It is my working assumption that both parties in the United States are wholly owned subsidiaries of the largest corporations. The U.S. will default it the corporations believe it is beneficial to them.
Let us run some scenarios⌠(Note: I believe that all of this is extremely unlikely and will not change my investment positions based on debt default at all)
The U.S. defaults for a week. Checks are delayed and the dollar falls precipitously in value. The Fed loses control of the bond market and bond prices fall forcing all banks into insolvency. The U.S. has to nationalize all banks to save the world financial system and the resulting currency controls permanently reset the dollar at a lower level determined by the difference in nominal GDP and PPP rankings worldwide.
Ok, this seems horrible. But really, not so bad as Yellowstone blowing up or an extinction level asteroid hitting.But it would change a lot of things. One it would put wage inflation into drive as manufacturing inputs would rise to the point of super charging reshoring. The U.S. banking industry as we know it would be gone. All holders of bonds of any type would be wiped out including most pensions. These would also need to be nationalized.
Personally, I am not seeing an upside for anyone inside the USA. What an seeing wrong, who is the winner, the winner that owns the government.
Cheers
Qazulight
Scariest thing Iâve read about the debt limit.
Are the corporations really in that much control?
Iâm not sure that defaulting for a week will cause quite the scenario you detailed, but it would not be good.
Personally, if the dollar drops precipitously, I might just transfer some offshore money in to take advantage of the temporary exchange rate.
If the US banking industry is wiped out, money wonât matter anyway.
Yes
The control runs top to bottom. City government to the President. It is not just in the politicians anymore but has moved control down into the upper civil servant level.
It seen and understood at the upper levels of General Service maybe, maybe not understood at lower levels, but the unspoken belief is that corruption is both up and down but also wide spread.
Cheers
Qazulight
When this latest episode of brinkmanship started, I did some quick calculations. I donât recall the entire list, but if certain departments and programs were shuttered, the budget would be balanced. No default necessary. No SS benefits stopped. The projected deficit for 23 is $1.4T. The Shiny factions would probably agree to raise the debt limit, if well over half of that deficit was erased with the following cuts.
The Dept of Educationâs budget is $175B/yr.
Federal aid to states for road maintenance is close to $100B/yr
Federal spending on Medicaid appears to be over $500B/yr
SNAP costs over $100B/yr. There has been a push, for years, to force people to work for food. Now, with âJCsâ crying âno-one wanna workâ, efforts are redoubled to force people to take lousy jobs at lousy pay. Recall, a few years ago, Michigan tried to enact a work requirement to qualify for Medicaid. The billâs sponsors said it had nothing to do with cutting Medicaid expense, but, rather, to force people to take lousy jobs at lousy pay.
Are you suggesting that corporations would somehow benefit from a shut down? If so, I donât see any supporting evidence.
I think it would be just the opposite.
How would it be? Explain.
There is no surprise here. The entirety of supply side economics has been mismanagement. No one ever runs for office these days declaring they want supply side econ but the completely ignorant underpinnings of supply side econ are brought before Congress and the public till this day. We can not $crew up any more than to believe like an ejit that the rich need tax cutsâŚetcâŚor the poor are the problemâŚor people making a living at the bottom are a problem.
Things are changing slowly but because people in congress are supporting the old policies you have to figure with that amount of ignorance the government will default.
No they are not all the same. If you are thinking that you are a problem in American society.
I am suggesting that if there is a default, there is a profit to be made buy a group of corporations with significant power.
I am also saying that I do not see how it benefits any group of entities that wield power. I am also saying that a senator talking about default profits somebody, so if you want to know why the senator is saying what he is saying, look at his donor base and the latest lobbyist visits. Then you will have an idea of who is profiting and why what is being said is being said.
Maybe Goldman Sacs got caught short and needs pull back to unload some credit default swaps. Who knows? I do not know why the senator is being told to say what he is saying, but I have a great deal of confidence that I have seen cheap rugs lie less.
Cheers
Qazulight
The USA defaulted on the Bretton Woods agreement on 15th August 1971
What debts were defaulted on? Who lost money?
Everyone lost money. When they defaulted gold was $35 an ounce and itâs now $2,000. The USA then flooded the world with rapidly depreciating paper money. The US elitist screwed us all.
So for now, weâre left with the current monetary system of unlimited money-printing, which in turn makes each U.S. dollar less valuable and each ounce of gold more valuable.
From the article:
Before 1971, there was a natural limit to how much money could be printed. New issuances were dependent on the amount of gold sitting in the nationâs coffers.
No they werenât. Many more dollars had already been printed than could be backed by gold. Other nations, notably France, were redeeming their dollars for gold, which would have exhausted US gold reserves had it continued. Dollar to gold convertibility would have ended one way or the other.
Not only that syke6, but a fractional reserve banking system guarantees there will be more money in circulation than gold to back it. The gold standard is a foolâs errand. Weâre not going back to it because, frankly, it doesnât work as well as some think it does.
The GDP is what backs the currency.
If you want wealth manufacture more products as the market allows in a given period of time. Optimize the US economy. Stop the ignorant points of view from distracting.
Iâm not too sure that GDP is a very reliable measure of much these days as it can be affected by so many things. The classic example is Southern Ireland. Itâs GDP was boosted by multinationals having their offices there for tax reasons. It âbookedâ a lot of wealth that did not actually exist in the country:
Irelandâs GDP is principally distorted by the presence of more than 1,500 multinationals, among them most of the worldâs top tech and pharma firms. Ireland is also the worldâs top hub for aviation leasing.
Whether it is reliable or not that is how fiat currencies are backed.
If that is Irelandâs economy year after year the currency is adjusted appropriately.