US Treasury shrugs off minting $1-trn coin

Washington: 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.