Welcome to the MacNN Forums.

If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below.

You are here: MacNN Forums > Community > MacNN Lounge > Political/War Lounge > Chance the US defaults on its debt

Chance the US defaults on its debt
Thread Tools
Big Mac
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 25, 2011, 01:00 AM
 
QE 2 is (hopefully) coming to an end, which means a rise in interest rates and a slowing economy - possibly a double dip. The debt ceiling vote is coming up, and the political elite is trying to convince everyone it would be catastrophic not to raise the limit. That would be funny if it weren't so dire. (Read as: It will be catastrophic for the federal government not to live on its revenues and to continue instead massive deficit overspending.) The political elite either wants a collapse or just is so power hungry it wants to keep the train rolling as long as possible (dolling out benefits we can't possibly afford) despite the consequence of it rolling off the cliff.

What do you think the percentage chance is that the US will default on its national debt within the next decade? And what percentage of your fiat currency savings are you selling off in favor of precious metals? I don't know where the short term top is in precious metals (I assume a short term top if Bernanke gets muzzled), but they're running up fast.
( Last edited by Big Mac; Apr 25, 2011 at 01:13 AM. )

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
subego
Clinically Insane
Join Date: Jun 2001
Location: Chicago, Bang! Bang!
Status: Offline
Reply With Quote
Apr 25, 2011, 04:20 AM
 
0.005%
     
Dork.
Professional Poster
Join Date: Sep 2005
Location: Rochester, NY
Status: Offline
Reply With Quote
Apr 25, 2011, 07:21 AM
 
Should have been a poll.
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 25, 2011, 08:01 AM
 
I thought about that but decided I'd leave it open ended.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 25, 2011, 08:50 AM
 
100% if inflation counts as default (as it should).

-t
     
Dork.
Professional Poster
Join Date: Sep 2005
Location: Rochester, NY
Status: Offline
Reply With Quote
Apr 25, 2011, 09:01 AM
 
Originally Posted by turtle777 View Post
100% if inflation counts as default (as it should).

-t
Why? Aren't you just upset that you can't just create money out of thin air to pay your debts, like the Government can?
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 25, 2011, 09:23 AM
 
Originally Posted by Dork. View Post
Why? Aren't you just upset that you can't just create money out of thin air to pay your debts, like the Government can?
Seriously ?

Are you really that clueless about inflation ?
Man, read up before you discuss.

-t
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 25, 2011, 09:38 AM
 
turtle, I think Dork. was being sarcastic.

On the subject of inflation, that's the other possibility I didn't mention. The feds could just hyperinflate the dollar. But what would that end up looking like? I know that it's said that governments can inflate their way out of debts by paying off old debt with inflated dollars, but could the feds even successfully do that? If the dollar gets hyperinflated doesn't the debt get hyperinflated as well? Don't interest rates skyrocket during periods of high inflation, and wouldn't that quickly multiply the debt faster than inflated dollars could pay it off? It seems like the quicker path is to default.
( Last edited by Big Mac; Apr 25, 2011 at 09:45 AM. )

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
Sealobo
Professional Poster
Join Date: Apr 2001
Location: The Intertube
Status: Offline
Reply With Quote
Apr 25, 2011, 12:57 PM
 
the US will NOT default.

end of discussion.
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 25, 2011, 01:48 PM
 
Okay, that's reassuring. But I wonder if that's the same kind of guarantee as "there will never be a magnitude 9 earthquake in Japan" - because things that people never thought could possibly happen sometimes happen.

If not default, hyperinflation then? Because it seems like even the Tea Party isn't unified regarding deep cuts to Entitlements. I don't see how it will be possible to get government spending down to sane levels given the political climate as it is today, especially with all the demagoguery on the Left placing most of the blame for large deficits on tax cuts for the "rich."

When you have one of two major parties saying there's no problem with our enormous spending except for having to soak the rich more, and when you have the other major party not even being staunchly committed to balanced budgets, I see nothing but pain ahead. If not default, hyperinflation.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
Wiskedjak
Posting Junkie
Join Date: Jun 2002
Location: Calgary
Status: Offline
Reply With Quote
Apr 25, 2011, 02:03 PM
 
Originally Posted by Big Mac View Post
When you have one of two major parties saying there's no problem with our enormous spending except for having to soak the rich more, and when you have the other major party not even being staunchly committed to balanced budgets, I see nothing but pain ahead. If not default, hyperinflation.
I think part of the problem is that you only have 2 major parties which each have only 1 goal: making the other party look bad (not to be confused with actually running a country). You need a 3rd major party to point out reality and keep the other parties honest(ish).
     
Dork.
Professional Poster
Join Date: Sep 2005
Location: Rochester, NY
Status: Offline
Reply With Quote
Apr 25, 2011, 02:12 PM
 
Strictly speaking, the issue isn't spending, it's debt (and the need to constantly make more new debt). Debt is spending minus revenue. Less spending means less debt, and more revenue means less debt, all things being equal.
     
CreepDogg
Mac Elite
Join Date: Jun 2001
Location: Chicago
Status: Offline
Reply With Quote
Apr 25, 2011, 03:37 PM
 
Originally Posted by Wiskedjak View Post
I think part of the problem is that you only have 2 major parties which each have only 1 goal: making the other party look bad (not to be confused with actually running a country). You need a 3rd major party to point out reality and keep the other parties honest(ish).


Pick your poison. The only thing the parties really disagree on is which version of 'bad' to serve up.
     
el chupacabra
Mac Elite
Join Date: Apr 2001
Status: Offline
Reply With Quote
Apr 25, 2011, 03:51 PM
 
Sealobo is right, there is no chance the US will default.

Defaults are just rhetorical talking points to rile people up and get them focusing on technicalities rather than the big picture.

The largest governments/corporations of the world are the ones who create, bend, and change the rules as they see fit to fix their problems... or make themselves richer since this was never really a problem for policy makers to begin with. Does this mean you can sit back and relax? No. They will avoid default and other problems at the expense of your standard of living.

History is repeating itself; only this time it's happening in the US. Prepare to see extreme class separation.

Wiskedjak
I think part of the problem is that you only have 2 major parties which each have only 1 goal: making the other party look bad (not to be confused with actually running a country). You need a 3rd major party to point out reality and keep the other parties honest(ish).
Actually their 1 and only goal is to profit; and making each other look bad is a means to that end when dealing with such a simple stupid population that eats that stuff up.
...and most people dont want a 3rd party.. Makes stuff too confusing for their black and white point of view.
the largest problem for Americans today is they eat too much food and dont have enough work to do to keep their heart healthy
     
mduell
Posting Junkie
Join Date: Oct 2005
Location: Houston, TX
Status: Offline
Reply With Quote
Apr 25, 2011, 04:23 PM
 
Why bother defaulting when you can just debase the currency? The Fed will go along with whatever the Treasury wants to do. There's no meaningful independence anymore.
     
Sealobo
Professional Poster
Join Date: Apr 2001
Location: The Intertube
Status: Offline
Reply With Quote
Apr 25, 2011, 08:09 PM
 
The world's economic models and financial products are scaled and PRICED according the risk-free rate which is basically the AAA rating of the US. If the US defaults, the world will be distorted and there will be no winner. The impact is similar to have Christianity falsified in financial term.

There is no need to over-think the problem here. there are only two ways in solving any debt issue; the borrower either repay the debt, or kill the lender(s). Furthermore, I think this time around the US cannot "lower" the debt by simply inflating the dollar, because many of the outstanding debt is inflationary-adjustable. However, i also believe that these inflationary adjusted loan instruments are mostly written to domestic US citizens... hm... those being held by China/Japan are not.

btw I have a degree in economics.
     
Sealobo
Professional Poster
Join Date: Apr 2001
Location: The Intertube
Status: Offline
Reply With Quote
Apr 25, 2011, 08:12 PM
 
Originally Posted by el chupacabra View Post
Actually their 1 and only goal is to profit; and making each other look bad is a means to that end when dealing with such a simple stupid population that eats that stuff up.
...and most people dont want a 3rd party.. Makes stuff too confusing for their black and white point of view.
that's why there is only 1 party in China... adding one more will surely confuse the people.
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 25, 2011, 08:26 PM
 
Originally Posted by Sealobo View Post
There is no need to over-think the problem here. there are only two ways in solving any debt issue; the borrower either repay the debt, or kill the lender(s). Furthermore, I think this time around the US cannot "lower" the debt by simply inflating the dollar, because many of the outstanding debt is inflationary-adjustable. However, i also believe that these inflationary adjusted loan instruments are mostly written to domestic US citizens... hm... those being held by China/Japan are not.
That was my suspicion - much of the outstanding debt is inflationary-adjustable (or, as I put it, the debt would inflate along with the currency). So the inflation "cure" is out. I can't really see a way to pay off the debt as long as around half the country votes Democratic/Progressive and thereby votes to implode the system.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
CreepDogg
Mac Elite
Join Date: Jun 2001
Location: Chicago
Status: Offline
Reply With Quote
Apr 25, 2011, 08:29 PM
 
Originally Posted by Big Mac View Post
So the inflation "cure" is out. I can't really see a way to pay off the debt as long as around half the country votes Democratic.
The other (about) half voting Republican doesn't help either.
     
imitchellg5
Posting Junkie
Join Date: Jan 2006
Location: Washington + Colorado
Status: Offline
Reply With Quote
Apr 25, 2011, 08:29 PM
 
Originally Posted by Big Mac View Post
Much of the outstanding debt is inflationary-adjustable. So the inflation "cure" is out. I can't really see a way to pay off the debt as long as around half the country votes Democratic.
Way to make a non-partisan question completely partisan. There is absolutely no chance the US will default on its debt regardless of who is leading the nation. While the US debt is certainly huge, you MUST have debt to run a country. It's not possible to run a country like the US without incurring debt. There needs to be restraint on spending, but you can't simply stop spending.
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Apr 26, 2011, 07:32 AM
 
What's the chance the US defaults on its debt? Well, I'd say the larger the debt the greater the chance of defaulting on it.

They'll of course vote to raise the debt ceiling as they always have which will push the question of our default to some future date and a much greater figure at that time.
ebuddy
     
Wiskedjak
Posting Junkie
Join Date: Jun 2002
Location: Calgary
Status: Offline
Reply With Quote
Apr 26, 2011, 08:14 AM
 
Just as liberals stopped complaining about war once Obama got into office, what's the chance that conservatives stop talking about debt once a Republican is back in the Whitehouse?
     
Dork.
Professional Poster
Join Date: Sep 2005
Location: Rochester, NY
Status: Offline
Reply With Quote
Apr 26, 2011, 09:58 AM
 
Didn't Reagan prove that deficits don't matter?
     
The Final Dakar
Games Meister
Join Date: Aug 2009
Location: Eternity
Status: Offline
Reply With Quote
Apr 26, 2011, 10:04 AM
 
Originally Posted by Dork. View Post
Didn't Reagan prove that deficits don't matter?
It's pathetic the lengths liberals will go to just to just to prove him wrong.
     
OAW
Addicted to MacNN
Join Date: May 2001
Status: Offline
Reply With Quote
Apr 26, 2011, 12:39 PM
 
What are the chances the US defaults on its debt? I'd say it all depends on how many of the Tea Party freshmen congresspersons and senators are willing to cut off their nose in order to spite their face. If enough of them are willing to precipitate another global economic meltdown in order to maintain their "ideological purity" then the US will default. If not, then it won't.

OAW
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 27, 2011, 12:38 AM
 
Originally Posted by imitchellg5 View Post
Way to make a non-partisan question completely partisan. There is absolutely no chance the US will default on its debt regardless of who is leading the nation. While the US debt is certainly huge, you MUST have debt to run a country. It's not possible to run a country like the US without incurring debt. There needs to be restraint on spending, but you can't simply stop spending.
Mitchell, it's very much a partisan issue because the Left has made it one, demagoguing any even semi-serious reform proposal to get deficits under some kind of control (let alone balance the budget or run surpluses). They make Paul Ryan out to be a radical when he wouldn't get near balanced budgets for decades. He's a moderate in this discussion.

Also, could you please cite the immutable law of economics that says the US federal government must run deficits to run the country? I missed that teaching in all the econ courses I took. You think the economy would crater if we had a balanced budget?
( Last edited by Big Mac; Apr 27, 2011 at 12:48 AM. )

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
imitchellg5
Posting Junkie
Join Date: Jan 2006
Location: Washington + Colorado
Status: Offline
Reply With Quote
Apr 27, 2011, 01:11 AM
 
Originally Posted by Big Mac View Post
Mitchell, it's very much a partisan issue because the Left has made it one, demagoguing any even semi-serious reform proposal to get deficits under some kind of control (let alone balance the budget or run surpluses). They make Paul Ryan out to be a radical when he wouldn't get near balanced budgets for decades. He's a moderate in this discussion.

Also, could you please cite the immutable law of economics that says the US federal government must run deficits to run the country? I missed that teaching in all the econ courses I took. You think the economy would crater if we had a balanced budget?
Oh really? It's an issue that crosses party lines. No party has given a crap about the deficit that I'm ever aware of until now.

It's not economics, it's history. Since the creation of the Bank of England to help fund England's colonies, virtually every major polity in the world has been run based upon the ability to lend or borrow money. It's no different with the US. I'm not talking economically, I'm saying it is impossible to run a country without debt. There is no law that says the US must have a deficit. It's like if I want to buy a house: I could either save up for 30 years and live in an apartment until then or I can move in a house now and pay it off for 30 years. While that's oversimplifying, a country naturally makes debt to achieve its goals, no mater if the President is Republican or Democrat. We don't live in a world where leaders literally have to count their own money to do something. Debt is traded on the market too. It seems as if you're saying that one banker in China somewhere is shaking their head in disbelief that the US owes him so much money and will suddenly ask the US to pay him back. That's not the reality. US debt is spread across the world throughout millions and millions of institutions. Same with China, Great Britain, anyone. Nobody is suddenly going to ask the US to pay up. While I am certainly not happy with the US deficit and would like to see the government take an active role in reducing it, not adding to it, the idea that the US could default on its debt just seems like fear mongering to me.

[BTW, the US started out with staggeringly huge debt to France that happened to be written off thanks to the French Revolution in 1789]
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 27, 2011, 03:14 AM
 
Originally Posted by imitchellg5 View Post
Oh really? It's an issue that crosses party lines. No party has given a crap about the deficit that I'm ever aware of until now.
The LP has for a long time. The Republicans have to some degree since the Tea Party and are actually proposing a number of different possible solutions. The Democrats don't care save for those who think we should end all wars and tax the "rich" at 100%. And that's only a slight exaggeration.

I'm saying it is impossible to run a country without debt. There is no law that says the US must have a deficit.
Sounds contradictory. I can assure you, though, that you don't have to run deficits to run a country. There are countries - even some in the 1st world - that run budget surpluses. It's not impossible. Those countries are living below their means and taking money out of more productive private hands, but that's better than the extreme alternative we're facing in the US because of enormous government and the Entitlement Society.

It seems as if you're saying that one banker in China somewhere is shaking their head in disbelief that the US owes him so much money and will suddenly ask the US to pay him back.
Actually, China's been warning us in recent years that we're being reckless with our deficits, and many international players have signaled a desire to move away from the dollar. Also, did you notice the S and P downgrade and the recent IMF comments placing our national credit rating at risk? You can look forward in time to what our predicament will resemble (staying the current Progressive/Socialist course) if you look at Greece right now.

While I am certainly not happy with the US deficit and would like to see the government take an active role in reducing it, not adding to it, the idea that the US could default on its debt just seems like fear mongering to me.
Have you thought about what will happen to our debt service interest payments when our interest rates invariably rise? The path we're on is absolutely unsustainable and requires a serious course correction unless we want to wake up one day to very adverse conditions - a much poorer, endlessly indebted country with nearly worthless fiat currency.

I wish I could be comforted by your optimism, but it doesn't seem to correspond to reality. You indicate that you're uncomfortable with our deficit spending to some degree, so let me ask you when you think our debt would become unsustainable. How much fake money can the government fabricate and spend before you think we're in real trouble? Many share my point of view that we're already past that point, even though the effects of a debt crisis haven't hit us yet. But since you don't agree, where do you think that point happens to be? What percentage of debt to GDP? How many more Trillions added to the debt?

I'd also ask all of you enormous government partisans to take a look at what's happening to Greece's debt and its interest rates. As I said, it's a preview of the type of future we will have to look forward to if Americans don't wake up to reality and elect leaders capable of steering away from the cliff.
( Last edited by Big Mac; Apr 27, 2011 at 03:33 AM. )

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Apr 27, 2011, 03:36 AM
 
Debt is money, money is debt. And the way the system works you cant pay off debt, there isnt enough money. If you borrow 100.00 and that 100.00 is owed back plus interest, where does the money for the interest come from.
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 27, 2011, 03:40 AM
 
By running surpluses in good times to pay off the debt, like Keynes' theory states. Big government proponents love Keynesian economic policy on the downswing because it excuses irresponsible deficit spending, but they very conveniently forget what he said to do when the economy recovers.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 27, 2011, 04:26 AM
 
Originally Posted by Sealobo View Post
I think this time around the US cannot "lower" the debt by simply inflating the dollar, because many of the outstanding debt is inflationary-adjustable.
Huh ? Care to give details, because I have no knowledge of this.

The only US inflation-adjusted debt I know of are TIPS and Series I savings bonds. Normal Treasury bills/notes/bonds are NOT inflation adjusted.

Plus, since the government controls the CIP calculation, and notoriously changes it to underreport real inflation, TIPS are not a very inflation-proof investment.


Btw, I have a degree in Finance and a CMA, does that count ?

-t
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 27, 2011, 04:34 AM
 
Let's take a step back and look at ALL the possible options to "recover" from a debt hangover:

Options:
1) Grow your way out - strong GDP growth will bring in extra tax revenues that can be used to pay of debt.
2) Massive Spending cuts
3) Outright Default
4) Debasement of currency (a.k.a inflation)

Re 1) very unlikely, the US would need real GDP growth well north of 5% for many many years. Not gonna happen.

Re 2) Looking at how they managed to cut $38B $352M after weeks of bickering, I doubt this is going to happen. We're talking necessary cuts of $1.7T + more to pay back debt.

Re 3) Personally, I don't see that happening, but it's a viable option

Re 4) Most likely option, and ONLY option if Default is ruled out.

There is no other magic bullets.

-t
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 27, 2011, 05:21 AM
 
Oh, and for all who really wanna study this, here's my recommended reading list:

Blogs:

FOFOA

Gonzalo Lira: How Hyperinflation Will Happen
Gonzalo Lira: Hyperinflation, Part II: What It Will Look Like

Books

Reinhart and Roggof: This Time Is Different: Eight Centuries of Financial Folly
Empirical evidence - consequences of high debt burden:

Amazon.com: This Time Is Different: Eight Centuries of Financial Folly (9780691142166): Carmen M. Reinhart, Kenneth Rogoff: Books

Jens O. Parrson: Dying Of Money (book available as free PDF):
http://esocap.com/uploads/files/Dying%20of%20Money.pdf

Adam Fergusson: When Money Dies
Amazon.com: When money dies: The nightmare of the Weimar collapse (9780718302146): Adam Fergusson: Books

-t
     
ShortcutToMoncton
Addicted to MacNN
Join Date: Sep 2000
Location: The Rock
Status: Offline
Reply With Quote
Apr 27, 2011, 06:25 AM
 
Originally Posted by Big Mac View Post
Sounds contradictory. I can assure you, though, that you don't have to run deficits to run a country. There are countries - even some in the 1st world - that run budget surpluses. It's not impossible. Those countries are living below their means and taking money out of more productive private hands, but that's better than the extreme alternative we're facing in the US because of enormous government and the Entitlement Society.
Soooooooo...you're saying you want to be Canadian? Hah. Oh boy.
Mankind's only chance is to harness the power of stupid.
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 27, 2011, 06:48 AM
 
I'd rather be Norwegian

-t
     
ebuddy
Posting Junkie
Join Date: Aug 2003
Location: midwest
Status: Offline
Reply With Quote
Apr 27, 2011, 08:05 AM
 
Originally Posted by Wiskedjak View Post
Just as liberals stopped complaining about war once Obama got into office, what's the chance that conservatives stop talking about debt once a Republican is back in the Whitehouse?
Hopefully, their silence will be due to substantial measures aimed at decreasing debt once a Republican is in office. For now, we get to watch all the liberals who voted against raising the debt ceiling during Bush II explain how they're now in favor of it.
ebuddy
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 27, 2011, 08:15 AM
 
My predictions of The Chairsatan's speech this afternoon:
  • Benzebub will announce the end of QE2
  • The Fed will talk tough and indicate a more restrictive money policy
  • USD will rally, precious metals drop for 3 months
  • Broad sell off in stock markets
  • By mid-summer, we will be back in recession territory
  • Secretly, the Fed will keep "printing money" on a small scale
  • TBTF banks will threaten to go bankrupt if Fed doesn't re-institute QE
  • Aug/Sep: QE3 announced
  • Huge rally in precious metals, USD drops like like crazy

-t
     
Wiskedjak
Posting Junkie
Join Date: Jun 2002
Location: Calgary
Status: Offline
Reply With Quote
Apr 27, 2011, 08:16 AM
 
Originally Posted by ebuddy View Post
Hopefully, their silence will be due to substantial measures aimed at decreasing debt once a Republican is in office. For now, we get to watch all the liberals who voted against raising the debt ceiling during Bush II explain how they're now in favor of it.
Hopefully, but conservatives didn't seem too vocal about Bush's contributions to the debt issue. Partisan voters are only ever concerned about what the other party is doing and always seem to turn a blind eye to what they're party is doing when it's in power.
     
Dork.
Professional Poster
Join Date: Sep 2005
Location: Rochester, NY
Status: Offline
Reply With Quote
Apr 27, 2011, 08:31 AM
 
Originally Posted by turtle777 View Post
My predictions of The Chairsatan's speech this afternoon:
  • Benzebub will announce the end of QE2
  • The Fed will talk tough and indicate a more restrictive money policy
  • USD will rally, precious metals drop for 3 months
  • Broad sell off in stock markets
  • By mid-summer, we will be back in recession territory
  • Secretly, the Fed will keep "printing money" on a small scale
  • TBTF banks will threaten to go bankrupt if Fed doesn't re-institute QE
  • Aug/Sep: QE3 announced
  • Huge rally in precious metals, USD drops like like crazy

-t
It looks like you've got it all figured out. Can I subscribe to your investment newsletter?
     
turtle777
Clinically Insane
Join Date: Jun 2001
Location: planning a comeback !
Status: Offline
Reply With Quote
Apr 27, 2011, 08:42 AM
 
Originally Posted by Dork. View Post
It looks like you've got it all figured out. Can I subscribe to your investment newsletter?
Hey, it's free, and worth twice what you paid for it

-t
     
ShortcutToMoncton
Addicted to MacNN
Join Date: Sep 2000
Location: The Rock
Status: Offline
Reply With Quote
Apr 27, 2011, 09:07 AM
 
Originally Posted by turtle777 View Post
I'd rather be Norwegian

-t
Yikes - powerful welfare system, incredibly large public sector, state ownership of important companies in the biggest economic sectors, taxation on net worth, and universal health and unemployment/disability benefits? Let me tell you, when I think "Norway", "made for turtle777" is rarely the next thought.

Unless you're thinking about Svalbard with the polar bears? Tax-free haven in the Arctic circle - I'd suggest lower-latitude islands first to be honest!

greg
Mankind's only chance is to harness the power of stupid.
     
imitchellg5
Posting Junkie
Join Date: Jan 2006
Location: Washington + Colorado
Status: Offline
Reply With Quote
Apr 27, 2011, 09:07 AM
 
Originally Posted by Big Mac View Post
The LP has for a long time. The Republicans have to some degree since the Tea Party and are actually proposing a number of different possible solutions. The Democrats don't care save for those who think we should end all wars and tax the "rich" at 100%. And that's only a slight exaggeration.
LP?

Sounds contradictory. I can assure you, though, that you don't have to run deficits to run a country. There are countries - even some in the 1st world - that run budget surpluses. It's not impossible. Those countries are living below their means and taking money out of more productive private hands, but that's better than the extreme alternative we're facing in the US because of enormous government and the Entitlement Society.
Those countries also don't have massive militaries or wars. Not that having a military is bad, but militaries are in their nature, expensive to run. Just take a look at the US FY2011 budget. A HUGE percentage of our budget goes to the military. It's the same way in Britain, and now they are cutting back the military massively.

Actually, China's been warning us in recent years that we're being reckless with our deficits, and many international players have signaled a desire to move away from the dollar. Also, did you notice the S and P downgrade and the recent IMF comments placing our national credit rating at risk? You can look forward in time to what our predicament will resemble (staying the current Progressive/Socialist course) if you look at Greece right now.

Wait. S&P didn't downgrade our rating, they downgraded our outlook. The US is still a AAA country. Yes, a downgrade would be harmful, but debt and the way it is handled is so much more nuanced than just that (and beyond what I know). Greece is a country whose issues have a lot more to do with, well, laziness, at the national level. People in the US are the opposite: Most of us work until we can't physically work any more, Greeks retire in their 40s and pull money from the state. And again, the Greek situation is very nuanced as well. There are countless factors that are a part of that. Drops in tourism (basically their largest huge industry), oil prices, the Euro, etc. Luckily the US has a very diversified economy that isn't necessarily as vulnerable to exterior forces as many Eurozone countries (apart from oil).

BTW, you know that China has a massive national debt as well? Bloomberg estimates that in 2012, 96% of China's GDP will be from the deficit.

Have you thought about what will happen to our debt service interest payments when our interest rates invariably rise? The path we're on is absolutely unsustainable and requires a serious course correction unless we want to wake up one day to very adverse conditions - a much poorer, endlessly indebted country with nearly worthless fiat currency.
I agree that it's unsustainable. I just don't see that the end result of this spending is defaulting.

I wish I could be comforted by your optimism, but it doesn't seem to correspond to reality. You indicate that you're uncomfortable with our deficit spending to some degree, so let me ask you when you think our debt would become unsustainable. How much fake money can the government fabricate and spend before you think we're in real trouble? Many share my point of view that we're already past that point, even though the effects of a debt crisis haven't hit us yet. But since you don't agree, where do you think that point happens to be? What percentage of debt to GDP? How many more Trillions added to the debt?
I think our debt will become unsustainable if/when the government spends trillions year after year to keep US businesses afloat. Luckily that only happened in 2009, but if this ongoing recession deepens and hurts US industries more, I can assure you I'll be watching the government's response. If the response is to continually throw money at US businesses, then I'll be worried. While I didn't like the 2009 bail outs, as long as it's a one-time thing, I think we're okay. But if every CEO expects Uncle Sam to keep him out of the red, and Uncle Sam is willing to oblige, I think our national debt today will seem like a quaint memory. I see debt as something that's reactionary based upon what the government will or won't do.
( Last edited by imitchellg5; Apr 27, 2011 at 10:08 AM. Reason: Fixed my massive quoting fail.)
     
Dork.
Professional Poster
Join Date: Sep 2005
Location: Rochester, NY
Status: Offline
Reply With Quote
Apr 27, 2011, 10:00 AM
 
Originally Posted by imitchellg5 View Post
LP?
Libertarian Party, I assume.
     
imitchellg5
Posting Junkie
Join Date: Jan 2006
Location: Washington + Colorado
Status: Offline
Reply With Quote
Apr 27, 2011, 10:07 AM
 
Oh, the leading US political party which have been so influential?
     
Sealobo
Professional Poster
Join Date: Apr 2001
Location: The Intertube
Status: Offline
Reply With Quote
Apr 27, 2011, 03:13 PM
 
Bernanke sucks.
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 27, 2011, 11:59 PM
 
I've been reading turtle's recommended PDF book Dying of Money, and it's stunning looking at the parallels between the Weimar Republic of Germany and the Bush-Obama era. There's one particular page early in the book that you can take and substitute America under Bush-Obama for Weimar Germany and the paragraph would make complete sense. It's also interesting the way the book points out that Germany seemed to be well enough off for much of its decade of inflation, and it wasn't until the last year of the inflationary cycle that the real misery kicked in. In fact, it even goes into amazing details about the way unions and government employees exploited the system by demanding lavish benefits that couldn't be met except through inflation, which served to substantially increase the inflationary pressure. We see nearly all the same trends today, although one notable difference is that at least under Weimar unemployment was very low because tons of unproductive office and bureaucratic jobs were created. We don't even get that "benefit."
( Last edited by Big Mac; Apr 28, 2011 at 12:19 AM. )

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Apr 28, 2011, 12:12 AM
 
Originally Posted by Big Mac View Post
I've been reading turtle's recommended PDF book Dying of Money, and it's stunning looking at the parallels between the Weimar Republic of Germany and the Bush-Obama era. There's one particular page early in the book that you can take and substitute America under Bush-Obama for Weimar Germany and the paragraph would make complete sense. It's also interesting the way the book points out that Germany seemed to be well enough off for much of its decade of inflation, and it wasn't until the last year of the inflationary cycle that the real misery kicked in.
Would that be when they started WW II?
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 28, 2011, 12:34 AM
 
No. Was that a serious question? If so you really need to read the book.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
Athens
Addicted to MacNN
Join Date: Jan 2003
Location: Great White North
Status: Offline
Reply With Quote
Apr 28, 2011, 01:25 AM
 
Actually was just testing you. Seeing if I was still blocked.
Blandine Bureau 1940 - 2011
Missed 2012 by 3 days, RIP Grandma :-(
     
Big Mac  (op)
Clinically Insane
Join Date: Oct 2000
Location: Los Angeles
Status: Offline
Reply With Quote
Apr 28, 2011, 03:08 AM
 
You are, but I selectively choose to read some blocked user's posts.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
 
Thread Tools
 
Forum Links
Forum Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Top
Privacy Policy
All times are GMT -4. The time now is 08:22 PM.
All contents of these forums © 1995-2017 MacNN. All rights reserved.
Branding + Design: www.gesamtbild.com
vBulletin v.3.8.8 © 2000-2017, Jelsoft Enterprises Ltd.,