4 ms·
Yeah, no country's going to compel the US to pay back its debt, given that the US probably spends about as much on the military as the rest of the world combine
by calibraxis 14y ago
Yeah, no country's going to compel the US to pay back its debt, given that the US probably spends about as much on the military as the rest of the world combined. Instead, they simply roll over the debt by buying more US Treasury IOUs. It looks far more like tribute to the military superpower, than the usual creditor-debtor relationship where the creditor dominates the debtor.
Of course, weak countries must pay their debts (even when a military dictatorship racks up odious debt), which is a lever to force them to ruin their societies through austerity programs.
- adventureful 14y agoIt would take extreme desperation for someone like Japan to call in their held paper. That's an entirely plausible scenario though, given their debt loads. However, the US could push a button and 'print' $2 trillion tomorrow morning in a monster QE3, and then hand Japan and China each a trillion dollars and nearly pay them off completely. All it would do is probably push the dollar index back down into the mid 70's, where it was 9 to 12 months ago. The bigger problem would actually be confidence, such a move would freak everybody out. Instead the Fed prefers to gradually inflate the value of Chinese and Japanese debt holdings away (which is also why China has taken such a liking to gold).