Treasury Secretary Janet Yellen said she is against the $1 trillion dollar coin idea, which has been floated around as a way to curb the impending debt ceiling, calling it a “gimmick” in a CNBC interview.
Indeed, as the debt ceiling crisis escalates, talk of a trillion-dollar platinum coin — which would be deposited at the Federal Reserve as an asset swap – could result in an extra $1 trillion to cover a big portion of Washington’s bill, according to Seeking Alpha. However, the idea has been shot down multiple times by the White House.
Just yesterday, when asked why the White House determined minting the trillion dollar coin would not solve the debt ceiling problem, Press Secretary Jen Psaki responded that “we obviously look at a range of options, and none of those options were viable, either because they wouldn’t be accepted by the Federal Reserve, by the guidance of our Treasury Secretary, or just by legal restrictions,” according to a transcript of her press briefing.
The Senate is holding a procedural vote on the debt ceiling today.
“Last night–I filed cloture on legislation passed by the House to suspend the debt ceiling. And tomorrow–the Senate will vote on moving forward. We’re working to bring this GOP-manufactured debt-ceiling crisis to a swift end and avoid irreparable economic harm to people & families,” Senate Majority Leader Chuck Schumer tweeted yesterday.
The concept of the U.S. minting a trillion-dollar platinum coin in order to avoid a default on federal debt has gripped some quarters of markets and Washington amid political brinkmanship over the debt ceiling. The Biden administration has consistently dismissed it as an option, insisting that the debt ceiling be raised by Oct. 18 through bipartisan action.
Seeking Alpha explains that the concept of a trillion-dollar coin dates back to 1992 when populist presidential candidate Bo Gritz suggested the idea during his second White House run. The idea resurfaced during the debt ceiling crisis of 2013 and the Obama administration even explored the possibility before the impasse came to an end with a continuing resolution, Seeking Alpha reports, adding that the method results in the U.S. minting more money to pay for its obligations, rather than borrowing through Treasuries or the collection of taxes.
A trillion-dollar platinum coin could be minted “within hours of the Treasury Secretary’s decision to do so,” Philip Diehl, former director of the United States Mint, told Axios.
All Yellen would have to do is ask the Mint director to prep the coin ahead of her Oct. 18 deadline, according to Axios.
Once prepped, it would take just moments for it to be minted and an equally short amount of time to get it by helicopter to the Federal Reserve for depositing.
“Voila, we’d have bought ourselves the equivalent of a trillion-dollar increase in the debt limit, without any impact on inflation,” Diehl told Axios.