3 ms·

Good luck when Congress fails to agree on the debt ceiling issue in June, defaults on treasuries and government bonds become nearly worthless.

ericpauley 4y ago
Most everything is eventually wrapped treasuries. If the US government defaults you have far bigger worries.
grey-area 4y ago
Why go for a hard default when they can soft default (as now), and nobody cares? Yes republicans in Congress will try to force a crisis, no it won't actually mean government bonds become worthless.
xeromal 4y ago
That scenario is a can of beans and hunting deer with my 30-06 kind of situation if it really gets that bad.
mastax 4y ago
If you're going to hold until maturity, I don't see how the debt ceiling affects you significantly (any more than it would affect the entire asset market). The treasury will pay you eventually, likely within days. If you are holding 10 year treasuries and were planning on selling them on the secondary market in July, yeah that could be very bad.
icecap12 4y ago
The situation you've described has never happened. Out of all the options, it is considered the safest. People forget that the dollar is backed by the ultimate currency - military force.
- revscat 4y ago
  There is a possibility that members of Congress are actively seeking to undermine the financial strength of the United States, and to do so will not vote to raise the debt ceiling. Weakening the federal government is their goal, conservative social issues are merely justifications. I’m not sure what relevance you think the military has here in this situation.
  - inglor_cz 4y ago
    I have heard similar speculations in the Bush era. At the end of the day, it never happens.
  - rootusrootus 4y ago
    There are just a few members of Congress that meet that description, however. They only wield a lot of power when the rest of Congress is divided neatly into two nearly equal parts. The moment actual default becomes a real possibility, the mainstream members of both political parties will briefly form a consensus and kick that can down the road a ways. Just like they always have. Not too far, mind you, because it must remain something they can argue about periodically. The bad part, of course, is they likely won't do that until we've already done some damage to our credibility.

ericpauley 4y ago

Most everything is eventually wrapped treasuries. If the US government defaults you have far bigger worries.

grey-area 4y ago

Why go for a hard default when they can soft default (as now), and nobody cares? Yes republicans in Congress will try to force a crisis, no it won't actually mean government bonds become worthless.

xeromal 4y ago

That scenario is a can of beans and hunting deer with my 30-06 kind of situation if it really gets that bad.

mastax 4y ago

If you're going to hold until maturity, I don't see how the debt ceiling affects you significantly (any more than it would affect the entire asset market). The treasury will pay you eventually, likely within days. If you are holding 10 year treasuries and were planning on selling them on the secondary market in July, yeah that could be very bad.

icecap12 4y ago

The situation you've described has never happened. Out of all the options, it is considered the safest. People forget that the dollar is backed by the ultimate currency - military force.

revscat 4y ago
There is a possibility that members of Congress are actively seeking to undermine the financial strength of the United States, and to do so will not vote to raise the debt ceiling. Weakening the federal government is their goal, conservative social issues are merely justifications. I’m not sure what relevance you think the military has here in this situation.
- inglor_cz 4y ago
  I have heard similar speculations in the Bush era. At the end of the day, it never happens.
- rootusrootus 4y ago
  There are just a few members of Congress that meet that description, however. They only wield a lot of power when the rest of Congress is divided neatly into two nearly equal parts. The moment actual default becomes a real possibility, the mainstream members of both political parties will briefly form a consensus and kick that can down the road a ways. Just like they always have. Not too far, mind you, because it must remain something they can argue about periodically. The bad part, of course, is they likely won't do that until we've already done some damage to our credibility.