So recently the GAO addressed the question of replacing the dollar bill with a dollar coin to save money. The idea is that a bill wears out in, say, ten months while a coin lasts ten years. The government would save the cost of printing dollar bills.
Also recently some economists have proposed that the Treasury avoid the debt ceiling crisis by simply minting two one trillion coins out of platinum.
Many years ago when I was researching Keeping Watch I interviewed a lobbyist, James Benfield, who lobbied on two issues only: daylight saving, and the dollar coin.
How can daylight saving have a lobbyist, you might ask? A whole series of industries benefit from daylight saving, mostly industries having to do with outdoor activities. The makers of charcoal briquets, mosquito repellant, and softball gear all support an extended period of daylight saving. Benfield discovered that fast-food franchises did more business under daylight saving—“up to eight hundred dollars per unit per day” and convinced them to help pay his salary.
The dollar coins’s constituents are more obvious and less numerous: the metal extraction and processing industries, which as NPR explains here, have convinced Senators Tom Harkin and John McCain to introduce a bill favoring those industries. On the other side, Crane Paper has hired its own lobbyists to protect the dollar bill and its exclusive monopoly on paper stock for same.
In 1918, when daylight savings was first tried, the main supporters were A. Lincoln Filene, of Filene’s department store, and his creature, the US Chamber of Commerce. They pitched DST as a patriotic measure to save fuel, as below in this ad and the congressional mailing card sponsored by “United Cigar Stores Company:”
At one time, a strong economic lobby opposed daylight saving: the movie industry. In 1930, Fox West Coast Theaters of Los Angeles led a second fight against daylight saving for California, which its spokesman claimed brought “unlimited possibilities for evil” to the movie industry.” Fox pledged $50, 000 to stopping such a measure.
In the case of daylight saving, time was and is money. In a more general sense, “time is money” is a phrase growing out of usury, and the lending of money, which was at one time considered imoral for many reasons including the fact that the lender profited from the passage of time, a quantity created by and belonging to god.
Daylight saving and the dollar coin both have the same odd relationship with the natural world. Both involve real things which have become abstracted. In the case of both money and time the symbols have come to replace the things they once represented.
Preindustrial people measured time by natural cues–the passing of seasons, the phases of the moon, the biometric schedules of farm animals. Time was inseparable from nature: “noon” was when the sun was directly overhead, and so noon was different ten miles to the east or west. Time was a local thing that depended on local conditions, and it existed in nature. A clock or watch was just a convenient symbol, a re-presentation, of this natural quality.
But by the mid nineteenth century, and the establishment of regional and national time zones, time had become what the clock said: noon in Bangor Maine was the same thing as noon in Detroit and St. Petersburg Florida. The sun had nothing to do with it. Daylight saving, first tried in WWI, epitomized this change. In 1850, Americans had changed the hours of operation to reflect changes in daylight.
In 1919, with daylight saving, they changed the clocks and pretended it was 6 am when it was actually 7. The symbol, the clock, had replaced the natural cues it once symbolized.
Similarly money is now a purely symbolic medium: it’s been largely divorced from the tangible commodities it once simply represented. Money was once gold or silver coins: paper money was orginally a symbol of the gold it merely represented.
Now there is no gold backing the paper. And just as “noon” is a standardized genralization covering a broad set of time zones, having little to do with what time the sun is overhead, paper money is a symbol of generalized social production, indexed roughly to the “gross national product.”
But in both cases the “natural” origins, or the origins of the concept in tangible artifacts of the natural world, persists. When we change to or from daylight saving we feel odd and slightly disoriented. We feel the difference between what “nature” says and what the clock says. Similarly, the origins of money haunt the present. We act as if money is a scarce natural commodity, like gold. To create two trillion dollars, we need to mint two platinum coins.
At this moment, we’re again approaching a fake economic crisis, in which congress, having agreed to spend X in its budget, has now declared that it will refuse to raise the borrowing limit required to fund the levels of spending it just authorized. It won’t vote to increase taxes, and it won’t vote to cut spending in any way close to what would be required to balance the budget and begin to pay down the debt and address the budget deficit. So we have this phony crisis, with a government shutdown being threatened.
The Obama administration has an option, though: it can simply mint two platinum coins and value them at a trillion dollars a piece. It would then deposit them at the local Federal Reserve bank, and voila, two trillion dollars. It’s just that easy. Just as the position of the sun no longer determines the time, except In a very general way, so money is not tied, except In a very general way, to scarce natural commodities.
Congress sets the budget, but it doesn’t determine how much money the government has. That’s determined by the Treasury, in cooperation with the Federal Reserve. The Treasury takes in tax revenue, and issues Treasury Bonds which people buy. It can issue as many Treasury bonds as the market will bear, or the Fed is willing to buy.
The trillion dollar coins won’t cause inflation, because–and this is the hard part to remember–they will only go to cover spending Congress has already authorized. Objecting that the Treasury is artificially “creating money” is exactly like objecting that daylight saving is artificially creating daylight. Time is indeed money.