Fed rules out plan for $1 trillion platinum coin to avoid debt limit

 
City A.M. Reporter
THE US TREASURY this weekend stamped on the idea of minting a $1 trillion (£620bn) platinum coin as a way of funding government spending and dodging the debt ceiling.

The Treasury and the Federal Reserve both concluded that the novel way of getting around the fierce political row on public spending was not a viable solution.

“Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” said a Treasury spokesman in a statement.

US borrowing is set to reach its authorised limit of $16.4 trillion next month, meaning congress must vote again to raise the ceiling to avoid defaulting on its debts or missing some payments – potentially including state sector workers’ wages.

The novel idea was taken seriously after big-spending economists and commentators like Paul Krugman pushed for it to be considered. But the government declined to use such a creative approach to the debt limit.