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If we fail to pay interest in a timely manner is potentially catastrophic. US Bonds are considered a safe haven because we have never defaulted on our debt
by fridder 1mo ago
If we fail to pay interest in a timely manner is potentially catastrophic. US Bonds are considered a safe haven because we have never defaulted on our debt
- engineer_22 1mo agoUS bonds are a safe haven because the world’s oil supply is locked up by US warships.
- verzali 1mo agoBut it isn't. US warships proved incapable of keeping the Strait of Hormuz open. Oil is not flowing.
- engineer_22 1mo agohave you considered that closing the straight may be one of the primary objectives of the war?
- budman1 1mo agoThe interest is only part of it ! How about paying back the principle when the bond comes due?
- Beretta_Vexee 1mo agoThe principal is repaid by issuing new bonds at maturity. This can be sustained for a long time if interest rates are low, but for much less time if rates rise. The volume of bonds being issued becomes so great that rates have to be raised to ensure they all find buyers. It is not as though the US Treasury can afford to wait until it finds a buyer at lower yield. It absolutely must sell these bonds to pay off the principal on the old ones.
- budman1 1mo agoIt's the payday loan principle. Loan comes due. I pay the interest. And rollover the principle. Problem is, now we are starting to add to the principle, because there isn't enough cash to cover the interest and keep the lights on.