If USD collapses

[Craig3215]

Cost of insuring U.S. 5 yr. Treasury bond is now 1%

If an institution buys a 5-yr Treasury and then wants to turn around buy credit default protection on its purchase, it now must pay 1%. The yield on a 5 yr. T-bond is 1.92%. It now costs more than 50% of your rate of return on a T-bond to insure that you get your money back. This is an absolute disaster for our Government. The cost of credit default insurance is a real world, market assessment of the risk of default of the U.S. Govt, as opposed to the fantasy/fraudulent ratings issued by Moodys and S&P. As per this article, the default risk of the U.S. Govt is now considered to be higher than that of Japan, Germany and France. I would also argue that, given the risks being priced into our credit markets, including the Govt bond market, that the level of the Dow/S&P 500 is still way too high:

http://zerohedge.blogspot.com/2009/0...tion-risk.html

It's staggering, to me its kind of like buying cds on monopoly money, can't they just print it? I'm racking my brain here trying to come up with a way the us treasury could possibly default... worse case I think the us has trouble borrowing money at such low rates so treasury rates rise, from there if that doesn't work they print money causing possibly hyper inflation and major devaluations of the usd so now 1000 usd = 1 yuan paying back the bond just got a whole lot cheaper... why not short usd to protect yourself, if the US gov defaults in my worst case and you get paid off (from a bank that has been able to outlast the us gov?) your still loosing almost everything you invested because your still exposed to usd... to me this just shows how fear has taken over and that there are big opportunities to make money in select markets... i must be missing something, and i'd be interested to hear what that something is?