Observer

with the US debt already above $40 trillion and the debt ceiling getting closer, i’d be more concerned about how far trump might push things if congress refuses to cooperate. he could turn the threat of default into a political game of chicken, betting that the other side blinks first. and if neither side backs down? washington has spent years entertaining some pretty wild ways around the debt ceiling. 1. the trillion-dollar platinum coin mint a coin with a $1 trillion face value and deposit it at the Fed. a trillion dollars in Treasury cash without selling a single bond, provided the Fed accepts it. yes, this has actually been discussed. 2. gold revaluation america still carries its gold reserves at $42.22 an ounce. reprice those holdings at market value and the paper gain runs into the trillions. getting that money into the Treasury’s account is legally complicated, but the temptation is hard to ignore. bessent dismissed gold revaluation in 2025, saying, “that’s not what I had in mind.” whether he’d stick to that position during a full-blown debt ceiling crisis is worth considering. 3. premium bonds can’t borrow more because of the debt ceiling? offer investors higher coupons so they’ll pay $150 for a bond with a $100 face value. the idea is to raise $150 while counting only $100 against the ceiling, assuming that interpretation holds up legally. the extra interest payments are tomorrow’s problem. 4. perpetual bonds the British were issuing consols centuries ago, paying interest indefinitely without ever having to repay the principal. washington could explore something similar, although whether such bonds could legally escape the debt ceiling is another question for the lawyers. 5. the 14th Amendment Section 4 says the validity of US public debt shall not be questioned. trump could argue that this allows continued borrowing despite the statutory ceiling, leaving the courts to decide whether the president actually has that authority. 6. change the rules trump has already called for abolishing the debt ceiling. why negotiate over the limit if you can pressure congress to get rid of it altogether? of course, that still requires legislation. none of these is a confirmed administration plan. several face serious legal obstacles, but the Treasury’s financing needs aren’t going away. while washington fights over borrowing authority, the Treasury could be drawing down its TGA balance, releasing liquidity into financial markets. traders might enjoy that for a while, until a deal is reached and the Treasury starts borrowing again to rebuild its cash reserves. and if trump decides to push the confrontation to the brink, markets may end up pricing in something far worse than a temporary liquidity squeeze: the risk of US Treasuries themselves becoming bargaining chips in washington’s political fight..