[Red Dog #1]

NBC...Question: "Are U.S. treasury bonds still safe to invest in?"

Alan Greenspan...Answer: "Very much so. This is not an issue of credit rating, 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."

don't worry, the bonds will be repaid as they come due. The only question is just how worthless the repayment dollars will be.

[BobL]

“NBC...Question: “Are U.S. treasury bonds still safe to invest in?”

Alan Greenspan...Answer: “Very much so. This is not an issue of credit rating, 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.”

Amazing. And it’s not like the Chinese don’t watch these shows (or even frequent these websites - hi Phoebie). In a few short years, the Chinese will calmly ask us to start paying them back. A few years after that, they will demand repayment. And a few years after that, once they have the means, they will come here and collect....while we’re still waiting for the green economy to materialize and going broke paying off baby boomers.

[Oceander]

don't worry, the bonds will be repaid as they come due. The only question is just how worthless the repayment dollars will be.

You nailed it exactly. And that, of course, is one of the reasons that a sovereign's debt would get downgraded, a reason that is inapplicable to private companies because they (generally) don't have the power to issue their own currencies. Actually, come to think of it, I believe my statement is not entirely correct: I believe that a private company's debt could get downgraded for currency risk precisely if that debt was all repayable in the currency of a country that was preparing to debase its currency and let inflation devalue matters. That, of course, makes that company's debt riskier - the likely PV of the return to investment decreases because of the increased likelihood that the repayment currency will be devalued - and thus the debt becomes riskier and, at a certain quantum of increased risk, must be downgraded.