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Inflation is a kind of default, I'm not missing the point. The value of the dollar is based on the promise of 2% inflation of a basket of goods. Breaking that
by luke5441 9mo ago
Inflation is a kind of default, I'm not missing the point.
The value of the dollar is based on the promise of 2% inflation of a basket of goods. Breaking that promise is default.
- deleted 9mo ago[deleted]
- nonethewiser 9mo agoWell... no. Default is when you can't pay back what you promised. Not keeping inflation under a certain target. Unless words just don't mean anything anymore. In which case, yes. Which could also mean no.
- luke5441 9mo agoIn case you are interested in more than definitions of words: Bond investors do not care if you default by giving them a haircut, doing things like forcefully extending the term to 100 years or lowering the currency value by printing money. In either case they will adjust their future risk premium of US govt. bonds and of course price in future inflation. One might be able to hide the money printing for a while, though, while the haircut is explicit.