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Old 10-09-2013, 06:44 AM   #7
TonyR
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Join Date: Apr 2008
Location: Mid-Atlantic
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Wells Fargo Bank economist Scott Anderson has said of a default, It would be an earth-shattering event. Its taken as given that U.S. Treasuries are a safe asset. Once you question that assumption, it shakes the foundations of global finance and the way its been established over the last 50 years.

University of California, Berkeley, economist Barry Eichengreen, a world-renowned expert on the international monetary system, warned that a debt default could lead to a run on the dollar if foreigners come to feel that the U.S. is being run by irresponsible leaders. As he put it:

If there is a threat to the dollar, it stems not from monetary policy, but from the fiscal side. What is most likely to precipitate a dollar crash is evidence that U.S. budgets are not being made by responsible adults. A U.S. Congress engaged in political grandstanding might fail to raise the debt ceiling, triggering a technical default. Evidence that the inmates were running the asylum would almost certainly precipitate the wholesale liquidation of U.S. Treasury bonds by foreign investors.
http://capitalgainsandgames.com/blog...ett-debt-limit
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