Rumours are flying in the US that President Biden plans to fix the debt ceiling issue by minting a one trillion dollar coin. Although this sounds patently absurd, there’s some logic behind this.

Carlos Mucha first floated the idea (opens new window), jokingly, in 2010 when he spotted a law from 1997, covering the US Mint, that allows them to create commemorative coins of any denomination as a way to raise funds. So if the Mint decided to create a trillion dollar coin, technically it would be legal to do so, and it would be legal tender as the Federal Reserve has to honour it. The only catch is that it would need to be made in platinum, but even for an expensive metal like platinum the cost of the metal would be many orders of magnitude less than the worth of the coin.

Supposedly since the idea was first mentioned, government officials have at times seriously considered it as a way to help fix the curious set of circumstances in the US where congress needs to approve much of the government’s budget, including the debt ceiling (how much the government can be in debt before defaulting), and that this has led to parties using this power for political gain.

But finally this rumour has been put to bed, as the Treasury secretary of the United States, Janet Yellen, said this week that she does not intend to mint a platinum coin worth 1 trillion dollars to pay for the US government’s expenses. So it looks like this crazy idea is not going to happen - at least for now.