Before Cashing Out My Coins

Matt Yglesias is a one-man wrecking crew in an epic battle against reality. His launch point was the Trillion Dollar coin concept, and he delivers not one but two missiles of misinformation today.

His first launch:

The Platinum Coin Was Intended To Generate Seigniorage

No, not really at all. What is "seigniorage"? It is the added value that attaches to a bit of metal (or paper) when the government deems it to be legal tender. For example, a few cents worth of copper and bronze are stamped and boom - we have a quarter worth $0.25.

But platinum is part of the US bullion coin program, along with silver, gold and palladium. Using gold as an example, the Mint takes an ounce of gold worth maybe $1,600, stamps it with a face amount of $50 and boom - sells it for $50, thereby losing $1,550. NO!

They sell it for $1,600 plus a mark-up for production, marketing and administration. But that magic stamp of $50 isn't why they can sell the coin for more than $1,600 - it's the gold!

With the bullion coin program the Mint makes money by banging out their precious metal coins more cheaply than the Canadians can deliver their Maple Leafs, the Australians their Koalas, the Chinese their Pandas, and so on. How does General Motors make money? Seigniorage or great products? Yeah, this is America!

The US does make seigniorage on its circulating coins (the stuff in your pockets). Let's cut to the Mint's annual report:

The United States Mint (Mint) operates two fiscally separate programs: a circulating program and a numismatic program that includes both collectible coin products and precious metal bullion coins. The Mint enjoyed strong performance throughout fiscal year (FY) 2012 in both programs. Though revenue decreased in each program in FY 2012, as a result of our continued focus on costs, we generated positive seigniorage in our circulating program and positive net income in our bullion and collectible coin programs.

There is one bit of crossover - the Mint markets collectible editions of conventional circulating coins (such as proof sets of the new quarters.) Those coins don't circulate but they do produce seigniorage gains. However, that is not part of the bullion program.

So no, the platinum program was never intended to produce siegniorage profits.

And the next comic caper:

Fox News Doesn't Understand How Coins Work

What did those dumb bunnies say? Matt shows us a graphic in which Fox News explained that a Trillion Dollar Platinum coin would weigh 17,773.995 tons, equal to 89 blue whales or one nuclear sub. Har de har! Back to Matt:

Here's Fox News confusing the idea of a coin-shaped pile of platinum worth $1 trillion and a $1 trillion coin that happens to be made out of platinum and can be of any size. We saw earlier this week that the National Republican Campaign Committee also doesn't understand how coins work, so perhaps I can try again to explain.

You know what? Let me try to explain. The law we are looking at says that "(k) The Secretary may mint and issue platinum bullion coins and proof platinum coins..."

And what is a "bullion coin" you might ask, although Matt has not? Let's go to the Mint for a definition (my emphasis):

A bullion coin is a coin that is valued by its weight in a specific precious metal. Unlike commemorative or numismatic coins valued by limited mintage, rarity, condition and age, bullion coins are purchased by investors seeking a simple and tangible means to own and invest in the gold, silver, and platinum markets.

"Valued by its weight"? Like the way a $50 gold coin can be worth $1,600? Gee, that means a One Trillion Dollar Platinum Bullion coin would have to weigh... as much as a nuclear sub. Har de har indeed.

Hmm. Maybe the Foxies are still wrong even though they are right about bullion coins. After all, maybe the Secretary could produce a "proof platinum coin". But what is that?

The long answer is at the bottom of this earlier post. The short answer is that 'proof' coins refer to enhanced production techniques that result in great looking coins. However, as best I can tell from looking at the product offerings at the Mint or by reading the law on coins, "proof" coins always have their conventional counterpart.

[Or let me cite this handy defintion from "The Coin Site":

Proof Coins are specially made examples of regular issue coins historically used as gifts or for presentation.]

More on the history of proof coins issued in the US here. The gist - as best I can tell (but I have only paged through two books at the library and do not claim a numismatist), there are examples of conventional coins being struck without accompanying proof versions for collectors, but there are no examples of proof coins being struck for which there is no conventional circulating, commemorative or bullion counterpart. Which is consistent with the defintion provided above.]

For example, in addition to conventional circulating quarters like the ones jinggling in your pocket the Mint makes proof quarters of conventional metal for collectors (very pretty!) and Silver Proof quarters that will knock your eyes out. The Silver Proof quarters are worth about $8 each based on the silver content, but have a face value of $0.25. No seigniorage there.

Or here is an example of how "proof" is used elsewhere in the law:

(6) Quality of coins.—The bullion coins minted under this Act shall be issued in both proof and uncirculated qualities.

There are many similar examples, and please note the pairing of "proof" with a conventional counterpart (in this example, uncirculated).

The point being, under the one-sentence law governing platinum coins, the normal meaning of "proof platinum coin" would simply be the proof version of a platinum bullion coin or the proof platinum version of some circulating coin (e.g., a platinum proof dollar).

In either case, however, we are talking about a Trillion Dollar coin that can't exist - we don't have 18,000 tons of platinum for a bullion coin, proof version or no, and we don't have a circulating trillion dollar coin we can spruce up in platinum.

In principal, the phrase "proof platinum coin" has a fairly clear meaning distinct from "platinum coin"; it is also pretty clear that Matt has no idea what that meaning might be, and I am not fully pounding the table myself. But Laurence Tribe had this to say in endorsing the Trillion Dollar coin:

Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used.

"Plain language"?

...

Of course, Congress probably didn’t have trillion-dollar coins in mind, but there’s no textual or other legal basis for importing this probable intention into the statute. What 535 people might have had in their collective “mind” just can’t control the meaning of a law this clear.

How clear is it? "Proof platinum coin" surely means something different from "platinum coin". "Bullion coin" certainly does. So how do the Coiners propose that we glean the meaning of that phrase? I think history, common practice, and legislative intent would be sensible places to start if we really can't agree that proof sets of coins don't exist except alongside conventional counterparts.

AND SPEAKING OF CLEAR LANGUAGE: Elsewhere in the law there are fairly specific definitions the shape of a coin as to weight, diameter and edging. Yet in the one sentence on platinum coins we are told that the Secretary has full discretion to issue coins

"...with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time."

So can the Secretary exert his discretion to authorize issuance of a six-side cube with graphics of the American landscape? I say no, because even though it is not defined here, a "coin" is not a die, and we all know it. As to what the Coiners would say, I am not so sure.

CHIPS, PLEASE... We are moving on - it is all about IOUs now. But Ann Althouse thumps Matt on the eay out the door.

Comments

[narciso]

I clicked through to the climate news blog, brain slug's damage is apparently irreversible in the comment section.

http://www.examiner.com/review/zero-dark-thirty-bigelow-tells-an-intriguing-story-about-the-greatest-manhunt

[Ignatz Ratzkiwatzki]

OT, but I hope 2013 witnesses the end of this zombie plague we've been inundated with.
When I turn on even Leave It to Beaver now I half expect to see the Beav with his eyes rolled back in his head sneaking up behind Ward to try a bite of his standing rib roast.

[anonamom]

JANE---DON'T DO IT!!!

Skipping ahead here, as I catch up---
No point at all in wearing a mask while you are traveling. Once you speak through it, the physical block to transmission of something as small as a viral particle is gone.

Instead--hydrate, wash your hands, and keep them away from your face! Real handwashing--running water and soap--is much better than Purell, but that's better than nothing.

You did get a vaccine back in October, right?
If not, go ahead and get it today.

Don't bother buying masks.
They're part of the theater we do at the hospital.

[narciso]

They really ought to put a shock collar on him;

http://twitchy.com/2013/01/11/oof-bidens-shooting-for-tuesday-to-deliver-gun-violence-recommendations/

[Mark Folkestad]

Clown Prince Biden was shown a few minutes ago on Fox, demanding that all guns only fire when held by the purchaser. Sort of takes the protective factor out of having one in the home, and the wife and older children being well-trained in the use of guns.

Uma Pemmaraju was being overly sympathetic to the gun banners. Leftists screaming that Fox is right-wing propaganda don't know what they're talking about.

[Captain Hate]

It is striking, how they can turn on a dime, maybe those scenes, were augmented, just like with the MacGuffin ending in the Kingdom

Hmmm, this software seems to be eating comments. Is there any dumbass bandwagon McRINO won't jump on? Maybe Mega should "weigh in" on this.

[sbw]

From Narciso's link: Wilson further wrote, "Political liberty consists in the best practicable adjustment between the power of government and the privilege of the individual."

FIFY: Political liberty consists in the best practicable adjustment between the power privilege of government and the privilege power of the individual.

People own the power to give government the privilege to exist.

Individuals form society because it matters to them. Groups, like those at work in government don't form society; they try to drive it in their favor.

[narciso]

It is striking sbw, how fundamentally wrong he got that point, which was the template of his philosophy.

[Captain Hate]

sbw FTW

[maryrose]

sbw:
Absolutely correct.
Other than defense I don't see a role for government. We need to go back a few centuries to when states rights were the template.Unfortunately I am becoming an isolationist. Some commerce but no nation building. Let them solve their own problems. Afghanistan is a good example.

[Captain Hate]

There has to be a shortage of fainting couches: http://www.aceshowbiz.com/news/view/00057065.html

[Danube of Thought]

I loathe Matt Taibbi, but he gets an A+ for this piece on the unbearable David Brooks.

[Rick Ballard]

Not so fast on feelings of relief concerning the SkyDragon. The Fed branch of the Scientism High Priesthood has issued a report, assuring us that the fires of Hell and utter damnation await, should we not revert immediately to hunter/gatherers.

Manbearpig and the NYT may have realized their climate pimping apogee has passed but the palace eunuchs responsible for SkyDragon cult maintenance will not go gently. We can be assured new episodes of Desperately Seeking Stasis are being written and casted even as we read.

[Clarice]

Very good, RB. I love Desperately seeking stasis

[Danube of Thought]

ABC News:

A gun-carrying grandmother in Milwaukee foiled an attempted robbery when she pulled a firearm on the suspect as he grabbed for her grocery store cash register. Ernestine Aldana, 48, was behind the counter at the San Ignacio Market when a man in a dark hat pulled a knife on her and attempted to rob the store register, police said. Aldana pulled a handgun from behind the counter on the man, causing him to flee.

[Captain Hate]

Taibbi is a douche but every blue moon he devotes his efforts to deflating gasbags at which he's very good. His piece on Flathead Friendman is primo also.

[Clarice]

DoT, that article is primo.

[Captain Hate]

Friendman LOL == Friedman

[Captain Hate]

Here's the Friedman takedown: http://nypress.com/flathead/

[matt]

" There is no silver bullet"

Joe Biden on gun control measures last week.

"We're shooting for Tuesday"

Joe Biden, when asked what his plans for introducing new gun control measures.

You just can't make this stuff up.

[Danube of Thought]

From Ebben Raves at American Thinker ("Dangerous Old Men"):

There are over twenty-five million veterans in the United States -- among them many Walt Kowalskis -- and most of them are gun owners. Some of them remember the horrors of the concentration camps and of communism. Others are from the Vietnam era and remember what awaited them when they came home. They see John Kerry, the same man who threw his medals over the White House fence and was photographed with Jane Fonda and the North Vietnamese, nominated as secretary of state. They remember. ObamaCare, where you get painkillers instead of treatment because you are old? They have heard this. They have been spat at and vilified before, and now, with time running out for them, and the America that they knew seemingly fading away, many will say, "At one time, I was asked to write a check to my country for up to and including my life. Do I need to do it again?"

[henry]

DoT, too bad I already cut off donations to my alma mater. The Brooks thing is even worse than the new president there.

[Melinda Romanoff]

Lautenberg to retire at end of term. AMF.

[Danube of Thought]

From an Esquire article on narcissists:

And let's not forget Thomas Friedman, whose every column reads: I was visiting somewhere impossibly glamorous when I had an idea that could change the world. As my prince/billionaire/ genius host showed me around, he pointed out how deeply he agreed with me. Why is everyone else so slow?

[matt]

The elephant in the living room in the gun control controversy. LUN

[Jim Eagle]

Mel,

Its true. I mean't to let NK know that after my dinner with one of FL's best friends (not politically, though:). His old CoS is a good friend of mine and my dinner friend. He is a big time political consultant in New Jersey that we have used from time to time and he verifys that news. Good riddance.

Duke appears to be on the road less traveled as NC State is about to beat them and give them their first loss. 78-71 with 33 seconds remaining and Duke at the line.

[Captain Hate]

Brutal week for Vitale; first ND and now
Dook. Oh the humanity

[Ignatz Ratzkiwatzki]

--Don't bother buying masks.
They're part of the theater we do at the hospital.

Posted by: anonamom | January 12, 2013 at 12:08 PM--

In my later years as a cat skinner I took to wearing a dust mask which is a few cuts above a surgical mask and several below a respirator. Even with the form fitting ones I was always struck by how brown my face was under the mask and was also always struck by the fact that if that much visible dust, made out of relatively huge particles, was getting through my good mask how many millions upon millions of viruses and bacteria were seeping in and out of surgical ones.

[peter]

Kudos to Al Roker, who instantly made the expression, " I think I threw up in my mouth a litte," hopelessly out of date.

[Ignatz Ratzkiwatzki]

Is that the first time a grown man has ever gotten an 'attaboy' for making a mess in his diaper?

[Manuel Transmission]

Just remembered an old sign above one my past associate's desk that goes to Cathyf's tab count (as well as my own that runs from 50-150 in any given week):

If a cluttered desk is the sign of a cluttered mind, what is the sign of an empty desk? ;-)

[peter]

Seems to me like Carlos Slim could really save a lot of jobs if he fired Krugman and Friedman. But with dancing chimps it's quality, not quantity.

[Captain Hate]

Definitely TMI on Roker's shart adventures. Did he say what administration was in the White House at the time? If it was Slick the clean up crew may have thought he misfired on a Cleveland Steamer with Monica; I'm sure they'd disposed of worse things. Maybe they had a hazmat crew on call.

[sbw]

What makes you think Carlos Slim wants a better NY Times?

[Jim Eagle]

Talikng about Friedman, when you become a form of parody and satire at Rolling Stone, then you have lost not just your nuclear center but also all the opposing forces.

Some of the entries are truly funny and spot-on. What a narcissist is this guy.

[Ignatz Ratzkiwatzki]

--If a cluttered desk is the sign of a cluttered mind, what is the sign of an empty desk? ;-)--

They probably prefer to think of their desks as buttoned down rather than empty.

[sbw]

Earlier this year I was in the second bed of a room where the consequences of bariatric surgery was described to the other occupant.

I give Al Roker a -- if you will excuse the expression -- pass . . . for having the brass to have the surgery and face the consequences.

I do not give NBC a break for ruining the Weather Channel and worsening an already pathetic NBC.

[Clarice]

Friedman's like Kerry, they both managed to marry rich women and think it's proof of their genius in all things.

[cathyf]

If a cluttered desk is the sign of a cluttered mind, what is the sign of an empty desk? ;-)

Ok, right now at this very moment I've got Safari, Mail, SystemPreferences, Terminal, Stickies, iCal, TextEdit, Firefox, Preview, iChat, Numbers, Xcode, Skype, AppleRemoteDesktop, ActivityMontor, Eclipse, ColdFusionLauncher, Chrome, NeoOffice, Pages, iPhoto, Dreamweaver, Console, and 2 copies of Adobe Reader Updater open in my Dock. Firefox, 100 tabs in 10 windows. Safari 26 tabs in 11 windows. Chrome, 80 tabs in 6 windows.

I've got 8GB of ram, and run with 2-3GB available. Yeah, I'll quit a browser if I have to launch my windoze partition, but, otherwise, why the heck would I have 8GB of ram if I was only going to use 2 of it?

[Janet]

This is funny, from JiB's link -

"This is an excellent point: a metaphor is supposed to make things clearer, but it's actually easier to understand Mesopotamian politics than some of these columns."

[pagar]

O/T
http://www.sltrib.com/sltrib/home3/55598812-200/johnson-swallow-rawle-attorney.html.csp

"Then, with the FTC investigation continuing, Johnson said Swallow suggested Reid could make problems with regulators go away — for a price."

Of Course, there would be a price.

[rse]

Thanks Rick for the link. AS you know I have been trying to call attention to that awful USGCRP 2012-2021 report.

Have read Chapters 26 and 29 so far.

You will be shocked shocked by how well it dovetails with Common Core ed initiatives. More meetings apparently we taxpayers were not invited to.

Same week as those new Science Standards too that are largely about changing beliefs.

[narciso]

'that gambling is going on here' not really rse,
now the column that Taibbi is riffing actually makes a point, yet Friedman, is too byzantine to get to it, Iraq was dominated by a small tribal
microfraction of Baathist tribesmen, just like Syria is by the Alawites, they have often with the Anfal campaign, sought to wipe out their opposition, when external forces, the US and the
Iranians, intervened on the Shias's behalf,
the balanced the scales somewhat in a particularly bloody fashion, The Turks and Emirates are doing the same for the Sunni majority,

[Have Blue]

Anybody notice that the story about the Barbour pardon guy identified one of the weapons as a 20mm rifle?

Was he planning on hunting tanks?

[Clarice]

Tel me TM's not prescient:

Washington Post:

The Treasury Department will not mint a trillion-dollar platinum coin to get around the debt ceiling. If they did, the Federal Reserve would not accept it.

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. ”Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” he said.

The inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless.

[Have Blue]

OK. A closer reading (actually examination) of the story indicates that the two weapons involved were a .20mm rifle and a .9mm pistol.
Is it too much to ask for the MFM 9even Fox) to hire people who know anything at all about guns?

(For some reason on this monitor periods are painted in grey and are invisible at certain viewing angles.)

[maryrose]

I am glad TM got recognition for his excellent analysis of the Super Dooper Coin kerfuffle.
Next up-Biden's swan dive into hilarity when he attempts to shoot for some regulation on guns.
Clown show indeed.
Meanwhile back in the real sane world, our country is 16 trillion dollars in debt and what is brainchild Obama going to do about it?
This is all theatrics and " look squirrel moments in time" This idiot Obama{ no not you Joe Biden} is clueless as to how to rectify our financial disaster because he is a pathologically deranged spender of government money and he is unable to stop borrowing and giving money away to hopeless causes.

[sbw]

Cathyf, Xcode? You have Xcode open? What for?

I thought I was the only one.

[adoxographer]

Sorry, but the plain meaning of the law (howevermuch its author now regrets it) is that the Treasury Secretary absolutely has the ability to mint these things, provided he make them very shiny. If Geithner did go this route (very unlikely, since it would undermine the current Fed system and get him blackballed from ever holding a bank sinecure after he leaves office), Roberts has already made it clear that he wouldn't let his court be the c.

There would be some leeway to argue that the Fed could simply refuse to take the damned thing, except (even ignoring that they would so as to avoid permitting a default) they legally can't refuse the guy.

“Wherever any power vested by this chapter in the Board of Governors of the Federal Reserve System or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, such powers shall be exercised subject to the supervision and control of the Secretary.”(12 USC § 246.)

[adoxographer]

Apparently can't edit comments here.

Anyway, the rest of that sentence above should've been: "...Roberts has already made it clear that he wouldn't let his court be the court that made a decision this politically radioactive, let alone one that would (by the time it got to them) force a default".
(Fwiw, I agree under normal circumstances this would be a lousy idea — although the rates right now are so close to zero as to make the coin essentially no different from bonds, it would never be lived down or forgotten for the rest of the life of the Republic — but the author of the post above is simply wrong that (a) shiny coins aren't proof coins, (b) proof coins aren't legal tender, or (c) the Fed could legally refuse to accept one from the Tsy.)