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hi_vis360
November, 2024

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Someone who knows economics

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deleted5
Posts: 14507 - Karma: 13,507
can you explain to me how the us defaulting on its debt will effect the value of the dollar? I'm curious if there are more quantifiable relationships. I can see that the interest rate on bonds would go up as people would see them as having higher risk, but I'm unsure how to go from there to inflation/deflation of the dollar.
Oct 6 2013 7:24PM
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JahLiam
Posts: 2321 - Karma: 7,828
17
Oct 6 2013 7:25PM
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Phil-X-
Posts: 7205 - Karma: 14,399
Click for larger image

I got 22... are you sure you're in radians?
Oct 6 2013 7:28PM
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first_rodeo
Posts: 2385 - Karma: 7,781
428 days since we lost AAA rating......

"Failure to raise the federal debt ceiling in a timely manner will prompt a formal review of the U.S. sovereign ratings and likely lead to a downgrade," Fitch said in JUNE

This trend is going to continue for the next twenty years or until baby boomers cease to exisit
Oct 6 2013 7:32PM
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do.a.rodeo
Posts: 270 - Karma: -30
All of this is completely uncharted territory. But it's likely that the value would drop significantly in the case of a default because investor sentiment towards the US would take a crushing blow, whereas currently US bonds are seen as a safe haven.

However, in a way, the US has already defaulted resorting to 85 billion a month in Fed QE/money printing/bond buying of its own assets. This is because taxes and borrowing from actual people are not covering the cost of running the US' gigantic government, so the Fed has to step in and keep the party going.

On a related note, the stock market could be in for a big 'correction' in the next year or two, as this bull market has gone on since early 09 and the news lately is that big players like Buffett are quietly backing out.
Oct 6 2013 7:43PM
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El_Barto.
Posts: 11661 - Karma: 24,340
I could but then id have to have sex with you
Oct 6 2013 7:54PM
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KravtZ
Posts: 6637 - Karma: 2,629
Once we default on tresuries the prices will drop due to a rise in interest rates. The US has always been one of the safest places in the world to store money. As the other posted said, this is totally new territory considering we have never defaulted on debt or has it even been considered.
Oct 6 2013 9:49PM
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Shredsterr
Posts: 2090 - Karma: 6,930
Well in GTA you invest in rival companies and then hurt one of the companies so their stock goes down and the one you invested in goes up. I assume real life is the exact same. Question is, who's Lester setting you up with?
Oct 6 2013 10:00PM
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.MASSHOLE.
Posts: 7495 - Karma: 11,554
You hit the nail on the head. The increase in riskiness will lead to an increase in the interest rates and a decrease in price, assuming that people actually want to invest in the US Gov't bonds. This is ruling out the Fed Monetary Policies to try to jump start our economy and lead to an increase in Net Exports. Its a slippery slope, so as of right now its all theoretical because we have never been here.

My Professor is a banking specialist and has been talking to colleagues who work with the Fed and she said even they arent sure about the correct way to approach this
Oct 6 2013 10:09PM
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SFB
Posts: 8895 - Karma: 26,353
what happened to the other thread you made like this?
oh wait.
Oct 7 2013 12:06AM
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