• Janet Yellen has knocked hopes the US could issue a $1 trillion platinum coin to keep out of debt default.

• The Treasury Secretary told the WSJ that the Federal Reserve wouldn't back the #MintTheCoin plan.

• The US hit the $31.4 trillion debt limit Thursday, forcing the Treasury to take extraordinary measures.

Janet Yellen has crushed hopes the US Treasury could mint a $1 trillion platinum coin to help cover the country's bills as it struggles with a debt default.

Under the #MintTheCoin plan, the White House would tell the US Mint to issue a $1 trillion platinum coin, which would then be deposited at the Federal Reserve. The Biden administration could then withdraw money to pay the government's bills.

"It truly is not by any means to be taken as a given that the Fed would do it, and I think especially with something that's a gimmick," Treasury Secretary Yellen said in a Wall Street Journal interview published Sunday.

"The Fed is not required to accept it, there's no requirement on the part of the Fed. It's up to them what to do," said Yellen, a former chair of the US central bank.

Officials in the Biden administration and Democrat lawmakers have floated the idea of the coin to avoid a wrangle in Congress over raising the debt ceiling.

The US hit the $31.4 trillion borrowing limit on Thursday, forcing the Treasury to step in with so-called extraordinary measures to prevent a default. But those measures will only stave off until early June the political debate over how much money the government can borrow to make its payments.

Congress is shaping up for a standoff, as Republicans want any debt ceiling agreement to include cuts to government spending, while Democrats have rejected that move. The Biden administration insists the statutory limit on its borrowing should be raised without any conditions.

The $1 trillion coin — which exploits a loophole in US currency law — would allow the US to keep paying its bills without any agreement from Congress or issuing new debt.

Yellen has warned the US risks defaulting on its debt when the extraordinary measures run out.

"Failure to meet the government's obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability," Yellen previously wrote in a letter.

She also urged lawmakers to "act in a timely manner" to increase or suspend the debt limit to prevent the US from facing a catastrophic economic situation.

Read the original article on Business Insider

Source: Read Full Article