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As the latest debt ceiling fight looms, calls are surfacing for a wacky solution: minting a trillion-dollar coin. The idea is based on the Modern Monetary Theory, or MMT, which says the government can create money out of thin air to pay its bills.

The idea is to mint a $1 trillion platinum coin and deposit it with the Federal Reserve. This would bypass Congress and avoid a default.

What is a trillion-dollar coin?

As the political deadlock over the debt ceiling worsens, a novel solution has been proposed: creating a trillion-dollar coin. This entails the Treasury Secretary, Janet Yellen, directing the US Mint to produce a platinum coin worth $1 trillion and depositing it in the Federal Reserve to alleviate the country's financial crisis.

Those in favor of Modern Monetary Theory argue that the coin would be lawful under a provision that allows the Mint to mint coins of any face value, and the Federal Reserve can hold coins on deposit. However, some experts are skeptical, believing the currency to be a gimmick that could lead to inflation.

During the current debt ceiling negotiations, a unique idea has gained popularity on social media and among some economists. The idea is that a loophole in the law permits the Treasury Department to mint platinum coins, deposit them with the Federal Reserve, and continue paying its bills while avoiding the debt ceiling.

The idea of minting a trillion-dollar coin has resurfaced among Democrats as a possible solution to avoid a debt ceiling crisis. This concept is based on Modern Monetary Theory, which suggests that the government can create more money to pay its bills without congressional approval for new debt issuance. While this approach could boost the economy by increasing bank reserves and credit availability, it may also compromise the independence of the Federal Reserve and lead to a chaotic default. Therefore, experts were consulted to determine the feasibility of this unconventional proposal. The proposed coin would have an exaggerated face value and be stored in a Federal Reserve vault to prevent a default on government bonds.

The coin solution was introduced in 1992 and gained attention during the debt ceiling crisis. It allows the president to bypass Congress, but its constitutionality is uncertain. Aides are considering using a clause in the 14th Amendment to address the current debt limit issue. Proponents suggest minting a trillion-dollar coin and depositing it at the Federal Reserve to inject cash into the Treasury and avoid breaching the debt ceiling.