Don't threaten the Treasury bond holders!

Since bonds “held by the public” are bought and sold constantly, you really cannot default on one particular issue, and have all the hurt visited on only one holder. That is what makes SS such an appealing target: those are a special series, with only one holder.

Besides, defaulting on one bond, would make the interest rate on the others soar to banana republic levels. Say the US defaults on half it’s bonds, but the price received on new ones crashes, because holders demand triple the pre-default interest rate. What has he gained?

Steve

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