Credit Default Swaps

Some worthwhile observations

A common fallacy in the following article:  ” Many believe a default by the U.S. Treasury is a physical impossibility, since all of the government’s debts are denominated in its own currency and it could conceivably print more dollars to meet their obligations.”

What the reporter omits to take into account is that a government can print all it wants but the real tricks are two: first, government must be able to inject the money in the real economy (keep an eye on the Money Multiplier) and, second, the government must print an amount equal to or greater than the ongoing debt implosion. To satisfy these two necessary conditions, the US government should be printing in the several dozen of Trillions


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