Trillion-dollar coin

The idea

A law passed in 1996 allows the Treasury secretary to mint platinum coins in denominations the secretary chooses. It was intended for commemorative and bullion coins for collectors. Proponents of the coin noticed that the law sets no upper limit on face value.

Under the proposal, the Treasury would mint a single platinum coin worth, say, one trillion dollars and deposit it at the Federal Reserve. The Fed would credit the Treasury’s account with that amount, and the government could keep paying its bills without issuing new debt that counts against the ceiling.

Why it keeps coming back

The idea surfaced during the 2011 standoff and drew wide attention in 2013 and again in 2023. Its appeal is that it appears to rely on existing law and avoids both a default and a constitutional confrontation over the Fourteenth Amendment.

Why it has been rejected

In 2013 the Treasury said that neither it nor the Federal Reserve believed the law could or should be used this way, and later Treasury leaders dismissed the idea as a gimmick. The objections are practical as much as legal:

• The law was evidently written for collectors’ coins, and a court could find that using it to fund the government defeats the intent of Congress.
• The Federal Reserve is not obliged to accept the coin, and its independence would be pulled into a political fight.
• Markets could read it as a step towards financing the government by creating money, damaging confidence in the dollar.

What it would and would not change

Even if it worked, the coin would not reduce spending or the deficit. It would only change how the gap is financed: from borrowing from investors to a claim on the central bank. That is why economists who find the legal argument clever still tend to see it as an emergency escape hatch rather than a policy.