Former Federal Reserve Bank Chairman Alan Greenspan (pictured) came up with a novel way to claim the U.S. government would never default on debt: print the difference. Greenspan told NBC's "Meet the Press" August 7, in response to a question about the recent downgrade in the U.S. bond rating by Standard and Poor's:
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.
Analysts ask, Zimbabwe-like inflation of the dollar is not default? They say that Greenspan won't find that argument very persuasive to bond-holders, who won't be able to buy anything with their bonds when they come due.
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