The idea of a "short term" technical default is gaining traction among Republicans, it's starting to appear more in the mainstream press. I have to wonder if they are serious about this possibility or if they are using it to force the spending cuts they are demanding without raising taxes?
A Technical Default for a Fiat currency could have immeasurable repercussions, after all, our debt is backed by the "Full Faith and Credit of the United States"-FAITH, nothing else, not gold.
If we cross that threshold once as a political ploy, what would make the world and specifically China think that we wouldn't do it twice the next time a game of hardball comes about?
As I have stated more and more frequently, the Treasury and Fed's answer to the crisis during the Lehman era was to make big toxic banks, bigger and more toxic. If one defaults or falls into a Lehman situation, I would hate to be in the country watching it all play out.
Is interest rates about to start going up?
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Yes, I know - it does not make any sense - FED is about to cut
rates...but....real world interest rates are not always what FED wants it
to be.
5 years ago
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