The fanciful idea that the US Treasury could circumvent the debt ceiling by minting a $1trn platinum coin suddenly exploded in popularity last week. This is never going to happen. One question that hasn't been answered is, in the very unlikely event it did happen, how would the Federal Reserve respond? If the debt ceiling stand-off looked like it was going to continue for more than a few weeks, which it surely would if the Obama administration took the $1trn coin option, then we suspect the Fed would consider curbing or halting its quantitative easing.
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