One of the frequent controversies in the frequent flyer world is, should the mileage-earning opportunity be shared?
On the one hand, the community benefits by sharing with each other. Before internet forums and blogs a mistake fare might be discovered by one person, they would share with a few friends, but that would be it. In the modern age a mistake fare is discovered, it goes viral, and many more people either have their tickets cancelled or luck our and wind up with a once in a lifetime to travel the world at ridiculously low prices. (And what’s once in a lifetime for many turns out to be ‘just another Wednesday’ for many of us.)
The fear is that ‘too much exposure’ will lead to a deal being pulled more quickly than if it had been kept quiet. Fewer people benefit if deals are kept close to the vest, but those people benefit potentially for longer periods of time.
These are the debates that consume some gatherings of frequent flyers. But rarely do they consider that sharing a deal might have major political and national fiscal implications.
It turns out that sharing of one deal had just that effect.
Wall Street Journal reporter Scott McCartney emails me this afternoon to say that dollar coins, it turns out, are the inspiration for the current in vogue notion that the government should mint a trillion dollar platinum coin and deposit it at the Fed as a means of averting the debt ceiling crisis (so that the President doesn’t have to offer spending cuts to induce House Republicans to be willing to allow the federal government to borrow more money).
Here’s his blog post on the subject.
Scott learned about buying coins with a credit card to earn miles (with no shipping charges), depositing those coins in the bank to pay of the credit card, on a MegaDO frequent flyer trip. He wrote a piece on it, and the notion of buying commemorative coins and depositing them turns out to have been the inspiration for ‘depositing of a the $1 trillion Platinum coin’ debt ceiling idea.
This week Paul Krugman endorsed the idea, though I agree that the perverse consequences would outweigh any benefits.
This new Wired article goes into detail on how the Wall Street Journal piece that came out of the MegaDO launched the policy idea.
It was a December 2009 Wall Street Journal article that ultimately inspired the Georgia lawyer known online as “Beowulf” to invent the trillion-dollar coin.
The article, “Miles for Nothing,” detailed how clever travelers were buying commemorative coins from the U.S. Mint via credit cards that award frequent flier miles. The Mint would ship the coins for free and the travelers would deposit them at the bank, pay off their cards, and accumulate free miles.
More than six months later, during a wonky online discussion about the debt ceiling, Beowulf thought of the article and, egged on by fellow monetary-system obsessives, came up with his own clever plan to exploit the powers of the U.S. Mint. His idea to issue a single trillion-dollar coin to the U.S. Treasury, thus letting it avoid borrowing and bypass the debt ceiling, is now much discussed among Washington elites, including at the White House, where a spokesman Wednesday wouldn’t rule out the scheme.
Scott McCartney learned all about it on the first Star Mega DO and wrote a Wall Street Journal column about it. That was three years ago.
After attention in the press, the Mint took some heat for letting the practice continue. And they started to scold some people for doing it in some pretty extreme ways. But the deal continued on, it wasn’t actually killed at that time.
By the summer of 2010, the mint placed a limit of $1000 in purchases every 10 days. But, of course, people continue to purchase what they were willing to sell. Some credit card programs, like US Bank Flexperks, stopped awarding points for the purchases. And Chase closed down accounts from some very high volume purchasers. But on the whole, things were still chugging along fine, even a couple of years after the deal had gotten public scrutiny.
A year and a half ago, though NPR ran a story explaining that the deal was still alive and well. And the Mint continued to get a little too much spotlight for their comfort. And the deal finally died in the summer of 2011.
While the initial media attention didn’t kill the deal, arguably subsequent attention on NPR did, although it’s hard to suggest a deal that went on for years was ‘killed prematurely.’
What seems indisputable, though, is that the media attention led to a shift in the national discussion of government spending and debt.
So perhaps the lesson is that frequent flyers have substantial pull in policy debates, or perhaps that lobbyists who wish to change policy should be trying to get on one of our frequent flyer MegaDO trips like the one in November where we chartered United’s first 787 (which was covered in the New York Times, Wall Street Journal, and the Economist).