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by rmc 4963 days ago
The US Dollar area (i.e. the US) has come closer to default than the Eurozone.
2 comments

If by "default" you mean "voluntary default", perhaps yes, in the context of the debt ceiling debate.

However, since the US government cannot be forced into default - after all, the US government runs the USD system, and all its obligations are denominated in USD - this is all just political posturing.

It's kind of depressing how effective this posturing is. It's a testament to the terrible state of public education about fundamentals of our monetary systems.

yep. But can the largest military power really default?
Easier than anyone else, I'd say.

"Hi Everyone, POTUS here. About those treasury bonds a lot of you are holding... we're not going to pay interest on them. Or pay back the princiapl. Ever. On a totally unrelated note, here are some pictures of our 11 carrier strike groups. Impressive, aren't they?"

Argentina is a serial defaulter yet investors still lend money to the government there.

If the U.S. decided to completely default on it's debt it would be more destructive to the U.S. economy since the majority of the debt is held by U.S. citizens & institutions. Insurance companies & banks would collapse instantly since the a very large percent of their asset bases would be wiped out.

We (meaning U.S. citizens) owe more to ourselves than to any foreign entity. Default is, at least right now, a political non-starter.

"Hey, POTUS, you got us. BTW, we'll never lend you money again. Or vote for your party again."

The US would never need to default on its debt, since its debt is in USD. Worst case, it would just print more money, leading to inflation.

Ask the Germans and the British before the WWII.

They were the largest military power at the time, Germany in land, British Empire(India,Pakistan, Afghanistan, Ethiopia...) on the sea.

They started getting in debt and a little country called United States became the biggest creditor of the world.

They they killed each other in a stupid war trying to reign supreme, and someone else did.

Now this someone else had started thinking their power will be forever. We will see...

Well the European Union is the largest economy by GDP (not sure of eurozone). Can it 'collapse'? If it can collapse, what makes you think the largest military can't?