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The Trillion Dollar coin HALLOWEEN EDITION 2021
Can a trillion dollar coin make the deficits Ghosts disappear?
With the U.S. government running a 29 trillion dollar deficit (USDEBTCLOCK.ORG), with another 157 trillion in unfunded liabilities (debts not due yet but still owed) the additional 1.9 trillion stimulus proposal (the amount changes daily) is being hotly contested in Congress. Washington desperately wants to authorize this additional spending. Opponents of the bill from both parties point to the money already spent during CoVid (about 4.5 trillion) saying another two trillion is excessive and will add even more debt to an already bloated U.S. budget. Now a U.S. default approaches, which is only compounding the problem.
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Where there is a will there is a way, and an idea that was originally tossed about and discarded in last decade is once again up for discussion. The idea is to mint a platinum coin with a face value of one trillion dollars, then give that to the Federal Reserve of United States, who in turn would deposit it into the U.S. Treasury. Then the Treasury Department could essentially cash the coin back at the Federal Reserve to fund one trillion dollars in additional spending. The idea is with the theoretical $1 trillion coin on deposit, the government could pay its bills without additional borrowing, making the debt ceiling a nonissue and, therefore, averting a government shutdown. Since the coin would be legal tender per the original U.S. Coinage Act, it is essentially just making change from the coin to U.S. dollars, which it could then spend.
The idea is being pushed by, among others, Professor of Economics and Nobel Prize winner in Economic Sciences, Economist Paul Krugman. In his latest article (Oct 1, 2021) entitled “Wonking Out: Biden Should Ignore the Debt Limit and Mint a $1 Trillion Coin”, Krugman suggests the coin could provide a respectable solution to the spending plan and not officially increase the deficit. Krugman also suggests the coin does not have to actually contain a trillion dollars’ worth of platinum (that would be beyond huge), but would only have to be denominated as such.
If you find yourself scratching your head and trying to put the pieces together in your mind, you’re not alone. Not only did the Treasury Department and the Federal Reserve nix the idea a few times in the last decade, the logic of it, well, defies logic.
That the coin is being seriously considered by the powers at be makes more than a few of us shake our heads.
More concerning is that the Treasury Department and the Federal Reserve for the most part, not commenting much, nor outright killing the idea like they did way back when. We have to remember different people run these institutions now, and along with many other ideological changes, what seemed impossible a few short years ago is now on the proverbial table of consideration.
Not everyone in Washington is onboard with the idea. Ex-Federal reserve chief now our Treasury Secretary, Janet Yellen, dismissed the of minting a $1 trillion coin as a last-ditch effort to help the United States pay its debt, saying the concept shouldn’t be considered seriously despite its popularity.
Like I said, where a will comes a way. I would ask why stop at a trillion? Why not stamp it 29 trillion and wipe out that nasty deficit once and for all?
Well the “for all” part is probably not going to happen. Wipe the deficit clean is like destroying a beaver dam. Get rid of it and you’ll likely find another in short order. Wipe the deficit clean and do you think they would start running it back up again?
Me thinks so.
In any case, the very concept seems ludicrous. Why bother wasting the platinum? Just print a “one trillion dollars” on a lead fishing weight and be done with it.
Many analysts and economists doubt the coin idea will ever make it out of the concept stage, but if we have learned anything in the last six years or so, don’t bet against putting anything past those that rule us. It can get a whole lot wackier before we come to our senses.
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