United States of America eSeries: The Big Coin 💰

The Big Coin 💰

Posted by :

View in Browser

There's a trillion-dollar idea floating around to save America from the brink of default. And it's very, very silly. Let's get into it.

by Allison Morrow

💰 BIG COIN

While Democrats and Republicans are locked in a standoff over the debt ceiling, some of the finest economic minds on the planet are buzzing about a theoretical workaround so bizarre it might just work.

The theory goes like this: Make a really big coin.

Seriously.

Here's the deal: The Treasury has the power to mint coins, of course. But the law contains an ambiguity that, in theory, means Secretary Janet Yellen could simply order a big ol' platinum coin to cover the balance. Then we'd stick it in a vault at the Federal Reserve and go about our lives. Because it'd be locked up, the coin wouldn't get into circulation and drive up inflation the way cash would. Again, in theory.

If this sounds familiar it's because the trillion-dollar-coin idea got a lot of attention in 2011, when Congress was (surprise!) deadlocked over the debt ceiling. Paul Krugman, the Nobel Prize-winning economist and New York Times columnist, became a big advocate of the idea, describing it as little more than a harmless "accounting gimmick" that would allow Treasury to bypass "GOP blackmail."

Lawmakers averted a default at the time, but not without creating a huge mess. The process was so dysfunctional, and we came so close to the brink, that Standard & Poor's went ahead and downgraded America's credit rating for the first time.

The Biden administration has dismissed the trillion-dollar-coin idea, saying Congress needs to do its job. (And, of course, that's true, but as we discussed in Wednesday's Nightcap, lawmakers aren't exactly being reasonable right now, so you can't blame us for asking.)

A NOTE OF CAUTION

The appeal is in the simplicity, of course, and I'm a simple American who craves a solution to the debt ceiling drama. But here's my armchair-expert thought, without getting too in the weeds about monetary theory: The stability of the US dollar — the backbone of global commerce — really depends on the whole world believing in an intangible value. That's how all currency works, really. And I have to wonder what happens when the whole world witnesses such an absurd stunt that underlines just how fake this whole money thing really is.

🤝 SPONSOR CONTENT BY THE MOTLEY FOOL

Top Stock Picks – $99 for New Members

Financial freedom could be right under your nose. The Motley Fool's top stock picking service is now just $99 for new members. Start building wealth today with market-beating stock picks!

#️⃣ NUMBER OF THE DAY

500

Wall Street is shaking off the September Scaries. It's been a turbulent week, but investors' ability to disassociate from the horrors playing out around the world were on full display Thursday. The Dow soared more than 500 points despite another uptick in weekly jobless claims, the Delta variant spread, the looming implosion of China's Evergrande Group, and the very real threat of the US defaulting on its debts in the next month.

⚡ LIGHTING DEBACLE

Apple's always been something of a pain in the ass when it comes to charging its devices. Don't get me wrong, I'm typing this on a MacBook Pro in between watching TikToks making important phone calls on my iPhone.

Its proprietary Lightning cable is the one you use to charge your iPhone, your AirPods and ... not much else. People have been complaining about this for years. Apple has moved almost all of its MacBook and iPad models over the the more sensible USB-C, which is a logical choice because it's capable of handling power and data transfers (according to Dave Goldman who understands this stuff way more than I do).

Now the European Union is actually doing something about it, and Apple HQ is, predictably, not pleased. The EU proposed new rules on Thursday that would make USB-C ports standard on all smartphones, tablets, cameras, and other devices. Imagine it: You're on a trip and one of your friends forgets her phone charger, but even though she's an Android user (God help her) she can borrow your iPhone cord.

The rules are a few years off, but they're going to force Apple to change its marquee product, the iPhone, to comply. And it reallllly doesn't want to do that, especially since Apple is working on a completely port-free version of the iPhone.

CNN Business' Chris Liakos has more on the EU effort.

QUOTE OF THE DAY

You can talk about the political process. You can talk about climate. You can talk about the pandemic. In each and every major topic, it gets connected back to the mistrust that is happening and especially the amount of it being seeded by the social networks. It must stop now.

Marc Benioff, the CEO of Salesforce, says deception is spreading like wildfire on Facebook. It's time for the government to hold the platform accountable, he says in an interview with CNN Business' Matt Egan.

WHAT ELSE IS GOING ON?

⚖️ James Mattis, the former US Secretary of Defense, testified in the criminal trial of Elizabeth Holmes, saying he invested $85,000 in her blood-testing company Theranos.

⛽ BP is temporarily closing some of its UK service stations because of a shortage of truck drivers caused in part by Brexit.

🇨🇳 Concerns about China's Evergrande have shifted away from the risk of financial contagion and focused more on the broader risk to the world's second biggest economy.