Posted on 10/17/2014 5:02:50 PM PDT by Morgana
If the USA defaults, a real...not short-term...but real default...the entire world plunges into chaos and darkness for a thousand years.
100's of millions will starve and millions more lost to disease. Tyrants will kill so many the oceans will run red with blood.
Liberty will be forever lost. And you can lay all blame on Republicans and Democrats in Washington.
All of it.
Whether it is you, me, a company, a state or a country there comes a time when you must pay your bills.
Yes, a country can print money....but if the country goes too far with it, eventually no one wants their money.
Argentina, Greece,.........
Of course we are bigger, richer, rules don’t apply to us.
Think of Greece as if it were a little guy with little in assets and the US as a very very rich guy who really has most of it on paper.
Everyone calls the debt on the little guy almost immediately upon the news that he is in trouble.
The rich guy runs on his reputation, bluffs his way with his creditors...but only for so long and then they demand payment.
That is the only difference between our debt and theirs.
So again I say that to believe that because it never has happened it cannot happen is foolish.
That is the same as saying that because you house has never burned, it never will.
Remember, we have never ever had in our history a government so inept as the government we have now.
We just had an unbelievable example of that today in the appointment of our newest czar, who for God’s sake, will report to non other than Susan Rice.
Unreal and a terrible insult to the public to indicate that we deserve no better.
I meant to add that there was a very long story in today’s Wall Street Jornal about the mess China has got themselves into by the same monetary policies the US has followed.
Not good.
btt
Hey Obama, be a MAN - Implement a travel BAN!!
China still has a primitive financial system. Their bond market is large but primitive. Secondary bond trading is thin. A year ago you couldn’t get daily price quotes. They don’t let their yuan/renminbi float. All of this combines to give murky information about the Chinese economy.
Don’t confuse their problems with ours, there are great differences in the two economies. Problems in China will be felt here and vice versa, but our financial system is much stronger despite its troubles.
The Fed holds a very large portion of the Treasury debt issue for the purpose of adjusting the money supply.
When the Fed wants to increase the amount of money in the banking system they purchase bonds in the secondary market.
When they want to drain money out of the banking system, which they do if there’s an inflation, they sell the bonds they own into the secondary market. This acts like a sponge, soaking up loanable money.
Right now the Fed holds a very large position in Treasuries, reserved for the day when the economy strengthens and inflation begins to become a problem. At that time they will start selling their bond position to reduce the supply of high powered money in the banking system.
You have convinced me.
There is not one worry in this world about our financial system.
We can spend any amount of money we want on anything we want. The sky is the limit and we should have no fear.
Just enjoy.
And the best thing of all is that we have people like obumbler, Pelosi and Reid looking after our interests, and our money.
Unfunded liabilities? Don’t worry. They will take care of that.
We arr infallible and invincible.
By the way, in your other life, were you the captain of a large aircraft or maybe a large ship? Like the Titanic?
I forgot to mention that you are correct in that China has a primitive financial system.
I remember a few years ago when we looked on their manufacturing system as primitive.
Look how that turned out.
I am not sure that we should think them primitive about anything. Especially since my industry it one of those the Chinese totally destroyed in this country.
Feel free to worry all you want. If you think the American financial system is going to collapse I’d suggest living among the Amish because you will do fine without electricity and you’ll still eat.
I never said that there aren’t problems with the American financial system. They just aren’t the end of the world problems listed in this ridiculous article.
Our government has been spending a minimum of 18% of the GDP since the end of WWII. I believe it is now spending around 23%. That’s not something we can’t reduce. People who aren’t dependent upon government spending shouldn’t feel as much pain as those who expect government to do everything for them.
” Especially since my industry it one of those the Chinese totally destroyed in this country.”
Send your thanks to the politicians of both parties. They all have been singing the praises of free trade for a very long time. If it were up to me I’d have put some tariffs on imports- that’s how we financed the national government for 124 years. But our libertarian friends would be screaming that the Smoot Hawley monster would devour the Earth if we had a tariff once again.
No they don't.
and those banks resell the bonds on the open market,
This "open market demand" is why no one needs to be ordered to buy these bonds.
but mainly to the smaller banks downstream who may be taking advantage of the FED’s fund rates.
What's this supposed to mean?
What you say is true,
And I don’t know how long the Fed can keep their low interest madoff/ponzi scheme running, it may be far longer than any of us imagine, nonetheless it will come due as soon as they’re forced to raise interest rates (instead of only pretending they want to) where our existing debt becomes too expensive to service, it must be kept that way indefinitely,
The MSM like to push puff stories presenting an economic reality that matches the administrations narrative and ignores this outright scheming and picking winners and losers in the market by political data manipulations,
When a pause or stutter by the fed chairman during a live meeting can cause the markets to rise or fall, then we should all understand that its based on craft and deceit instead of sound fundamentals,
But there is another element to consider here also, to overlay onto where we are today even with all that, this nation is on a downward spiral morally and spiritually by every conceivable measure, and our judgement may very well be on a trajectory to intersect with our economic downfall, and if so, then how much worse or even more likely might that fall be,
It doesn't cause you even a twinge that the taxpayers will be saddled with all this new debt caused by the "injection" of non-existent money being used to "purchase" all these bonds?
but mainly to the smaller banks downstream who may be taking advantage of the FED’s fund rates.
What's this supposed to mean?
The taxpayer is saddled with this debt, whether the Fed buys all, some or none of it.
It's those big spending congress critters and the President doing all this crazy spending. Not the Fed.
“It doesn’t cause you even a twinge that the taxpayers will be saddled with all this new debt caused by the “injection” of non-existent money being used to “purchase” all these bonds? “
Your comment is a bit confused. New debt is created when Congress raises the debt ceiling, “injections” have nothing to do with it. As for the money being “non-existent”, that depends on whether you include Treasury bonds as part of the M3 money supply. When the Fed “purchases” bonds it converts illiquid bonds into liquid funds. It’s a change of state and not creation out of nothing. This is all very rudimentary.
If the Fed buys debt directly from the Treasury there is no added burden to the taxpayer because interest payments made to the Fed revert back to the Treasury, except for a very small portion covering payroll and normal expenses.
If the new debt authorized by Congress is bought by anyone other than the Fed then there is more money being paid out. What is important is the amount of this debt burden as a percentage of tax receipts and a percentage of the GDP.
The Federal Reserve has recently, where it never had before, started paying interest on banks’ reserves.
When banks refused to make loans in the worst of this past recession, this was one source of income they could count on.
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