Replies to post #2823 on Velocityshares Daily 2X Vix Medium Term (TVIZ)

[gldtimer]

UST Issuing Debt in Dollars Can Never Go Bankrupt.

If you look at the balance sheet of the UST as it stands today assets = $0 with liabilities of $18 or so trillion. From a balance sheet standpoint the UST is bankrupt.

However, bankruptcy is defined not as a negative net worth, but the inability to pay current obligations, and that is where the FED comes in monetizing any additional debt the UST issues.

What makes UST valuable is #1 economic growth or lack of, and #2 inflation or lack of.

Companies on the other hand don't have the FED buying their debt (yet) so when the economic prospects fall, so do their bond prices.