Term of the Day

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Fiat money. This is not cash to buy an unreliable Italian car, but it does help understand why the trillion coin does not need to be a huge pile of metal.

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2 thoughts on “Term of the Day

  1. Don't Jump the Shark

    Colin:

    Fox never said that the coin had to weigh that much. Never, never, never. That photograph was taken from this tweet:

    https://twitter.com/dceiver/status/289478968166477824/photo/1/large

    which purely ignores the context of that screen shot (New York Magazine made the same nonsensical conclusion). When that video was being played (when the screen shot was taken), Fox was talking about how much $1 trillion would weigh, i.e., what the mass of the new coin would have to be to avoid disrupting the value of our currency.

    Fiat money is always disruptive to the value of currency. With fiat money, a government says, *this* (anything – paper, metal, whatever) is worth $1, $100 or $1000 because we say so. If a dollar costs a penny to make, then by printing a dollar, the government is making 99 cents out of thin air. Extrapolate that to the government stamping $1 trillion on 2 1/2 grams of platinum (which I think, if my math is right, costs about $140), and the government is making $999,999,999,860 out of thin air.

    That’s why gold standard guys are half crazy and half geniuses. If we reverted to the gold standard, it would create a gigantic shock to the economy because unless you owned something that had real value (and not a bank account statement with a number on it or a wad of green and white paper), you’d get creamed. But, then at least money would make sense.

    Fox is acutely aware of how fiat money works. Slate (and New York Magazine, which posted the same concept) should learn how journalism works. I am stunned that two ostensibly legitimate news organizations would even think that Fox suggested this — based solely on some nerd’s tweet from his basement. After all, if we didn’t have fiat money, a dollar gold coin would have a mass of about 0.017 grams, or the same as about five ants.

  2. Tea Party

    I thought it was cash given to a reliable Italian car company to buy an unreliable American car company?

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