United States: Could a Trillion Dollar Coin End Debt?

the essential While the issue of the country’s debt ceiling resurfaces in the United States, the American Congress is torn apart. A solution appears however: strike a trillion dollar coin.

Solve the debt ceiling of the United States? Maybe that’s what a trillion dollar coin could do. Born in 2011, the idea for such a play came from an anonymous lawyer from the state of Georgia. This play is at the heart of the debates, when a political crisis pulls Democrats and Republicans over raising the debt ceiling. This recovery is necessary for the American government, so that it can meet its commitments.

Supporters of this coin advocate implementing the law passed in 1997 which would allow the Secretary of the Treasury to strike a platinum coin of the denomination of his choice. Thus, the Minister of Finance could, on the instructions of the President, create a trillion dollar coin. This would then be deposited with the American Central Bank and would make it possible to repay an equivalent part of the debt of the United States.

The government could then have additional leeway, without asking Congress for authorization, which is normal procedure, since it would find itself below the debt ceiling.

A recurring idea since 2013

Despite the appealing and fanciful nature of the creation of such a coin, the US Treasury nevertheless took the trouble to assert that it would not create such a coin, by 2013. The idea was again discussed in 2017, between Barack Obama and then Treasury Secretary Jack Lew. The former president revealed, in Pod Save America, that this creation was then discarded.

For Laurence Kotlikoff, professor of economics at Boston University, “the heart of the matter is issuing change to pay government bills. And when you spin the printing press enough, you generate money. of inflation “. However, inflation has again invited itself into the US economy, after twenty years of weak price increases.

Currently, Republicans are once again opposing raising the debt ceiling. For them, this would amount to validating the massive investment plans of the Biden government, which they consider “irresponsible”. Then looms the threat of default, the first in the history of the United States.

A “stupid idea”

But the play continues to inspire dreams. On Tuesday, the deputy of New York Jerry Nadler would have suggested that this “trillion dollar coin” would be one of the possible solutions to avoid new showdown on the debt in Congress, revealed the Democratic leader of the House of Representatives Nancy Pelosi.

“It’s a workaround highlights the fact that the debt ceiling itself is a stupid idea,” said Bard College economics professor L. Randall Wray, co-creator of The Theory. modern currency.

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