US Constitution, 14th Amendment, Section 4: The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
The issue for the US government is not whether it can and will repay its current debts, which it absolutely must according to the Constitution as we see above, but only whether or not it can continue to increase its level of indebtedness without sacrificing the exchange value of its currency.
US government default, in nominal terms, is out of the question. It would be illegal.
Thursday, 24 July 2014
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