CNBC World: US is Already Bankrupt

States cannot be bankrupt unless their money is not accepted ( example Iceland) as the mean of liquidation of the debts. All they have to do is borrow on the future by issuing T-Bonds then asking the Fed or someone else to buy it.

BUT, by becoming more and more endebted ( the debt must be paid back plus the interests), the taxes levied by the state become bigger and bigger.

UNLESS the state is able to keep on issuing more T-Bonds.

This is precisely what has happened.

Actually the US has exported for the past 30 years inflation of the mass of dollars being created to "pay" for the debts in T Bonds. Call it the dollar bubble if you like. It s exactly like the real estate bubble. As long as everyone accepts the increased value of the total market , fine. But comes one day when people change their mind and it s a catastrophy.

So, I don t think the US will ever be bankrupt. No one is going to put guns ( or missiles) at the US and say: we want our money back.

But certainly, the respect for the dollar and NEW debts of the US will be deeply impacted.