Bankruptcy for nations means that nobody wants your paper money any more.
You can't import things as easily and everyone therefore becomes poorer.
The government eventually can't finance its operations and collapses or becomes North Korea.
Then you try it over again.
Think about Iceland. I'll admit it's not a perfect example but nothing usually is.
We're getting closer, you're describing exactly what I pointed out above.
And it's not bankruptcy. Bankruptcy is the inability to pay your debts. Greece, for example, had outstanding debt obligations in Euros, and since it didn't have them, they couldn't pay. Which is the same thing that happens when the household doesn't have enough money to pay the loans.
What you're describing is effectively inflation: Since the currency is losing value, importers want more money for their goods, which in turn means imported goods cost more, and salaries can't keep up. It indeed makes everybody 'poorer' but at the same time, it actually increases compe iveness... Now you can manufacture in the US and build cheaper than the imported good.
Again, two completely different situation. BTW, IIRC, the only two countries with full monetary sovereignty are the US and Japan. That is, they only have debts in their own currency.
The budget became unbalanced under the Repugs 2001 - 2008: Repug tax cuts, 2 unfunded Repug wars, unfunded Medicare Advantage and Pard D (and with govt forbidden to negotiate drug prices). Remove those, and budget is very close to being balanced.
The explosion of Medicare and Medicaid has not been due to those humanitarian programs as policies but the exorbitant annual increases for 30 years in medical costs for nothing in return.
Does not apply to the US. There's technically no instance where the US cannot pay it's debt obligations. (and by technically, I mean things like the 'debt ceiling' are entirely political instruments. There's no reason, other than inflation, that the US cannot issue dollars to pay for it's obligations).
What you call compe iveness I call slavery. The debtor nation is forced to work to pay off its debt to the creditor one. That's a semi-voluntary loss of sovereignty. Or you can refuse and your creditor can declare war on you. That's a involuntary loss of sovereignty. In either case, not good.
The US is a special case but only because it has the reserve currency and therefore is going to be the last country to take the plunge. But being last country to jump off a bridge is not good public policy. And just because nobody could invade the US to force it to pay back its debts doesn't mean that there are no consequences for accruing it. That's an issue of enforcement, not economics.
There was no reason Iceland couldn't either. They issue the krona why not keeping issuing. What happened? Nobody wanted it. The exchange markets did it for them before they even had the chance to inflate and England essentially threatened war on them if they did.
Obama vows veto over Vitter measure
President Barack Obama told House Democratic leaders Tuesday that he would veto debt-ceiling legislation if it includes a provision pushed by Sen. David Vitter (R-La.) and House GOP leaders that would cut health subsidies for congressional and senior executive branch officials,
While Obama said he would veto the Vitter language, he was "more irate," one of the sources said, over the Republican proposal to limit his ability to use tools referred to as extraordinary measures to avoid a default.
http://www.politico.com/politico44/2...on-175145.html
the Repug proposal to block the Treasury's "extraordinary measures" is bad-faith (duh, it's the Repugs) throwing gasoline on the fire.
You lost me. The debtor (the US) pays in US dollars. It doesn't have "to work to pay off it's debt". It just needs to issue the amount of US dollars it owes when the payment is due. That's it. It's all fiat money.
The creditor now has US dollars sitting at the Fed which they can either spend or re-invest in another loan.
Well, it isn't the US that chose what countries use for reserve currency. Every country is free to chose what they peg their currency to. It just happens that the US is one of the biggest economies and also a fairly stable country that in general doesn't manipulate it's currency much (at least not at the level that other countries do).
I'm talking about in general, like it is for most small countries not the US which is a special case.
Small countries with lots of debt have to work to pay off their debts by using their exports to pay for their imports. If it can't, it doesn't get imports. Money also gets taxed from the populace and the government has to make the debt payments in whatever currency it wants (it could buy US dollars with its local currency and pay it off with that). The taxed money that is paying off the debt is an outflow from the economy because it isn't saved in the economy.
What will happen to the US is other countries will eventually stop using the dollar. China desperately wants to internationalize the RMB. They are doing currency swaps with anyone who will listen. When the world starts trading in RMB instead of dollars, there is less need for dollars, and our ability to print them to buy our imports goes down. Then we have to work, ie produce things, to buy our imports. That is not a good thing. A good thing is to have a magic machine that produces everything we want for free with none of us having to work. Then we'd all be rich. But until that happens, more work is bad. (income distribution is a whole different thing altogether)
The US shouldn't be engaging in activities that will cause other countries to not want our dollars. It may take a hundred years but eventually that well runs dry. Then all we'll be left with is the debt.
Last edited by angrydude; 10-16-2013 at 03:46 AM.
Ehhh, no. Iceland had a size-able external debt (about $116 billion USD in 2008).
Shutdown and Default Considered Small Price to Pay for Banning Birth Control, Say Catholic Bishops and Paul Ryan
Cardinal Séan O’Malley and Archbishop William Lori asked that the language of the proposed Health Care Conscience Rights Act (H.R. 940, S. 1204) be added to either the continuing resolution (CR) legislation needed to fund the operation of the federal government, or to the legislation needed to prevent the United States from defaulting on its debt.
Opposition to the birth control benefit has been framed by the bishops and their allies as an infringement of their religious liberty, turning the definition of the term on its head by claiming a right to impose their theological views on those
who believe differently. The religious liberty theme—and the claim that President Barack Obama aims to revoke it—is one that pervaded the annual conference, which took place at the Omni Shoreham Hotel, a sprawling Washington landmark.
According to two Republicans familiar with the exchange, Ryan argued that the House would need those deadlines as “leverage” for delaying the health-care law’s individual mandate and adding a “conscience clause”—allowing employers and insurers to opt out of birth-control coverage if they find it objectionable on moral or religious grounds—and mentioned tax and en lement goals Ryan had focused on in a recent op-ed in the Wall Street Journal.
the bishops insist on falsely describing some of the prescription contraception methods covered by the preventive care regulations issued by the Department of Health and Human Services under the ACA as “abortifacients.”
http://rhrealitycheck.org/article/20...-and-paul-ryan
the male-pedophile-protecting Catholic Church pushing legislation of its morals on female non-Catholics.
2008 was the year everything went to in Iceland. I know its different. They couldn't roll over the debt. The banks were private, yada yada. Same effect.
I haven't really been updated on the goings on but I know they essentially told England to go screw themselves, put the bankers in jail, and rewrote their cons ution.
Smaller countries are a completely different story, couldn't agree more. I come from one, and the whole debt story there is completely different.
The problem is that the Chinese manipulate the RMB way more than the US does. China has effectively been engaging in currency depreciation to remain a compe ive force since forever.
Right now this political instability is much more damaging to the US than the actual ratio of debt/GDP. Getting spending and future debt under control has to be done, but it can't be done with all this posturing.
But going back to the original premise, we're not on a household economy. I'm tired of listening on the impending bankruptcy and "what happens when the creditors call in their debts"... there's no such thing (for the US)
Pretty much. Ballsy and it worked great for them. Their external debt in US dollars has ed though.
lol boutons
No we're not a household economy. All I'm saying though that just like a household economy eventually debt screws you. You're right that they won't ever call in our debts. That's just really confused people talking.
But the financial system was set up to be unsustainable to benefit the rich so its going to happen eventually anyway and neither side cares.
I gotta get some sleep. Will be continued
The bottom line is that the safest way the world sees to invest or harbor it's assets is in the US. Primarily in T-bills.
Make this haven perceived as shaky, and most of the world is gonna have a problem. Perception is huge in all of this. The Republicans have been reprimanded by a whole lot of people from all parts of the world that understand this. The old school republicans understand this, the tea baggers want to run an experiment. Apparently uncertainty is fun for them.
It was plain stupid for the republicans to tie something that is already passed by congress (Obamacare), to our ability to pay our bills.
Sometimes problems need to be separated. This is not some little subsidy that a congressman from Alaska tries to attach a little gravy for his cons uents to look good. The tea party thinks they need to uphold some moral standard foolishness so they can say they fought Obamacare. They knew the democrats would not budge, they think this is some silly little game so they can look good to Rush Limbaugh and thus their ignorant vocal minority back home.
Playing chicken in your car with a wall that moves randomly is not wise.
Last edited by pgardn; 10-16-2013 at 08:44 AM.
"It was plain stupid for the republicans"
... no surprise, they're tea baggin Repugs, in gerrymandered-safe districts
So someone remind me.
What harm will come tomorrow if the demonrats continue this shutdown?
"Under the agreement, the government would be funded through Jan. 15, and the debt ceiling will be extended to Feb. 7. The Senate will take up a separate motion to instruct House and Senate negotiators to reach accord by Dec. 13 on a long-term blueprint for tax-and-spending policies over the next decade."
http://www.nytimes.com/2013/10/17/us...e.html?hp&_r=0
so the tea baggers can up the country again in Jan and Feb, IF the Householes pass the Senate bill.
"Do Your Own Research"
--WC
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