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A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war. Things would have to be very, ve
by marvin 13y ago
A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war. Things would have to be very, very bad for things to go that far. More likely you'd see dollar devaluation and heavy inflation, but even that would be a global political problem.
- dragonwriter 13y ago> A refusal of any considerable scale by the US to repay its foreign debt obligations would probably be considered an act of war. Default has rarely been considered an act of war except when the default was on debts incurred as part of a peace settlement, and its not like anyone is in a position to take much substantive action because they "consider" a US act to be an act of war. > Things would have to be very, very bad for things to go that far. Well, its not going to happen in practice in any case, because the US debt is dollar denominated, and if it was necessary, it could be monetized (not that it would have to be: creditors would probably prefer to allow the US to restructure debt rather than encouraging monetizing it, since many other debts are dollar denominated, and for most creditors it would be better for the US debt to be devalued through restructuring than for all USD-denominated debts to be devalued by monetization.) Sovereign default is mostly an issue with countries whose debts are denominated in something other than their own national fiat currency.