When I logged on to check the financial news this morning, one headline quickly caught my eye, “$1 trillion coin is nuts but not $25 billion – Opinion.”  My first thought, both ideas are nuts.  Seriously, why on Earth would either a $25 billion coin or a $1 trillion coin be needed?  Oh yes, these coins could be beneficial in the game of politics.

Now that a fiscal cliff deal has been reached, attention has turned to the upcoming debt ceiling.  If this sounds familiar, it should.  Back in August 2011 Congress and President Obama reached a debt ceiling deal, a deal that alleviated debt repayment concerns and led to the fiscal cliff issue we just solved.

Although the Budget Control Act of 2011 addressed the debt ceiling problem at that time, it is cropping back up.  In about two months the nation is going to butt up against the debt ceiling again, and that means that Congress and the President need to reach another agreement.  Or do they?

Evidently there is some discussion of “solving” the debt ceiling concern with the minting of a single $1 trillion coin.  

“Treasury is forbidden from printing money to cover government deficits. Treasury must issue debt, while the Federal Reserve independently controls our nation's monetary printing press. That is exactly as it should be. But there is an arcane exception for platinum coins. To serve coin collectors, Treasury can issue platinum coins of any denomination. That creates an intriguing loophole: Treasury could bypass the collector market and mint a $1 trillion platinum coin. By depositing it at the Federal Reserve, Treasury could keep paying bills after we've fully exhausted our borrowing limit.”  Source: CNNMoney

Voila, problem solved!  Not really, though.  Minting dollar bills or $1 trillion coins can send inflation sky high.  Even if inflation increases could be mitigated through other measures, minting a coin doesn’t solve the problem.  Congress and the President need to reach a deal to reduce spending.  

If a deal can’t be reached in time, though, the $1 trillion coin may be the best choice for the nation, at least according to Donald Marron, director of the Urban-Brookings Tax Policy Center.  “If we reach the brink, however, minting million- or billion-dollar platinum coins would be better than default.”  

Photo: DonkeyHotey/Flickr

The opinions expressed by MNN Bloggers and those providing comments are theirs alone, and do not reflect the opinions of MNN.com. While we have reviewed their content to make sure it complies with our Terms and Conditions, MNN is not responsible for the accuracy of any of their information.