Thor’s hammer, Lancelot’s sword, Yellen’s trillion dollar platinum coin: It’s human nature to yearn for a magical weapon to save us from our enemies — or worse, our own blunders.
That’s why the idea of the United States Treasury Secretary Janet Yellen minting such a coin to save the country from the looming debt ceiling which Republicans refuse to raise, is such a popular one. Without an increase to the limit, the government faces imminent shutdown and the inability to pay off its debts.
That’s because the federal government’s fiscal year ends on September 30th, and if Congress doesn’t agree on a spending bill by then, nonessential parts of the Federal Government will begin to shut down. The debt ceiling is not the same as the budget, but the two are typically linked. Republicans, who are the minority in Congress, are using their power to limit the debt ceiling to attempt to stop Democrats from passing their proposed $3.5 trillion Build Back Better reconciliation deal.
On Tuesday, every House Republican, including those from Louisiana which is still recovering from Hurricane Ida, voted against a continuing resolution that would fund the government until December 2021, suspend the debt ceiling until December 2022, and provide hurricane relief.
So what can be done if the two sides won’t budge? Technically, Yellen has the authority to create a coin with enough ascribed value to pay off all debts, and drop it off at the Federal Reserve. In fact, 31 U.S. Code § 5112 puts it into law. “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,” it reads.
The concept has been around for a while, Populist Party presidential candidate Bo Gritz first suggested it in 1992. The idea picked up steam in 2012 during the fiscal cliff debates. In 2017, President Barack Obama even gave it a nod.
“We were having these conversations with [former Treasury Secretary] Jack Lew and others about what options in fact were available, because it had never happened before,” said Obama on the Pod Save America podcast. “There were all kinds of wacky ideas about how potentially you could have this massive coin.”
Wacky being the key word.
But proponents of the coin use it as a foil to a concept they think is just as silly: The debt ceiling.
To put it simply, the ceiling, which was enacted by Congress in 1939, sets a legal cap on the amount of money the Treasury can borrow. When that cap is reached, and there’s no more money to be spent, the U.S. stops making legally mandated payments like military salaries and pensions. Eventually, if the ceiling isn’t raised, the Treasury is forced to stop making payments on interest from debts, sending the country into default.