The former director of the United States mint says that a trillion-dollar coin could be minted at the last minute in order to avoid defaulting on the national debt.
Philip Diehl, who was the director of the U.S. Mint from 1994 to 200, told Axios that the platinum coin could be minted “within hours of the Treasury Secretary’s decision to do so.”
Although it may sound far-fetched on the surface, and Treasury secretary Janet Yellen has not yet announced any intention to implement the plan, many experts are entertaining the plan as a more reasonable answer than it seems.
Reasons for this are many. Most importantly, a Congressional solution could potentially take weeks to put into place, and time is of the essence. If the Treasury did decide to use a trillion-dollar coin, it could be deployed quickly to cover the ground between the money running out and the debt ceiling being raised.
Diel said that the U.S. mint already makes a one-ounce Platinum Eagle and has platinum blanks in stock. All the mint would have to do is change the denomination of the Eagle to a trillion dollars. “This could be quickly executed on the existing plaster mold of the platinum Eagle,” said Diehl.
The Treasury could then deposit the coin into the Federal Reserve, giving the country $1 trillion dollars to use toward the national debt– effectively creating a situation where the nation escapes default without raising the debt ceiling higher.
Why some experts are taking the trillion-dollar coin idea seriously
Yellen said on Tuesday that she doesn’t think it is an option and that such a coin would be a “gimmick.” But many experts find the bizarre idea to be ingenious: Paul Krugman, a Nobel laureate in economics, responded to Yellen by saying that “Gimmickry in the defense of sanity– and, in an important sense, democracy — is no vice.”
The threat of defaulting on the country’s debt could mean that the U.S. runs out of money to use, having potentially disastrous consequences for the nation.
House Democrats recently approved funding for the government, suspended the debt ceiling, and approved emergency aid for disaster relief.
Although it was passed at the beginning of this week, it is predicted to stall in the Senate, where the majority of Republicans are opposed to anything that plans to raise or suspend the debt ceiling.
Congress must find a way to increase or suspend the debt ceiling by a yet to be determined “drop-dead” date.
A “drop-dead” date is terminology for the absolute final date by which something can take place, with no possibilities for extension.
Raising or suspending the debt ceiling, which refers to the government’s borrowing limit, does not grant the government the ability to authorize new spending, but gives the Treasury the ability to pay for the legislation that has already been approved. Raising the ceiling would let the department pay off debts pertaining to the trillions of dollars in COVID relief distributed under former President Donald Trump and Biden.