March 23, 2023

The Indicator from Planet Money explores how a trillion-dollar platinum coin could get the country around the debt ceiling limit.


The U.S. can’t legally borrow any more money – not unless the debt ceiling is lifted. But it can still mint money. And that has some folks asking, why not just mint a coin to keep funding the government – specifically, a trillion-dollar platinum coin? Wailin Wong and Darian Woods from our daily economics podcast, The Indicator From Planet Money, have more.

WAILIN WONG, BYLINE: The notion of a trillion-dollar platinum coin traces back to a now-defunct blog focused on Modern Monetary Theory. This is a branch of economics that argues that governments that control their own currency and borrow in that currency can just create the money they want to spend. The only real limit to this ability is inflation.

ROHAN GREY: The government is the issuer of the currency. It makes the money. And so in that respect, it has always had, what I call nowadays, a big infinity sign in its bank account.

DARIAN WOODS, BYLINE: Rohan Grey is an assistant professor of law at Willamette University, where he specializes in contracts and financial institutions and the regulation of money. Rohan says the government could actually fund its operations without raising the debt ceiling, without needing to borrow at all. It could just create the money as it needed.

WONG: The authority would come from a 1996 law that says basically…

GREY: The Treasury Secretary may, in their discretion, mint and issue platinum coins of whatever denomination, quantities, specifications, designs as the Treasury Secretary may choose.

WONG: So here’s how the coin would work. The U.S. Mint, which is part of the Treasury Department, would create a platinum coin with a face value of $1 trillion. The Treasury would take this coin to the Federal Reserve, and the Fed would accept it as a deposit. Now, the government can use that money to pay government salaries and Social Security benefits and whatever else.

WOODS: Rohan says the government has always had the authority to coin money, but it’s kind of like everybody forgets about this until the country enters another debt ceiling crisis.

GREY: So what the coin represented was – it’s a symbol of the money power we’ve always had but forgotten.

WONG: I mean, it’s a symbol, but it’s also something that you are advocating for as a real policy option.

GREY: Yes, because the policy option that we’re facing right now is that we are about to drive off the cliff.

WONG: But there are reasons why economists and policymakers are not all just furiously tweeting #mintthecoin.

LOUISE SHEINER: Gut instinct is that it is a gimmick.

WONG: Louise Sheiner is an economist at the Brookings Institution. And Louise says the economics of the trillion-dollar coin are completely sound. For example, she doesn’t think it will lead to inflation.

SHEINER: The amount of spending the Treasury would be doing is no different than if the debt limit wouldn’t bind. So it’s not more spending. It’s not like, oh, I’m going to just increase spending.

WOODS: The coin wouldn’t actually circulate in the economy. The government would use the trillion dollars to pay its bills, just like it would have if it was borrowing money normally.

WONG: So Louise doesn’t object to the mechanics of the coin. It’s the legal and political feasibility piece of this that really dooms the idea for her.

SHEINER: There are so many murky questions about whether or not it’s legal and would it be challenged, and that’s just a mess. You wouldn’t prevent the chaos in the debt market that we’re all worried about from the debt ceiling breach.

WOODS: Even if the U.S. Mint makes the platinum coin, the Fed might not accept it. Janet Yellen raised this concern over the weekend when asked about the coin. Louise says that the Fed wants to stay out of it.

Darian Woods.

WONG: Wailin Wong, NPR News.

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