Explained | U.S. plan for $1 trillion platinum coin to address debt crisis

While some support idea, others term it a gimmick

The bipartisan fight between U.S. Democrats and Republicans over the ceiling on U.S. Government debt has thrown up an interesting idea. Some in the Democratic camp have suggested that a $1 trillion platinum coin may be issued to bypass the debt ceiling if Republicans refuse to raise it. U.S. Senators reached a compromise on Thursday, which will allow the U.S. Government to meet its spending obligations till December. However, the bipartisan fight over the debt ceiling looks far from over.

The U.S. Congress limits the total amount of debt that the U.S. Government can borrow to finance its spending. The debt ceiling has been gradually raised over the decades, from around $4 trillion in the early 1990s to $28.4 trillion in August, 2021. U.S. Governments generally run a budget deficit, that is, their expenditure exceeds their revenues, which forces them to borrow. The debt ceiling is supposed to serve as a check on government borrowing by forcing the government to live within its means.