For a glimpse of how our national debate on monetary policy has progressed, feature the comments the other day of Congressman Jerrold Nadler. They appeared in an interview with capitalnewyork.com. The congressman, a leading figure among the Democrats, wants the Federal Reserve to use what he insists is “specific statutory authority” to “”make a platinum coin for one trillion dollars.” He wants the Fed to deposit said coin in the Treasury, which would then use it to pay its bills in the event that the Congress refuses to raise the debt ceiling. “I’m being absolutely serious,” Capital quotes the congressman as saying. “It sounds silly but it’s absolutely legal.”

Well, up to a point. The statutory authority to which he is referring seems to be part of the U.S. Code enacted to enable the Treasury Secretary to authorize the issuance in any denomination of commemorative coins of platinum bullion. If anyone had told the worthy members that such authority would be used to issue a single slug against which the Treasury would spend $1 trillion, why the entire House would have keeled over in a dead faint. “It would normally not be proper to consider such a thing,” Mr. Nadler is quoted as conceding to Capital, “except when you’re faced with blackmail to destroy the country’s economy, you have to consider things.”

The blackmail to which Mr. Nadler is referring is the reluctance of the constitutionalist faction in Congress to raise the debt ceiling. Mr. Nadler is saying in effect, “Let me borrow more money or I’ll resort to methods that would normally not be proper.” It may sound sinister or absurd or simply unworthy of a legislator. Yet it’s no less absurd than the current system, in which money is issued with no reference at all to anything of value. The government is not required to redeem Federal Reserve Notes with either gold or silver, the constitutional specie. At least with the platinum coin trick, the dollar would be backed with a few atoms of platinum.

Only in theory, however. Under current law, scrip issued against the platinum coin would be redeemable not in atoms of platinum — a grayish element — but in what is called “lawful money.” Which turns out to be slugs made of base metal and more scrip issued by the Fed. This is the regime of fiat money to which the Congress defaulted after the collapse of the Bretton Woods system, in which our governments were required to redeem in gold dollars presented by foreign governments. It was abandoned in the early 1970s, when the value of a dollar was nearly 47 times the 1,630th of an ounce of gold at which it is valued today.

It strikes us that this is the missing element in the grand bargain President Obama keeps talking about. This elusive bargain is supposedly a deal that would comprise both spending and taxes. But how can one resolve spending and taxes without also making a deal to end the era of fiat money? It is fiat money — issued without any reference to specie — that enables the Fed to cover the government’s deficits, while the government resorts to Congress only on such occasions when the debt ceiling is reached. It’s a dodge every bit as improper as the coin trick about which Congressman Nadler has said he’s “absolutely serious.”