NEW YORK, United States | A trillion dollar coin. The thing is possible, according to the texts; it ignites social networks and the idea has even seduced an elected American, presented as the solution to the recurring psychodrama of the debt ceiling of the United States which is currently tearing the American Congress apart.
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The idea, born in 2011 in the mind of an anonymous lawyer from the state of Georgia resurfaces with every political crisis, like the one currently taking place in Washington, between Republicans and Democrats, one or the other. party blocking the raising of the debt ceiling, necessary for the US government to meet its commitments.
His supporters suggest using a law passed in 1997 that, in theory, allows the Secretary of the Treasury to strike a coin of any denomination he chooses, in platinum.
The Minister of Finance, presumably on the instructions of the President, could thus create a trillion dollar coin, which would then be deposited into the account of the American Central Bank (Fed) to repay an equivalent share of the debt of the United States.
The government would thus find itself well below the debt ceiling and once again have the necessary leeway, without having to seek authorization from Congress, which it should normally do.
Deemed fanciful by the majority, even legally impossible to implement in practice, the concept nevertheless gained ground, to the point that in 2013, the US Treasury took the trouble to say that it would not strike this coin.
In January 2017, a few days before the end of his mandate, US President Barack Obama recounted in the “Pod Save America” podcast that the idea had been discussed with then Treasury Secretary Jack Lew , but discarded.
Few economists have lent credit to this theoretical construction, among them the American Nobel laureate Paul Krugman, in March 2020, who presented it as an “accounting sleight of hand” which “would simply allow the Treasury to override. the blackmail of the republicans ”.
“Workaround”
“This is the kind of reasoning we see in a developing country,” protested him, Laurence Kotlikoff, professor of economics at Boston University.
“The heart of the matter is issuing change to pay government bills,” he adds. “And when you spin the printing press enough, you generate inflation. “
However, after more than twenty years of weak price increases, inflation has already returned to the American economy, thanks to the end of the coronavirus pandemic.
Republicans who are now again opposing raising the debt ceiling believe it would validate the massive investment plans of the Biden government, which they deem “irresponsible.” The threat of a default, the first in US history, is looming.
In recent days, the trillion dollar coin has been making social networks fantasize, or scream.
House of Representatives Democratic Leader Nancy Pelosi revealed on Tuesday that New York MP Jerry Nadler had suggested the “trillion dollar coin” as one of the possible solutions to avoid new arms in the future. iron on debt to Congress.
For Bard College economics professor L. Randall Wray, co-creator of Modern Monetary Theory (which argues that a country’s indebtedness is not a handicap), the famous coin is no more eccentric than the massive support system for the economy that the Fed has put in place since the start of the pandemic, by buying back hundreds of billions of dollars in public and private debt on the market.
“It’s a workaround,” said the scholar, “which highlights the fact that the debt ceiling itself is a stupid idea.” “
And a growing number of economists, including L. Randall Wray, point out that the colossal injections of liquidity by the Fed into the financial system since 2008 have had no effect on inflation, and that the specter is not. a.
For Matthew Gertz, researcher at the Media Matters for America media observatory, rather than the trillion dollar coin, “you know what’s cool? The million trillion coin. “
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