The U.S. Government is in a boondoggle because it hit its debt ceiling limit last Thursday. The national debt has now surpassed $31.5 Trillion and that clock keeps counting higher and higher. While Congress hasn't yet settled the matter, the U.S. Treasury has about $400 Billion to keep things going until the first week of June.

At this point, the Federal Reserve cannot print any more currency as the government is limited by law to not go over the debt limit. The only way to bypass this is to pass a bill that cancels the old law while creating a new law that raises the statutory limit, usually by a couple of trillion dollars these days. This is occurring more frequently as the limit is reached again and again. In fact, it's going on 80 times!

This draws a lot of attention to Congress and probably not in a good way. While the law restricts them from over-spending past the limit, there is another less known statute in place that could actually bypass that law and in perpetuity, avoid hitting the debt ceiling. This statute pertains to the minting of coinage that allows the Secretary Of The Treasury to mint platinum coins. You'd think the Treasury would have to mint a mountain of platinum coins to reach a trillion dollars but this statute is different. It allows the Secretary Of The Treasury to mint in any denomination, even $1 Trillion.

The idea is to then take the coin to the FED and PRESTO! The FED goes to work printing a trillion dollars. It's crazy and ludicrous and you know what? They might actually try it because it is crazy and ludicrous. Why not go for a $10 Trillion coin instead. How fast would it be spent? Would it cause inflation?

My bet is, yes it will and would still add to the debt and the debt burden aka interest payments but it does raise a good point that the U.S. Treasury has the power to mint unlimited coinage in whatever denomination for the U.S. government. At this point, the FED is broke. It can no longer print money in the form of currency. It does not have the authority!

The U.S. Treasury under Janet Yellen is effectively in charge. While she really does have the power to mint a trillion dollar coin, I don't think she's crazy enough to do it but if under pressure from Congress which is essentially her boss, she may find herself being forced to act. So what comes next in such a situation?

Secretary Yellen is a woman with genuine experience. After all, she was FED Chair under President Trump before Jerome Powell took over. One million dollar coins sound more viable but would have to have precious metal content, such as platinum but can also include gold and silver which is more common than platinum. 

This would mean the (re-) introduction of a new a precious metal backed coin. I'm not saying this will happen but it does surprise me that the Treasury has this unique power. There was a time when everyone walked around with a bit of silver in their pockets and you could buy a lot with it because prices were stable and people had confidence in their silver coins for their strong purchasing power.

So it wasn't like people lined their pockets to the brim with coins. No, most people walked around with just a couple of dollars (or less) because that's all that was needed to get by for the day.

It is quite possible we could return to those days. Maybe that's why the U.S. Mint has had 'supply and production' issues in 2022 that saw its silver coin sales drop by more than 40%? Are they holding on to their silver supplies? After all, the U.S. Mint is an arm of the U.S. Treasury and ultimately answers to Janet Yellen.

If Congress doesn't 'act' to raise the debt limit by the first week of June when the Treasury runs out of cash to fund its obligations, we may see Janet Yellen exercise her extraordinary powers to mint new coinage and it would be unlimited to boot. If this happens, it would be unprecedented. It would mean the Treasury is in control of the money and not the FED. If that will be the case, watch out. Those guys won't likely give up without a fight.

Also, when the treasury creates money, it is interest free!

Oops, did I say the quiet part out loud?

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