Quote from: aminorex on December 30, 2014, 12:49:22 AM

Quote from: deluxeCITY on December 30, 2014, 12:27:21 AM

Quote from: aminorex on December 29, 2014, 12:58:48 AM

In comments at private appearances, Ben Bernanke has stated that he does not expect interest rates to normalize in his lifetime. If the rate on the Japanese 10 year went to 2%, all the tax revenue of the Japanese government would not suffice to service the coupon payments. That is where the U.S. is heading, and it is no secret, merely an unmentionable elephant. Given that it is unlawful to default on the debt of the U.S. Treasury, the only possible outcome is hyperinflation: No austerity, no financial repression, no feasible growth will suffice to overcome the magnitude of the debt mountain. The debatable aspect is the timing of that hyperinflation. Everyone wants time to roll out of USD before it breaks loose.

It may be against the law to default on US (federal) government debt however if the US is not able to raise enough money to pay it's bondholders then it will have no choice but to default. There may become a point where potential investors will not be willing to lend to the US federal government at any price (interest rate)

The Fed will always be there to buy bonds. So it's not a problem. Move along.

If the FED becomes the only buyer the Dollar will tank and loose most its value. We will risk hyperinflation.