August 03, 2011
The NYT had a great opportunity to raise this question, but for some reason chose not to. A lengthy piece discussing the possibility and implications of a downgrade never asked the fundamental question, how could the United States ever be unable to pay off its debt?
This a simple but important point. The debt is issued in dollars. That means that the U.S. government is committed to paying it off in dollars. The U.S. government also prints dollars. So does a downgrade mean that Moody’s thinks that it is possible that at some point we will forget how to print dollars?
The NYT should have asked this question in the article. We should ask why they didn’t.
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