Putting scare quotes around sovereign "debt" doesn't change that fact that bondholders are actually expecting to get paid. Though there's no force of law behind that expectation, if the government defaults no-one will lend to it any more without hefty sweeteners. Similar deal if we debase the currency with inflation.
Scare quotes are what you use when the thing you are discussing is not the word you're using. They are completely appropriate there.
The guy who replied to you is correct, as everyone who paid attention in Econ 101 is aware: there is no reason for the US Federal Government to default, ever. It dictates the literal amount of its monetary units that exist on earth (another thing carefully defined and explained in Econ 101) by extending credit. It extends this credit with no collateral, no limits and no need for leverage. They create money when they want to for any reason, and they don't when they don't want to for any reason. They can, tomorrow, instruct the Fed to create $17T (roughly the national "debt") and credit it to whoever they want. The key difference between a central bank and all other entities: when it extends credit, it does not create a matching liability in the government's accounting. The central bank, or rather something with the power of a central bank, is the only entity in a society that can do this. That's what the "sole power to dictate the supply of money" means.
Any logic developed while thinking about debt carried by people, companies, cities or states, all of whom must add liabilities to their accounting books when they take on debt, does not apply to the entity that controls the central bank for the monetary units in question. Anytime anyone expresses concern about the national "debt" as if it wasn't something Congress could wave away with a pen in 15 minutes, they're being ignorant at best and disingenuous at worst.
It is absolutely critical that you read up on and understand this. It puts the lie to a lot of the national dialogue about austerity, belt-tightening, and service cuts.
'Anytime anyone expresses concern about the national "debt" as if it wasn't something Congress could wave away with a pen in 15 minutes, they're being ignorant at best and disingenuous at worst.'
Whether Congress have the power to do this is not the issue. The issue is whether they can do it without serious negative consequences. I'm curious to know why Argentina had to institute currency controls if waving a pen is such a trifling matter.
> I'm curious to know why Argentina had to institute currency controls if waving a pen is such a trifling matter.
Because Argentina's debt is largely foreign-currency denominated, not local-currency denominated, meaning that Argentina, lacking the ability to print, for instance, (non-counterfeit) US dollars, can't just monetize its debt. (And, because it can't just monetize its debt, its not in as good a position to negotiate restructuring of its debt as it would be if it could monetize it.)
there is 0% chance that the US will be forced to default on the debt.
We could choose to do so, just as a person trapped in a warehouse full of food could choose to starve, but we could never be forced to. This is not a theory or conjecture, it is cold, hard fact.
>"That might be relevant if someone on the thread had claimed such a thing."
It's extremely relevant to the argument at hand.
In case you didn't read the article, it's about Detroit going bankrupt, to which other commentators have drawn an analogy to the country that makes no sense. That's what we're talking about here.
But I'm glad you feel good pride in finding something tangential to the real topic so you can say, "Nuh-uh! You're wrong!". Yes, we can decide tomorrow to cease paying interest on our public debt, which would put us into default. Brownie points for you.
No, the analogy being drawn between Detroit and the USA is that they both have shit-loads of debt.
Of course the feds would inflate debt away with QE rather than defaulting. The real tangent is to claim that this makes such a world of difference that we don't need to worry about the federal debt.
BTW: Although your statement that "the federal government cannot default" was literally false, my response to it was overly pedantic.
>"Asserting something confidently does not make it so."
You're pointing to the debt ceiling as an argument? It's political posturing. You know, to scare the plebes. Apparently it works.
The article is referring to a "default" because of some artificial cap placed on spending, which proposed spending would surpass. It's a technical default, by choice, not from inability to pay.
You can argue until you're blue in the face about the risk of default. It's wrong-headed.
