Economist Paul Krugman has proposed that the US Treasury can print a $1 trillion coin to pay off its bills, thus avoiding a debt ceiling crisis. He has suggested that in order to prevent inflationary effects, the Treasury must sell equal value of US bonds. His suggestion has received mixed reactions from the public with many believing that it would be irresponsible and create instability in the market. However, Krugman is confident that this would not be the case, noting that this could actually be done without resorting to Modern Monetary Theory.
Krugman has further proposed the idea of creating a new form of “premium bonds” to raise capital without increasing the money supply in the market. He believes that the public will be more accepting of the premium bonds, compared to the trillion-dollar coin, although it could involve going to court to address its legality. He has further suggested that the Supreme Court will have difficulty in blocking the initiation of premium bonds, as it would likely have detrimental effects on the economy.
Krugman’s proposal for the US Treasury to print a $1 trillion coin has stirred up a debate, with many believing it as a dangerous and reckless approach. However, Krugman has iterated that it is possible to do it without causing inflation and without resorting to Modern Monetary Theory. He has further suggested that premium bonds may be a viable option, which could have the same effects but be more acceptable to the public. For now, the debate is ongoing and only time can reveal the best approach for the US to pay off its bills and avert the debt ceiling crisis.
Adriana Parker
- 2023-05-04
Paul Krugman's Proposal To Pay Off US Treasury
Economist Paul Krugman has proposed that the US Treasury can print a $1 trillion coin to pay off its bills and avert a debt ceiling crisis. Additionally, he suggests introducing premium bonds to raise capital without increasing the money supply, but it comes with its own legal obstacles.
