The United States will run out of money if the debt ceiling is not raised in October. But instead of relying on politicians to solve the problem, the Treasury Department has another surprising option, that is, to mint a $ 1 trillion platinum coin.
This idea gained popularity a decade ago, during the previous debate on the debt ceiling, but was eventually rejected by the Obama administration.
There is a loophole in the law that allows the Treasury Department to mint platinum coins of any denomination and deposit them with the Fed in exchange for the US federal debt.
Theoretically, US Treasury Secretary Janet Yellen can order the minting of a platinum coin if the debt ceiling is not raised on time.
The coin does not have to be minted entirely from platinum.
There is no gold or platinum standard in the US. And although it will take a little platinum to create a coin, it can be as little as ten cents. The US Treasury will assign it any value.
The coin should not be massive. One just needs to use platinum and print $ 1 trillion on it. This was written back in 2017 by Joe Weisenthal – an American journalist and TV presenter.
As for the inflationary impact that a $ 1 trillion platinum coin can have, Weisenthal assured his readers that this type of Treasury quantitative easing will not be the same as the huge spending on fiscal stimulus for the US economy during the COVID-19 pandemic.
According to the journalist, the creation of such a coin looks inflationary. As his colleague Ed Harrison says, it is possible to think of the coin as a kind of Treasury quantitative easing. It will just be an asset exchange. The Fed is given a coin that it holds on its balance sheet and the repaid debts are returned to the Treasury. The impact on the real economy is almost insignificant. There are no new expenses, there is no new money in the pursuit of goods; instead, it's just that different government agencies are making changes to accounting.
Previously, Treasury officials have said that minting platinum coins is not a solution to the debt ceiling problem, and instead called on Congress to do its job.
The thinking has not changed this time, however, the idea of a $ 1 trillion platinum coin was actively discussed this year.
