Obama and investors get creative to avoid default

President Barack Obama and investors are considering some bizarre tactics to avoid a default that would spark a market meltdown, reports the Wall Street Journal.

The U.S. government is expected to start defaulting on its loans Oct. 17 if lawmakers don’t raise the country’s debt limit.

Read: IMF sounds alarm on U.S. debt ceiling

Here are some options being bandied about:

• Issuing super-high interest Treasury debt. This would let the government raise cash quickly to pay off its debts.
• Selling the gold at Fort Knox. The WSJ says if the U.S. sold its estimated $350 billion in gold, that would delay a default until mid-February.
• Reversing QE. The U.S. could sell the more than $2 trillion in government debt it owns and give the proceeds to the Treasury.
• Minting a trillion-dollar platinum coin, and using it to pay the bills.

For details on the problems with these strategies, go here.

Also read:

What clients find on Google: U.S. debt ceiling

Buffett predicts debt ceiling resolution

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.