Did you know…the U.S. treasury (nearly) minted a one trillion dollar coin

The concept of a one trillion dollar coin first emerged in 2011 as a result of the U.S. debt ceiling crisis. To understand why this seemingly absurd idea arose, one must first understand the debt ceiling. The debt ceiling is an arbitrary limit set by congress determining the amount of debt the government is allowed to take on.  Every time the U.S. has approached this limit, congress has passed a bipartisan bill raising the debt ceiling. If the U.S. were to pass this limit before congress raised the ceiling, there would be extreme consequences, and the government may be forced to default on its debts (for everyone taking econ, you know this is a VERY bad thing). 

Now that the background has been set, we can look at the infamous one trillion dollar coin. In 2013, the U.S. was quickly approaching the debt ceiling of 16.699 billion dollars. Normally, this would not be a big issue; congress would raise the debt ceiling and the government would be in the clear for a few more years. However, the bill to raise the ceiling was stuck in congress – Republicans were refusing to pass the bill as a political leverage tool to repeal the Affordable Care Act. The democrats, including then President Obama, refused to meet their demands, and instead they looked for other solutions to the debt crisis. One of these ideas was the one trillion dollar coin.

The basic idea goes something like this: due to a loophole in a bill back in 1996, the U.S. Treasury could mint platinum coins of ANY denomination. This was originally intended for the minting of commemorative coins, yet it also meant that the U.S. treasury could mint a platinum coin and declare it to be any amount of money, even one trillion dollars. Due to this loophole, some democrats proposed an idea for the treasury to mint a one trillion dollar coin, then deposit said coin into the federal treasury. This is similar to a fiscal mechanism the government uses called quantitative easing, and it would artificially lower the federal government’s debt. Now, before you comment about what a horrible idea this is, it was not meant to be permanent. The plan was a temporary solution to bypass congress, and, if the government did implement it, the treasury would buy back the coin as soon as the debt ceiling was raised.

Eventually the debt ceiling was raised and the one trillion dollar coin plan was dropped. However, the trillion dollar coin idea emerged once again in March 2020, this time championed by democratic congresswoman Rashida Tlaib, as a possible solution to the financial crash resulting from the COVID-19 pandemic. Some have even taken to twitter to express their support for this proposal under #MintTheCoin. At the time of this post, no one trillion dollar coin has been minted.