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The United States has never missed a coupon payment and it doesn't look like it will for the forseeable future (many, many decades). What would you call that be

The United States has never missed a coupon payment and it doesn't look like it will for the forseeable future (many, many decades). What would you call that besides the best credit any organization could possibly have?

cm2187 8y ago
The US is critically reliant on creditors rolling their debt. At one point the music will stop. They will then likely inflate the debt away rather than miss a payment but this biggest accumulation of peace time debt in history will end in tears somehow.
- icelancer 8y ago
  There have been multiple pauses of music and it hasn't really done much to the USD. The argument that the music will stop requires there to be a new conductor and financial instrument that can replace the USD and the role that the United States plays in the world economy. The EUR was the closest thing we've had in my lifetime, if you don't count all the ridiculous goldbug rushes we've had in the last five decades - the same people saying the exact same thing you are, who have been perpetually wrong when compared to any other type of financial instrument such as the S&P500 or more recently, VTI. I am no fan of carrying enormous amounts of debt. I critically disagree with the United States economic and fiscal policies of the last twenty years, including most quantitative easing initiatives. But if you think the AAA credit rating is somehow fake or corrupt, no metric-driven analysis that even remotely resembles fairness would agree with you. Only theories like "the music will stop" do.
  - suff 8y ago
    The phrase, "cleanest shirt in the laundry basket" comes to mind. Relatively speaking, the US is in a much better place than others, even if it isn't perfect.
    - Tsubasachan 8y ago
      There are countries in the EU who manage budget surpluses. Its why the EU can bail out Greece and soon Italy. Its not impossible.
  - JohnJamesRambo 8y ago
    Cryptocurrency will replace the dollar. A world currency free of any nation’s policies is too attractive. Transferring all your wealth to it allows the rich to escape all these massive debts that have been accumulated by governments and the financial system. This flip will be quite violent as the money moves from one sector to the other and is called hyperbitcoinization, although I don’t believe bitcoin will necessarily be the actual coin used.
roenxi 8y ago
That is a very low bar though, any country still functional enough to run a printing press can make coupon payments. The issue is, if someone lends the US enough money to buy a coffee, it is difficult to see why they believe they are guaranteed to get a coffee+ worth of money back. The numbers are staggering, the economic growth isn't there. The US has a technological edge and a big army, but at the end of the day it is 'just' a country like all the others. At this point, a reasonable observer could conclude that the political process is locked in to running up debt until the interest can no longer be paid. Neither the Republicans nor Democrats are in a position to improve the numbers. After the '07-'08 era crisis, it seems a legitimate question to ask why the taxpayer should pay their debts if the financiers seem to get a pass when it all gets too hard for them.
- icelancer 8y ago
  >> That is a very low bar though, any country still functional enough to run a printing press can make coupon payments. This hasn't happened unless you count QE as printing money to pay debt, which would be a pretty serious twist of logic. >> The issue is, if someone lends the US enough money to buy a coffee, it is difficult to see why they believe they are guaranteed to get a coffee+ worth of money back. >> At this point, a reasonable observer could conclude that the political process is locked in to running up debt until the interest can no longer be paid. Neither the Republicans nor Democrats are in a position to improve the numbers. If you think this is actually true, there is a ton of money to be made on the open markets by securing your position with capital. There's plenty of financial instruments you can leverage to back your position. >> After the '07-'08 era crisis, it seems a legitimate question to ask why the taxpayer should pay their debts if the financiers seem to get a pass when it all gets too hard for them. This is a legitimate criticism but separate from your other claims. QE is protectionist and massively contributes to inequality (in more ways than just income). I am quite critical of the USG and their economic policies. Now I can admit that and also admit that the United States is probably the safest credit risk on the planet, primarily due to the hegemony-driven policies we exert globally. You might argue that this is not for long, but I highly doubt this to be true, and the rest of the world acts as if.
  - 8y ago
dis-sys 8y ago
how many times Lehman defaulted before Sept 2008? how many people believed Lehman could go bankruptcy that month? btw, you are talking about credit ratings made by agencies that consistently rated Lehman's products as AAA.
- icelancer 8y ago
  Sounds like you have found a market opportunity to make a lot of money. Congratulations.

cm2187 8y ago

The US is critically reliant on creditors rolling their debt. At one point the music will stop. They will then likely inflate the debt away rather than miss a payment but this biggest accumulation of peace time debt in history will end in tears somehow.

icelancer 8y ago
There have been multiple pauses of music and it hasn't really done much to the USD. The argument that the music will stop requires there to be a new conductor and financial instrument that can replace the USD and the role that the United States plays in the world economy. The EUR was the closest thing we've had in my lifetime, if you don't count all the ridiculous goldbug rushes we've had in the last five decades - the same people saying the exact same thing you are, who have been perpetually wrong when compared to any other type of financial instrument such as the S&P500 or more recently, VTI. I am no fan of carrying enormous amounts of debt. I critically disagree with the United States economic and fiscal policies of the last twenty years, including most quantitative easing initiatives. But if you think the AAA credit rating is somehow fake or corrupt, no metric-driven analysis that even remotely resembles fairness would agree with you. Only theories like "the music will stop" do.
- suff 8y ago
  The phrase, "cleanest shirt in the laundry basket" comes to mind. Relatively speaking, the US is in a much better place than others, even if it isn't perfect.
  - Tsubasachan 8y ago
    There are countries in the EU who manage budget surpluses. Its why the EU can bail out Greece and soon Italy. Its not impossible.
- JohnJamesRambo 8y ago
  Cryptocurrency will replace the dollar. A world currency free of any nation’s policies is too attractive. Transferring all your wealth to it allows the rich to escape all these massive debts that have been accumulated by governments and the financial system. This flip will be quite violent as the money moves from one sector to the other and is called hyperbitcoinization, although I don’t believe bitcoin will necessarily be the actual coin used.

roenxi 8y ago

That is a very low bar though, any country still functional enough to run a printing press can make coupon payments. The issue is, if someone lends the US enough money to buy a coffee, it is difficult to see why they believe they are guaranteed to get a coffee+ worth of money back. The numbers are staggering, the economic growth isn't there. The US has a technological edge and a big army, but at the end of the day it is 'just' a country like all the others. At this point, a reasonable observer could conclude that the political process is locked in to running up debt until the interest can no longer be paid. Neither the Republicans nor Democrats are in a position to improve the numbers. After the '07-'08 era crisis, it seems a legitimate question to ask why the taxpayer should pay their debts if the financiers seem to get a pass when it all gets too hard for them.

icelancer 8y ago
>> That is a very low bar though, any country still functional enough to run a printing press can make coupon payments. This hasn't happened unless you count QE as printing money to pay debt, which would be a pretty serious twist of logic. >> The issue is, if someone lends the US enough money to buy a coffee, it is difficult to see why they believe they are guaranteed to get a coffee+ worth of money back. >> At this point, a reasonable observer could conclude that the political process is locked in to running up debt until the interest can no longer be paid. Neither the Republicans nor Democrats are in a position to improve the numbers. If you think this is actually true, there is a ton of money to be made on the open markets by securing your position with capital. There's plenty of financial instruments you can leverage to back your position. >> After the '07-'08 era crisis, it seems a legitimate question to ask why the taxpayer should pay their debts if the financiers seem to get a pass when it all gets too hard for them. This is a legitimate criticism but separate from your other claims. QE is protectionist and massively contributes to inequality (in more ways than just income). I am quite critical of the USG and their economic policies. Now I can admit that and also admit that the United States is probably the safest credit risk on the planet, primarily due to the hegemony-driven policies we exert globally. You might argue that this is not for long, but I highly doubt this to be true, and the rest of the world acts as if.
- 8y ago

dis-sys 8y ago

how many times Lehman defaulted before Sept 2008? how many people believed Lehman could go bankruptcy that month? btw, you are talking about credit ratings made by agencies that consistently rated Lehman's products as AAA.

icelancer 8y ago
Sounds like you have found a market opportunity to make a lot of money. Congratulations.