5 ms·
The goal here is to circumvent the debt ceiling. Writing a $1T IOU would add $1 trillion to the liability side (i.e. debt) of the bookkeeping (and presumably al
by wcoenen 5y ago
The goal here is to circumvent the debt ceiling. Writing a $1T IOU would add $1 trillion to the liability side (i.e. debt) of the bookkeeping (and presumably also to the asset side in the form of an addition to a federal reserve account), while minting a $1T coin only adds it to the asset side.
- Uehreka 5y agoSo then why not a note? And is there a rule somewhere that a physical thing needs to be minted at all?
- wcoenen 5y agoIt has to be a platinum coin because subsection (k) of https://www.law.cornell.edu/uscode/text/31/5112 https://www.law.cornell.edu/uscode/text/31/5112 is the special case that allows for issuing any denomination. Notes are a liability of the Federal Reserve. Meaning they can be traded for balance on a Federal Reserve account. The treasury can't just create liabilities for the Fed out of thin air, I mean that would be wrong ;-) (edit: just joking. The $1T coin would also be deposited at the Federal Reserve. I don't know why it can't be a note, other than that's how the law was written.)
- jjk166 5y agoThank you, this is the answer I was looking for