09.400 --> 0:03:12.080 dollar platinum coin and just end as far as once 0:03:12.080 --> 0:03:14.600 and for all. So yes, this is my bias. But 0:03:14.720 --> 0:03:16.400 you know, people, it is weird, and I will be 0:03:16.440 --> 0:03:18.440 the first to admit it's like a weird thing. Like 0:03:18.480 --> 0:03:21.120 I'm not going to deny that it's strange that it 0:03:21.160 --> 0:03:23.440 seems that it's a legal loophole, that it's a hack. 0:03:23.760 --> 0:03:27.320 That people have lots of questions, both on the economics, 0:03:27.480 --> 0:03:31.640 the legality and the sort of like the institutional aspects 0:03:31.639 --> 0:03:34.320 of how this can be done and who is the 0:03:34.400 --> 0:03:37.120 unilaterally authority to just create a train dollar the money. 0:03:37.320 --> 0:03:39.680 I admit that there's a lot of questions and people 0:03:39.760 --> 0:03:43.440 have reason to be skeptical. Nonetheless, I think it's a 0:03:43.440 --> 0:03:46.760 good idea. Maybe you do too well, maybe you'll be convinced. 0:03:47.280 --> 0:03:50.720 And I think though it is surprising that after all 0:03:50.760 --> 0:03:53.440 these years of the Outlaws podcast, where finally for the 0:03:53.520 --> 0:03:56.880 first time doing a coin episode, because, as you point out, 0:03:57.400 --> 0:03:59.880 I've actually been writing about this topic for really a 0:04:00.000 --> 0:04:02.280 most a decade. Yeah, so this is going to be 0:04:02.360 --> 0:04:04.280 one of the episodes where I think I sit back 0:04:04.400 --> 0:04:08.040 and learn a lot from both you and our guests, 0:04:08.120 --> 0:04:11.000 and I think I'm probably going to be representative of 0:04:11.400 --> 0:04:15.280 maybe the average person who encounters the idea. I kind 0:04:15.280 --> 0:04:21.080 of get how the mechanics of it would work, but again, instinctively, 0:04:21.200 --> 0:04:25.120 it just seems absolutely crazy to I guess, try to 0:04:25.200 --> 0:04:30.480 fix the absurdity of American political theater with what basically 0:04:30.520 --> 0:04:33.600 amounts to more absurdity. But I have a feeling we're 0:04:33.600 --> 0:04:35.880 going to get into that there is some logic to that. 0:04:36.160 --> 0:04:38.320 So yeah, I I hope you play an active role 0:04:38.320 --> 0:04:42.400 in this conversation because we have to ask the tough questions. 0:04:42.640 --> 0:04:45.080 Let's let's get started. So alright, let's without further ado, 0:04:45.160 --> 0:04:47.200 we have the best guest, I think to discuss it. 0:04:47.200 --> 0:04:49.880 We're gonna be speaking to Rowan Gray. He is an 0:04:49.920 --> 0:04:54.400 assistant professor of law Lambit University. He is also a 0:04:54.440 --> 0:04:58.719 longtime coin advocate, and he has in fact written what 0:04:58.800 --> 0:05:02.839 I think is probably the definitive sort of law review 0:05:03.240 --> 0:05:07.600 article on the legality of the coin. It is extremely thorough, 0:05:08.080 --> 0:05:11.320 both in terms of talking through its economics, some of 0:05:11.320 --> 0:05:14.360 the common objections to it, and why he believes it's 0:05:14.360 --> 0:05:19.160 illegal and perhaps even mandatory route to circumvent the debt ceiling. 0:05:19.760 --> 0:05:23.080 It is titled Administering Money, Coinage, Debt Crises in the 0:05:23.120 --> 0:05:29.200 Future of Fiscal Policy, a very serious, thorough, rigorous legal work, 0:05:29.920 --> 0:05:32.440 and in addition to advocating, he's also a bit of 0:05:32.480 --> 0:05:36.920 a sort of policy entrepreneur, having worked with elected representatives 0:05:37.279 --> 0:05:40.960 to introduce laws that would bring about the coin. So 0:05:41.080 --> 0:05:45.440 he is a scholar and an activist and an entrepreneur 0:05:45.520 --> 0:05:48.880 on the subject. So the best guest to discuss it Rowan. 0:05:49.120 --> 0:05:51.960 Thank you so much for coming on, coming back on 0:05:52.000 --> 0:05:54.840 all lots. Thank you so much for having me. It's 0:05:54.839 --> 0:05:58.960 a pleasure to be here talking about a jointly favorite topic. Yeah, 0:05:59.160 --> 0:06:02.360 so let's let's actually just start with like the really 0:06:02.400 --> 0:06:05.480 big picture, because you know, there are still some people 0:06:06.000 --> 0:06:08.920 who are, like I encounter on Twitter and so forth, 0:06:08.920 --> 0:06:11.560 they're like, can you just point me, just like the 0:06:11.720 --> 0:06:15.400 simple version, like, how does the coin work? Yeah, I 0:06:15.400 --> 0:06:17.760 mean the starting point is that the coin works like 0:06:17.880 --> 0:06:20.960 all coins work, which is that the Mint, which is 0:06:21.000 --> 0:06:24.479 the oldest monetary institution in the United States, predating the 0:06:24.520 --> 0:06:28.080 Federal Reserve by over a century, which is housed within 0:06:28.120 --> 0:06:32.480 the Treasury, would mint a coin of a certain value 0:06:33.040 --> 0:06:37.560 and would deposit that coin at the Federal Reserve uh, 0:06:37.600 --> 0:06:40.440 and the Federal Reserve would take that coin and then 0:06:40.520 --> 0:06:42.760 own that coin and record it on its balance sheet 0:06:42.800 --> 0:06:44.599 as an asset like you and I would if we 0:06:44.680 --> 0:06:47.120 go to coin that someone gave us UH, and then 0:06:47.160 --> 0:06:49.800 it would credit the Treasury for the equivalent amount of 0:06:49.839 --> 0:06:53.279 dollars that the coin is worth, which is legally speaking, 0:06:53.279 --> 0:06:56.480 its face value, and that money would then be available 0:06:56.480 --> 0:07:00.800 in the Treasury's regular spending account to end in the 0:07:00.839 --> 0:07:04.000 same way as it would if it sold any other 0:07:04.040 --> 0:07:07.039 financial instrument like a Treasury bond or a Treasury note, 0:07:07.680 --> 0:07:10.480 and then it would go about the daily spending, and 0:07:10.680 --> 0:07:13.840 this coin would work the way that all the other 0:07:13.880 --> 0:07:16.160 coins that get minted on a regular basis work, in 0:07:16.200 --> 0:07:20.000 the sense that the Mint would would issue it and 0:07:20.040 --> 0:07:22.880 then take the money in and then sweep the money 0:07:22.920 --> 0:07:25.600 back into the treasury sort of general account. It's general 0:07:25.600 --> 0:07:28.360 spending account. Um. The only difference here would be that 0:07:28.480 --> 0:07:30.640 the number of zeros on the end of the coin 0:07:30.680 --> 0:07:33.600 would be substantially larger than most other coins, and for 0:07:34.120 --> 0:07:36.360 a change, it would be made out of platinum instead 0:07:36.400 --> 0:07:40.440 of cop rosing or whatever else. So, I mean, the 0:07:40.520 --> 0:07:43.720 idea here is that basically you would bypass all the 0:07:43.800 --> 0:07:47.160 political wrangling that we see, you know, every three or 0:07:47.200 --> 0:07:51.840 four years nowadays, I guess over raising the debt ceiling. 0:07:52.200 --> 0:07:55.480 And I'm wondering maybe just to like step back even further, 0:07:56.000 --> 0:07:59.400 could you explain why we have a debt ceiling in 0:07:59.440 --> 0:08:01.360 the first is sort of limits on the amount of 0:08:01.400 --> 0:08:07.800 debt in the US and what that's supposed to accomplish. Yeah. Thanks, 0:08:07.880 --> 0:08:10.160 I think it's a great starting point. The starting point, 0:08:10.160 --> 0:08:12.000 at least to me, is to think about what the 0:08:12.000 --> 0:08:16.960 world was like before the debt selling, and before there 0:08:17.160 --> 0:08:20.880 was a practice where if Congress wanted to create a 0:08:20.880 --> 0:08:24.120 new spending program or or spend on a particular project, 0:08:24.160 --> 0:08:28.280 you know, a canal or a war or the postal service, 0:08:29.080 --> 0:08:33.640 it would appropriate the funds used through the appropriations process, 0:08:34.440 --> 0:08:37.920 and then usually either in a separate accompanying bill, or 0:08:38.000 --> 0:08:42.080 sometimes in the same bill. It would direct the Treasury 0:08:42.600 --> 0:08:46.960 on how to finance that spending. So sometimes it would say, 0:08:47.280 --> 0:08:50.360 issue a bunch of three month bills. Sometimes it would 0:08:50.400 --> 0:08:53.439 say issue a bunch of thirty year bonds. Sometimes it 0:08:53.440 --> 0:08:57.360 would say issue some combination. Sometimes it would say, raise 0:08:57.440 --> 0:09:01.320 the revenue through a cuss TAM's taxes, or through a 0:09:01.360 --> 0:09:04.679 new tax, or through sign your ridge with the mint. 0:09:05.240 --> 0:09:08.160 And it would tell the Treasury how which which sort 0:09:08.160 --> 0:09:11.640 of financing mechanism, and that financing mechanism would be specific 0:09:11.679 --> 0:09:14.679 to that spending bill. And for a long time this 0:09:14.760 --> 0:09:17.360 was the way that things worked. Each spending commitment had 0:09:17.400 --> 0:09:20.480 its own financing authority. But when World War One comes 0:09:20.520 --> 0:09:23.000 along and the United States is sort of getting bigger, 0:09:23.000 --> 0:09:26.400 and this really started probably with the Civil War with Lincoln, 0:09:26.400 --> 0:09:29.000 but it kind of reached its sort of mature form 0:09:29.000 --> 0:09:33.800 in the twentieth century. Um it became basically logistically unwieldy, 0:09:33.840 --> 0:09:39.360 impractical to have a different spending authority, different financing authority, 0:09:39.400 --> 0:09:42.839 I should say, four different spending commitments in a way 0:09:42.840 --> 0:09:45.520 that the Treasury had no discretion. So you would have 0:09:45.559 --> 0:09:48.240 situations where there'd be excess money left over in this 0:09:48.360 --> 0:09:51.720 financing authority, and then a different spending commitment would not 0:09:51.800 --> 0:09:55.079 have enough and the Treasury Secretary wouldn't be able to 0:09:55.160 --> 0:09:58.600 move that spending a financing authority around to make sure 0:09:58.640 --> 0:10:01.000 that it could finance everything. And so the debts in 0:10:01.120 --> 0:10:03.120 which sort of started nine seventeen and then kind of 0:10:03.120 --> 0:10:07.480 reached its mature forming in nine. But it was never 0:10:07.520 --> 0:10:10.280 originally intended to be a limit on spending. It was 0:10:10.320 --> 0:10:15.160 intended to facilitate more executive branch autonomy and discretion and 0:10:15.200 --> 0:10:20.160 flexibility in financing practices. So so that's really interesting, and 0:10:20.200 --> 0:10:22.680 I already learned something new because I always had just 0:10:22.720 --> 0:10:25.280 sort of been under this assumption that the only purpose 0:10:25.520 --> 0:10:30.160 was to create this sort of like nominal or you know, 0:10:30.360 --> 0:10:33.400 fig leaf restraint on the amount of debt, and I 0:10:33.480 --> 0:10:36.920 hadn't realized that actually sort of served this purpose to 0:10:37.160 --> 0:10:43.280 establish flexibility. So these days, obviously most people would agree 0:10:43.320 --> 0:10:47.000 is just an opportunity for politicians to grandstand and to 0:10:47.040 --> 0:10:50.120 say they opposed the debt, even if they rang it up. Now, 0:10:50.360 --> 0:10:54.400 you mentioned that the trillion dollar platinum coin would really 0:10:54.440 --> 0:10:57.400 be like any other coin, except that a it would 0:10:57.400 --> 0:10:59.360 have a lot more zeros at the end of it 0:10:59.679 --> 0:11:02.640 and be it would be made out of platinum. What 0:11:02.760 --> 0:11:04.800 don't you talk us about it have to be made 0:11:04.800 --> 0:11:07.960 out of platinum. Well, this is the key thing. So Roan, 0:11:08.080 --> 0:11:11.240 what don't you talk to us about the specific law 0:11:11.880 --> 0:11:16.439 and where that law came from, where that gives legal 0:11:16.480 --> 0:11:21.440 authority to the creation of this high denomination clips. Yeah. So, 0:11:21.520 --> 0:11:23.880 you know, when you think about the debt ceiling, one 0:11:23.920 --> 0:11:26.840 way to think about it is that there's a quantitative cap. 0:11:26.920 --> 0:11:29.280 But within that cap, the Treasury Secretary has a lot 0:11:29.360 --> 0:11:31.840 of discretion. They want to issue three months, one year, 0:11:31.880 --> 0:11:35.280 two year, ten year, thirty year, or you know, fifty year. 0:11:35.360 --> 0:11:38.120 As as Minutian was floating for a hot minute when 0:11:38.160 --> 0:11:40.760 he was the Treasury secretary. The dead ceiling is really 0:11:40.760 --> 0:11:44.160 talking about the aggregate cap. The Coinage Act has a 0:11:44.240 --> 0:11:48.520 very different set of constraints. It constrains qualitatively. That is 0:11:48.559 --> 0:11:50.440 to say, you know, if it's going to be one 0:11:50.480 --> 0:11:52.320 center has to look like this, if it's going to 0:11:52.360 --> 0:11:53.920 be made of gold, it could only be up to 0:11:53.960 --> 0:11:57.160 one dollar, etcetera. But it has never and does not 0:11:57.280 --> 0:12:00.440 today impose any quantitative cap. There's not a point where 0:12:00.440 --> 0:12:02.280 the Mint says, oh, we produced the number of coins 0:12:02.280 --> 0:12:04.079 we can for this year, we'll have to stop shop 0:12:04.120 --> 0:12:05.959 in September or something. You know, it was a big 0:12:06.040 --> 0:12:09.200 year for coins. Nothing like that. There's been no limit 0:12:09.200 --> 0:12:11.560 on the number of coins that can be issued, but 0:12:11.679 --> 0:12:14.080 there has been these qualitative caps and so you know, 0:12:14.280 --> 0:12:17.040 we probably have seen you know, dollars, silver dollars, things 0:12:17.080 --> 0:12:20.800 like that, and they're above a single dollar. There's commemorative 0:12:20.880 --> 0:12:24.200 usually coins, you know, twenty five dollar palladium coins, certain 0:12:24.320 --> 0:12:27.040 kinds of sort of collector coins and things. But in 0:12:27.080 --> 0:12:31.120 the nineties particularly, there was a bill that was passed 0:12:31.120 --> 0:12:34.120 that amended the Coinage Act to create a new provision 0:12:34.520 --> 0:12:39.280 on two K which granted the Treasury Secretary of the 0:12:39.320 --> 0:12:44.480 authority to Mint an issue platinum bullion or platinum proof coins. 0:12:44.480 --> 0:12:47.480 And proof there just means a high production grade, like 0:12:47.880 --> 0:12:52.080 very very very shiny coins of whatever denomination the Treasury 0:12:52.120 --> 0:12:55.960 Secretary wished whatever they thought was useful and socially beneficial. 0:12:56.280 --> 0:12:59.040 And this was originally a bill that was sponsored by 0:12:59.080 --> 0:13:03.319 a Republican member who was the Subcommittee on Coinage is 0:13:04.240 --> 0:13:08.120 chair named Mike Castle, in very close consultation with then 0:13:08.240 --> 0:13:10.920 director of the Mint, Philip Deal, who was previously, I 0:13:10.960 --> 0:13:14.240 believe the legal director of the Senate Finance Committee. It 0:13:14.280 --> 0:13:16.840 could be Banking Committee. I could be confusing those Mint 0:13:16.840 --> 0:13:18.760 Director Deal was probably one of the most sort of 0:13:18.840 --> 0:13:23.600 visionary MINT directors of our generation because even putting aside 0:13:23.679 --> 0:13:26.680 this provision, he transformed the internal budget of the MINT. 0:13:26.760 --> 0:13:29.840 He he made it off budget in the way that 0:13:29.880 --> 0:13:33.440 the FED is off budget. He gave it more autonomy. 0:13:33.559 --> 0:13:35.960 He created a whole range of new products and things 0:13:36.040 --> 0:13:38.520 to bring in more revenue. And one of the reasons 0:13:38.520 --> 0:13:42.320 that Mike Castle like this was because it would bring 0:13:42.400 --> 0:13:45.200 in sign rridge revenue, that is, the difference between the 0:13:45.200 --> 0:13:47.120 face value of the coin and how much it costs 0:13:47.120 --> 0:13:50.040 to produce, and that that revenue would go into the 0:13:50.080 --> 0:13:53.480 Treasury's account and reduced the need for additional borrowing. So 0:13:53.679 --> 0:13:55.960 Mike Castle was a fiscal conservatos like this is good 0:13:56.320 --> 0:13:57.839 and from the Mint's point of view, this was a 0:13:58.040 --> 0:14:01.600 was a pretty kind of powerful catch all provision. At 0:14:01.640 --> 0:14:04.760 the time, the aim was actually to allow the mid 0:14:04.840 --> 0:14:07.320 directed to make even smaller coins than the ones that 0:14:07.360 --> 0:14:10.240 were being sold and to give more flexibility on that end. 0:14:10.320 --> 0:14:13.400 But the way the language was written, and again Director 0:14:13.440 --> 0:14:16.240 Deal was very intentional and very smart about this. Gave 0:14:16.280 --> 0:14:20.160 the Treasury Secretary under the plane language, complete discretion. But 0:14:20.240 --> 0:14:21.840 wanted to be a five dollar coin, want to be 0:14:21.880 --> 0:14:23.440 a five hundred dollar coin, want to be a five 0:14:23.440 --> 0:14:25.600 thousand dollar coin, Wanna be a five million dollar coin? 0:14:25.840 --> 0:14:29.640 The law said, this is within the Treasury Secretary's discretion, 0:14:30.680 --> 0:14:32.640 just like it's within their discretion whether to issue a 0:14:32.680 --> 0:14:34.600 thirty year bond or a five year bond or a 0:14:34.640 --> 0:14:38.800 fifty year bond. That law stayed on the books, and 0:14:39.280 --> 0:14:43.240 when the regular financing system works the way it's supposed to, 0:14:43.360 --> 0:14:46.360 nobody is looking in the draw for the crazy hail 0:14:46.440 --> 0:14:50.200 Mary statutes. But the dead ceilings showdown sort of they were. 0:14:50.240 --> 0:14:52.040 They were going on in a low grade way since 0:14:52.080 --> 0:14:54.000 about the fifties, but never really to the point of 0:14:54.080 --> 0:14:58.560 kind of complete government shutdown until about the midies, and 0:14:58.600 --> 0:15:01.240 then it really got bad with President Obama. That was 0:15:01.280 --> 0:15:03.920 when really for the first time that it looked like 0:15:03.960 --> 0:15:06.640 one party would would just not play ball at all 0:15:07.040 --> 0:15:09.600 rather than just do the regular kind of grandstanding and 0:15:09.600 --> 0:15:14.640 grumbling and eventually pass something. And that was when a 0:15:14.720 --> 0:15:16.880 lawyer named Carlos Mitscher, who at the time was going 0:15:16.960 --> 0:15:20.080 under the internet Monica Beowulf did some digging because he 0:15:20.120 --> 0:15:22.320 had heard some people talk about, you know, coinage as 0:15:22.320 --> 0:15:25.520 a power that was under explored, and found this law 0:15:25.560 --> 0:15:27.720 on the books and said, look, you know, we could 0:15:27.800 --> 0:15:32.440 use this now and avoid the need to continue to 0:15:32.480 --> 0:15:34.920 sort of have these recurrent crisis and this law is 0:15:34.960 --> 0:15:38.520 pretty clear. This is this is a pretty clear interpretation. 0:15:38.600 --> 0:15:44.160 There is no ambiguity here, there's no asterisks, and it 0:15:44.160 --> 0:15:47.680 would be consistent with how coinage works in general. Again, 0:15:47.800 --> 0:16:06.640 just a matter of degree, not kind. When the idea 0:16:06.680 --> 0:16:11.680 of first surfaced, like, what was the intention behind it? 0:16:11.720 --> 0:16:14.200 Do you think was it basically a thought experiment of 0:16:14.280 --> 0:16:17.760 how you could solve the dead ceiling crisis? Or was like, 0:16:18.440 --> 0:16:22.160 was it basically just like trolling by you know, some 0:16:22.240 --> 0:16:25.000 finance nerds, a little bit of both. I think, you know, 0:16:25.040 --> 0:16:28.440 I'll let Carla speak for himself, but I think, um, 0:16:28.480 --> 0:16:31.520 he was making this comment on an MMT blog, And 0:16:32.040 --> 0:16:34.120 you know, one of the things that mmts like to 0:16:34.120 --> 0:16:37.800 talk about is the fact that the government spending limits 0:16:38.360 --> 0:16:41.120 are not on the financial side, they're on real resource 0:16:41.160 --> 0:16:45.320 and inflationary capacity, etcetera. But to the extent that there 0:16:45.320 --> 0:16:49.400 are procedural restrictions on how the treasury spends or how 0:16:49.480 --> 0:16:52.400 you know whether the Treasury spending account can go into 0:16:52.440 --> 0:16:56.280 a negative overdraft or not. And those kinds of questions, Um, 0:16:56.320 --> 0:16:59.600 they're all self imposed. They are all things that we 0:16:59.640 --> 0:17:01.960 passed a law and could pass a different law tomorrow 0:17:02.000 --> 0:17:04.880 and change destruction. Right, They're not They're not a sort 0:17:04.880 --> 0:17:09.479 of physical constraint. There are a socially constructed constraint. And 0:17:09.560 --> 0:17:12.040 so that was the sort of water that Carlos was 0:17:12.080 --> 0:17:16.000 swimming in when he started looking into this stuff. This 0:17:16.119 --> 0:17:18.960 was the sort of general discussions that we were having 0:17:19.000 --> 0:17:21.439 on those blogs back in the day that was, you know, 0:17:21.920 --> 0:17:24.480 there are things like the dead ceiling, there are things 0:17:24.520 --> 0:17:28.159 like treasury bond auctions that happened, But are they because 0:17:28.200 --> 0:17:30.480 they need to or just because they're sort of a 0:17:30.600 --> 0:17:33.439 leftover of a different regime, or because they serve a 0:17:33.520 --> 0:17:37.160 useful social fiction. And it was just one more example 0:17:37.240 --> 0:17:42.760 of showing how arbitrary and stupid and self imposed these constraints. 0:17:43.040 --> 0:17:45.399 Remember this is taking place against the backdrop of the 0:17:45.560 --> 0:17:49.400 Deficit Reduction Commission and Obama saying, you know, we're out 0:17:49.440 --> 0:17:51.680 of money now when asked when the government's going to 0:17:51.760 --> 0:17:53.840 run out of money? And all these things. So, in 0:17:53.840 --> 0:17:56.320 addition to solving the acute problem with the dead ceiling 0:17:56.359 --> 0:17:58.920 crisis with this sort of clever legal hack that required 0:17:58.920 --> 0:18:03.000 only the President's um and I guess the Mint stamping machines, 0:18:03.760 --> 0:18:08.720 it was also a very pedagogically and and symbolically powerful 0:18:08.760 --> 0:18:10.680 way to make the point that there's a big, fat 0:18:10.720 --> 0:18:13.760 infinity sign next to how many dollars the US government has, 0:18:13.800 --> 0:18:15.840 and and that's always been the case, even if we 0:18:15.920 --> 0:18:20.960 do create laws to obscure that fact. Let's talk a 0:18:21.040 --> 0:18:25.360 bit more about the intent behind the law and why 0:18:25.400 --> 0:18:27.920 you're doing to see that as a problem. So, Mike 0:18:28.000 --> 0:18:33.000 Castle from Delaware, the congressional author obviously was not thinking 0:18:33.040 --> 0:18:36.119 of this as a way to circumvent the dead ceiling. 0:18:36.160 --> 0:18:39.359 It was about a collectible coinage and senior edge revenue 0:18:39.400 --> 0:18:43.720 at the Mint. Philip Deal, the Mint director at the 0:18:43.720 --> 0:18:47.040 time we draft the language, He's like, yeah, this is legal, 0:18:47.480 --> 0:18:50.960 but this is clearly like not the intent of the law. 0:18:51.080 --> 0:18:55.440 It was about creating more collectible coins for people. Why 0:18:55.520 --> 0:18:58.960 isn't that a problem? Decided It's like, look, obviously this 0:18:59.119 --> 0:19:02.080 was not their intent. This is just about creating some 0:19:02.160 --> 0:19:06.600 more options for collectible coin collectors. Etcetera. Why should we 0:19:06.640 --> 0:19:10.160 now just dismiss this as sort of like an absurd 0:19:10.240 --> 0:19:16.600 reinterpretation that's clearly not what the law is intended for. Yeah. 0:19:16.680 --> 0:19:18.720 I think there's a couple of layers. So the first 0:19:18.840 --> 0:19:23.000 layer is intent can be looked at narrowly or broadly. 0:19:23.600 --> 0:19:27.280 The narrow intent here, the short term, immediate intent was 0:19:27.400 --> 0:19:31.800 to actually make it possible to create smaller denomination platinum coins, right. 0:19:32.280 --> 0:19:35.120 But the way that that problem was solved was not 0:19:35.560 --> 0:19:38.399 to write a law that said the maximum value of 0:19:38.440 --> 0:19:41.280 this coin is a hundred dollars or smaller. It was 0:19:41.359 --> 0:19:42.840 to say, you know what, let's get out of the 0:19:42.840 --> 0:19:46.240 business entirely of regulating what the denomination is. Let's leave 0:19:46.240 --> 0:19:49.720 that up to the Treasury Secretary. So even if the 0:19:49.800 --> 0:19:53.160 immediate problem is one thing, if you develop a broader 0:19:53.200 --> 0:19:56.760 solution that it fixes that problem and fixes potential other problems, 0:19:56.800 --> 0:19:59.920 that's fine. The second thing is, at a broader level, 0:20:00.320 --> 0:20:03.320 the goal of this bill was to give the Mint 0:20:03.720 --> 0:20:07.520 more tools to use the sign rridge power to generate 0:20:07.560 --> 0:20:10.360 additional revenue that would reduce the need to borrow. That's 0:20:10.359 --> 0:20:13.160 what my Castle has said, That's what Deal has said, 0:20:13.560 --> 0:20:16.320 was that the goal of these commemorative coin programs, which 0:20:16.359 --> 0:20:18.760 again remember deal kind of ramped up as the mint 0:20:18.800 --> 0:20:21.520 director was to bring in more revenue, which meant less 0:20:21.520 --> 0:20:25.000 borrowing was necessary. So in that sense, using it in 0:20:25.040 --> 0:20:28.240 this way, and again I wouldn't deny it all that 0:20:28.280 --> 0:20:30.200 there's a lot more zeros than any of the people 0:20:30.200 --> 0:20:32.400 that wrote this whatever expected to appear on a coin 0:20:32.480 --> 0:20:35.920 like this. In a broader sense, that is still entirely 0:20:35.960 --> 0:20:38.840 consistent with what it's doing. It's minting a coin to 0:20:38.960 --> 0:20:43.760 generate revenue to reduce the need to issue additional government debt. 0:20:44.320 --> 0:20:48.280 There's another layer, which is about legislative intent, you know, 0:20:48.359 --> 0:20:50.080 And of course we're at a time now where the 0:20:50.119 --> 0:20:53.040 politicization of the courts is pretty overt and obvious. No 0:20:53.080 --> 0:20:55.239 one would look at the Supreme Court and pretend that 0:20:55.600 --> 0:20:58.320 decisions aren't going to be, you know, impacted by the 0:20:58.320 --> 0:21:00.600 fact we have a six three court now in one way, 0:21:01.080 --> 0:21:03.600 but a number of the people on the Court have 0:21:03.720 --> 0:21:06.399 been pretty dismissive of legislative intent as something that they 0:21:06.440 --> 0:21:09.280 should look to it all. Um. So if they're consistent 0:21:09.280 --> 0:21:11.680 with their own principles, which I don't expect it will 0:21:11.680 --> 0:21:14.960 always happen. But if they were, then that shouldn't even 0:21:15.000 --> 0:21:17.760 be an issue for them. Um. But even even sort 0:21:17.760 --> 0:21:20.199 of more progressive members of the Court have said, you know, 0:21:20.240 --> 0:21:23.919 we're all textualists now, and whatever we might look to 0:21:24.000 --> 0:21:28.320 legislative intent, we don't usually do so when the plain 0:21:28.480 --> 0:21:32.400 meaning of the statute is so obvious, when it's very 0:21:32.520 --> 0:21:34.919 very clear, when there's no room for sort of wiggle 0:21:35.040 --> 0:21:38.119 room or interpretation, there's no point where we have to 0:21:38.160 --> 0:21:40.679 sort of ask more deeply than what's being said to 0:21:40.760 --> 0:21:43.639 us plainly to our faces. Then we don't get into 0:21:43.680 --> 0:21:46.640 that kind of messy process of trying to work out 0:21:46.720 --> 0:21:49.680 legislative intent. The fact that this is not the one 0:21:49.880 --> 0:21:53.400 narrow thing that people uginally created this law for shouldn't 0:21:53.400 --> 0:21:55.600 be fatal to it, because it's not fatal to any 0:21:55.600 --> 0:21:59.840 other law we use. We creatively reinterpret laws all the time, 0:22:00.880 --> 0:22:06.000 especially in moments of crisis, especially when the alternative is 0:22:06.080 --> 0:22:10.800 even worse. And in this situation, that's I think that 0:22:11.080 --> 0:22:14.480 the context in which this comes up is that the 0:22:14.560 --> 0:22:20.320 alternative here is catastrophic and unconstitutional, and if we can 0:22:20.480 --> 0:22:24.240 read this on its face, take it on its face, 0:22:24.840 --> 0:22:28.879 and in doing so, of the not only a political 0:22:28.920 --> 0:22:32.360 crisis and an economic crisis, but a legal constitutional crisis. 0:22:33.040 --> 0:22:37.600 I think that's entirely consistent, and so do constitutional scholars 0:22:37.600 --> 0:22:40.199 like Lawrence Tribe and Jack Balkan and a number of 0:22:40.280 --> 0:22:44.320 others who have far more experience with the canons of 0:22:44.320 --> 0:22:50.600 constitutional interpretation than I do. So two things here. I 0:22:50.640 --> 0:22:54.879 think I understand the legality argument, and I understand also 0:22:55.280 --> 0:22:58.200 the argument that the way the debt ceiling is currently 0:22:58.200 --> 0:23:02.000 being used, it basically seems like an ana criticism, and 0:23:02.080 --> 0:23:05.760 it seems like it's damaging the economy. You know, increasingly 0:23:06.000 --> 0:23:10.280 frequently we have these like brinkmanship theater like events in 0:23:10.320 --> 0:23:13.359