Economic amateurs please wake up and get savvy. If the US became bankrupt then Japan and Germany would lose their US dollar surpluses and the ability to sell in the US market. US debt is only $US IOUs; it don't mean sh*t. So US bankruptcy ain't gonna happen because its not in Germany's or Japan's economic interest or in the economic interest of the world at large. You could even argue that the US trade deficit is a good thing.
<b>US Bankruptcy is a done deal not if but just when...</b> but as long as we own and control the world's printing press the dance will go on... could be 50 years could be 50 days until some large country calls our bluff... Why do fiat currencies always fail? http://www.dollarcollapse.com/faq/ Put simply, governments are fundamentally incapable of maintaining the value of their currencies. Every leader, whether king, president or prime minister, serves at the pleasure of two powerful constituencies: Taxpayers irate about what they currently pay and violently opposed to paying more, and recipients of government help who demand vastly greater levels of spending on everything from defense, to roads, to old age pensions. Alienate either group, and the result can be an abrupt career change. So our hypothetical leader finds himself with two choices, the most obvious of which is to level with his constituents and explain that thereâs no such thing as a free lunch. Taxes are the price of civilization, but government largess can consume only so much of a healthy economyâs output, so no one person or group can have all they want. This looks simple on paper, but alas, in the real world it opens the door to challenge from rivals who have no qualms about promising whatever is necessary to gain power. Not liking this prospect at all, our leader then turns to his remaining option: Borrow to finance some new spending without raising taxes. Then create enough new currency to cover the resulting deficit. The anti-tax and pro-spending folks each get what they want, and no one notices, for a while at least, the slight decline in the value of each individual piece of currency caused by the rising supply. Human nature being what it is, every government eventually chooses this second course. And the result, almost without exception, is a gradual loss of confidence in the value of each national currency, which we now know as inflation. But a little inflation, like a little heroin, is seldom the end of the story. Over time, the gap between tax revenue and the demands placed on government tends to grow, and spending, borrowing and currency creation begin to expand at increasing rates. Inflation accelerates, and the populace comes to see the process of âdebasementâ for what it is: the destruction of their savings. They abandon the currency en mass, spending it or converting it to more stable forms of money as fast as possible. The currencyâs value plunges (another way of saying prices soar), wiping out the accumulated savings of a whole generation. Such is the eventual fate of every fiat currency. âThe Coming Collapse of the Dollarâ tells the stories of five of the more spectacular currency crises, but like we like we said, they all go this way eventually. A currency that's created and controlled by a government. In other words, it exists by government âfiat.â Using the dollar as an example, the U.S. Federal Reserve creates new dollars simply by printing them or injecting electronic âreservesâ into the banking system. The supply of dollars thus depends on the decisions of our elected officials and their appointed administrators like the governors of the Fed. An example of a non-fiat currency would be the gold and silver coins that used to circulate in much of the world. There was only so much of each metal, and the supply only increased when some enterprising miner discovered and dug up more. Governments were unable to create this kind of money out of thin air. Like the dollar, todayâs euro, Japanese yen, and British pound are all fiat currencies. Andâhereâs the crucial pointâevery single fiat currency that has existed prior to the current batch was eventually destroyed by its government. Since the beginning of history ALL FIAT currencies have failed... ours will too... but how it will all play out... i wish somebody upstaris would let me know cj... __________________ HAVE STOP - WILL TRADE If You Have The Vision We Have The Code
If you read the article, the author explains that a nation becoming bankrupt is a matter of opinion. I actually read the whole thing and I think it was a well written piece that avoids bias. Makes some good points. It's not in the world's interest to watch the dollar go down in flames, but every major nation knows that you cannot break the laws of math. It's a game of musical chairs, except the loser gets to sit on a 10 foot pole. Someone is gonna get badly f**ked. A nation will dump the dollar if they feel they can insulate themselves from any sort of dependency on US trade. They can get out early and even make profit on the crisis. A nation that is unfriendly to the US will do the same or take even harsher and more serious measures. Something like an oil exchange denominated in Euros by one of the top oil exporters. That, by the way, is a financial attack on the US and was at times claimed as such by the perpetrator.
Other countries would certainly not try to force the US into bankruptcy - that would be economic suicide as you say. However, if they believe that the risk is rising beyond acceptable levels they could certainly begin to reduce their purchases of US debt. That would gradually crimp the US' ability to fund the deficit and encourage some kind of fiscal rectitude. Suss
Hey, you just need to "think outside of the box", acknowledge the "paradigm shift" and go with the "flow".
I think it was from the world cup they say that instead of right on or exactly but for the life of me I don't know why I used the term never usually do probably never did Maybe from Mr. Subliminal
THANK YOU!!!!!!!!!!!!!!!!!!!!!!!!!! Some of this thread's participants would be well served picking up an economics 101 book. Take it further by saying that dollar devaluation is a good thing and necessary for balancing trade deficits. The countries that send us boatloads of goods for our paper currency (which from a good number on this thread consider nothing but painted toilet tissue) is a GREAT THING as long as they will do it. But, one day they will wake up and stop doing so as their wealth rises and eventually turn and start buying more U.S. goods. I also laugh at those here that have proposed "America produces nothing". Services, information and ideas are not "sterile" products/commodities as many here stunningly have assumed. Read " The Wealth of Nations" by Smith for starters then progress to some David Ricardo after that. Good places to start for those "new" to economics and interested. I'm surprised at how many on these boards subscribe to notions that are nothing more than "black helicopters circling" and yet supposedly trade in capital markets. Economically speaking, actually many Marxist notions circulating, but stating that directly would brand me as nothing more than an neocon alarmist (now that's worth a chuckle).
Sometimes shit well, just happens, even if it is in nobody's interest. Is it possible that the US go bankrupt? Yes. Is it probable? well, that is what we argue about.