Why are the consequences of minting a trillion dollar coin so much worse than the consequences of default?
In: 0
Not going to address the legality I’m just going to assume you can do it.
It’s not. The trillion dollar coin would be mildly inflationary, not what we need right now but not catastrophic. It would increases the money supply, but spoilers so would issuing a trillion dollars worth of T bonds. It would be more inflationary than the T bonds but not hugely so. The risk would be that we would make a habit of it. i.e. let’s stop issuing T bonds and just issue platinum coins. If you make a habit of it you will start to get legitimately problematic inflation. As it’s a immediate increase in the supply of money. Where as with T bonds the money supply increases because of the interest on the bond. This spreads the increase out over years if not decades. Making the inflation less noticeable.
Latest Answers