Elon Musk and the Magic Money Machines................

 BYGreg McKenna

March 19, 2025 at 11:05 AM EDT/Fortune 

                                   

• Elon Musk claimed 14 computers at the Department of Treasury and other government agencies just “send money out of nothing” during a podcast appearance with Sen. Ted Cruz (R-Texas) on Monday. He appeared to be criticizing the government’s bookkeeping, though it’s worth noting the government can, in fact, print money at little to no cost. 

Elon Musk said it’s “insane” the U.S. government has computers that can just “make money out of thin air.” Ever since America fully abandoned the gold standard in 1971, however, international finance has depended on just that. 

Admittedly, it’s difficult to decipher what Musk was referencing when he talked about “magic money computers” at the Department of Treasury and other government agencies on a podcast appearance Monday with Sen. Ted Cruz (R-Texas). Musk’s comments came in a broader conversation about DOGE’s search for waste, fraud, and abuse in the federal government. The agency says it’s found $115 billion in savings, though a Fortune analysis suggests that figure is significantly overstated. Musk and Cruz discussed what they characterized as a complete breakdown in government bookkeeping. 

“I think we found now 14 magic money computers,” Musk said. “They just send money out of nothing.” 

Hedge fund and ETF manager Jay Hatfield, CEO of Infrastructure Capital Advisors, said the Tesla CEO may be suggesting that much of the government is not properly implementing double-entry accounting, where a financial transaction must have equal and opposite effects in at least two different accounts. That seems a bit hard to believe, Hatfield said, but he didn’t entirely discount the possibility. 

“If it was a public company, it would be delisted immediately,” Musk said of the government. “It would fail its audit, and the officers of the company would be imprisoned.” 

Both the Washington, D.C. offices of Cruz and the Treasury Department did not respond to a request for comment.

Meanwhile, others have suggested that Musk may be expressing bewilderment about how the U.S. government can, in essence, issue money to pay for its own spending. Cruz and retired Republican Kentucky Sen. Ron Paul have long argued the government basically taxes its citizens without representation by issuing currency and causing inflation. 

“Any computer which can just make money out of thin air,” Musk said, “that’s magic money.”

David Andolfatto, a former senior VP at the Federal Reserve Bank of St. Louis, said that language is a red herring. Banks effectively do the same when they lend out deposits, he said, or when a corporation like Musk’s Tesla issues more shares, diluting the value of existing holdings. 

“What Musk was probably trying to communicate was that the resources devoted to these agencies, they’re not being properly audited, or there’s not proper oversight,” said Andolfatto, who now chairs the University of Miami’s economics department. “That may be true or false, I don’t know, but the fact that the government can print money out of thin air is neither here nor there.”

How the U.S. prints money

The government, of course, can do just that, whether or not Musk was referring to money creation. Former Fed chair Ben Bernanke explained this concept during a famous speech to the National Economists Club in 2002. The U.S. dollar, he said, was valuable only in that it is strictly limited in supply. 

“But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost,” Bernanke said in his address. “By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.”

While the Treasury oversees the printing of bills and minting of coins, it is the Fed that creates money in practice by buying assets—traditionally Treasuries—from commercial banks, which receive a cash injection as a result. Banks then create credit by lending some of that cash out. 

But, as Bernanke acknowledged, this increase in the money supply can be inflationary. In an extreme situation, the government may be tempted to excessively issue currency to help pay down its debts, inducing the type of hyperinflation Germany endured after World War I, which is commonly attributed as a major cause of the rise of the Nazi Party. 

The Fed doesn’t buy government debt from the Treasury directly, but it distributes its profits back to the government. Libertarians like Paul have alleged this dynamic leads to similar incentives. In his 2009 book End the Fed, Paul noted that a collection of goods and services worth $1 in 1913 cost $21 at the time of publication. 

“Another way to look at this is from the perspective of the purchasing power of the dollar itself,” Paul wrote. “It has fallen to less than $0.05 of its 1913 value. We might say that the government and its banking cartel have together stolen $0.95 of every dollar as they have pursued a relentlessly inflationary policy.” 

Andolfatto has acknowledged that inflation constitutes a tax on consumers. “Seigniorage revenue,” he noted in a 2011 blog post, “refers to the purchasing power the government creates through the act of creating new money.”

Still, he called Paul’s claim “preposterous.” The nation’s money stock in 1913 had indeed lost 95% of its value over the course of nearly a century. That was not the case, however, for a dollar issued more recently in, say, 2010.  

“This 1913 money stock constitutes a tiny fraction of our total wealth,” Andolfatto wrote.  Moreover, since it has been in circulation for almost 100 years (much of it held by banks themselves in the form of reserves), the loss in its purchasing power has been spread over countless individuals, agencies, and generations.” 

The Trillion Dollar Coin: A Debt Solution for the People

Published on Friday, January 18, 2013 by YES! Magazine

 

Far from being a gimmick, having the U.S. Treasury mint high-denomination coins is a solution that cuts to the root of America’s financial problems. And Benjamin Franklin would have liked it, too.

by Ellen Brown

On Friday, January 11, economist and New York Times columnist Paul Krugman urged the White House to mint a platinum coin worth $1 trillion, as a counter to what was then a threat to block federal spending that Congress had already approved. (Republicans made good on that threat yesterday, putting the United States in danger of default.)

We have forgotten the role that money issued directly by the government has played in our history.

The White House responded by saying the trillion dollar coin is off the table, because the Federal Reserve declared that it “wouldn’t view the coin as viable.”
Even Krugman called the coin idea “silly.” He just thought it was less silly—and less dangerous—than playing with the debt ceiling.
But it is not silly. We have forgotten the role that money issued directly by the government has played in our history. The American colonists did not think it was silly when they escaped a grinding debt to British bankers and a chronically short money supply by printing their own paper scrip, an innovative solution that allowed the colonies to thrive.
Many people believe that the U.S. government creates its own money. This is not true. Today, the Federal Reserve creates trillions of dollars on its books and lends them at near-zero interest to private banks, which then lend them back to the government and the people at market rates. We have been brainwashed into thinking that it makes more sense to do this than for the government to simply create the money itself, debt- and interest-free.
In fact, the trillion dollar coin represents one of the most important principles of popular prosperity ever conceived: nations should be free to create their own money without incurring debt. Some of our greatest leaders, including Benjamin Franklin, Thomas Jefferson, and Abraham Lincoln, promoted this essential strategy. They realized that the freedom to print money offers a way to break the shackles of debt and free the nation to realize its full potential.

While a commoner might get 10 to 20 years for robbing a bank, bank executives get huge bonuses for robbing us.

Money creation is an all-important power that has been fought over for centuries, in a largely secret battle between governments and private banks. For the last two and a half centuries, the banks have had the upper hand, making us forget that any other option exists. But we are learning the great secret of money: that how it gets created determines who has the power in society—we the people, or they the bankers.
It is no secret who has that power today. Witness the great bailout of 2008 that rewarded banks for making irresponsible and fraudulent gambles in the subprime mortgage scandal. None of the bankers responsible served time in jail. Then there was the robosigning scandal, in which banks skipped important steps in the process of foreclosing on the homes of ordinary Americans, and came away with a slap on the wrist. Now we are seeing the LIBOR scandal unfold, in which traders at the Swiss financial services company UBS were convicted of colluding with other banks to tweak interest rates for their own financial benefit. We can make an educated guess as to how this too will turn out for them (hint: well). While a commoner might get 10 to 20 years for robbing a bank, bank executives get huge bonuses for robbing us.
We may rail against the banks and demand change, but change will not come until we grasp the fundamental secrets that are the foundation of their power: those who create the nation’s money control the nation, and nearly the entire money supply today is created by banks in concert with the Federal Reserve.

Remembering our roots

Everyone knows that Benjamin Franklin played an important role in the founding of the United States. Fewer know his views on the printing of money. “Experience, more prevalent than all the logic in the World,” he wrote, “has fully convinced us all, that [paper money] has been, and is now of the greatest advantages to the country.”
When the British forbade new issues of paper scrip by the colonial governments, Franklin went to London and argued that issuing their own money was responsible for the colonies’ prosperity.
The response of the king, leaned on by the Bank of England, was to ban all issues of paper scrip. Without their paper money, the money supply collapsed, and the economy sank into a deep recession. The colonists then rebelled. They won the revolution, but the bankers retained the power to create money by setting up a banking system like that dominated by the Bank of England.
Fourscore and six years later, in 1862, President Abraham Lincoln boldly took back the power to create money during the Civil War. To avoid exorbitant interest rates of 24 to 36 percent, he decided to print money directly from the U.S. Treasury as U.S. Notes or “greenbacks.” The issuance of $450 million in greenbacks was the key to funding not only the North’s victory in the war but an array of pivotal infrastructure projects, including a transcontinental railway system.
After Lincoln was assassinated, however, the greenback program was quickly discontinued. Repeated popular attempts by farmers and laborers to revive it failed. They were opposed by a wave of banker activism to maintain the banks’ control over the printing of money, which had been established by the National Bank Act of 1863.
In 1872, New York bankers sent a letter to every bank in the United States. The letter, as quoted by Lynn Wheeler in Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920, read in part:

Dear Sir: It is advisable to do all in your power to sustain such prominent daily and weekly newspapers…as will oppose the issuing of greenback paper money, and that you also withhold patronage or favors from all applicants who are not willing to oppose the Government issue of money. Let the Government issue the coin and the banks issue the paper money of the country. [T]o restore to circulation the Government issue of money, will be to provide the people with money, and will therefore seriously affect your individual profit as bankers and lenders .

Bank-created money, including paper bills and now electronic money, could be rented to the people at a profit. The people’s debt-free money was limited to coins, which today compose less than one ten-thousandth of M3, the broadest measure of the money supply.
Lincoln’s assassination and the abandonment of debt-free greenbacks marked the exchange of physical slavery for what has been called “debt peonage” or “wage slavery.” Today, as a result, the American government and American people are so heavily mired in debt that only a radical overhaul of the monetary system can free us.

Gimmick or game-changer?

This is the real context and backstory of the trillion dollar coin. The stakes are much higher than just fending off the debt ceiling. We the people need to take back the power to issue our own money, and we can’t do it with nickels and dimes. We’re going to need coins bearing some very large numbers.

The coin could put within the government’s grasp the power to solve its debt problems once and for all.

The idea of minting large-denomination coins to solve economic problems seems to have first been suggested by a chairman of the Coinage Subcommittee of the U.S. House of Representatives in the early 1980s. He pointed out that the government could pay off its entire debt with some billion-dollar coins. The Constitution gives Congress the power to coin money and regulate its value, and sets no limit on the value of the coins it creates.
That may have been true then, but in legislation initiated in 1982, Congress chose instead to impose limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes.
An attorney named Carlos Mucha, who at the time was blogging under the pseudonym “ Beowulf ,” proposed issuing a platinum trillion dollar coin to capitalize on this loophole, after he heard me mention the trillion dollar coin in a Thom Hartmann interview. At first, he said, it was just an amusing exercise. But with the endless gridlock in Congress over the debt ceiling, it got picked up by serious economists as a way to checkmate the deficit hawks.
Philip Diehl , former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender:

In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years. The Secretary authority is derived from an Act of Congress (in fact, a GOP Congress) under power expressly granted to Congress in the Constitution (Article 1, Section 8).

Warren Mosler, one of the founders of Modern Monetary Theory (MMT), reviewed the idea of the trillion dollar coin and concluded it would work operationally. And Joe Firestone pointed out that the trillion dollar coin has far greater game-changing potential than mere political maneuvering. The coin could put within the government’s grasp the power to solve its debt problems once and for all, replacing austerity with the abundance enjoyed by our forefathers.
The invariable objection to government-issued money is that it will lead to hyperinflation. The trillion dollar coin can evoke images of million-Deutschemark notes filling wheelbarrows. But as economist Michael Hudson points out:
Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending.
And as professor Randall Wray observes, the coin would not circulate in the general economy. Instead, it would be deposited in the government’s account and held at the Fed, so it could not inflate the circulating money supply.
As far as spending goes, the fact that the Treasury has money in its account doesn’t mean Congress could or would go wild spending the funds. The budget would still need congressional approval. To keep a lid on spending, Congress would just need to abide by some basic rules of economics. It could spend on goods and services up to full productive capacity without creating price inflation (since supply and demand would rise together). After that, it would need to tax—not to fund the budget, but to shrink the circulating money supply and avoid driving up prices with excess demand.

Time to take back the money power

The current political stalemate cannot be solved with the thinking that created it. There is simply not enough money in the system to fund the services that Americans desperately need, create full employment, pay down the debt, and keep taxes affordable. The money supply has shrunk by $4 trillion since 2008, according to the Fed’s own website.

The massive push from educational campaigns such as those organized by Occupy Wall Street, Strike Debt, and the Free University is starting to lift the veil from our eyes.

The only real solution to the unemployment created by this shrinkage is to add more money to the economy, and that means that someone needs to create it. Either the Fed does this in the way that it is currently done, by adding the money nearly interest-free to the balance sheets of banks to be lent to the government and the people at interest; or the Treasury does it and adds the money to the government’s account debt- and interest-free.
After a century of domination by the Federal Reserve, it is time we tried something new. In flatly rejecting the Treasury’s legal tender, the Fed as representative of the banks is asserting itself to be more powerful than the elected representatives of the people. If the Fed won’t acknowledge the coins created by the government, perhaps the government needs to charter a publicly owned bank that will.
We have a chance today to end the charade of big money gridlock politics, as well as the reign of the big banks. But the current government is so thoroughly captured by the bank-created money of our time that it is unlikely to take action without pressure from the people. Our ignorance on these issues has played into the hands of the 1 percent, who are dependent on the current system for their wealth and power. However, the massive push from educational campaigns such as those organized by Occupy Wall Street, Strike Debt, and the Free University is starting to lift the veil from our eyes.
We have the power to choose prosperity over austerity. But to do it, we must first restore the power to create money to the people.

This work is licensed under a Creative Commons License

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest of eleven books, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. She is president of the Public Banking Institute, http://PublicBankingInstitute.org, and has websites at http://WebofDebt.com and http://EllenBrown.com.