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American Capital Agency Corp. Message Board

  • raybans2 raybans2 Oct 10, 2013 12:56 PM Flag

    What debt default?

    It is a fantasy as it will never happen.

    The consequences of a debt default are so severe that they will pay the interest first, and then prioritize what is to get funded after that. They have to pay the interest. They could have chosen to not pay it already but did they? No, they furloughed workers instead and paid the interest. So why would they change their behavior in the future. They have already demonstrated that if given a choice in the past that they pay the interest first and then defund programs. So why would they stop doing that in the future when this would be the Armageddon decision that they would have to explicitly make? Not paying interest is not something that happens by default. They have to explicitly decide not to pay it even though they have enough tax revenues coming in to pay it. Thus it will never happen. Because they will not make the Armageddon decision if they can pay it, which they can.

    I don't take any of this seriously and I am surprised at how many authors of articles even bother to discuss it as if it could happen. I have to believe they haven't given the actual process that would have to take place to cause such an event to happen any serious thought or they would have never bothered to discuss it to begin with. What we have going on is a lot of blowhards trying to engender fear in others for the purposes of getting people to express concerns to congress. And for those who understand this but choose to engender fear anyway, they are basically propagandist who want deficit spending because they don’t want programs that they like to be cut. So they try to save their programs by creating fear of an event that would never happen. But of course they do not what you to think this. The last thing they want you to believe is that the interest will get paid no matter what.

    Just think about it intelligently and you will conclude the same.

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