Fed planning For Potential Default - 7/21/11

Miscellaneous General
1

http://uk.reuters.com/article/2011/07/20/us-usa-debt-fed-idUKTRE76J6IT20110720

Question: What exactly do they mean default? Default on payments to treasury bond holders?

So, everyone who has a treasury bond right now, who thought it was a guaranteed safe investment, will not get it paid back if the Fed defaults?

2

This is the Federal Reserve “default” plan:

  1. Pay domestic financial institutions

  2. Pay foreign sovereign debt-holders

  3. All remaining private holders of debt get screwed

3

What would be the repercussions if the they did default?