Is the minting of a $ 1,000 billion platinum coin the answer to the debt ceiling crisis?
Could a $ 1,000 billion platinum coin be the solution to the US government’s debt ceiling crisis?
While politicians stalled, some senators and other supporters, at the last minute, resumed debate on the unlikely idea.
The U.S. government is on the verge of running out of money to pay its bills, including federal employee salaries and to pay Social Security benefits, which the White House and experts say would have serious economic effects and could trigger a recession.
Legislation enacted in 2001 allows the treasure to mint platinum coins of any denomination without the approval of Congress. Under this law, the value of the coin could be anything, but it should be platinum, not gold or silver, nickel, bronze or copper, which are under the control of Congress.
So, in theory, President Joe Biden could order Treasury Secretary Janet Yellen to mint a $ 1,000 billion coin and deposit it in the Treasury, giving the government an additional $ 1 billion to cover the costs. debts and avoid default.
The idea had already been launched in 2011, when the government was faced with another debt ceiling crisis. Former President Barack Obama said in 2017 on the podcast “Pod save America“, that he and his advisers discussed the use of a trillion dollar coin as a safety valve.
“There were all kinds of wacky ideas about how you could potentially… have this huge coin.” Obama said in the 2017 interview. “I mean… it was kinda primitive – it was like coming out of the Stone Age or something and I imagined myself rolling in a coin. “
Treasury Secretary Janet Yellen said in an interview with CNBC on Tuesday that she was “opposed” to the idea and didn’t think it should be taken seriously.
“It really is a gimmick and what it takes is for Congress to show that the world can count on America to pay its debts,” Yellen said Tuesday. CNBC’s “Squawk Box”“.
Yellen also raised concerns about how the use of a trillion dollar coin would affect the confidence and independence of the Federal Reserve and the Treasury.
“The platinum coin is tantamount to asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover by issuing debt, it undermines the independence of the Fed by confusing politics monetary and fiscal, and instead of showing that Congress and the administration can be trusted to pay, to pay the country’s bills, it really does the opposite, ”Yellen said.
Many experts do not know what the economic effects of this decision would be, given that it is unprecedented. But experts cite concerns about inflation, saying creating more money would weaken the value of existing money flowing through the economy. This would mean that existing dollars would have less purchasing power, which could affect American consumers.
Still, some Democratic lawmakers support the idea. House Speaker Nancy Pelosi said Rep. Jerod Nadler, DN.Y., referred to the piece during a closed-door political meeting last week as one of the other “options” to prevent the government default without congressional action.
“Jerry Nadler wants to have a coin … a trillion dollar coin that doesn’t even require Congress [action]. “Pelosi said.” So we talked about a range of things. “
Representative Rashida Tlaib, D-Mich., Tweeted in favor of the idea in late September.
White House Press Secretary Jen Psaki was asked on Monday if the play was being considered as the debt crisis debate intensified and she dismissed the idea.
“We are obviously looking at a range of options, and none of those options were viable, either because they would not be accepted by the Federal Reserve, by the advice of our Secretary of the Treasury, or simply by legal restrictions.” , said Psaki.
Psaki, like Yellen, said the only solution is for Congress to act.
“There is a simple process that could be put in place in the next few days, before Friday, to reduce uncertainty, to make sure the American people don’t have to worry about their bank accounts, their savings- retirement, ”Psaki said. “And all Republicans have to do is step aside, let Democrats be the adults in the room, and vote.”
Trish Turner and Sarah Kolinovsky contributed to this report.