The American Interest
Analysis by Walter Russell Mead & Staff
Trillion Dollar Coin DOA

The kids were getting rambunctious, so the grownups had to step in.

They did, and the trillion dollar coin is dead. As Ezra Klein reports, the Treasury won’t make one and if it did the Fed wouldn’t accept it.

The grownups understand what the kids don’t; money is serious business and playing silly mind games with the public and the markets that undermine faith in the monetary system  is a Very Bad Idea.

The abolition of the gold standard means that the power of money is based on faith. A dollar is only worth what people think it is; the platinum coin wheeze would have undermined the faith of Americans and foreigners both in the value of our money and of the sobriety and wisdom of those called on to manage it.

That faith is particularly important at moments like this one, when the world’s central banks (the Fed not excluded) continue to strain the limits of credulity with unorthodox monetary policies following the financial crisis.

We never thought the authorities would be so fatally misguided as to embrace this too-clever scheme; we are glad they have spoken so clearly to kill a bad idea.

Published on January 12, 2013 3:59 pm