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The obsession over national debt is gonna make the US stick another knife into the backs of its "allies" to make an imaginary number go down

:yeltsin: moment?

Let’s turn to another example, Russia. Of course, Russia had been part of the Soviet Union and was already relatively developed and wealthy. However, dissolution of the USSR generated economic and political problems that we will not go into. In 1998 Russia shocked financial markets by defaulting on its government debt. Many people believe that Russia’s default is contrary to the MMT position that there is no default risk on sovereign government debt. It is clear that the debt was denominated in Rubles, the currency issued by the government. What went wrong? The key is its peg to the Dollar.

In August 1998, the Ruble was convertible into $US at the Russian Central Bank at the rate of 6.45 Rubles per $US. The Russian government, desirous of maintaining this fixed exchange rate policy, was limited in its willingness to pay by its holdings of $US reserves, since even at very high interest rates holders of rubles desired to exchange them for $US at the Russian Central Bank. Facing declining $US reserves, and unable to obtain additional reserves in international markets, convertibility was suspended around mid-August, and the Russian Central Bank had no choice but to allow the ruble to float.

The peg was to allow for capital flight by the oligarchs btw.

Throughout this process, the Russian Government had the ability to pay in rubles. However, due to its choice of fixing the exchange rate at a level above ‘market levels’ it was not, in mid-August, willing to make payments in rubles. In fact, even after floating the ruble, when payment could have been made without losing reserves, the Russian Government, which included the Treasury and Central Bank, continued to be unwilling to make payments in rubles when due, both domestically and internationally. It defaulted on ruble payment by choice, as it always possessed the ability to pay simply by crediting the appropriate accounts with rubles at the Central Bank.

Why Russia made this choice is the subject of much debate. However, there is no debate over the fact that Russia had the ability to meet its notional ruble obligations but was unwilling to pay and instead chose to default. As best one can determine, it was a political decision. We cannot completely ignore politics.

book

I'd hate to be the Japanese bank that purchased woke DEI Treasuries.

Critical support for the commendable work the Trump administration is doing in undermining US legitimacy on so many fronts.

Bring on the Super Bowl default lmao