The Debt Ceiling and Trillion Dollar Coins

I was asked by a friend about the trillion dollar coin scheme is a scheme and here is my answer:

The trillion dollar coin scheme is a scheme to get around the debt ceiling.  The constitution allows the treasury to mint coins, so the idea is to mint a trillion dollar coin which lowers that federal government’s indebtedness by a trillion dollars thus avoid another debt ceiling fight.  

It is my opinion considering the incentives that politicians will borrow and spend money as long as they can do so without major short term negative consequences.  That is why I think an eventual default might be the best thing, because then no one would lend them money and so they would have to run balanced budgets.  As Jeffrey Hummel has said default would be a balanced budget amendment with teeth.  I do not invest based on such things, the way I see it is that companies can do fine even while the Fed Government defaults not only that but we do not know when the real problems will start or will be the best investment at that time.  Also I am holding an appropriate amount of stock in companies outside the USA which seems prudent at al times.

Further IMHO the government does not need all the money that takes in now, I think that they could cut defense spending in half and not endanger the country’s defense, cut SS by 40% and not hurt needy retirees and cut Medicare 30% without hurt the health of the elderly and cut education (mostly not the federal Government but state and local but still) by about 50% with hurting education.