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If households could print currency it would be analogous. The US Federal Government can not ever run out of money because it controls the currency. This is not
by wonderyak 14y ago
If households could print currency it would be analogous. The US Federal Government can not ever run out of money because it controls the currency. This is not to say that bad things can't happen (inflation for one); but in most cases its a balance sheet equation - Federal Debt is Private Credit.
- podperson 14y agoIf anything this makes Federal Debt more useful and attractive than private debt. The problem isn't that households can't "print currency" (in a sense they can) but that their debts aren't denominated in the currency they can print. Thus, the US government is in a relatively unique position that, for example, Cyprus and Greece do not enjoy.
- dragonwriter 14y ago> If anything this makes Federal Debt more useful and attractive than private debt. A theoretical observation borne out quite well by the observed market characteristics of federal debt (e.g., the federal governments cost of borrowing.)