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> and is completely risk free because the US government is monetarily sovereign. So what? Ctrl+P is cheap, but that's besides the point. The reason USA is not

by vrotaru 14y ago

> and is completely risk free because the US government is monetarily sovereign. So what? Ctrl+P is cheap, but that's besides the point. The reason USA is not Ctrl+P-iing now, but is borrowing instead should at least serve as a hint. My point: If it is OK to Ctrl+P at later date as the Is-Safe-To-Borrow propaganda wants us to believe why is not safe to Ctrl+P now? Why borrow when you can print? So, no. No such thing as free cookies or risk-free debt. At least this side of the Jupiter orbit. Yes, it would be a different endgame, as the one for Greece, but this is not the same as risk-free.

nhaehnle 14y ago
The reason USA is not Ctrl+P-iing now, but is borrowing instead should at least serve as a hint. Actually, the US is Ctrl+P-ing now. That's what QE is all about: from the perspective of the private sector, QE is equivalent to the government creating money out of thin air to pay back the debt. This is only obfuscated a bit by the fact that treasury and central bank have separate balances. Why borrow when you can print? My guess is a combination of (a) most people are afraid of change (case in point: you), (b) the people owning treasury bonds effectively get a hidden subsidy via the interest paid by government, and (c) the problem is framed in such a way that most people never even question the existing institutional arrangement - and when they do, they tend to do it in terribly uninformed ways. No such thing as risk-free debt. Please explain under which conditions the US government would become unable to fulfill the promises implied by its debt.
- vrotaru 14y ago
  I agree with a lot of what you said above. I just don't think it changes the general picture that much. > Please explain under which conditions the US government would become unable to fulfill the promises implied by its debt. At the point where the choice would be a) currency destruction (10-15% inflation), b) default.

by vrotaru 14y ago

nhaehnle 14y ago

The reason USA is not Ctrl+P-iing now, but is borrowing instead should at least serve as a hint. Actually, the US is Ctrl+P-ing now. That's what QE is all about: from the perspective of the private sector, QE is equivalent to the government creating money out of thin air to pay back the debt. This is only obfuscated a bit by the fact that treasury and central bank have separate balances. Why borrow when you can print? My guess is a combination of (a) most people are afraid of change (case in point: you), (b) the people owning treasury bonds effectively get a hidden subsidy via the interest paid by government, and (c) the problem is framed in such a way that most people never even question the existing institutional arrangement - and when they do, they tend to do it in terribly uninformed ways. No such thing as risk-free debt. Please explain under which conditions the US government would become unable to fulfill the promises implied by its debt.

vrotaru 14y ago
I agree with a lot of what you said above. I just don't think it changes the general picture that much. > Please explain under which conditions the US government would become unable to fulfill the promises implied by its debt. At the point where the choice would be a) currency destruction (10-15% inflation), b) default.