Greenspan: There is zero chance of default. The US can always print money

[Cali_Democrat]

Zero chance of US default: Greenspan
August 8, 2011 - 10:21AM

<snip>
Mr Greenspan said he does not expect a ‘‘double dip’’ recession but said: ‘‘With all of this bickering going on, the economy is slowing down - you can see it in all of the data.’’

‘‘This deficit problem that sits out there is much larger than we’ve been calculating, because the actual numbers employed by those who are calculating the deficits are based on a level of economic activity which we are not achieving.’’

Mr Greenspan, however, said that US Treasury bonds are still a solid investment.

‘‘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. There is zero probability of default,’’ Mr Greenspan said.

Read more: http://www.smh.com.au/business/zero-chance-of-us-default-greenspan-20110808-1ii7q.html

You don't usually see current or former central bankers speaking so openly like this. Of course many people already know what's going on.

You just know Benny is itching to fire up that printing press.

[DJ13]

1. Mr Greenspan said he does not expect a ‘‘double dip’’ recession

Crap, we're screwed.

[David Gill]

2. Money can only be printed with Congressional approval

Coining money on the other hand...

[golfguru]

3. Zimbabwe is doing a fantastic job in printing money n/t

[Kennah]

4. More musings from Mr. Randspan

[MyshkinCommaPrince]

5. So...

He just said we don't have such a huge deficit problem, except insofar as we have diminished tax revenues due to a stalled economy? Or did I misunderstand? Greenspan's utterances are often hard to sort out.

[A HERETIC I AM]

6. Regardless of whether you like the guy or not, he's right.

US Treasury Bonds are only redeemable in, and pay their interest in Federal Reserve notes. We just so happen to have the printing presses that produce those notes, so he is in fact correct. We can always print the money necessary to redeem the bonds and to pay their coupons.

Of course, doing so willy nilly is very inflationary, and I'm sure Greenspan knows it. He is no dummy. A bit of an asshole perhaps, but not stupid.

He is absolutely correct. There is ZERO chance of a default on US Treasury Securities.

[bayareamike]

7. Yep. +1. n/t