A $1 trillion platinum coin that could save the US government from bankruptcy

Time is running out for Republicans and Democrats to agree on raising the US debt limit to prevent a federal government bankruptcy.

If an agreement is not reached before June, the government in Washington will not be able to fulfill its obligations, and it could be serious consequences for the global economyconsidering that the USA is the main economic engine of the planet.

In recent days, the White House and Republicans in Congress have given signals that negotiations are progressing wellalthough this did not prevent the spread of nervousness.

This has prompted some pundits and analysts to return to talking about the – to many insane – option of last resort: issuing a $1 trillion platinum coin save the country from bankruptcy.

And that is the law from 1997 authorizes the US Treasury Secretary. mint platinum coins of any denomination and for any reason.

Those who defend minting this currency say that, given the impossibility of reaching an agreement in Congress on raising the debt ceiling, it would serve to finance the costs of the US government and avoid bankruptcy.

Treasury Secretary Yanet Yellen has rejected the idea, as have other officials in Joe Biden’s administration, though that hasn’t stopped proponents of the trillion-dollar coin from making their voices heard.

Coins for collectors

The Treasury Secretary’s authority to mint platinum coins of any denomination was never intended as a solution to increasing the US debt limit.

Their goal was to make special edition coins that they could buy collectors.

But what if they decided to make a trillion dollar coin?

“They would just have to write $1 trillion on a coin and send it to the Federal Reserve,” Philip Diehl, the former head of the U.S. Mint, said on NPR Public Radio’s Marketplace.

Although many laugh imagining that it would be a gigantic and heavy platinum coin, the truth is that it is it can be as small as a single coin of the quarter dollar he keeps in his pocket.

It wouldn’t even need to have all zeros listed to be worth 1 trillion. It would be enough for the words to denote that denomination.

The comment started it all

“If you have to choose between defaulting and minting currency…the executive branch has no right to allow default,” Rohan Gray, a Willamette University law professor and one of the main promoters of the idea, told NPR in Oregon.

The possibility of a $1 trillion coin to avoid Washington’s government bankruptcy appeared first written in the 2010 in the comments section of the blog dedicated to unconventional monetary policy.

The commenter was Carlos Mucha, an obscure Atlanta attorney, considered by some to be the “intellectual creator” of the platinum coin, who came across a provision in the Currency Act of 1997 that allows the platinum coin to be minted.

“Interestingly, Congress has already delegated to the Treasury Department the authority to mint $1 trillion in coins,” Mucha wrote in the forum, not realizing that his comment would end up being debated in the corridors of the White House and Capitol Hill.

“The best thing was to receive an email from Phil Diehl, the former director of the mint,” the lawyer told Vox in an interview.

In it, Mucha recounted, the economist told him that his proposal would “really work.”

it went viral

Like a snowball, the blog comment started gaining followers. However, it entered the public debate only in 2011, in the midst of the debt limit crisis that occurred during the first administration of Barack Obama.

In those days, a letter was published with the support of 7,000 signatures, including some leading economists, such as Nobel Laureate Paul Krugman and Philip Diehl himselfpromoting the initiative.

It even got a hashtag on Twitter: #MintTheCoin (something like #mint the coin).

The idea, however, did not prosper, although every time the political and economic drama of the debt limit is unleashed, as it is now, it resurfaces.

“In my opinion it’s a scam”

In the midst of the current crisis, Joe Biden’s government does not consider it a possible alternative.

“It’s a fraud in my opinion,” Treasury Secretary Janet Yellen said a few days ago.

Some experts claim that the idea of ​​a US$1 trillion coin has been put on the table as one of the a weapon of political negotiations Democrats in their battle with Republicans.

The latter are unwilling to approve in Congress an increase in the debt limit requested by the Joe Biden government without first obtaining certain counter-candidates, such as cutting public spending.

The pulse is yet to be defined considering that the US, if the parties do not agree, will enter into a suspension of payments on June 1.