The threat of default in the US is quite real. But this can be avoided by issuing platinum coins, issuing permanent bonds, and by declaring the debt itself unconstitutional. The New York Times about it declaration American economist Paul Krugman.
“There are at least three ways in which the administration can in principle bypass the debt ceiling. The first possible way is to ignore the debt limit by declaring it unconstitutional. The 14th Amendment states that the legitimacy of US debt is “unquestionable,” and this provision is now receiving more attention,” Krugman said.
According to him, you can use a rather specific measure, which is the minting of platinum coins. It can then be put into the Federal Reserve, after which the American authorities will be able to withdraw money from there for necessary payments. Moreover, this situation will not lead to an increase in inflation.
He added that another option could be a permanent bond issue. In other words, investors can earn income from them indefinitely as they have no maturity. In general, all three of the above options are economically harmless and provide a temporary solution for the next government expenditure. However, given the stubbornness of the current administration, such measures should not be expected in the near future.
Earlier on Saturday, Pavel Samiev, Managing Director of analytics agency BusinessDrom declarationHe is of the opinion that the still unresolved disagreements between the representatives of the Republican and Democrat parties in the USA regarding raising the public debt ceiling may bring the onset of the financial crisis in the country closer. A compromise cannot be found, as such a solution will only help delay the default.