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Well, if the government starts defaulting on payments, then bond rates go to infinity while the domestic currency goes to zero. The US is currently defaulting
by hedora 2y ago
Well, if the government starts defaulting on payments, then bond rates go to infinity while the domestic currency goes to zero.
The US is currently defaulting on all sorts of debts, and the deficit has nothing to do with it. I wonder why its credit rating hasn’t been slashed yet.
- alaxhn 2y agoThe US is not defaulting on bond payments and thus bond interest rates have not increased and the creditworthiness of bonds has not changed. As I think you are hinting at, the US is in the process of cancelling many contracts deemed no longer in the interest of the country under a new administration. Contracts can represent a form of obligation similar to debt and there are many companies who will not sign contracts with the government due to the complications involved (or who will request very favorable terms). Unfortunately, there is not really a good rating mechanism (at least that I am aware of) for rating entities that is risky to enter into a contractional relationship with - this stuff is often passed around via word of mouth.