Where there’s money, there’s risk
Events in America show that no asset is copper-bottomed
A GOVERNMENT with debt denominated in its own currency need never default, or so the theory goes. It can simply print more money to pay off the debt. In practice, however, countries do default on local-currency debt: six have done so in the past 15 years, including Jamaica, Russia and Ecuador. Before this week’s budget deal, markets had feared that America could join the list, if only in a technical sense.
This article appeared in the Finance & economics section of the print edition under the headline “Where there’s money, there’s risk”
From the October 19th 2013 edition
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