Monday, August 2, 2021

Treasury Dept to invoke ‘extraordinary measures’ as Congress misses debt-ceiling deadline



Why would interest rates spike if rates were negative?  “Debt ceiling!” doesn’t prevent redemption of any previously issued UST securities…

“Though the federal government has never defaulted, economists say such an event would have disastrous effects on the U.S. economy by spiking interest rates.

 “The government needs to have funds, for example, to pay interest on its debt, and if it were to stop paying interest that could be extremely unsettling for financial markets,” Harvard University economics professor Karen Dynan told CNBC on Thursday.“


2 comments:

NeilW said...

How often do 'extraordinary measures' have to be activated before they become 'ordinary'?

Matt Franko said...

They just wont look at these securities as assets Neil... all they see is a liability...