DSGE
VIP Member
- Dec 24, 2011
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If creditors didn't expect that the US would be able to pay off the debt, they wouldn't lend to the US. We see the opposite; everybody flooding to buy US Treasuries.
Do you plan on being in this downturn for the next 30 years? Even so, growth at at least 1.5% will still happen. But sooner or later the Fed will get off it's arse and close the output gap.
That's just the thing. As shit-poor as we are right now, we're still the best bet going, if you're a gambling man. The problem is, gambling is foolish if your best bet is a bad hand.
First off, what are you talking about gambling for? People buy treasuries because they want a safe place to park their assets and earn a little interest. If they wanted to gamble, they'd pick any other asset to invest in. Second, what do you mean the US is the best bet? There are loads of countries whose economy is in much better shape.
This downturn will likely improve a little, but with our aging population and the number of government dependent folks we have, relative to the number of income and tax revenue generators, it's unlikely that we will ever again be monetarily stable long-term.
You'll have to make some structural reforms, yes, but if buyers of treasury bonds (people who want somewhere safe to go) expected any sort of default in the future, they'd go somewhere else. They'd buy government bonds from any of the other countries with safe debt.