AVN 67.05 Increased By ▲ 1.85 (2.84%)
BAFL 31.05 Increased By ▲ 0.31 (1.01%)
BOP 4.88 Increased By ▲ 0.08 (1.67%)
CNERGY 3.78 Increased By ▲ 0.07 (1.89%)
DFML 14.49 Increased By ▲ 0.28 (1.97%)
DGKC 41.61 Increased By ▲ 0.56 (1.36%)
EPCL 46.22 Decreased By ▼ -0.23 (-0.5%)
FCCL 11.63 Increased By ▲ 0.23 (2.02%)
FFL 5.11 Increased By ▲ 0.06 (1.19%)
FLYNG 5.80 No Change ▼ 0.00 (0%)
GGL 10.40 Increased By ▲ 0.07 (0.68%)
HUBC 67.54 Increased By ▲ 0.67 (1%)
HUMNL 5.77 Increased By ▲ 0.06 (1.05%)
KAPCO 28.00 Increased By ▲ 0.24 (0.86%)
KEL 2.29 Increased By ▲ 0.09 (4.09%)
LOTCHEM 25.06 Increased By ▲ 0.16 (0.64%)
MLCF 21.67 Increased By ▲ 0.23 (1.07%)
NETSOL 86.06 Increased By ▲ 2.46 (2.94%)
OGDC 92.38 Increased By ▲ 6.48 (7.54%)
PAEL 11.06 Increased By ▲ 0.05 (0.45%)
PIBTL 4.23 Increased By ▲ 0.01 (0.24%)
PPL 80.15 Increased By ▲ 5.67 (7.61%)
PRL 13.64 Increased By ▲ 0.21 (1.56%)
SILK 0.89 Decreased By ▼ -0.03 (-3.26%)
SNGP 43.47 Increased By ▲ 3.07 (7.6%)
TELE 5.93 Increased By ▲ 0.07 (1.19%)
TPLP 15.82 Increased By ▲ 0.42 (2.73%)
TRG 114.88 Increased By ▲ 3.47 (3.11%)
UNITY 13.76 Increased By ▲ 0.01 (0.07%)
WTL 1.16 Increased By ▲ 0.02 (1.75%)
BR100 4,124 Increased By 87 (2.16%)
BR30 14,930 Increased By 518.1 (3.59%)
KSE100 41,191 Increased By 719.6 (1.78%)
KSE30 15,494 Increased By 331.4 (2.19%)
Follow us

NEW YORK: Talk of a trillion-dollar US coin has returned to Washington now that Congress is mired in another political impasse over raising the debt ceiling.

The idea for the pricey platinum -- which would be unprecedented but not necessarily illegal -- was originally floated in 2011 as a run-around in the recurring war between Democrats and Republicans over lifting the debt limit to enable the government to pay its bills.

Champions of the idea point to a 1997 law, which in theory would allow the Treasury Secretary to authorize a platinum coin at the value of his or her discretion.

The president could direct the Treasury Secretary to mint a $1 trillion piece that could be deposited in the Federal Reserve and used to cover a big portion of Washington's bills.

Such a maneuver would bypass Congress, which is again flirting with disaster. Treasury Secretary Janet Yellen warned on Tuesday that the government would run out of cash unless the federal borrowing cap is lifted.

Dollar little changed, euro steady ahead of ECB decision

Accounting 'gimmick'?

Though it may seem far-fetched, the idea got far enough during the 2013 impasse that the Treasury Department explicitly ruled out minting the coin.

Former president Barack Obama alluded to the internal talks over the concept in a January 2017 podcast, just as he was leaving office.

"There were all kinds of wacky ideas," Obama said on "Pod Save America" of the 2013 discussions with staff.

But the solution has hardly been embraced by mainstream economists.

Critics include economist Paul Krugman, who wrote in March 2020 that the idea was "an accounting gimmick" that "wouldn't even fool anyone."

Laurence Kotlikoff, an economics professor at Boston University, said it was "the kind of thinking of a third world country."

Pelosi hints infrastructure delay as US Congress begins huge week

"The essence of the issue here is printing money to pay the government's bills," Kotlikoff said. "And when you print enough money, you get inflation."

Policy makers are already grappling with pricing pressure in the wake of heavy fiscal spending during the pandemic. That marks a break from the anemic inflation seen over most of the last two decades.

Congressional Republicans have opposed raising the debt ceiling, arguing that President Joe Biden's enormous proposed investments in infrastructure and social programs are fiscally irresponsible.

For now, there is no obvious solution to the impasse, raising the possibility that the United States could default for the first time in its history.

But if the trillion-dollar coin draws eye rolls from economist, it is a source of curiosity on social media.

Quadrillion-dollar coin

On Tuesday, House Speaker Nancy Pelosi said senior Democratic Representative Jerry Nadler "wants to have a trillion-dollar coin that doesn't require congressional approval."

Economics professor L. Randall Wray, a Bard College professor who has championed Modern Money Theory, which de-emphasizes the drawbacks of debt, said the special coin is no wackier than other expansionary financial maneuvers enacted by the Federal Reserve during the pandemic that have involved hundreds of billions of dollars of public and private debt.

US Treasury yields edge up

"It is a work around," Wray said. "It sort of makes it obvious that the debt limit itself is a pretty stupid idea."

Wray and others note that massive infusions of liquidity by the Federal Reserve in the wake of the 2008 crisis did not spur inflation.

For Matthew Gertz of Media Matters for America, the question is not whether the trillion-dollar coin is too big, but whether it is big enough.

"A trillion-dollar coin isn't cool," Gertz wrote on Twitter. "You know what's cool? A quadrillion-dollar coin."

Comments

Comments are closed.

Trillion-dollar coin? Washington eyes solution to budget impasse

Rupee up 0.46%, ends day at 275.30 against US dollar

KSE-100 jumps over 700 points amid return of positive sentiment

Second hike in two weeks: Honda Atlas jacks up car prices by up to Rs550,000

PM Shehbaz announces aid for quake-hit Turkiye

Govt projection of achieving $3bn current account surplus in FY23 ‘unrealistic’: PBC

IHC bars Sindh, Balochistan police from taking action against Sheikh Rashid

Govt schedules All Parties Conference for February 9

Kohinoor Textile board recommends buyback of 30 million ordinary shares

Islamabad police say security being improved at F-9 Park after rape incident

Saudi Arabia raises price for March Arab Light crude to Asia: sources