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The US government may soon be forced to print $1 trillion in coins.
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Democrats and Republicans have yet to reach an agreement on the debt limit.
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Analysts expect the two sides to eventually reach an agreement.
The US government is at a crossroads as divisions in Congress put the country at high risk of default. Treasury Secretary Janet Yellen warned in a recent statement that the US government could default in June if Democrats and Republicans fail to reach an agreement. This is one of the major reasons why the price of gold has reached an all-time high.
trillion dollar coin
It is still unclear whether the US will default on its obligations if Congress fails to raise the debt ceiling. I believe the situation will not reach that point because of its effect on the US economy.
Analysts believe that a default would lead to high unemployment and possibly the collapse of the economy as we know it.
Therefore, there is a possibility of an agreement between the two sides in the coming days. Signs of a possible agreement will come when Biden meets with Kevin McCarthy on Monday.
There are several options if both the parties fail to raise the debt limit. One possible solution would be to print a trillion dollar coin. The concept of that coin was considered in 2011 when the US faced another debt ceiling issue.
This would allow the mint to come up with a platinum coin. Important at $1 trillion. These funds would then be delivered to the Federal Reserve, which would deposit it into the National Treasury. By doing so, the Treasury would then eliminate part of the national debt and postpone the need to raise the debt ceiling. a professor at Willamette University Said,
“At this point, if any other solution, the so-called more serious solution, would work, they would have been used by now. But they are never really strong enough. Only one coin is strong enough.”
Bullish for Bitcoin, Solana, Cardano
Such a move would be positive for Bitcoin, which is seen as the digital version of gold. Unlike fiat currencies, bitcoin cannot be printed because its supply of 21 million coins cannot be adjusted. If bitcoin rises, we can now see altcoins such as Solana, Cardano, and Tron rise due to their close correlation.
The reality is that the US government is at risk of major changes going forward. For one, the total public debt has been in a strong upward trend over the years. It has grown from just $320 million in 1970 to over $31.4 trillion today.
And the situation will continue to worsen due to the large budget deficit. Analysts expect the debt to grow to more than $44 billion by 2030. cbo believes that that the budget deficit will grow to 5.9% of GDP by 2040.
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