Does the Biden’s Administration want to mint a trillion dollar coin?
With the debt ceiling debate back in full swing, the idea is circulating as an option. It’s referred to as the “platinum coin loophole” and it’s a way for the government to circumvent congress.
According to MSNBC, “A 1997 law clearly grants the treasury secretary the ability to mint platinum coins of any denomination, in part with the intended purpose of making profit for the government through seignorage.”
But does the Biden Administration want to mint such a coin?
Considering their appetite for outlandish spending, one could assume they do. Especially as a way to stick it to the Republicans (the Freedom Caucus, in particular).
The real question is, would they?
Know one knows for sure, but this goes far beyond the Biden Administration. Look at how much money was spent during the Covid-19 pandemic. Or just take a gander at our national debt.
We’re 31 trillion dollars in the hole and it doesn’t look to be slowing down anytime soon.
Why is the mainstream media “suggesting” a Trillion Dollar Coin as a solution?
To be fair, Biden hasn’t mentioned this as a solution to his spending problems. But the mainstream media has been harping on the idea, and they look to be frothing at the mouth at the possibility.
Just look at these headlines…
CNN: The trillion dollar coin idea is back as a wacky way to prevent financial Armageddon
New York Times: Biden Should Ignore the Debt Limit and Mint a $1 Trillion Coin
MSNBC: Biden should stop worrying and learn to love the platinum coin
This idea isn’t new. It’s been circulating since the law’s inception. But why is the media pushing it as of late? Likely, they are trying to warm up the public to the notion or influence the politicians at the helm, but that’s nothing more than opinion.
Let’s say they decide on going the “platinum coin loophole” route. Why is it such a dangerous idea?
Let’s take a look at some of the main points as to why this would be catastrophic for the nation, and potentially why it has never been used.
Let’s consider the inflationary consequences.
Printing such a large amount of money could (you guessed it) lead to inflation. Inflation leads to an increase in prices which gives you a decrease in purchasing power for your savings. This is specifically bad news for those on fixed incomes (such as retirees) and for those living paycheck to paycheck.
Just take a look at history. Because of inflation, the value of the U.S. dollar has dropped significantly over the last century.
Since 1913, the value of the dollar has lost over 97% of its value.
Since 1970, a dollar has lost nearly 87% of its value.
If you thought 8% inflation was bad, just wait until you see a trillion dollar coin pumped into circulation. It could get ugly.
Issuing a trillion dollar coin could lead to a loss of confidence in government.
If the government were to resort to issuing such a large amount of money without congressional approval, it could send a signal to the public and international markets that it is struggling to meet its financial obligations. This could be concerning, especially if the economy is already struggling as it is.
If the people and business community lose trust in the government’s ability to properly manage their finances and economy, they may be less likely to invest in the economy, less likely to spend money, and more likely to save money instead. This, in turn, could lead to a decrease in economic activity, which could further harm the economy.
If other countries and international investors lose faith, they may be less likely to invest in the country or lend it money. This could make it more difficult for the government to finance its operations and can also increase the cost of borrowing for businesses and individuals.
If you think confidence in government is at a low point now, just wait to see what a trillion dollar coin would potentially do.
It could be used as a way to circumvent the debt ceiling
The debt ceiling is a legal limit set by Congress on the amount of debt the government can take on. This limit is in place to ensure that the government does not take on too much debt, which can lead to inflation, a decrease in the value of the currency, and other negative economic consequences.
By issuing a trillion dollar coin, the government would potentially be able to bypass the debt ceiling and continue to spend without having to get approval from Congress. This could lead to a dangerous situation where the government continues to spend without any checks and balances in place.
The ability to bypass the debt ceiling could also lead to a lack of accountability and transparency in government spending. Without the constraint of the debt ceiling, government officials may not feel compelled to be as fiscally responsible (if it could get any worse), leading to more government spending without any real oversight.
Issuing such a coin would take the fiscal recklessness of our government to a whole new level.
Conclusion
The idea of issuing a trillion dollar coin is certainly as ludicrous as it seems. It would clearly have serious negative consequences for the economy and for the country as a whole, and set an even more dangerous precedent.
The government should focus on responsible and sustainable ways to manage its finances, rather than resorting to drastic and potentially dangerous measures. But with the ever-increasing recklessness we see our government take part in, you really never know.
How far would they take it? Let’s hope we never have to find out.