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and personally, i think it fits in both of your categories above. It is a domestic as well as an international issue.
I have said this before but it bears repeating: US Treasury securities are seen by the international investing community as one of the, if not THE safest investments available. The reason for that is simple. It is because Americans get up in the morning, go to work and willingly pay taxes on their wages. It is also recognized that the US Congress has virtually unlimited taxing power (which they do) in order to satisfy the financial obligations Congress incurs. When compared to the rest of the world, the US financial markets are deep, highly regulated. very liquid, transparent and probably most important of all, politically stable. The US Government is seen as being politically stable as well. With certain arguable exceptions aside, there has never been a violent Coup d'etat in the United States, the transfers of power happen regularly and peacefully and the citizens do not riot in front of the Capitol building protesting taxation on a regular basis.
That is why US Treasuries are seen as a good investment. There is a point, however where the maximum sustainable debt is reached. We aren't there yet, but this administration seems hellbent on reaching it as fast as possible. If that happens and the world financial markets begin to see treasuries as having any risk at all, the US economy and that of the rest of the world will suffer dramatically. Let's hope we get some sound fiscal policymakers in place before that happens.
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