A reader writes:
The first time I saw you write that the US is "bankrupt", I assumed you were just resorting to hyperbole. But you have now said it again and again. Andrew, it's absolutely not true that the US is bankrupt.
The US is the richest country in the world and not anywhere close to anything resembling bankruptcy, and if you really want to be taken seriously about the debt then you need to stop throwing around falsehoods. You know very well the issue is not that we don't have money to pay our debts. If we were anywhere close to bankrupt, investors wouldn't consider US treasury bills the safest of investments. I admire you as a deficit hawk, but I can't take it seriously if you're throw words like bankrupt around so carelessly.
If the US is bankrupt, could you please explain why the US treasury is able to borrow at 3.326% for 10 years and 4.437% for 30 years? Where are the bond vigilantes? The fiscal imbalances that the US faces sound very scary in the abstract, but the bond market is signaling that this is not a major concern with our creditors. I am disappointed that you have bought the absurd claims from the austerians when unemployment is hovering near 9% and core inflation is at multi-decade lows. Clearly there will be a time to deal with the deficit and an entitlement, but now is now that time, given the incredibly harmful affects of the recent financial crisis.
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