Warren Buffett explains the simple reason why the US will never default on its debt

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Warren Buffett explains the simple reason why the US will never default on its debt
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At the Berkshire Hathaway annual meeting, legendary investor Warren Buffett explained why even though the U.S. is borrowing record sums, there is zero chance of a government default on its obligations.

The U.S. Treasury is borrowing $3 trillion in three months to pay for the pandemic response, a record sum that dwarfs the $1.8 trillion borrowed in 2009 during the financial crisis. The debt will be sold in bonds to a variety of foreign and domestic investors.

“If you print bonds in your own currency, what happens to the currency will be the question,” said Buffett. “But you don’t default. The U.S. has been smart to issue its debt in its own currency.”“Argentina is now having a problem because the debt isn’t in their own currency, and lots of countries have had that problem,” he said. “And lots of competent countries will have that problem in the future.

But whether the U.S. can pay the dollars that it owes is not in doubt. The Oracle of Omaha noted back to when Standard & Poor’s downgraded the U.S.’s credit rating in 2011.

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