They wouldn’t default. They’d simply print money to cover the difference, deflating the value of your currency. Obama did this quite often. Biden will likely do this leading into the election to bring down interest rates (rather than cutting spending, which would have a similar impact withou lessening the value of a dollar). Buying up the bonds that are not purchased by others in an attempt to keep interest rates artificially low.
I don't know why people are downvoting this person's post. He or she is correct. The US will never default. They will just print as much money as is necessary to cover the debt, resulting in inflation.
It’s the basis of modern monetary theory that is behind the economic policies of Obama and Biden, even though their advisors can’t seem to explain it.
Greg Gutfeld and the panel discuss how Jared Berstein, the chair of the United States Council of Economic Advisers, struggled to explain monetary policy on ‘...
Palo Verde nuclear power plant (the largest nuclear power plant in the US) cost of construction was $14 Billion in today's dollar. There are 93 nuclear power plants in the US. So I guess they could probably take all of them.
If the Chinese try to repossess even one isotope on US soil, we will bomb the living sh!t out of them.
I have to assume you are either joking, or a complete moron. If we 'bombed the living sh!t' out of China, life as we know it on this planet ceases to exist. Hopefully this is not news to you.
That’d probably be the easiest way out of this mess!
If the Chinese try to repossess even one isotope on US soil, we will bomb the living sh!t out of them.
I have to assume you are either joking, or a complete moron. If we 'bombed the living sh!t' out of China, life as we know it on this planet ceases to exist. Hopefully this is not news to you.
Complete moron theory reinforced by throwing around the word isotope, clearly with no idea what it means.
Are you referring to percentage of U.S. Treasury Bills, U.S. Treasury Notes and U.S. Treasury Bonds held by People's Republic of China, Chinese large corporations and Chinese whale investors? It is not wise to worry about U.S. Treasuries defaulting at this time. If there comes a time when U.S. Empire is having difficulty paying interest on Bills, Notes & Bonds and having difficulty providing services to citizens of U.S., U.S. will do what all empires do: shrink military and reduce military expeditionary missions.
I’d be concerned if China starts disposing of its massive amounts of Treasury securities, surreptitiously through phony intermediaries of course. Yields up, principal down, stock market freak out.
Debt service is about 2.4% of GDP and 16% of the total Federal budget. And that is much higher than normal because interest rates are so high. So, while debt service is a big scary number, it is not something that the US cannot afford the way other countries who have defaulted on their bonds. The only way the US would default is due to a political crisis causing a government shutdown.
If I owe the bank $100,000 then the bank has leverage over me. If I owe the bank $1,000,000,000 then I have leverage over the bank as well. The US and China are so economically intertwined neither party would want to see the other fully collapse (despite the rhetoric).
Palo Verde nuclear power plant (the largest nuclear power plant in the US) cost of construction was $14 Billion in today's dollar. There are 93 nuclear power plants in the US. So I guess they could probably take all of them.
$859 billion gets you a lot of "stuff"
I thought Trump told us that China was already paying the US "hundreds of billions of dollars" because he "charged tariffs to them" and that that's how tariffs work now, and that the US therefore doesn't owe China money anymore. Did I miss something? Or was he lying?
If US defaults on debt, the US economy would take a major hit. Interest rates would shoot up very high and that will slow the economy in a bad way. who is going to buy US debt in the future?
This would obviously need to be a decision by the US government (their decision) because they simply can print more money of course. The only thing is that I don’t know what the next step would be. That was my question. It’s a 0.0000000001% possibility, but there has to be a second step.
Let’s remember that “currency” is also debt on the Federal Reserve bank Balance Sheet.
T-Bills are simply issued to reduce the money supply (to my knowledge)
The US had $1,300 Billion in debt to China in 2012, so that debt level is approx half now. China has been buying gold with its US$ (more so recently), I believe this is done to reduce dependence on the US, given the way the world has been going in the past 4 years…
…anyway, I am no economist, but I am surprised with some of the comments on this thread. Are all the people who posted on this thread allowed to vote? This explains why we get to choose between Trump and Biden I guess.
This would obviously need to be a decision by the US government (their decision) because they simply can print more money of course. The only thing is that I don’t know what the next step would be. That was my question. It’s a 0.0000000001% possibility, but there has to be a second step.
Let’s remember that “currency” is also debt on the Federal Reserve bank Balance Sheet.
T-Bills are simply issued to reduce the money supply (to my knowledge)
The US had $1,300 Billion in debt to China in 2012, so that debt level is approx half now. China has been buying gold with its US$ (more so recently), I believe this is done to reduce dependence on the US, given the way the world has been going in the past 4 years…
…anyway, I am no economist, but I am surprised with some of the comments on this thread. Are all the people who posted on this thread allowed to vote? This explains why we get to choose between Trump and Biden I guess.
You don' seem brighter than anyone else on this thread.
Reducing money supply:
* U.S. Treasury burns old bills and prints new bills monthly. Continue to burn old bills and print new bills at a percentage lower than rate of inflation.
* Raise overnight fed funds rate and raise discount rate.
* U.S. government bond buy back: U.S. government buys back T-Bills, T-Notes and T-Bonds on open market.
Print more money logic only has worked out due to foreign countries willingness to buy T-Bills, T-Notes and T-Bonds. Over-printing should collapse a nation's currency which would produce stagflation. The reason it hasn't collapsed USD due to willingness of global billionaires to buy T-Bills, T-Notes and T-Bonds. Also foreign governments doing the same. Large corporations doing the same. City, county and state pension funds doing the same.
The China debt is only 2.5% of the total debt. Why would we care so much about China with the other 97% to be concerned with, which is mostly US citizens?
The annual servicing cost to China is only $34 billion. That’s not bringing the US to its knees.
If China wants its $859 billion back, they can just sell their share on the market and cash out at any time.
China isn’t really lending the US money so America can pay its bills. They are investing in US securities as a safe place to keep some cash. The same reason most people do.
Palo Verde nuclear power plant (the largest nuclear power plant in the US) cost of construction was $14 Billion in today's dollar. There are 93 nuclear power plants in the US. So I guess they could probably take all of them.
$859 billion gets you a lot of "stuff"
how can we default when the debt is in US$?
This... If you are the world reserve currency you can always print money and inflate your way out of debt.. This is what will happen and what will eventually decrease the wealth gap as borrowers pay back less "real" money.
If the Chinese try to repossess even one isotope on US soil, we will bomb the living sh!t out of them.
No, you won't. China makes more than half of the things you use daily and without them US economy will collapse. Also, if you owe somebody, you pay them back, otherwise it's stealing.
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