The Case for default

[RGacky3]

In the US, cutting social security, cutting medicare I would say IS defaulting on debt to the American people (this is stuff Americans paid into with the full faith and confidence of the government for a future return, just like bonds).

So I would say instead of defaulting on the poorest and the working class of the US, why not default on the (mostly rich) bond holders. "Oh we could never do that, it would mean a collapse of the American economy, the confidence would be destroyed, its all gonna go to hell." Really? Tell that to Argentina, they did the biggest default in history and they are doing fine. (Keep in mind they aslo raised taxes AND social welfare).

If the US defaults, yes it will cause a fuss, yes, there will be capital flight, but guess what, right away the US saves all that money on interest payments, and capital will come crawling back as the economy recovers and you have a consumer market.

But you also raise taxes, build up local with trade policies, lower inflation rates (encourages exports, as well as workers spending power).

There is no reason that the US cannot just refuse to pay part of its debt.

[Ingraham Effingham]

It's funny that the government is ok with renegging on promises to its people, but defaulting on loans to international bankers and the like is totally unfathomable.

I blame this broken clause in the 14th amendment:

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

Hidden among the rest of the amendment, which deals entirely with black rights, it's used by corporate-owned politicians to justify stealing from the populace to keep the hang-glider of capitalism suspended a few more hundred feet. Although its original aim was for the civil war reconstruction, it goes fundamentally against what the founding fathers intended: freedom of the people to reject the government. It also firmly established financial usury into the core of America.

The longer we put off the default, the worse the depression will be. Better to have an "okay depression" rather than another "great depression." We have a better infrastructure than we did in the 20's, so hopefully there wont be famines and disease.

But as the current infrastructure continues to crumble, and materialism and consumerism is further indoctrinated, I fear for the mass suicides and riots when gas is 20 dollars a gallon, and there arent enough iphones to go around. ;)

[agnixie]

The longer we put off the default, the worse the depression will be. Better to have an "okay depression" rather than another "great depression." We have a better infrastructure than we did in the 20's, so hopefully there wont be famines and disease.


Treasury Bonds and Debt now add up to 25-30% of the US' total wealth. It's already at great depression levels.

[Dean]

On 7/8/11, the US approved a new military budget at 560Bn or so dollars. this included a 17bn increase over the previous year. There was no significant debate over this. And the media ignored it.

There isn't a deficit crisis. There is only a bipartisan attack on the rights of our underclass. Furthermore, the government doesn't need to worry about its debts - it can simply issue currency to repay them. The "hard money" folks don't like this though. That's the only battle in Washington today.

[RGacky3]

There isn't a deficit crisis. There is only a bipartisan attack on the rights of our underclass. Furthermore, the government doesn't need to worry about its debts - it can simply issue currency to repay them. The "hard money" folks don't like this though. That's the only battle in Washington today.

Issuing currency causes problems, but your right, cutting defence would almost fix it right away, I mean the peoples budget put forward by the progressive cuacus would fix it. My point is the panic over default is a little missplaced.

[RichardAWilson]

Defaulting on bonds is unfathomable. If we defaulted on those bonds, the international markets would refuse to continue lending to us. Furthermore, our dollar would crash. Argentina, unlike us, wasn't running a massive and unsustainable trade deficit for as long as we have.

A more balanced solution to the problem would be to monetize our longer-term financial obligations with the socialization of the Federal Reserve Banking System.

The Federal Reserve would become the leading consumer of our Treasury's Securities and would be allowed to socialize the banking system's surplus reserves by using those reserves to purchase bonds and paper. The commercial banks are sitting on over $1.1 trillion which has been deposited with the Federal Reserve Banks.

We should be putting that money to work.

[RGacky3]

Argentina, unlike us, wasn't running a massive and unsustainable trade deficit for as long as we have.


Yeah, but thats fixable. The markets will fuss about it, but if you "restructure those loans" they'll take it, and eveuntually start coming back.


A more balanced solution to the problem would be to monetize our longer-term financial obligations with the socialization of the Federal Reserve Banking System.

The Federal Reserve would become the leading consumer of our Treasury's Securities and would be allowed to socialize the banking system's surplus reserves by using those reserves to purchase bonds and paper. The commercial banks are sitting on over $1.1 trillion which has been deposited with the Federal Reserve Banks.

We should be putting that money to work.

That would obviously be a much better solution.

[RGacky3]

Also IMO this panic over default is just an excuse for Obama to pass republican policies, its the same game he's been playing.

[RichardAWilson]

I don’t think we’re worried about financiers and financial institutions as much as we’re worried with Sovereign Wealth Funds and Central Banks. Foreign States own trillions of dollars worth of our bonds and securities.

(I.e. China and Japan being the leaders of the bunch)

We're talking a Global Financial Collapse.

[RichardAWilson]

You're right though about the White House. Even if the debt ceiling isn't raised like planned, we still have enough revenue coming into Washington to finance our bonds.

Washington brings in $200 billion a month in tax revenue. Meanwhile, the interest expenses on our outstanding bonds average around $20 billion a month! There's even enough to continue mailing SSI Checks.

[RGacky3]

Btw, they will raise the debt ceiling, no doubt.

[RichardAWilson]

I don't know. The Tea Party Morons are willing to hold us hostage over a few tax cuts that primarily benefit the super-rich.

[agnixie]

Btw, they will raise the debt ceiling, no doubt.

Friday's legislative agenda has seemingly been taken over by the fall of Boehner; this leaves them monday and tuesday.

[RGacky3]

I don't know. The Tea Party Morons are willing to hold us hostage over a few tax cuts that primarily benefit the super-rich.


Yeah, but Wall Street and the Chamber of Commerce would never let it happen, imo rihgt now they are just playing, to milk obama for all they can get, but in the end I'm sure they'll do it.


Friday's legislative agenda has seemingly been taken over by the fall of Boehner; this leaves them monday and tuesday.

Ok, we'll see if my political prediction comes true, I'm sticking by my prediction.

[Rocky Rococo]

This whole thing is almost like a schematic diagram of how the system is rigged.

First of all, the supposed "cause" of the crisis is itself totally artificial. The whole catastrophe is based on a rule government imposed on itself for purposes of political posturing. And apparently, as this situation illustrates, as a convenient means of stampeding bourgeois politicians and a public deliberately kept economically confused, uninformed and disinformed into Shock Doctrine solutions that accelerate the upward redistribution of wealth. The media and the "experts" preach the fear of "default" in all its horror, and yet the fact that the very reason there's such a great "crisis" is an entirely made up rule that no other country in the world finds necessary. It's sure easy to rob the bank when you own it, and the same can be seen to be true for a nation and its owners.