US debates minting US$1tr coin to help pay off its debt
Platinum coin and constitutional change mooted as showdown nears in dispute over debt ceiling
The looming showdown between President Barack Obama and congressional Republicans over raising the US$16.4 trillion US federal debt limit has made alternatives - including minting a trillion-dollar coin or invoking a constitutional amendment to pay the bills - part of the political debate.
So far, the Obama administration is not participating.
The proposal for the Treasury Department to mint a platinum coin worth US$1 trillion and deposit it at the Federal Reserve to give the US enough money to pay its debts has been advanced by Representative Jerrold Nadler, a New York Democrat, and Nobel laureate Paul Krugman.
Representative Greg Walden, an Oregon Republican, said on Monday he would introduce legislation to block such a move.
The ideas underscore growing unease in Washington as the US reaches the debt limit and Obama and the Republicans move closer to a confrontation over increasing it. Republicans are demanding spending cuts in exchange for raising the limit, while Obama says he will not negotiate on the issue. Treasury Secretary Timothy Geithner took extraordinary measures on December 31 when the US was a mere US$25 million below the ceiling, to avoid breaking through it.
"A trillion-dollar currency is ridiculous," said Chris Krueger, a policy analyst at Guggenheim Securities LLC in Washington. "This is not something that a first-rate power should even consider."
A research note from Krueger last week helped spur interest in the idea by mentioning such coins as a "theoretical" option, while calling it "very low probability". An online petition to the White House requesting the coin got more than 6,800 signatures.