|
|
|
US Treasury Secy dismisses idea of minting $1 tn coin to prevent debt default
|
|
|
|
Top Stories |
 |
|
|
|
IANS | 25 Jan, 2023
US Treasury Secretary Janet Yellen scoffed at the idea of the Federal
Reserve minting a $1 trillion platinum coin to keep the government from
defaulting on its national debt that had breached the $31.4 trillion
limit last week, calling for the Congress to raise the limit to enable
the state to honour its commitment on interest payments.
Yellen
dismissed the idea as a "gimmick" which the Federal Reserve was
unlikely to follow through, thus dealing a blow to some ideas floated by
advocates thinking it could be used as end run around Congress amid the
debt limit crisis.
As Republicans and Democrats and the White
House locked horns over raising the debt ceiling limit in Congress with
no solution in sight, Yellen has no other option except to hold onto her
earlier action of resorting to extraordinary measures, that is
prioritizing the debt and the interest payments, focusing on immediate
national needs, media reports said.
Joe Manchin, a democrat from
West Virginia who has the ears of President Joe Biden, had appealed to
the latter to negotiate with Republican members a settlement to resolve
the debt ceiling crisis.
But most Democrats were in no mood for
such a negotiation and White House Press Secretary Karine Jean-Pierre
ruled out any settlement with Republicans on raising the debt ceiling
for any trade off as absolutely "non-negotiable".
The President is due to meet House Speaker Kevin McCarthy soon.
Some
progressive economists and a section of the Democratic lawmakers have
been pushing the Treasury to mint the $1 trillion platinum coin and
deposit it at the Federal Reserve to raise the debt ceiling, then use
the headroom created by the maneuver to fund more government spending.
It would utilise a legal loophole that allows the Treasury to mint platinum coins of any denomination, media reports said.
"It
truly is not by any means to be taken as a given that the Fed would do
it, and I think especially with something that's a gimmick," Yellen told
the Wall Street Journal in an interview on Sunday.
"The Fed is not required to accept it, there's no requirement on the part of the Fed. It's up to them what to do."
Yellen,
who was the chair of the Federal Reserve between 2014 to 2018, made
these remarks after the US reached its debt limit on January 19 which
prompted the Treasury Department to begin using "extraordinary measures"
that gives Congress time until at least early June to raise the debt
limit.
He opposition to mint the $1 trillion coin as a collateral
is no surprise. Because on a previous occasion of a debt limit standoff
in 2021, she discussed the idea of minting a $1 trillion coin and said,
"I don't think we should take it seriously".
The White House
endorsed Yellen in dismissing the suggestion as Press Secretary
Jean-Pierre told reporters earlier this month that "we're not
considering any measures that would go around the Congress".
The
$1 trillion platinum coin idea was often floated to end the impasse in
the Congress on earlier occasions of the debt ceiling crisis, as it was
suggested to fund broad spending plans. Progressive Representative
Rashida Tlaib previously proposed a bill to mint $2 trillion worth of
platinum coins to fund recurring monthly stimulus payments during the
Covid-19 pandemic
While the Federal Reserve didn't actually
consider the merits of minting such a coin, the central bank has been
focused on monetary policy and has stayed away and kept a safe distance
on matters such as this , putting its nose into matters of fiscal policy
that are ordinarily handled by Congress and the president, reports
said.
Those criticizing the coin mint plan feel it would only
help stoke the fires of inflation which was finally coming under control
since the October figures of CPI and WPI of this year showed a slide.
Another risk factor was that it would raise suspicions among investors
in the bond markets on the ability of the US government to redeem debt
repayment with interest and on broader issues of fiscal matters.
That
could cause interest rates to rise, hurting the national economy in
areas such as financing mortgages in the housing markets, while also
raising the government's cost of servicing its existing debt.
With
the $1 trillion coin mint idea virtually going off the table, lawmakers
in Congress will now have to take a bipartisan approach with the Biden
administration to address the debt limit before the Treasury's
extraordinary measures run out this summer by June.
|
|
|
|
|
|
|
|
|
|
|
|
|
Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
|
|
Daily Poll |
 |
 |
PM Modi's recent US visit to redefine India-US bilateral relations |
|
|
|
|
|
Commented Stories |
 |
|
|
|
|
|
|
|