Skip to comments.USA At Medium Risk For Default (Despite Ability To Print Trillions Of Dollars)
Posted on 03/30/2013 5:19:58 PM PDT by whitedog57
Former Federal Reserve Chairman Alan Greenspan said that the USA will not default because we can print money.
Assuming someone accepts it, that is. The Federal government continues to splurge on spending and running up the Federal debt to dizzing heights in the process.
The US does have a printing press, but is it enough? The US has a probability of defaulting on its debt of 2.59%. Or a medium risk of default.
That compares with a 93.12% of default for Greece and 52.01% for Spain, all in the high risk category. The USA is in the medium risk category with Japan.
We know that the USA suffers from a fragile economy with runaway government spending and debt. And the Congress and Administration almost had a stroke over a minuscule sequestration slowdown in the rate of government spending as if Mars was attacking.
What about our debt? It is front-loaded, meaning that it rolls over very quickly at low rates we hope.
When you consider the USA yield curve is almost zero at the front end and not much higher on the back end, one has to wonder what will happen when the huge amount of front-loaded debt rises, say, 200 basis point.
The Fed has an interesting problem with the maturity structure of its assets purchases being long the US debt maturity structure.
NOW you can seen why The Fed is keeping the pedal to the metal on asset purchases. It cant afford to let interest rate rise. M2 Money Velocity (GDP/Money Supply) continues to tank.
And the M1 Money Multiplier has fallen to 0.81.
Money printing is not working since the excess reserves are sterilized and not being loaned out. Except for subprime auto and student loans. If it ever escapes, we will have serious inflation (more than we have now).
I hope Congress and the Administrations doesnt pull a Cyprus and start wealth confiscation in the form of bank deposits, 401K plans and similar.
They will seize 401Ks - they need the financial panic and the right crisis to do so. They will give everyone "bonds" for their 401Ks.
This will happen.
Yup....there’s no way they are going to let trillions of dollars go untaxed in 401ks in the next 30 years. Not. going. To. Happen.
When they say we are at risk of default, are they saying we may run out of paper and ink?
“They will seize 401Ks - they need the financial panic and the right crisis to do so. They will give everyone “bonds” for their 401Ks. “
Are they okay with letting the stock market tank?
Because that would happen overnight.
Still only a medium risk? It’s a good thing Obama has four more years to finish the job. He’ll get us to full default with a 100% guarantee - that’s the real Change he promised.
Well thank goodness, because if it was 2.61%, we'd be in big trouble!
Well, the probability of default is five times higher than the intererest on a domestic CD. Everything’s just coming up roses.
It's important to put a time horizon on the probability of an event occurring. A 2.59% of default in the next 24 hours is a LOT different than 2.59% in the next 24 years.
24 weeks feels about right.
Impeachment File on B. Hussein Obama.
So, have you ever thought about putting the “impeach” keyword in threads so the Republicans can find them later? Because i know they’re about to start on that any minute now. (/s)
Seriously, though... Not sure how helpful or practical it would be, but it’s a thought.
It is hard to default when you can print money through illegal money laundering schemes.
Good suggestion, but the flaw in your logic is that the RINOs ignore all who do not agree with them. Hence, they remain “Elite.”
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