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How and Why a U.S. Sovereign Debt Crisis Could Occur

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  • Peter J. Wallison

Abstract

A U.S. sovereign debt crisis is a remote possibility, but in our increasingly fragile system it could be triggered by a number of financial catastrophes—​from a chaotic break-up of the Euro system to something as adventitious as a serious earthquake in California. The most likely source of a U.S. sovereign debt crisis, however, is a failure of the U.S. political system to address the growth of the major entitlement programs—Social Security, Medicare and Medicaid. That possibility is discussed in this paper.

Suggested Citation

  • Peter J. Wallison, 2012. "How and Why a U.S. Sovereign Debt Crisis Could Occur," Econ Journal Watch, Econ Journal Watch, vol. 9(1), pages 71-77, January.
  • Handle: RePEc:ejw:journl:v:9:y:2012:i:1:p:71-77
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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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