Listen to this articleWorld News, May 28, 2023. 5th June is the deadline for resolving the US debt crisis approaches, Republicans and Democrats are running out of time to avoid default. Amidst the uncertainty, experts propose the issuance of a one trillion dollar platinum coin as a last resort to prevent default. This article explores the potential impact and feasibility of such a coin.
As the United States faces a looming debt crisis, Republicans and Democrats are struggling to reach an agreement to avert default. To prevent the country from defaulting and to safeguard the global economy, experts have proposed issuing a one trillion dollar platinum coin. While the Treasury Secretary has dismissed the idea, some officials in the Biden administration remain open to considering it. This article examines the implications and viability of issuing such a coin amidst ongoing negotiations between the two parties and the increasing pressure to raise the debt ceiling.
In this situation it is saying that One Coin can Save America from Default, The United States is running out of time to save itself from a debt crisis, and both the Republicans and Democrats are unable to reach an agreement to raise the debt limit before June 5. If a consensus on increasing the debt ceiling is not reached by June 5, America will default.
Since the United States is the linchpin of the global economy, its impact will also be felt on the global economy. In recent days, Republicans in the White House and Congress have indicated that the negotiations are moving in a positive direction. However, people are still skeptical.
In this situation, some experts and analysts have started discussing the idea of minting a platinum coin worth one trillion US dollars as a last resort to save the country from defaulting.
In essence, a law enacted in 1997 grants the US Treasury Secretary the authority to mint platinum coins of any denomination and value for any reason. Those advocating for minting platinum coins argue that if there is no agreement to raise the debt ceiling in Congress, the US government can use this method to cover its expenses and avoid default.
However, Treasury Secretary Janet Yellen has dismissed this idea. The Biden administration has also rejected considering any such alternative. Treasury Secretary Janet Yellen had said a few days ago, “In my opinion, it would be a gimmick.” However, some officials in the Biden administration have a positive view on this.
Meanwhile, the argument of some experts is that proposing the issuance of a one trillion dollar coin in negotiations with Republicans can be another arrow in the Democrats’ quiver.
On the other hand, Republicans are not agreeing to increase the debt limit and are demanding cuts in public spending. But if both parties do not reach an agreement by June 5, America will begin to fail in its payments. In that case, the government will mint a coin worth one trillion dollars at the government mint.
How can this coin be issued?
However, increasing the US debt limit has never been a solution. But the Treasury Secretary has the authority to issue special edition coins that can be purchased by the public.
If a decision is made to mint a platinum coin worth one trillion dollars, what will happen? Former Director of the US Mint, Philip N. Diehl, says, “They just need to write one trillion dollars on the coin and send it to the Federal Reserve.”
However, people can imagine that a platinum coin of such a high value would be quite large and heavy, but in reality, its value will be equivalent to a quarter dollar coin that can be kept in a pocket. Even though there is no need to write any zeros on the coin as it represents one trillion dollars, it would be sufficient to write one trillion dollars on the coin.
Now the question arises, why only a platinum coin when there is a need to determine the value by writing on the coin? In fact, according to US law, the use of platinum metal is mandatory for coins with a value exceeding $50.
Professor Rohan Grey from Willamette University, who came up with the idea of minting a one trillion dollar coin, says, “If you have to choose between bankruptcy and printing currency, what would you do? The executive cannot allow a default to happen.”
How did the idea come about?
In fact, the idea of issuing a one trillion dollar coin to avoid default was first proposed by Carlos Mucha, an attorney from Atlanta, in a blog post in 2010. Carlos learned that under the Currency Act of 1997, there was permission to mint platinum coins. He wrote in his article, “It is interesting that Congress can already authorize the Treasury to mint a one trillion dollar coin…”
They didn’t know that their matter would be discussed in the White House and Capitol Hill. A few days later, they received an email from former Mint director Phil Diehl, stating that Carlos’ proposal ‘could really work.’
This news went viral, and the number of supporters of the blog started to increase. However, until 2011, it didn’t become a topic of public debate until the debt crisis in Barack Obama’s first term.
During those days, a letter with the signatures of 7,000 people was published, including prominent economists like Nobel laureate Paul Krugman and Phil Diehl himself, who supported it.
The campaign even ran on Twitter with the hashtag #MintTheCoin. However, when the political crisis was resolved, the discussion did not progress any further.”
If America goes bankrupt, it will have an impact on the global economy.
Since America is the linchpin of the world economy, its bankruptcy will affect the global economy.
In recent days, Republicans in the White House and Congress have indicated that the negotiations are heading in a positive direction. However, people are still skeptical.
In such a situation, some experts and analysts have started discussing the idea of a platinum coin worth one trillion dollars as a last resort, which could save the country from default.
The debt ceiling issuehas been resolved
Biden-McCarthy seeks a way to avoid the crisis in America. The debt ceiling issue in America has been resolved. The U.S. President Joe Biden and House Speaker Kevin McCarthy have agreed on an important deal to increase the debt limit in a strategic manner. The limit will be for two years.
The current debt limit for the U.S. government is $31.4 trillion. During this two-year period, significant cuts and capping have been implemented in some government expenses.
It is reported that Republicans have a majority in the House of Representatives. Republican members of Congress had demanded significant budget cuts instead of increasing the borrowing limit.
If the Biden-McCarthy deal is passed, it is likely to have an effective check on federal spending. Kevin McCarthy has stated that he hopes this agreement will be able to break the fiscal deadlock and provide the country with relief from the economic crisis.
This agreement is being considered a significant success in this crisis. It is necessary for this agreement to be passed in the House of Representatives before June 5. If this step had not been taken, there was a risk of a recession in the world’s largest economy.
It is worth mentioning that President Joe Biden had a long conversation with House Speaker Kevin McCarthy on Monday night. In this meeting, they discussed increasing the debt ceiling. However, no agreement was reached in this meeting, and Biden faced failure.
America is on the verge of bankruptcy.
U.S. Treasury Secretary Janet Yellen had mentioned the possibility of default by June 1. However, the default deadline has now been extended from June 1 to June 5, which is beyond the originally set date. During this period, U.S. President Joe Biden is also engaging in negotiations with Republican Speaker Kevin McCarthy to avoid default.
President Joe Biden of the Democratic Party and House Republican Speaker Kevin McCarthy are attempting to extend the loan time of $31.4 trillion and prevent a potential catastrophic default.”
Negative Impact on America’s Credit Rating Republican Speaker Kevin McCarthy expressed through a letter that banning or increasing loan time could cause significant harm to businesses and consumers. This could lead to increased borrowing costs for taxpayers and have a negative impact on America’s credit rating.
US Treasury Secretary Janet Yellen stated that if the US government fails to take action by the new deadline, American families will face serious difficulties, our global leadership will be undermined, and questions will arise about our ability to protect national security interests.
In addition, both Biden and Republican House Speaker Kevin McCarthy were hesitant about the budget cuts in the two-year deal, which could also increase the debt limit before the next presidential election in 2025.
“This is a time of crisis,” said Kevin McCarthy, the Republican Speaker. “We are facing a shortage of time. I am engaging in discussions with Biden to increase the debt limit. I hope for cuts in the president’s aggressive spending plans.”
Kevin McCarthy said, “I want to be able to solve this problem. Congress used to vote every year to increase the debt limit, but recently, it has become a political leverage where other measures are applied to the bill.”
The Danger of Bankruptcy for America and the Abyss on Both Sides In the past three years, the global economy has experienced two significant shocks. Now, there is growing concern that America’s debt crisis could be the third major blow to the world. First, the COVID-19 pandemic, and then the largest war in Europe since 1945, have already strained the global economy. Now, the fear of the US government being unable to pay its bills is causing turmoil in the financial market. For most people, this is an unimaginable scenario. Has anyone ever thought that the US government would struggle with a cash crisis? It will be unable to make payments and face the threat of bankruptcy. This reality cannot be denied.
Abyss on Both Sides On Friday, indications were received that negotiations to raise the US government’s debt limit were gaining momentum. If this happens, it will be an invitation to the 2008 global financial crisis. On the other hand, defaulting will be a hundred times worse. Danny Blanch flower, an economics professor at Dartmouth University and a former interest rate setter at the Bank of England, has said, “What if the country considered a superpower in the world cannot pay its bills? The consequences would be catastrophic.”
