Paul Krugman: $1 Trillion Coin Won't Cause Inflation

Nobel laureate economist Paul Krugman has suggested that the US could use a $1 trillion platinum coin to avoid defaulting on its debt without worsening inflation. The coin would be created by the US Treasury and deposited at a Federal Reserve account to pay bills while lawmakers remain deadlocked on lifting the debt ceiling. Some economists have criticized the idea as unrealistic and potentially inflationary. However, Krugman argued that the inflationary effects of the coin would be offset by the Fed selling bonds worth $1 trillion. The deadline for the US debt default is nearing, with no signs of progress on a deal to lift it. Treasury Secretary Janet Yellen warned that the government could run out of money and trigger an economic crisis as soon as June 1. Krugman thinks the government is more likely to issue "premium bonds" to avoid default than mint a $1 trillion coin. He acknowledged claims that Fed Chairman Jerome Powell wouldn't accept a $1 trillion coin or that the Supreme Court would block the issuance of premium bonds. However, he argued that nobody wants to be responsible for destroying the world economy.


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