I wrote a long discussion yesterday about defaulting on the national debt. During the course of the article, I became depressed and threw it away. It was just too damn depressing.
But when I woke up this morning, I still came to the conclusion that we should do a partial default.
We know where the bonds are. We know who has them. Other countries are less important than we are. The math is plain. If another country or an entity in another country holds our debt, we default on those bonds. If a multinational company that moved overseas to avoid taxes holds our bonds, default on those.
If a tax-paying, social security number holding, real live American holds the bond, they get the money. If a US chartered bank holds the bond in its reserves, it gets the money. All pension funds get their money
In a word, if you ain't one of us, tough shit pal. When you owe the bank a thousand dollars, you have a problem. When you owe the bank 10,000,000 dollars the bank has a problem.
Defaulting on the big multinational banks would also clip those bastards wings. Fuck 'em. We would be able to bail out the US depositors with the money we save defaulting on the bonds. Some US banks would survive. We would get by.
The real end of the day take home message is that we got in wayyyy over our heads. There isn't any way we can get out. Sometimes the most honorable thing to do is admit that you are bankrupt and take the steps necessary to fix the problem.
3 comments:
While I do agree with ya, I think the Chi-coms would get a bit purturbed if we was to default on 'em. And while I think D.C. getting nuked wouldn't necessarily be a bad thing.........
That's a horrible horrible idea. A bond is only as valuable as the reputation of it's issuer. If we defaulted on our loans, it'd be game over for the US economy. Never again would anyone lend us money. Every transaction we ever did with another country would have to be paid in gold, diamonds, oil, or something tangible.
We would immediately have to reduce our spending to far less than the taxed income. I say far less because the US gubmint doesn't have enough liquid assets to cover all bonds held by US citizens. So to pay off the US citizens as you suggest, the gubmint would have to pay in land (e.g. national parks), equipment (I'll take a few M-16s, a truck load of ammo, and a used space shuttle), and, well, there's really nothing else. The gubmint really can't cover those loans.
The value of the dollar would drop as everyone holding dollars would abandon them in fear that the gubmint would start printing more like crazy.
I'm sure that the repercussions would extend far greater than what I can think of.
I know you're touchy about criticism but that's about one of the most poorly thought out ideas I've ever heard. Keep thinking though! A bad idea is better than no idea.
Just a quick response to these:
Mayberry: China is at best a regional power with a very limited nuke-strike capability. I am not worried about them liking it. The worst that they could do is maybe sieze assets from American companies. As these are the bastards who outsourced the factories there so that they wouldn't have to pay Americans...well, I love the irony there.
Mockum: Good to see you again. Let see, your complaints are that we would have to pay for things in cash and we would have to stop spending more than we receive in tax reciepts? And this is bad how?
As for people never loaning again, I don't think that it works like that. Defaults on bonds occur often enough that it always comes about that people start loaning money again after a bit.
Sure, it will hurt, but its gonna hurt anyway.
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