The Trillion-Dollar Coin Idea Is Just Another Way To Rip Us Off
Here we go again.
Every few years in Congress there is a purely political battle over the debt ceiling. We’re supposed to be horrified and worried that the US might default on some of its debt. Some commentators will insist the US has never defaulted, and that default be a disaster.
But these debt ceiling debates always end the same way. Congress ends up increasing the debt ceiling and the US’s national debt continues to spiral upward.
During all the theatrics over the debt ceiling, however, many strange ideas are put forward as a supposed means to avoiding a shutdown.
One of these is the “trillion-dollar coin” idea. The general premise is that the government can do an end run around the debt ceiling altogether if it can find a way to raise revenue without borrowing. Thus, the scheme goes more or less like this, as explained by Yale law professor Jack Balkin back in 2011:
Are there other ways for the president to raise money besides borrowing?
Sovereign governments such as the United States can print new money. However, there’s a statutory limit to the amount of paper currency that can be in circulation at any one time.
Ironically, there’s no similar limit on the amount of coinage. A little-known statute gives the secretary of the Treasury the authority to issue platinum coins in any denomination. So some commentators have suggested that the Treasury create two $1 trillion coins, deposit them in its account in the Federal Reserve and write checks on the proceeds….
The “jumbo coin” [strategy works] because modern central banks don’t have to print bills or float debt to create new money; they just add money to their customers’ checking accounts.
Put another way, by minting a trillion-dollar coin, Congress could simply deposit the coin at its bank account at the Federal Reserve and then start spending money from the account which now has a trillion-dollar (or even larger) credit. – READ MORE
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