{"id":37649,"date":"2018-09-11T19:06:46","date_gmt":"2018-09-12T00:06:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=37649"},"modified":"2018-09-11T19:07:20","modified_gmt":"2018-09-12T00:07:20","slug":"think-that-governments-wont-default-think-again","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=37649","title":{"rendered":"Think That Governments Won\u2019t Default? Think Again"},"content":{"rendered":"<div class=\"thumbnail-wrap\"><img loading=\"lazy\" decoding=\"async\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" src=\"https:\/\/palisade-research.com\/wp-content\/uploads\/2018\/09\/think-e1536699244960.png\" alt=\"\" width=\"575\" height=\"305\" \/><\/div>\n<h3><a href=\"https:\/\/palisade-research.com\/governments-default-history\/\">Think That Governments Won\u2019t Default? Think Again<\/a><\/h3>\n<p>The <a href=\"https:\/\/www.marketwatch.com\/story\/us-budget-deficit-widens-to-fifth-highest-ever-cbo-reports-2018-09-11\">Congressional Budget Office (CBO) just reported<\/a> that the U.S. budget deficit is widening in a <em>\u2018big way\u2019.<\/em><\/p>\n<p>And what\u2019s even worse \u2013 last month the net interest on public debt jumped\u00a0<strong>25% <\/strong>compared to last August. . .<\/p>\n<p>I wrote last January about the soaring cost of interest that the U.S. Treasury\u2019s paying on its outstanding debts (<a href=\"https:\/\/palisade-research.com\/think-the-economy-is-okay-wait-until-you-see-these-3-charts\/\">you can skim that here<\/a>).\u00a0And it looks like things keep getting out of control \u2013 especially as the Federal Reserve continues raising rates (which further increases borrowing costs).<\/p>\n<p>Besides this <em>very<\/em> expensive \u2018interest\u2019 problem \u2013 the CBO reported that the U.S. budget deficit widened to its fifth <em>highest<\/em> <em>ever<\/em>.<\/p>\n<p>And as Trump\u2019s tax cuts continue taking away from Federal revenue, while government spending \u2013<em> including interest payments<\/em> \u2013 keeps growing, we need to ask ourselves some important questions. . .<\/p>\n<p><em>The next time the U.S. slides into a recession \u2013 will they be able to continue borrowing such enormous amounts while maintaining their interest payments? Will they follow the same route that the Emerging Markets are headed today?<\/em><\/p>\n<p>We see many\u00a0talking heads on CNBC and other mainstream financial media tell us that there\u2019s virtually <em>no<\/em> <em>risk<\/em> of the U.S. defaulting. Same thing with any other major country.<\/p>\n<p>Even worse, there\u2019s a growing point of view preaching to the masses that aslong as country has a central bank, <em>they can issue all the debt they need without risk of default.<\/em><\/p>\n<p>Why would anybody think that?<\/p>\n<p>Because \u2013 <em>for instance<\/em> \u2013 if the U.S. didn\u2019t have enough cash flow (tax revenue) to pay creditors (buyers of U.S. bonds). And if they weren\u2019t able to borrow anymore to roll over debt \u2013 the Fed would simply print U.S. dollars instead.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Think That Governments Won\u2019t Default? Think Again The Congressional Budget Office (CBO) just reported that the U.S. budget deficit is widening in a \u2018big way\u2019. And what\u2019s even worse \u2013 last month the net interest on public debt jumped\u00a025% compared to last August. . . I wrote last January about the soaring cost of interest [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[19913,21617,303,21616,431,18634,3650,2202],"class_list":["post-37649","post","type-post","status-publish","format-standard","hentry","category-economics","tag-adem-tumerkan","tag-congressional-budge-office","tag-fed","tag-government-default","tag-interest-rates","tag-us-budget-deficit","tag-us-federal-reserve","tag-us-treasury"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37649","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=37649"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37649\/revisions"}],"predecessor-version":[{"id":37651,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/37649\/revisions\/37651"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=37649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=37649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=37649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}