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Like you said the debt is denominated in USD, so the USA could repay all that money by minting a 31T$ coin. It would be devastating, the USD would become worthl
by nick__m 4y ago
Like you said the debt is denominated in USD, so the USA could repay all that money by minting a 31T$ coin. It would be devastating, the USD would become worthless, some economies would experience deflation while the USA would instantaneously experience hyperinflation.
IMHO, the only reason that the US debt is not a major problem is that no country whant to see the whole economic system collapse so no one will want that debt repaid as long as the interest are paid on time. And in the eventually that the USA is unable to pay the interest on time, a deal will assuredly be brokered to avoid that catastrophic solution.
- Retric 4y agoThe US wants to maintain positive inflation, and much of that debt is below the targeted inflation rate which offsets any concerns about the need to create 31$T in new money. Aka if they can pay back 31$T by borrowing 30$T inflation adjusted and then pay back that 30$T by borrowing etc, it’s just free money. The risk isn’t the need to come up with 31$T at some point the risk is people being unwilling to lend close to the inflation rate. The US economy is addicted to a subsidy from foreign borrowers, and that changing could be seriously problematic.
- nick__m 4y agoYour right about the risk. But I would like to know how the interest would be paid if no one want to lend more money?
- deleted 4y ago[deleted]
- indemnity 4y agohttps://www.statista.com/statistics/246420/major-foreign-holders-of-us-treasury-debt/ https://www.statista.com/statistics/246420/major-foreign-hol... Addicted might be son overstatement.