As some of you may have heard, Nobel Laureate Paul Krugman has suggested that the Treasury may be able to avoid having to raise the debt limit by minting a $1,000,000,000,000 plantinum coin. This would allow the Fed to then credit the Treasury’s bank account with one trillion dollars. Analysts say though that minting such a large value coin is in fact no different than the Treasury selling bonds to the public, who in turn sells it to the Fed. This causes the money currently in circulation to lose its purchasing power, causing inflation.
Here’s a link to the full article: http://finance.yahoo.com/blogs/the-exchange/treasury-already-minted-two-trillion-dollar-coins-005206800.html