Trillion dollar coin: fact or fiction?
There have been numerous discussions of the trillion dollar coin and how it could possible solve the looming debt ceiling problem. If you’re rooting through your wallet wondering why you aren’t in possession of one of these, calm down.
As of now, these coins don’t exist and are only discussed in theory as a possible solution to the U.S. debt problem. However, this past weekend the Treasury shut down any possibility of minting these coins, so it’s back to the drawing board to find another solution. Nonetheless, how did the discussion even begin in the first place?
Trillion dollar coin loophole
There is a limit to how much money the U.S. is permitted to circulate in regards to paper money, as well as gold, silver and copper coins. However, under Title 31 of the United States Code, there is no limit to the amount of platinum coinage the U.S. Treasury makes.
In essence, the Treasury could create trillion dollar coins at its own discretion. The suggested plan recommended the President deposit the coins at the Fed, after which they would be put into the Treasury and used to pay bills and other debts, thereby decreasing the probability of default. However, as proved by the recent rejection of the proposition, such an action by the Treasury would be highly unlikely.
Dispelling consideration of minting the coin
“Congress can pay its bills or it can fail to act and put the nation into default,” wrote White House Press Secretary Jay Carney in a statement released Saturday, further dispelling any serious consideration of minting a trillion dollar coin to solve the debt ceiling problem.
Since no solution was created during the recent fiscal cliff discussions, government officials still have a more than $16 trillion borrowing deficit to grapple with. While interesting to speculate on, a trillion dollar coin will not be the savior to these problems; and if the fiscal cliff negotiations were any indicator, this will take a lot of serious thought and back and forth before an actionable solution is reached.