JasonC

Just How Much Can the U.S. Government Guarantee?

The US as a whole is indeed borrowing at very low rates and investing in more profitable assets. Our net worth is not decreasing as a result of our present indebtedness. US household sector net worth is $57 trillion, up double digit trillions since 2001, far exceeding the net new debt taken on over that period. Which is precisely borrowing at low rates to carry assets that in the long run will outperform that debt.

How long will foreigners willingly do this? Forever. They are risk averse and our custodianship of capital and respect for the property rights of creditors dramatically exceed what is available in either respect anywhere on the planet.

The silly commentators pretending dollars are "funny money" or not real are welcome to try to get through the next year passing their own script without repaying any of it.

The willingness of the government to dramatically upset existing financial arrangements and to bankrupt politically connected shareholders with billions in prior capital values, at institutions like Bear and Fannie, entirely to protect senior creditors, are the precise reason dollars are not funny money but real wealth, and dollar denominated debts the safest investments on the planet. Every other society on earth would have stolen from creditors instead.

Meanwhile, we hear endless carping against Wall street and US finance generally, while no one raises a peep against the deadbeat borrowers who started it all. The banks and major US financiers are precisely the honest men making their creditors whole at the cost of their own fortunes, after being stiffed by those deadbeats. Yet the honest ones get all the brickbats, while the deadbeats sing "oh dearie me, I couldn't possibly pay this, just because I signed for it", and whine for handouts.

The degree of hatred for modern capitalism shown on this site and throughout the contemporary financial press is nothing short of sickening. You should all be ashamed of yourselves.