How the Government Borrows Money

There’s been a lot of unnecessary political drama over the past few weeks, notably the big issues with the debt ceiling and government shutdown. This put many investors – including technical traders and analysts – on edge and on the sidelines.
But as I clearly stated in my last few letters – unless you’re an American government employee – none of this should’ve worried you; the markets would likely move higher:

“With the amount of money in deposits growing at the banks and being used as collateral for big stock market bets, the markets could continue to move higher this year.”

Of course, a U.S. default would’ve been disastrous; more so for what America represents, rather than the actual outcome of a short-term default. One default in a set of bonds doesn’t directly affect other bonds, but would cause lending rates to skyrocket. The domino effect of this would’ve been very bad. (more)

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