The U.S. might default on its debt payment by June 1, but could a $1 trillion platinum coin help it avoid bankruptcy?
The United States is fighting back-to-back economic challenges while trying to tame inflation. Along with the recent banking crisis, there is a fear that the U.S. might default on its public debt payment for the first time.
Is Paul Krugman’s $1 Trillion Platinum Coin the Solution?
The American economist Paul Krugman introduced the idea of a $1 trillion platinum coin in 2013 through a New York Times op-ed article.
Krugman believed, “By minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling — while doing no economic harm at all.”
But yesterday, instead of the $1 trillion coin, Krugman suggested using premium bonds to prevent U.S. bankruptcy. He believes there are certain confident misconceptions about the $1 trillion coin; hence, premium bonds are preferable.
“But as I said, people who really should know better constantly get this wrong and imagine that the coin would be inflationary. And that’s a reason to prefer a route that doesn’t inspire confident misconceptions.”
Bitcoin and Gold, Safer Alternatives?
On Monday, U.S. Treasury Secretary Janet Yellen declared that the U.S. might default on paying public debt by June 1 if Congress didn’t extend the debt ceiling.
Congress must decide whether to increase the debt ceiling to prevent the country from defaulting. It is worth noting that since 1960, Congress has extended the debt limit 78 times.
While the U.S. teeters on the verge of bankruptcy, investors are moving towards the alternatives such as Bitcoin and gold. A community member wrote on Twitter, “Only Bitcoin can save the U.S. from total financial disaster.”
After Yellen’s announcement on Monday, the S&P 500 fell 2.3%, while Bitcoin is up by 5.8%. Gold has hit a new all-time high and is up by 3.38% since Monday.
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