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Role of US Debt
- US debt, particularly government debt, plays a special role in global finance as the most liquid dollar asset.
- It's considered secure due to its backing by the Federal Reserve and the government's ability to raise taxes.
Downgrade Paradox
- Paradoxically, a US debt downgrade might increase the value of treasuries.
- This "exorbitant privilege" stems from a lack of alternatives and the perception of US debt as a safe haven.
Trillion-Dollar Coin
- Minting a trillion-dollar platinum coin is a proposed solution to bypass the debt ceiling.
- This wouldn't cause inflation because it's a balance-sheet operation, not meant to enter circulation.