how the $1 trillion coin minted by the United States and deposited into the treasury doesn’t help resolve the outstanding debt without ramifications.
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Every comment here is wrong.
First, we need to understand the problem. It is really easy to get the order of things wrong. The US government already ordered so much spending, which, yes, is greater than the taxes it brings in. In order to finance the spending the US issues debt, that is sought after and wanted by many parties both inside and outside the US. Since Congress ordered this spending, the government has no right not to spend the money.
The debt limit is a relic of WWI where congress went from approving every individual bond issued by the US to telling the treasury, “you do it, just don’t go above this limit without our say so”. Now, the US government has hit that limit and needs permission to go higher since the spending has already been ordered. This is analogous to buying something on a credit card and deciding at a certain point you have too much debt, so you just aren’t going to pay the bill. Not that you will spend less, but that you won’t pay for what you already bought.
This long explanation is to say the only problem with the US government paying its debt is not lack of funds or willing creditors it is an arbitrary limit that was decided on for no real reason.
The coin gets around this arbitrary, made-up limit by increasing the assets the US officially has, so the net debt is lower, and thus, the debt limit has not been reached. If it is legal it will have no, zero, knock on effects to the economy. Of course, that isn’t going to happen because if it did, then Congress could just normally raise the limit normally and the coin would not be necessary.
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