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Twitter / wonkmonk_: Stiglitz, Greenspan, Buffett

Stiglitz, Greenspan, Buffett: 0 Pr of US default http://bit.ly/Zvxzqg http://bit.ly/1lA9b4P http://bit.ly/1mqOqL0 http://bit.ly/1tzT20I

"You have to distinguish between borrowers in their own currency (like US and Japan) and those who borrow in other currencies because creditors don't trust them. When weaker credits borrow in other currencies, it can really put you out of business really quickly. They can't print USD. That has caused failures. The EU -- it is a really interesting situation. Greece is sovereign but can't print their own currency -- they have Euro. Euro was an experiment, and it is a test case playing out here -- of a country using a common currency but is sovereign on promises to citizens. I don't know how it ends, but I'm not forecasting anything -- I just try not to watch movies like that. This will be high drama. We don't make big currency plays, and we did one a few years ago and did okay. I would say this - that events of last few years make me more bearish on ALL currencies holding value over time. If you really could run deficits of 10% of GDP and do it a long time -- world would have done it more, because that is really fun! Most understand it can't be kept up. How world weans itself off deficit financing will be interesting to watch. As long as US borrows in USD, there is no possibility of default. If world won't take USD debt, we have problem. You don't default when you print your own currency."

"Let me assure you the U.S. will always pay its debt. How do I know that? If you borrow money from the United States you get a piece of paper, a bond. And what does the paper say? We promise to pay, say a thousand dollars. How do I know the United States could always pay that? Because they just print those dollars. You know, you can imagine a temporary shortage of electricity and the printing press didn't work but apart from that it is inconceivable that we would not... we promise to pay you these little pieces of paper, you were foolish enough to accept that promise, and we will deliver those pieces of paper. But Greece can't deliver those pieces of paper. When it borrowed in drachma it could deliver those pieces of paper called drachma. But now it promises to pay in euros and it doesn't control the printing of the euros. That's done from Frankfurt. And so they can't get access to those euros. So in essence the euro created the potential for sovereign debt crises in Europe. A problem that had not been there before."

"As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational. Moreover, there will always be a market for U.S. government debt at home because the U.S. government has the only means of creating risk-free dollar-denominated assets (by virtue of never facing insolvency and paying interest rates over the inflation rate, e.g., TIPS―Treasury Inflation-Protected Securities)."

"We've got the right to print our own money, that's the key. Greece lost the power to print their money. If they could print drachmas they'd have other problems, but they would not have a debt problem. And seventeen countries in Europe gave up the right to print their own money. That's enormously important. And we've got the right to print our own money, so our credit is good."

ニクソン・ショック - Wikipedia