US dumps idea of minting $1 trn platinum coin to avert debt crisis
Imagine being able to mint a coin or print notes to take care of all your debts. Most of us cannot. A government can. And the US government should, many suggested. But it will not. Yashwant Raj reports.business Updated: Jan 14, 2013 01:52 IST
Imagine being able to mint a coin or print notes to take care of all your debts. Most of us cannot. A government can. And the US government should, many suggested. But it will not.
The administration on Saturday squelched all speculation that it will mint a $ 1 trillion platinum coin to get around the debt ceiling and doggedly uncooperative Republicans.
“Neither the treasury department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” a treasury department spokesman said.
The White House also weighed in. “There are only two options to deal with the debt limit: Congress can pay its bills or it can fail to act and put the nation into default,” said press secretary Jay Carney.
There is a debt ceiling of $16.4 trillion, which the US is fast approaching, and the congress, and only the congress, can raise it. But the Republican-dominated House will not.White House-Congress talks have succeeded partially in postponing the fiscal cliff — as the set of automatic spending cuts and tax hikes are being called.
Both sides need to concede more than they are willing to. And as that has become clearer, suggestions of all kind surfaced on what the President could do, without giving away anything.
The trillion-dollar coin was one of them. Though prevented from printing currency notes beyond a limit, under a little-known statute the Treasury can issue coins of any denomination.
Though the administration never expressed any support for it, the proposal did the get the backing of many, including Nobel prize winner laureate Paul Krugmen.
He wrote recently it was a “silly but benign” alternative to forcing the country to default — which he termed “equally silly but both vile and disastrous”.
“By minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all,” he added.
But that one coin will have to wait, for now.