Forbes: No, The United States Will Not Go Into A Debt Crisis, Not Now, Not Ever
http://crooksandliars.com/john-amato/forbes-explains-why-there-no-debt-crisi?utm_source=dlvr.it&utm_medium=twitter
If theres one article of faith in Washington (and elsewhere), its the idea that the United States might get into a debt crisis if it doesnt get its fiscal house in order. This is not true. The reason why its not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollarssomething that the United States government can produce infinitely and at no cost. Thats the reason why interest rates on United States debt have only gone down even as the debt has ballooned.
Thats the reason why Great Britain has very low rates on its debt despite having very high debt-to-GDP. Thats the reason why Japan has an astounding debt-to-GDP ratio and still enjoys some of the lowest rates ever. Investors have bet for so long that there would be a run on Japanese debt and have ended up so ruined that in financial circles that trade is called the Widowmaker. (Heres a more detailed analysis by my former colleague Joe Weisenthal at Business Insider.)
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You dont have to take my word for it. How about Alan Greenspan? He said (PDF): [A] government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.