Karl Smith: Failure to pay US Soldiers in combat is not default
Don't know what to make of this because I am very much pro-strong defense, but very pro-markets. This is in opposition to Niel Wolin who says that a failure to pay our obligations, including military and entitlements, is the same as a defaulting on our debt because, hey, if we renege on one commitment we will likely renege on another, regardless of where that liability stands on our national balance sheet. Via MB:
Unconscionable no doubt, but not default.
Contra to Neal Wolin, if bondholders needed sign that under no state of affairs will any credit losses on US bonds ever be allowed, then prioritizing debt payments over the men and women who have shed blood for their country would do it.
If seniors across America start having their chemo cancelled so that Arab Sheik’s get their bond payments on time then US creditworthiness will go through the roof.
Its already sky high of course, but a wealthy powerful government that is willing to see its weakest citizens lose care before it allows its creditors to miss a single payment would be the most credit worthy entity imaginable.
Economics is not a morality play