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The Bond Market Wins

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  • Garett Jones

Abstract

A U.S. default is unlikely: As a demographically young nation, the United States will watch other nations face demographic crises years before it faces the full brunt of the same. The spectacle will furnish salient examples of the short-run shame and suffering caused by default. Further, the soft default of inflation demands the element of surprise, always difficult for politicians to engineer. But default is still possible, and the GOP offers a uniquely American path to default: An unwillingness to raise taxes. Bondholders the world over will be watching to see if “starve the beast” is a pathway to “default on the beast.”

Suggested Citation

  • Garett Jones, 2012. "The Bond Market Wins," Econ Journal Watch, Econ Journal Watch, vol. 9(1), pages 41-50, January.
    • Handle: RePEc:ejw:journl:v:9:y:2012:i:1:p:41-50
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    References listed on IDEAS

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    More about this item

    Keywords

    sovereign debt crisis; financial crisis;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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