The U.S. debt is in dollars guys, if the U.S. Treasury cannot redeem the debt by using tax revenue or more debt then holders of U.S. debt will simply sell their securities to the Federal Reserve:)
And for a remote reason the investors don't want to lend to the U.S. government the Fed will do it. The result in both cases would be quantitative easing on a scale never seen before, this would be incredibly bullish for U.S. and world stock markets. The U.S. government will never default on its debt. The U.S. debt ceiling negotiations is just a comic.
And for a remote reason the investors don't want to lend to the U.S. government the Fed will do it. The result in both cases would be quantitative easing on a scale never seen before, this would be incredibly bullish for U.S. and world stock markets. The U.S. government will never default on its debt. The U.S. debt ceiling negotiations is just a comic.
Actually, during the 70's there stagflation. The Fed was loose but because the capital structure was so distorted from the inflation from previous years, the stock market did not do that good. The money flowed into other areas. So watch out, with stagflation the stock market wont collapse but it will hardly keep up with price inflation. Some stocks will do good (specially the ones related with commodities), but overall I dont think it will be that good.
