3 ms·

> the very real possibility of default It was never a possibility. Only a matter of cutting a better deal for each involved party. Just like with the Wall Stre

• bsaul 13y ago
  you do realize that a default means banks and pension funds and insurance will not give money back to people just like yourself ?
  • smsm42 13y ago
    That provides a default happens, which it would not. First of all, looking at last year's budget (or, whatever we have instead of a real budget which we didn't have since 2009), the government income is about $3trln, while the government spends about $250bn for debt service. So there's plenty of money to pay the pension funds. The problem is that the budget plans to spend another $3.55trln on other stuff, and 3.8 > 3. Which is the source of the trouble. But saying "we have to cut 0.8" is not the same as "we can't pay 0.25 out of 3". We can, we just prefer to spend it on other things. But if push comes to shove, the possibility to prioritize debt over other spending is there. Of course, other spending then needs to be cut. But it needs to be cut anyway, just preferably in orderly manner, not as a firefighting measure. Which, of course, is not easy since we can't even have proper budget since 2009.
• kaonashi 13y ago
  The 'debt' is just treasuries. Interest bearing dollars. They get exchanged for non-interest-bearing dollars as they mature, continually rolled over as a backwards facing record of past deficits. It's the deficits that matter; and given that the rest of the world is saving dollars, they are quite necessary to maintain private sector spending.