As the United States stares down the barrel of a potential debt default come June, a curious and intriguing solution has emerged: crafting a single $1 trillion platinum coin. This unusual tactic exploits a legal loophole that allows the Treasury Department to mint platinum coins of any value. By delivering such a coin to the U.S. central bank, the Treasury would create enough funds to settle its debts. Though this proposal might sound bizarre, it’s gained traction as a potential escape route from the impending debt catastrophe.
The Trillion-Dollar Platinum Coin Idea to Stave off U.S. Debt Default Returns
Devotees of Modern Monetary Theory (MMT) will be thrilled to learn that the trillion-dollar coin concept is making headlines once more as America edges ever closer to defaulting on its debt. Just three days ago, Treasury Secretary Janet Yellen cautioned that a U.S. debt default could likely result in an “economic and financial catastrophe.” As tensions rise over the debt ceiling, talk of the Treasury forging a trillion-dollar platinum coin has experienced a resurgence.
Insider reporters Juliana Kaplan and Ayelet Sheffey quote Rohan Grey, a professor at Willamette University College of Law and MMT advocate, as proclaiming the idea’s feasibility. Grey contends that “at this point, if any of the other solutions, the so-called more serious solutions would work, then they would’ve been used by now,” but they continue to disappoint. “The coin’s the only one that’s strong enough,” he asserts.
Back in 2020, during the initial stages of the Covid-19 pandemic, Grey collaborated with Michigan Democrat Rashida Tlaib on a proposal allowing for the U.S. Treasury to mint not one but two trillion-dollar coins for basic income purposes. Acclaimed journalist Joe Weisenthal hailed it as just “the kind of break-the-glass thinking we need to address the scale of the crisis.”
Even former President Barack Obama touched on the idea during a 2017 interview and suggested officials mull over this concept if financial turmoil engulfs the nation. In October 2021, U.S. lawmakers also suggested minting a $1 trillion platinum coin in order to magically bolster the treasury with cash for the same reasons.
Despite the buzz, Insider’s Kaplan considers the trillion-dollar coin plan “unlikely to fly,” noting that “Biden aides are looking at other legal workarounds.” The concept has elicited both ridicule and bewilderment on social media, with some commentators poking fun at the claim that this fabled trillion-dollar coin would be no larger than a standard one.
Shapeshift founder Erik Voorhees quipped: “Thank god it would be no bigger than a regular coin.” Meanwhile, Wall Street Silver’s Twitter account chimed in: “They are starting to talk about the magical $1 trillion platinum coin again. This is really an ‘end of empire’ type of economic strategy here. Why can’t they rationally discuss reasonable budget cuts to get things under control?”
Oddly enough, Nobel laureate Paul Krugman maintains that adopting the trillion-dollar coin approach would not constitute an implementation of MMT. “I keep seeing people saying that this would be MMT, that we’d just be printing money to cover the deficit,” Krugman said. “But it wouldn’t be that at all. The Fed would surely sterilize any impact on the monetary base by selling off some of its huge portfolio of U.S. debt.”
The Keynesian economist added that “minting the coin is just borrowing through the back door. It’s not financing the deficit through seigniorage, it’s not a way to avoid interest payments. It’s just a bookkeeping trick to avoid extortion.”
What do you think about the trillion-dollar platinum coin proposal as a solution to the United States’ impending debt default? Do you believe it’s a viable option or just a bookkeeping trick? Share your thoughts in the comments below.