aberrant85
Well-known member
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Given the trajectory our country is, I ask you: what is the worst possible development that could happen in the event that either the country defaults on its debt or President Obama unilaterally lifts the debt limit?
Keep in mind, the former is warned to create an economic crisis, the latter a constitutional crisis.
Meh. I've seen several of these alleged "shutdowns", and am not impressed.
Given the trajectory our country is, I ask you: what is the worst possible development that could happen in the event that either the country defaults on its debt or President Obama unilaterally lifts the debt limit?
Keep in mind, the former is warned to create an economic crisis, the latter a constitutional crisis.
Given the trajectory our country is, I ask you: what is the worst possible development that could happen in the event that either the country defaults on its debt or President Obama unilaterally lifts the debt limit?
Keep in mind, the former is warned to create an economic crisis, the latter a constitutional crisis.
Given the trajectory our country is, I ask you: what is the worst possible development that could happen in the event that either the country defaults on its debt or President Obama unilaterally lifts the debt limit?
Keep in mind, the former is warned to create an economic crisis, the latter a constitutional crisis.
I have been through 17 of these, this being the 18th. Ford 1, Carter 5, 7 Reagan, 1 under Bush the First and 2 under Clinton. These lasted anywhere from 1 to 21 days. All ended up being no big thing. In my opinion there is way too much hyperbole over this one coming from both sides.
Fact is most Americans are going about their daily business as usual as the government being shutdown isn't effecting them. Now from the political partisan die hards, you think the world has come to an end. If our politicians in Washington would start putting country over party, then perhaps our problems as a nation could get solved. But as long as it is more important to those in D.C. to be Republicans and Democrats instead of Americans, this country will flounder and soon give up its ghost.
But governing from crisis to crisis, in a peicemeal fashion is no way for a modern country to be run.
Given the trajectory our country is, I ask you: what is the worst possible development that could happen in the event that either the country defaults on its debt or President Obama unilaterally lifts the debt limit?
Keep in mind, the former is warned to create an economic crisis, the latter a constitutional crisis.
Ok, just in an effort to put things into perspective and propose options I’ve made some ‘back of the envelope’ calculation.
Annual revenue = ~$2,400b
Monthly revenue = ~$200b
Debt = $17,000b
Annual interest on debt = ~$415b
Monthly interest on debt = ~$35b
It seem obvious that our monthly revenue would cover the monthly interest thus preventing ‘default’.
Consider further that debt = debt held by public + intragovernmental debt (SS trust fund)
Current monthly social security payments = ~$62b
So we take $62b from monthly revenue reimburse SS trust fund, which reduces current debt, which would then allow an additional $62b in borrowing OR not and prevent hitting the ceiling. This can occur infinitely. Will the shutdown continue and necessarily expand due to insufficient revenue, yes but default is off the table. The burden of his expansion of the shutdown would ultimately cause the public to pressure the POLs to solve it…but the global economic calamity associate with default is avoided.
if we default, it has the potential to be a long term nightmare. the ironic part is that taxes will have to be raised significantly to deal with the increasing interest and the fact that it will be more difficult for us to borrow. if we lose global reserve currency status, then it's economic game over for the foreseeable future. think gas is expensive now? just wait.
as for the trillion dollar coin idea, it sets a horrible precedence, and my opinion is that it's a nonstarter. we either will or will not default. my guess is that they do what they always do and kick the ball down the road. those throwing a tantrum in the house will get the medical device tax repealed as a bone, and then we'll go further into debt.
I have been through 17 of these, this being the 18th. Ford 1, Carter 5, 7 Reagan, 1 under Bush the First and 2 under Clinton. These lasted anywhere from 1 to 21 days. All ended up being no big thing. In my opinion there is way too much hyperbole over this one coming from both sides.
Fact is most Americans are going about their daily business as usual as the government being shutdown isn't effecting them. Now from the political partisan die hards, you think the world has come to an end. If our politicians in Washington would start putting country over party, then perhaps our problems as a nation could get solved. But as long as it is more important to those in D.C. to be Republicans and Democrats instead of Americans, this country will flounder and soon give up its ghost.[/QUOT
If recent history is any indication, they'll continue in DC doing as they are currently doing... blaming the other side all the way down to the bitter end! :2mad:.... :sigh:
Greetings, Pero. :2wave:
Could you explain how we could default with monthly revenues of $250 billion and interest costs of 33 billion?
the way i understand it, we could go on short term by diverting money from other things to pay the most important bills. there are also a few treasury options that don't seem to be on firm legal footing. however, the biggest danger is perception; it's almost certain to lower our credit rating, which means more interest. if that happens, we will be in a situation where taxes will be increased. also, if our currency is in question, the globe starts looking for the next best option. this cannot be allowed to happen.
the way i understand it, we could go on short term by diverting money from other things to pay the most important bills. there are also a few treasury options that don't seem to be on firm legal footing. however, the biggest danger is perception; it's almost certain to lower our credit rating, which means more interest. if that happens, we will be in a situation where taxes will be increased. also, if our currency is in question, the globe starts looking for the next best option. this cannot be allowed to happen.
The world has no alternative to the dollar. There is no currency big enough to manage world trade. Elites are still buying dollars more than PMs. Most of our debt is to the Fed, Social Security and ourselves. Raising interest rates could happen, but revenue still exceeds debt interest payments by 8 to 1. It's not even close to default. That is so much obamahyperbole it's sick. The pain will be on the DOD, Medicare, social security, and all of that before the dictators chefs and golf outings!
if our currency looks insecure, other currencies start looking better and better. the renminbi is a long term contender.
on the global stage, it's about keeping up appearances. people vote with their money, and so do nations. the entire first world is looking at this and is shaking its collective heads.
Please take a look at the money supply of the renminbi or any of the world's currencies and let me know when you find one capable of handling the world's trade - even coming close? Then we should worry.
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