There’s no real choice for anyone with a working brain cell.
It’s a truly vicious circle, and in a credit meltdown, the circle would act like a juicer. Non-payment of debt means losses which creditors have to cover to meet their own obligations. The problem is that rates can’t remain low in a credit squeeze. They’re not worried now because rates are low. The credit markets, the same geniuses who didn’t predict the 2008 market meltdown, weren’t worried. US government debt hit 100% of GDP in 2020. A major credit market black hole would destroy their customers, their import suppliers, and their foreign investments. Even China, the surly new superpower, would be hit horrendously hard. The UK would simply get blown away in the breezes. Europe would be in a hurricane of extremely difficult debt position issues. The world’s economy wouldn’t do much better, if at all. A credit market meltdown would effectively burn down the American economy. If the debt ceiling is breached, Treasury will need to make hard decisions about which bills whether Social Security or tax refunds to pay in the first week. If so, it’s a pretty damn irresponsible bargaining chip. The debt limit could be a bargaining chip, perhaps. There may be some cogent argument for not raising the limit, but nobody’s mentioned it yet. Right now the US debt is being paid by not contributing to government employee pension funds. The short answer to that question is “the US Senate.” The administration wants to raise the limit, but there’s no guarantee of getting it through the deadlocked Senate. So why is there any debate at all about raising the debt limit, you ask? The government bond market gets trashed at nuclear levels.Ī US default wouldn’t actually be the end of the world.How much is something worth, if nobody has the money to buy those assets? Asset values become totally unpredictable.Instant insolvency as repayments overtake cashflow.Money becomes a lot more expensive for banks, who then pass it on to their customers.A gigantic proportion of that credit is either in the US, or from the US. So if credit becomes a problem, it’s everyone’s problem. Ridiculous amounts of credit on good debts, bad debts, and “meh” level debts. Jean Carroll said she kept quiet about rape. It’s not actually money that makes the world go round. takes new steps to reduce migrant arrivals with Title 42 set to end Carolyn Bryant Donham, key figure in Emmett Till's lynching, has died E. If the US defaults, the entire edifice can come down in one cringeworthy cascade. People invest in debt in huge amounts of money. Tens of trillions of dollars are tangled neatly in cross-loans, bank loans to other banks, etc. The US credit market is the world’s biggest. The US dollar is the default global currency. If this problem related to anyone but the US, it wouldn’t be so bad. The risk of debt default is one of the problems. The rather bizarre debate over raising the US government debt limit is looking to put it politely rather senile.
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