Could a $1 trillion dollar coin be the solution to the debt ceiling problem?
A deal has been reached to raise the debt ceiling, but it must be made law before 5 June. Could a $1 trillion coin be a solution if Congress fails?
The United States is on the brink of its first default. In recent months, the Republican leadership in the House of Representatives and the White House have been in negotiations to raise the debt ceiling limit. On Saturday evening President Biden and Speaker Kevin McCarthy reached a tentative deal which Congress must pass in order for it to be signed into law.
According to the US Treasury Secretary, Janet Yellen, the country has a deadline of June 5 to reach an agreement; otherwise, it could face its first default, making hundreds of government offices suspend work due to lack of money.
The easiest solution to avoid the disaster of a default, would be to reach a bipartisan agreement to cleanly increase the debt ceiling, as has happened in recent years, while negotiations on how best to curb spending play out. As Congress and the White House have continued to lobby, a far-fetched but possible solution to the debt ceiling has begun to surface on social media: mint a trillion-dollar platinum coin.
Could a $1 trillion dollar coin be the solution to the debt ceiling problem?
In recent weeks, the idea of the platinum coin has gained traction through the hashtag #MintTheCoin; however, it was developed in the early 2010s, in the comments section of a blog called Pragmatic Capitalism in 2011, when it was discovered that there is a 1997 law aimed at helping the Mint make money from numismatists - coin collectors - through a power given to the Secretary of the Treasury to mint platinum coins of any denomination, for any reason.
In 2011, commenters on that blog thought this power might offer a way to avoid default, because instead of issuing new debt and getting into trouble, the Treasury secretary could simply get the necessary financing through the minting of platinum coins. Since then, every time there is a possibility of default, this crazy solution reappears.
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How are the debt ceiling negotiations going?
Fortunately, the negotiations seem to be going in the right direction, at least in the last two days, since last Saturday, May 27, it was reported that both parties reached a tentative agreement to raise the debt ceiling and avoid Uncle Sam defaulting on its financial obligations. Now it is up to Congress to move quickly to pass the necessary legislation through both the House of Representatives and the Senate so that it can be sent to President Biden’s desk to be signed.