Monday, August 8, 2011

There is no chance of a U.S. credit default

I heard former Federal Reserve Chairman Alan Greenspan say this on Meet The Press yesterday. 

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default."

There.  Don't you feel better already? 
Why don't we go ahead and print 14 of some trillion dollar bills, and call it even?


JT said...

I don't know what to fear more; that our treasury secretary said that, or that there are millions of Americans that don't understand basic economic and monetary principles and think that printing more money is the solution.

Somewhere there is a group of people thinking,'Well, it's about damn time, I've been sayin' they should just print some mo' money for years.'

Hot Sam said...

Nations that DID have the ability to print money DID actually default on their debt.

After a while, your creditors get wise to your inflationary tactics and begin denominating your debt in their currency.

Of course, when the debtor nation goes bankrupt, it usually involves restructuring and debt forgiveness by the creditors and enforced austerity covenants.

It would be much better to enforce austerity now before we get to that point.

S&P sent a strong message, but we're still a long way from default. We can't wait until it's too late, but default is at least 20 years away in the worst of cases.

Dr Ralph said...

And this was said by your sometimes hero, Alan Greenspan? Was he being ironic or were you?

The Whited Sepulchre said...

No irony. The former Fed Chair (who I've scoured my typing in vain looking for heroic references to) has more or less admitted that their only solution is to print the dang money.