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USA 5 yr CDS

If the US treasury can print infinite dollars, what is the explanation for the explosion of USA 5 yr CDS ?

Hi Mehul,

The US govt can't really print infinite dollars. At some point that would cause high inflation and the govt would have to cut back. But there's no solvency risk here as in the USA running out of money. They can run out of real capacity to spend, they can't run out of money.

Honestly, I've never understood why anyone trades the CDS in US debt. It makes no sense to me. I guess it exists as an extreme outlier black swan product, but I have no idea why anyone would every feel the need to own it....

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