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Where would you even go if the US defaulted? It's such an armageddon level event that I don't know how you even begin to hedge it.
by ragnot 3y ago
Where would you even go if the US defaulted? It's such an armageddon level event that I don't know how you even begin to hedge it.
- JumpCrisscross 3y ago> Where would you even go if the US defaulted? Longer-dated Treasuries. This is a technical default, and when threatened in the past, other Treasuries rally. The problem is if someone needs liquidity in an affected issue, or if this prompts a general risk-off mentality which then leads to rising capital costs across the private sector.
- naveen99 3y agoThe shortest dated government debt is overnight. But if they don’t pay the overnight rate to money market funds using the reverse repo or banks money in the federal reserve, surely that would cause a divide by zero error somewhere in the financial system.
- deleted 3y ago[deleted]