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by jfengel
151 days ago
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The US will keep issuing debt as long as people are willing to buy its debt at a reasonably low price. Which people keep doing. For a long time that was because people were justifiably convinced that the US would honor those debts, which it could do because it kept producing even more stuff every year, and would never even think about threatening to default. Here in 2026 I cannot imagine why they are continuing to, except inertia. |
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Because there is no where else for that debt to go. No one else wants to take on so much debt.
Meanwhile there are a bunch of asset managers who are paying the mortgage on their beach home in the Caribbean with the bonuses they earn by investing in US debt. If the US defaults on that debt 10 tears from now that means they still earned 9 years of million dollar salaries, and anyways they won’t be blamed for something the entire industry suffered from at that point.
If they do the prudent thing and ask for a higher price they will end up investing fewer dollars which reduces their 2% commission on invested capital, money that might go to their international equity golfing buddy instead.
Entities where the money is managed by the investor itself (for example, foreign national governments) do indeed appear to be cutting back.