My word is my bond

Writing in WSJ Alan Greenspan notes;

An urgency to rein in budget deficits seems to be gaining some traction among American lawmakers. If so, it is none too soon. Perceptions of a large U.S. borrowing capacity are misleading.

Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

Which seems contradictory, with no evidence of fiscal excess there can be no case that fiscal excess exists.

Elsewhere he says

The U.S. government can create dollars at will to meet any obligation, and it will doubtless continue to do so. U.S. Treasurys are thus free of credit risk. But they are not free of interest rate risk. If Treasury net debt issuance were to double overnight, for example, newly issued Treasury securities would continue free of credit risk, but the Treasury would have to pay much higher interest rates to market its newly issued securities.

Good, so neither is there any evidence of fiscal excess there is also no risk of insolvency - there is no sovereign risk in the US.

Suspicion that Greenspan is acting for his clients is valid

Alan Greenspan, the former chairman of the US Federal Reserve and a well-known specialist on interest rate policy, has been roped in as a consultant by the operator of the world’s biggest bond fund, the Allianz-owned Pacific Investment Management, Pimco. In a major triumph for Pimco, whose bond portfolios are extremely sensitive to interest rate policy, Greenspan will communicate once a quarter with Pimco executives on economic issues, including offering his private outlook about interest rate policy at the US central bank.

Governments should act in the public interest - claims that governments have to embrace austerity measures to restore confidence in financial markets only serve the interests of traders who are deliberately undermining the general welfare of the people.