Key Takeaways:
- The United States s on the verge of a default
- If Congress fails to increase the debt ceiling, the Biden Administration will run out of cash by June
- Some suggest the Treasury Department might have to issue a $1 trillion platinum coin to solve the debt ceiling crisis
YEREVAN (CoinChapter.com) — When economists in the United States start talking about the $1 trillion platinum coin, you know the sh*t has hit the fan. Under the Biden Administration, the American economy is so beaten and bruised that people believe the US Treasury Department may have little choice but to mint the much-discussed but never issued coin worth a trillion dollars to avoid a default.
The Treasury has on several occasions warned that the US Government could run out of cash soon if Congress does not raise or abolish the country’s debt ceiling. In a recent letter to lawmakers, Treasury Secretary Janet Yellen indicated a default could come as early as June 1.
Last Month, the Republican Party-led House of Representatives narrowly passed a bill to increase the debt ceiling. However, it came with caveats that included massive budget cuts. So while the Democrat-majority Senate proclaimed it dead on arrival, the White House said President Joe Biden wouldn’t sign it if it reached his table.
Biden announced he would use his veto power against it and insisted that Congress increase the debt ceiling unconditionally.
With the situation now getting serious, Biden will meet House Speaker Kevin McCarthy and other majority and minority leaders of both branches of Congress. The meeting, scheduled for May 9, will look to find a way out of the US Debt Ceiling crisis.
However, economists now believe that if Biden Administration fails to make a breakthrough in the meeting, it may have to mint the trillion-dollar coin to save itself.
What is a $1 trillion Platinum Coin?
The possible $1 trillion platinum coin is doing the rounds again. The term refers to a loophole in Section 31 of the United States Code for the Treasury Department. According to expert interpretations, the law permits the US Government to “mint and issue platinum bullion coins” in any denomination.
“The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time,”
the law reads.
Essentially, the Treasury Department can decide to mint a $1 trillion platinum coin and deposit it at the Federal Reserve. This will temporarily relieve the Biden Administration, although it will come with its political implications.
The idea that the World’s largest economy has to even considering resorting to such tactics to save itself is laughable.
First used in 2011, the term has constantly come up in political discussion whenever the US government nears the debt ceiling. The Barack Obama administration considered the strategy in 2013 but rejected it.
Talk of the $1 trillion platinum coin also came up in September 2021 when the then-Senate Minority Leader Mitch McConnell (Republican) refused to support the Biden Administration in renewing the debt ceiling.
Also Read: Republican Presidential Candidate Nikki Haley Says Joe Biden Will Die in Office if Re-Elected
