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Letter: Keep in mind

Remember the following the next they talk about the possibility of government default.

“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” — Alan Greenspan

“In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets.” — Peter Zeihan, vice president of analysis for STRATFOR.

“In the case of governments boasting monetary sovereignty and debt denominated in its own currency, like the United States (but also Japan and the U.K.), it is technically impossible to fall into debt default.” — Erwan Mahe, European asset allocation and options strategies adviser.

“There is never a risk of default for a sovereign nation that issues its own free-floating currency and where its debts are denominated in that currency.” — Mike Norman, chief economist for John Thomas Financial.

“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.” — Federal Reserve Bank of St. Louis.

“There is no inherent limit on federal expenses and therefore on federal spending …When the U.S. government decides to spend fiat money, it adds to its banking reserve system and when it taxes or borrows (issues Treasury securities) it drains reserves from its banking system. These reserve operations are done solely to maintain the target federal funds rate.” — Monty Agarwal , managing partner and chief investment officer of MA Managed Futures Fund.



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