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As the United States stares down the barrel of a potential debt default come June, a curious and intriguing solution has emerged: crafting a single $1 trillion platinum coin. This unusual tactic exploits a legal loophole that allows the Treasury Department to mint platinum coins of any value. By delivering such a coin to the U.S. central bank, the Treasury would create enough funds to settle its debts. Though this proposal might sound bizarre, itās gained traction as a potential escape route from the impending debt catastrophe.
Devotees of Modern Monetary Theory (MMT) will be thrilled to learn that the trillion-dollar coin concept is making headlines once more as America edges ever closer to defaulting on its debt. Just three days ago, Treasury Secretary Janet Yellen cautioned that a U.S. debt default could likely result in an āeconomic and financial catastrophe.ā As tensions rise over the debt ceiling, talk of the Treasury forging a trillion-dollar platinum coin has experienced a resurgence.
Insider reporters Juliana Kaplan and Ayelet Sheffey quote Rohan Grey, a professor at Willamette University College of Law and MMT advocate, as proclaiming the ideaās feasibility. Grey contends that āat this point, if any of the other solutions, the so-called more serious solutions would work, then they wouldāve been used by now,ā but they continue to disappoint. āThe coinās the only one thatās strong enough,ā he asserts.
Back in 2020, during the initial stages of the Covid-19 pandemic, Grey collaborated with Michigan Democrat Rashida Tlaib on a proposal allowing for the U.S. Treasury to mint not one but two trillion-dollar coins for basic income purposes. Acclaimed journalist Joe Weisenthal hailed it as just āthe kind of break-the-glass thinking we need to address the scale of the crisis.ā
Even former President Barack Obama touched on the idea during a 2017 interview and suggested officials mull over this concept if financial turmoil engulfs the nation. In October 2021, U.S. lawmakers also suggested minting a $1 trillion platinum coin in order to magically bolster the treasury with cash for the same reasons.
Despite the buzz, Insiderās Kaplan considers the trillion-dollar coin plan āunlikely to fly,ā noting that āBiden aides are looking at other legal workarounds.ā The concept has elicited both ridicule and bewilderment on social media, with some commentators poking fun at the claim that this fabled trillion-dollar coin would be no larger than a standard one.
Shapeshift founder Erik Voorhees quipped: āThank god it would be no bigger than a regular coin.ā Meanwhile, Wall Street Silverās Twitter account chimed in: āThey are starting to talk about the magical $1 trillion platinum coin again. This is really an āend of empireā type of economic strategy here. Why canāt they rationally discuss reasonable budget cuts to get things under control?ā
Oddly enough, Nobel laureate Paul Krugman maintains that adopting the trillion-dollar coin approach would not constitute an implementation of MMT. āI keep seeing people saying that this would be MMT, that weād just be printing money to cover the deficit,ā Krugman said. āBut it wouldnāt be that at all. The Fed would surely sterilize any impact on the monetary base by selling off some of its huge portfolio of U.S. debt.ā
The Keynesian economist added that āminting the coin is just borrowing through the back door. Itās not financing the deficit through seigniorage, itās not a way to avoid interest payments. Itās just a bookkeeping trick to avoid extortion.ā
What do you think about the trillion-dollar platinum coin proposal as a solution to the United Statesā impending debt default? Do you believe itās a viable option or just a bookkeeping trick? Share your thoughts in the comments below.
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