Tuesday, July 26, 2011

The US need never default

Both Megan McArdle and Mosler are concerned that the Democrat/Republican impasse over the debt ceiling will not be resolved, and the US will default on its debt.

This will be a calamity and drive the US back into recession. I'm seriously considering liquidating all my equities and moving into cash and gold.

Note that this disaster was entirely man made. As a sovereign issuer of fiat currency, the US need never default. That does not mean that it might choose to not pay its bills, but that choice is entirely a political choice, not a consequence of not having the money (which it always does).

Really a disaster.


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