No Chance of Default, US Can Print Money: Greenspan

Former Federal Reserve Chairman Alan Greenspan on Sunday ruled out the chance of a US default following S&P's decision to downgrade America's 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" said Greenspan on NBC's Meet the Press

"What I think the S&P thing did was to hit a nerve that there's something basically bad going on, and it's hit the self-esteem of the United States, the psyche" said Greenspan

Austan Goolsbee, the chairman of the White House's council of economic advisors, hit out at S&P on the same show, insisting the credit ratings agency had got its math wrong.

Read more: http://www.cnbc.com/id/44051683

That happened when he apprenticed under Ayn Rand.

doesnt affect our ability to repay our bonds... which is all the credit rating is.

Insofar as the credit rating is concerned, the S&P grade is based on our ability and willingness to pay our debts. There is no risk that we will lose our ability to pay, and virtually no risk that we would be unwilling to pay.

The credit rating is not based on the value of the dollar relative to other currencies, commodities or assets. If it were, S&P should have downgraded all bonds denominated in dollars, not just US government debt.

What's more, "printing" to cover these debts would not automatically be inflationary, for several reasons.

I think we're at something like 70% capacity utilization currently, i.e. 1/3 of productive assets sidelined.

Edit: the actual figure: "The capacity utilization rate for total industry remained unchanged at 76.7 percent in June, a rate 2.2 percentage points above the rate from a year earlier but 3.7 percentage points below its average from 1972 to 2010."

http://www.federalreserve.gov/releases/g17/current/

willingness to pay as agreed. No one is talking about or inferring a lack of ability, but repugs have shown an utter disdain for a willingness, so the downgrade is justified imo, albeit S&P has nil creditability again imo: the repugs acted with no more responsibility in dealing with the debt-ceiling-limit issue than a Caa- or Ca-rated business entity would likely act, so we can likely deal with it only if the President were to use the vast power of his office to deal with those who use terror tactics to destroy our government as if they were any other domestic terrorist group. :patriot:

Perhaps he never read about Germany's hyper-inflation in the 20s, when people took wheelbarrows of Deutchmarks to buy a loaf of bread?

IS HE REALLY SO FUCKING IGNORANT?

Hyper-inflation is only possible if all credit dries up completely. The Weimar comparison becomes tiresome, an unfounded and overused allusion with no semblance to our current situation.

QE2 didn't budge the inflation needle.

Oil is $85/bbl, natgas is $3.90, CPI is 2%ish, nada - as long as home prices are falling inflation is tamed.

Anyone getting ripped off on 6-oz packages of cheese is out of touch anyway.

I suggest you learn about Germany's hyper-inflation before posting.

Ladies and Gentlemen, I offer you Exhibit A.

info on this....

AAAA

(and that S&P went way overboard) Surprise? NOT!

that is all.

and, therefore, that it is in the interest of the government to create some inflation." - Ben Bernanke

http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm

LOL.

QE1 and QE2 have not worked, nor will QE3 but they will keep on trying.

It is the very definition of insanity. trying the same thing over and over, expecting a different result.

It will rather be due to changes in foreign exchange values as e.g. the yen becomes stronger.


When China's prime minister, Wen Jiabao, expressed concern about the ability of the US government to repay its bonds, his comments prompted headlines everywhere. The newspapers were filled with gloomy warnings that China may no longer be willing to buy up US debt, which supposedly would have dire consequences for us all.

Unfortunately, too little thought was given to what these "dire consequences" might be, and who would end up suffering them. Suppose that China stops buying US government debt. That would mean that the dollar would plummet in value against the yuan. Chinese imports would suddenly become much more expensive for consumers in the United States, making domestically produced items far more competitive.

The opposite would happen in China. Goods and services made in the United States would suddenly be much cheaper. As a result, we would expect to export much more to China, and see many more Chinese come to the United States as tourists or for business purposes. The reduction in imports from China and the increase in exports would substantially improve our balance of trade.

http://www.guardian.co.uk/commentisfree/cifamerica/2009/mar/30/us-economy-china-debt

I would have placed the chances of an additional QE at 5-10% two weeks ago. Now? Probably closer to 50.

Printing money out of thin air is inherently inflationary. Witness oil, that has only now fallen due to the widespread belief that the Fed wouldn't undertake QE3. Also, the European debt crisis has significantly reduced demand projections.

Greenspan is correct in the technical sense--we theoretically possess the ability to artificially print our way out of debt. The ramifications of doing so, however, would be devastating. It would usher in the worst Depression this nation has ever even contemplated--much less actually witnessed. It would be a 10+ on the negative consequence economic Richter scale.

Oasis

and even predicted that they would not work. We need fiscal, not monetary, solutions.

At the same time, we've pumped trillions of dollars into the banks, hundreds of billions more into the economy, and there is no inflation to speak of. Housing prices are still falling. Wages are flat. Oil has traded in a tight range for years. Commodities have weakened dramatically since May.

At some point the Zimbabwe/Weimar hyperinflationists will have to admit that they have been wrong. Wrong about the US for the past 3 years and wrong about Japan for the past two decades.