'It's really a gimmick': Yellen on minting the $1 trillion coin for debt ceiling
(Kitco News) U.S. Treasury Secretary Janet Yellen rejected the idea of minting a $1 trillion platinum coin to avoid raising the debt ceiling via the usual bipartisan way.
Yellen referred to the idea as a "gimmick."
"I'm opposed to it, and I don't believe that we should consider it seriously. It's really a gimmick," Yellen told CNBC in an interview when asked about the $1 trillion platinum coin idea.
The U.S. Treasury Secretary equated mining the coin to "asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover by issuing debt."
She added: "It compromises the independence of the Fed conflating monetary and fiscal policy, and instead of showing that Congress and the administration can be trusted to pay the country's bills, you're really going to do the opposite," she said.
On Monday, White House Press Secretary Jen Psaki also stated that options such as mining the platinum coin were not viable because "they wouldn't be accepted by the Federal Reserve, by the guidance of our Treasury secretary, or just by legal restrictions."
In her testimony to Congress last week, Yellen warned that if the debt ceiling is not raised in time, the U.S. will default, which would trigger a financial crisis and undermine the U.S. dollar.
"If the debt ceiling is not raised, there would be a financial crisis, a calamity. It would undermine confidence in the dollar as a reserve currency … It would be a wound of enormous proportions," Yellen said.
According to the U.S. Treasury Secretary, the U.S. will run out of money on October 18 if the debt ceiling is not raised. But instead of relying on politicians to solve the problem, the Treasury Department has another surprising option – minting a $1 trillion platinum coin.
A loophole in the law dictates the mintage of coins, potentially allowing the Treasury Department to mint platinum coins of any denomination and deposit them at the Federal Reserve in exchange for the U.S. federal debt.
An exact wording can be found in the subsection (k) of 31 USC 5112, which governs "Denominations, specifications, and design of coins."
The clause states: "The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time."
Theoretically, U.S. Treasury Secretary Janet Yellen can order the platinum coin to be minted and avoid a government shutdown if the debt ceiling is not raised in time.
But before precious metals bulls get too excited and imagine a massive platinum coin being rolled down from the U.S. Treasury to the Federal Reserve, the coin doesn't technically have to be made out of $1 trillion worth of platinum.
The coin potentially would require some platinum to be used, but it can be as small as a dime, with the U.S. Treasury assigning any value to it, including $1 trillion or even more.
The #MintTheCoin option has also been gaining traction on social media, with experts and the general public debating the idea.
Got a very nice email and follow-up from former Mint Director @PhilipNDiehl, which I reproduce here with his permission, that provides useful context on the underlying legislative intent behind 31 USC 5112(k) and reinforces the case for #MintTheCoin. pic.twitter.com/FGIhSgtaoQ— Rohan Grey (@rohangrey) October 6, 2021
Strongly support minting the trillion dollar platinum coin, as long as it is scaled up in size and weight so it has to be comically carried and dropped everywhere like a Laurel & Hardy bit … #MintTheCoin pic.twitter.com/X1XV3C7MiK— James Adomian (@JAdomian) October 6, 2021