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by carlosjobim 23 days ago
Government debt isn't like personal debt or business debt. The treasury can choose to not honur it, and there's nothing anybody can do about it. Of course they're not going to find a market to sell more debt to after that, but wouldn't you say they already have enough?

No sympathy for people and institutions who make deals with the devil and expect the government to forever enslave taxpayers to honour those deals and pay back with interest.
5 comments
donavanm 23 days ago
As mentioned defaults do shockingly little to change future funding. Its been years since i looked but its something like a few years of “cool down” on issuance and a few points of coupon premium. The economist has done some great, very accessible, articles on this over the years.

Second, its critical that treasury bonds are denominated in USD. The us gov controls the monetary policy and can choose to inflate away the debt over time. This is in contrast to EM debt where they get trapped with foreign denominated bonds. See also the tensions around EU debt, greece, etc.

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JumpCrisscross 23 days ago
> Of course they're not going to find a market to sell more debt to after that

Argentina is doing fine. The real constraint would be that defaulting on the debt would cause a credit crisis and bank collapses.

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Avicebron 23 days ago
Pretty sure this is why the bankruptcy guy from NY was sent in
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flerchin 23 days ago
The way I understand my money market settlement account at vanguard, is that it's all, or nearly all, treasuries. Treasury not honoring government debt would be the worst bank failure in the history of the world.
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carlosjobim 22 days ago
It would be bad for you, but you also deserve that because you have made a deal with the government to enslave young people to pay taxes on their labour in order to pay interest to you. Loosing all your investments in a bond default would be a very fitting consequence for what you have done so wickedly.
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flerchin 21 days ago
I am one of those young people laboring and paying taxes. It's not clear to me what I should do with the surplus of my labor that is available to me, that would be acceptable to a worldview like you seem to be espousing.
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fsuts 22 days ago
Not true

The powerful people holding the debt will seek to change the government to one that obeys them

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sarchertech 23 days ago
We also don’t have anywhere near $175 trillion in debt. That’s a crazy made up number.
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