As a futures contract, at least.
The average retail price of brokerage and exchange fees for a futures contract is probably around $20/round turn. That means it costs $20 to trade into a contract and then exit that contract.
That’s the average retail cost to trade a single futures contract. You can find it for cheaper at places like Interactive Brokers, and professionals will get even lower rates.
But, if you’re just a regular person, looking to trade futures, you’re going to pay $20 or more to trade a single contract.
Trills are a futures contract linked in some way to 1 trillionth of the GDP of a country. They have been proposed several times, most notably by Robert Schiller, but also by Scott Sumner for his NGDP futures. Here is Scott in what I consider to be his most detailed blog post on the idea of NGDP futures:
“Note that it is not particularly important that the actual future GDP is equal to these futures estimates, just that we have a reasonable way of determining the payoff for future NGDP contracts. Also assume that at maturity the contracts are worth 1/1,000,000,000,000th of nominal GDP, roughly $15.90.
If these contracts had a full value of $15.90, the average brokerage cost would exceed the total value of the trills contract.
In general, futures contracts this small are unworkable in the United States and Europe. It’s possible to trade contracts of this size on other venues, but those are not futures contracts and are cleared with an entirely different, non-compatible infrastructure.
If the contract value was “Bills” instead of “Trills”, the brokerage would then become closer to what is standard in the industry. For example, the eMini S&P 500 contract has a multiplier of $50, so the value of a single eMini contract has a total value of $50 * 1430 = $72,500.
Brokerage is just one of the many things to keep in mind when designing futures contracts.
Those pesky transaction costs will get you ever time.
Speaking of pesky, the title wasn’t a Trekkie reference, was it?
http://buckeyepsych.files.wordpress.com/2010/02/tribbles.jpg
Exactly! Maybe we can get Mike to change the post title to “The Trouble …” just to make it perfect.
What about SS’s idea that monetary base (currency plus central bank reserves) is “money”? I will probably need JKH’s help, but I believe monetary base could go to zero and there would still be “money”. I use “money” because I would rather not use the term money at all.