US could mint $1 trillion platinum coin to raise debt ceiling
January 25, 2023 5:20 pm
As the debate on debt ceiling occupies headlines in the US, an unexpected option is being widely discussed, that is, the minting of $1 trillion platinum coin.
The plan is gaining momentum as the deeply divided Congress has reignited the debate over the debt ceiling issue, with fierce arguments over inflation and the way forward.
Earlier, the Treasury Department revealed that the US is already over the current borrowing limit of $31.4 trillion, so if the debt ceiling is not raised, the government could run out of money to pay all its bills by June. Of course, they already took some emergency measures last week to continue paying their bills, including halting investments in individual government accounts.
Secretary Janet Yellen was very skeptical of the $1 trillion platinum coinage loophole as it allows the Treasury Department to mint platinum coins of any denomination and deposit them at the Federal Reserve in exchange for US federal debt. However, in theory, she could order the minting of a platinum coin and avoid a government shutdown if the debt ceiling is not raised in time. Also, the coin does not have to be made from $1 trillion worth of platinum as it could be as little as a dime, and the US Treasury would assign it any value, including $1 trillion or even more.
Several government officials have been talking about this option, which was first proposed in the autumn of 2021, when the national debt ceiling had to be raised as well. Yellen was also against the idea back then.
This time, the debate could be even more controversial as Republicans and Democrats are still discussing the consequences of inflation and spending after the Fed’s aggressive tightening of monetary policy last year.
The material has been provided by InstaForex Company – www.instaforex.com
As the debate on debt ceiling occupies headlines in the US, an unexpected option is being widely discussed, that is, the minting of $1 trillion platinum coin.
The plan is gaining momentum as the deeply divided Congress has reignited the debate over the debt ceiling issue, with fierce arguments over inflation and the way forward.
Earlier, the Treasury Department revealed that the US is already over the current borrowing limit of $31.4 trillion, so if the debt ceiling is not raised, the government could run out of money to pay all its bills by June. Of course, they already took some emergency measures last week to continue paying their bills, including halting investments in individual government accounts.
Secretary Janet Yellen was very skeptical of the $1 trillion platinum coinage loophole as it allows the Treasury Department to mint platinum coins of any denomination and deposit them at the Federal Reserve in exchange for US federal debt. However, in theory, she could order the minting of a platinum coin and avoid a government shutdown if the debt ceiling is not raised in time. Also, the coin does not have to be made from $1 trillion worth of platinum as it could be as little as a dime, and the US Treasury would assign it any value, including $1 trillion or even more.
Several government officials have been talking about this option, which was first proposed in the autumn of 2021, when the national debt ceiling had to be raised as well. Yellen was also against the idea back then.
This time, the debate could be even more controversial as Republicans and Democrats are still discussing the consequences of inflation and spending after the Fed’s aggressive tightening of monetary policy last year.
The material has been provided by InstaForex Company – www.instaforex.com
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