Point taken. The US can, in fact, default on its bonds as a political choice, and it would take Congress to do it.
On the flip side, it’s not a bad thing that the US stops selling treasuries (anything beyond a 3-month bills)? Why give out free money to rich people?
Nothing bad can happen if the US just stops selling treasuries (it doesn’t need to borrow to spend) - just a lot of domestic and foreign investors losing their money and won’t buy dollar-denominated treasuries ever again, but then there is no need for a government running a floating exchange rate to do that (just let the interest rate fall to 0%). It’s a regressive system inherited from the gold standard era where your currency is pegged to a metal/some other currency.
Yeah I mean bonds are just savings accounts for rich people. Governments feel beholden to bond markets, and for countries like the large EU ones that don’t issue their own currency they really are, but for a country like the United States it wouldn’t really matter.
Point taken. The US can, in fact, default on its bonds as a political choice, and it would take Congress to do it.
On the flip side, it’s not a bad thing that the US stops selling treasuries (anything beyond a 3-month bills)? Why give out free money to rich people?
Nothing bad can happen if the US just stops selling treasuries (it doesn’t need to borrow to spend) - just a lot of domestic and foreign investors losing their money and won’t buy dollar-denominated treasuries ever again, but then there is no need for a government running a floating exchange rate to do that (just let the interest rate fall to 0%). It’s a regressive system inherited from the gold standard era where your currency is pegged to a metal/some other currency.
Yeah I mean bonds are just savings accounts for rich people. Governments feel beholden to bond markets, and for countries like the large EU ones that don’t issue their own currency they really are, but for a country like the United States it wouldn’t really matter.
Yea, defaulting on bonds in modern floating system is equivalent to defaulting on cash. Like the Government saying cash is no longer valid.
Treasuries, esp short term treasuries circulate like cash.