how the $1 trillion coin minted by the United States and deposited into the treasury doesn’t help resolve the outstanding debt without ramifications.
In: 141
Well, you can’t spend that coin, so it’s pretty pointless. The US has been running a deficit since the Clinton administration and while the coin could make the treasury look better, it couldn’t be used to pay off the bonds the treasury issues, so it doesn’t actually do anything.
It would cause ramifications.
Understanding what money actually is and why we have a debt should come first before this ludicrously stupid idea. Why didn’t anyone think of it before? It’s because you’re just kicking the can down the road. Debt has to be repaid at some cost, whether to the borrowers or the lenders. By printing a $1 trillion coin, you’re putting the onus on the primary users of the currency, making their existing money worth less, and therefore requiring them to work harder to earn the same amount of money to acquire the same necessary goods.
The Federal Reserve would deposit the coin in the Treasury, thereby reducing the national debt and postponing or eliminating the need to raise the U.S. debt ceiling….
Think about it like your rent is due, your need to hit groceries and you have no money, then all of a sudden you find $100. Basically it’s a loophole, that the Fed isn’t entertaining
The value of money is based on it being guaranteed by assets the market value at least at the value of the money it guarantees.
This $1 trillion coin will not be worth $1 trillion on the market, so using it to guarantee $1 trillion means that there’s more federal reserve money than federal reserve assets at market value. That will reduce the confidence of people in the US dollars, making it being used less internationally and creating inflation.
If the US does it too much, it will create hyperinflation, that is when monthly inflation is at least 50%, so the value of money goes down by at least 130 times a year. What you can buy with $1 now will cost $130 dollars minimum after a year of hyperinflation.
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