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Title: Is a U.S. Default Inevitable? [Pat Buchanan]
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URL Source: http://www.infowars.com/is-a-u-s-default-inevitable/
Published: Jul 5, 2011
Author: Patrick J. Buchanan
Post Date: 2011-07-05 11:18:15 by Capitalist Eric
Keywords: None
Views: 24369
Comments: 46
As President Bush prepared to invade Iraq in September 2002, the head of his economic policy council, Lawrence Lindsey publicly estimated such a war could cost $100 billion to $200 billion. Lindsey had committed candor, and the stunned Bushites came down on him with both feet. “Baloney,” said Donald Rumsfeld. The likely cost would be $60 billion, said Mitch Daniels of the Office of Management and Budget. We can finance the war with Iraqi oil, said Paul Wolfowitz. By year’s end, Lindsey was gone, back, in Ronald Reagan’s phrase, “testing the magic of the marketplace.” And the cost of the Iraq War? It has passed $1 trillion. So Lindsey is worth listening to. And he is now saving that the Obamaites may be wildly underestimating the deficits America is going to run in this decade. Here is why. The average rate of interest the Fed has had to pay to borrow for the last two decades has been 5.7 percent. However, President Obama is projecting the cost of money at only 2.5 percent. A return to the normal Fed rate would, by 2020, add $4.9 trillion to the cumulative deficit, says Lindsey, more than twice the $2 trillion in savings being discussed in Joe Biden’s debt-ceiling deal. Second, Obama is estimating growth in 2012, 2013 and 2014 at 4, 4.5 and 4.1 percent. But the normal rate for a mature economy recovering from recession is 2.5 percent. Hence, if we return to a normal rate of growth, rather than rise to Obama’s projected rate, says Lindsey, that would add $700 billion to the deficit over the next three years and $4 trillion by 2020. Taken together, a U.S. return to a normal rate of growth of 2.5 percent, higher than today, and a normal rate of interest for the Fed could add as much as $9 trillion to the deficits between now and 2020. New taxes on millionaires and billionaires who ride around in corporate jets can’t cover a tenth of 1 percent of these deficits. Writes Lindsey, “Only serious long-term spending reduction in the entitlement area can begin to address the nation’s deficit and debt problems.” His conclusion is logical, but seems impossible to achieve when both parties are talking of taking Medicare and Social Security off the table. Which makes his final point all the more compelling: “Under current government policies and economic projections, (bondholders) should be far more concerned about a return of their principal in 10 years than about any short-term delay in interest payments in August.” Lindsey is saying that the probability of U.S. bonds losing face value through inflation or default is high, given the size of the deficits we will be running and the improbability that any deficit-reduction plan now out there can significantly reduce them. Standard & Poor’s and Moody’s are already talking of downgrading U.S. debt if the debt ceiling is not raised by early August. Is America then headed for an inevitable default? One Chinese economist is already accusing us of defaulting, as the Fed’s flooding of the world with dollars has seen the dollar lose 10 percent of its value against other currencies in the last year. Holding $1 trillion in U.S. debt, China has watched the purchasing power of that U.S. paper plummet. Understandably, Beijing fears that if we ever pay back all they have lent us, it will be in U.S. dollars of far lesser value. What should House Republicans do? Stick to their principles and convictions. For the cause of the deficit-debt crisis has been the explosion in federal spending under Barack Obama to the largest share of the U.S. economy since the climactic years of World War II. Administrations of both parties contributed to this rise in the federal share of gross domestic product. But the GOP committed itself in 2010 to rein it in, without raising taxes. On that pledge the GOP triumphed and should keep its commitment. First, because it is a solemn undertaking with a nation disgusted with politicians who say one thing and do another. Second, because our fiscal crisis, like Europe’s, is a result of too much government, not too little revenue. Third, because there is no credible school of economic thought that says raising taxes on the productive sector when one in six workers is unemployed or underemployed is the way to prosperity. Under Obama these past two years, the nation relied on the U.S. government to pull us out of the ditch. But Obama’s $787 billion stimulus, his three deficits of 10 percent of GDP, and Ben Bernanke’s tripling of Fed assets by buying the bad paper of big banks and $600 billion in U.S. debt all failed. For Republicans to agree now to a tax increases that would violate their principles, their promises to the voters and their basic philosophy — and be icing on the cake of Obama’s debt-ceiling increase — would be politically suicidal. Indeed, were the Republican Party to do this, it would raise the question of why we need a Republican Party.
Poster Comment: Question: Is a U.S. Default Inevitable? Answer: YES.
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#1. To: Capitalist Eric (#0)
The USA prints its own money. Why should it default? If it defaults - it is because of the politics of the day only.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
To avoid a hyperinflation that would destroy the entire country like Weimar Germany.
Yep. Every single man, woman and child in America owes about $50,000 in current debt. If you take the future obligations of Socialist Insecurity, MediScare, and MediScathe in account, we all owe about $540,000. It can't be paid. There are two options: Hyperinflation or default. Default would be far less painful. It's time to start from scratch. Default on the debt. Get rid of the welfare / warfare state. Implement sound money. Rebuild the country on a more solid footing. We should probably also hang a whole bunch of politicians and political appointees for getting us into this mess. That would be a powerful incentive for future politicians to refrain from digging us into another hole.
Default would do the same and worse because it would mean borrowing at higher rates - and since that would be difficult - printing even more worthless money.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
You have a PhD in bullshit but not in economics.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
Wrong again bozo. A hyperinflation would escalate interest rates even more than a default. It would also suppress most economic activity. Look at Weimar Germany. Their entire economy collapsed and everyone lost their life savings when the hyperinflation destroyed the currency. A default would mostly effect the government and in positive ways for the country, because it would A.) restrict the amount of money people would be willing to lend the government in the future and B.) force the government to dramatically cut spending to live within it's means. Consumer interest rates may or may not rise, but we've dealt with higher interest rates in the past.
And you have an empty space between your ears, not a brain.
Look at Weimar Germany. Their entire economy collapsed and everyone lost their life savings when the hyperinflation destroyed the currency. Yet you fail to mention the reparations payments mandated by the Treaty of Versailles. The actual catalyst.
Yeah, and today we have payments that are mandated by federal laws called Social Security, Medicare, and Medicaid. So, what's your point? Do you think that any politician except maybe the two Paul's have the balls to remove these programs from entitlement status????? No. So the payments will continue to be mandated until the shit hits the fan.
Yeah, and today we have payments that are mandated by federal laws called Social Security, Medicare, and Medicaid. So, what's your point? Do you think that any politician except maybe the two Paul's have the balls to remove these programs from entitlement status????? Do I really have to spell it out to you? Money going into one's own economy versus money going into other economies, for a start. And neither Paul can remove anything unless you think they intend to grab dictatorial powers.
All it would actually take is 5 Americans. 5 supreme court justices to properly interpret the commerce clause. Then all this liberal bullshit goes down the toilet where it belongs. Then they liberals who did this to us can be prosecuted for treason.
Funny money. 40 cents of every dollar the U.S. government spends is borrowed from our future. Any successful business person will tell you that you don't borrow money to meet current obligations. If you have to borrow money, you borrow it to increase future productive capacity. What did Obama do? He borrowed $800 billion to temporarily keep government bureaucrats in their jobs. Those bureaucrats are being laid off now that the stimulus money has run out. Was that a smart thing to do? No. Less than 10% of the borrowed "stimulus" money was used for infrastructure, which could help increase future economic activity. It's all going to come crashing down, regardless of how many times you close you eyes, stand on your tippy toes, click your heals together, and wish it weren't so.
What was America's excuse since that is where the problem began. Weimar's problems were due to the world economy collapsing. It actually recovered much faster - and that was before Hitler took over (he lost votes as the economy improved).
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
You are correct - the plan was criticized by Nobel prize winning economist Dr. Paul Krugman for not being socialist enough.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
Oh really? Have you ever heard of the term filibuster? Rand Paul and a handful of freshman Senators are going to filibuster any increase in the debt ceiling. Then the government will have to immediately slash spending to balance the budget. If they can't cut enough, they will default on part of the debt. If any GOP Senator joins with the Democrats to remove the filibuster, their political careers will be over.
Then the government will have to immediately slash spending to balance the budget. If they can't cut enough, they will default on part of the debt. If any GOP Senator joins with the Democrats to remove the filibuster, their political careers will be over. I doubt any part of your wet dreams will come true.
Your posts are becoming more deranged every day. You ought to see a doctor before you hurt somebody.
No, Weimer's problem were: A.) The Kaiser borrowed money to finance the Great War B.) After the war ended, the French insisted that Germany pay war reparations. The German government couldn't pay their obligations, so they printed the money to pay them. America in the same situation today -- the government has borrowed so much money they they can't possibly pay their obligations. Either default or hyperinflation is the likely outcome.
The commerce clause doesn't mean the government can force economic activity. It is treason against the people. I know you like bending over for black guys but the rest of us don't.
If Rand Paul weren't around, I would agree. At this point, we'll see.
Government is not a business. Its function is not like that of a business's. Businesses borrow money all the time to meet current obligations, it doesn't mean they're insolvent.
Von Mises associates any Government involvement in markets as "Socialism" , to mislead people into thinking Government is the enemy , when infact empire is the enemy and empire is Privatized.
The Court has made some pretty good decisions over the last couple of years. Appointing Roberts and Alito were the only two good things to come out of the Bush administration. There are many potential challenges to the commerce clause in the pipeline, including the laws passed by 5 states that prohibit the federal government from regulating fire arms that are produced and sold in the same state (because that's not interstate commerce). Obamacare is another commerce clause challenge. ditto for Medical Marijuana.
Look up the definition of treason pinhead.
But most of what passes for government today can and should be provided by businesses, charities, cooperatives, and mutual aid societies. At the federal level, the military might be an exception, but not much else is. Businesses borrow money all the time to meet current obligations Successful businesses generally do not do this. The one's that do, only do so for a very short period of time. They cannot run perpetual yearly deficits. Trying to do so would put them out of business. The federal government needs to be out of business.
Any successful business person will tell you that you don't borrow money to meet current obligations. If you have to borrow money, you borrow it to increase future productive capacity. What did Obama do? He borrowed $800 billion to temporarily keep government bureaucrats in their jobs. Borrowed money is ALWAYS paid off in the future. You seem to think that in all of our history the US has never borrowed money nor raised taxes to pay it off. I wonder where the term 'revenue stamp' came from? Yet you forget the other uncommon denominator between the business versus government. One can print or coin it's own money and the other can't or only can on a limited basis usually using tokens. As much as you guys would love to equate the two their basic accounting systems are not similiar due to that very fact. And in ten years you will still be on your street corner preaching your doom and gloom scenario.
Yes, inflation. That's the point bozo.
Then let those entities make government obsolete.
Von Mises associates any Government involvement in markets as "Socialism" , to mislead people into thinking Government is the enemy , when infact empire is the enemy and empire is Privatized.
It's time to start from scratch. Default on the debt. Get rid of the welfare / warfare state. Implement sound money. Rebuild the country on a more solid footing. We should probably also hang a whole bunch of politicians and political appointees for getting us into this mess. That would be a powerful incentive for future politicians to refrain from digging us into another hole. Ditto, except for the hanging part; put them all on a deserted island and let them go Lord of the Flies.**** **** No cell phones.
Yes, we should eliminate all laws that restrict their operations, as well as repeal all laws that enable the government to unfairly compete with them through forced taxation. Then we can move forward to a just, decent, and prosperous society.
Robert Ringer wrote about the same solution years ago. Put them all on a deserted island. Give them a bunch of monopoly money. Let them have elections, tax each other, create regulations, and do whatever else they want. At least they won't be able to cause us any more harm.
The fallacy that gov should be accounted for like a business is promoted by big corps and is of very recent origin. In most of our history the populace was able to see that there were big differences in the goals between the two. Or maybe jwpegler thinks that the government should be in business to sell a product at a profit and compete even more with businesses.
Those are all excuses from those who see themselves as victims and whine "I can't, government won't give me a free pass".
Von Mises associates any Government involvement in markets as "Socialism" , to mislead people into thinking Government is the enemy , when infact empire is the enemy and empire is Privatized.
Just proves big biz has it's fantasies too. But I hear the niche is wide open in Somalia.
Right; taxes is how we pay for government services so we should raise taxes not to meet expenses, but to make a profit too.
Von Mises associates any Government involvement in markets as "Socialism" , to mislead people into thinking Government is the enemy , when infact empire is the enemy and empire is Privatized.
I can see why you would pick 'Lord of the Flies' as it's the premier 'conservative' utopian dream scenario.
Isn't that the country with an entrepreneurial coast guard?
Von Mises associates any Government involvement in markets as "Socialism" , to mislead people into thinking Government is the enemy , when infact empire is the enemy and empire is Privatized.
You need to take a reading comprehension class.
America lost a World War and was made to accept full blame for said war and all costs associated with? Let me know when they tighten up your loose screws.
"Keep Your Goddamn Government Hands Off My Medicare!" - Various Tea Party signs.
You need to take a reading comprehension class, airhead.
Ummm.... that's called "projection." jw b!tch-slaps you on a regular basis... and is doing so on this thread as well. You'd do well to shut up and listen, while the adults talk.
Socialists & Democrats want you to do one thing: Unless, of course, the borrower is so far upside-down that they can never pay off the debts. At that point, default is inevitable. Where the government is concerned, the only question then becomes either default or hyperinflation. Politicians ALWAYS want hyperinflation, because it keeps them in power, by throwing the rest of the population under the bus (Zimbabwe, Weimar Germany and Hungary being recent examples). The USA is so far under water, there is no way out. You can argue until you're blue in the face, it won't change these FACTS one iota. The money is GONE. Since the government requires businesses to use the government- issued tokens, the government controls the supply of capital that businesses have available. Businesses make a profit, and the government- like a parasite on a host- suck some of the blood out of the business, with every transaction. For this reason, yes, the accounting systems are different- the government is in the business of becoming a bigger, nastier parasite. Businesses are in the business of making a profit, and starving the parasite. But because government decides how much it's gonna' suck from the host, as well as what tokens will be available for business capital flows and how much of a supply of capital there is in the market, the deck is stacked in the favor of the parasites. Of course, you're PROUD of being part of the parasite-class. And you defend the parasites, because when they're cast off, you'll actually have to get a real job. No real surprise. You WISH. In ten years, you'll have changed your tune, and gotten tough... Or you'll have gotten dead. Personally, I hope ALL of you parasites end up in the latter category, as final payment for your treachery.
Socialists & Democrats want you to do one thing:
Comments (42 - 46) not displayed.
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#2. To: Godwinson (#1)
(Edited)
The USA prints its own money. Why should it default?
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#3. To: Capitalist Eric (#0)
(Edited)
Question: Is a U.S. Default Inevitable? Answer: YES.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#4. To: jwpegler (#2)
To avoid a hyperinflation that would destroy the entire country like Weimar Germany.
#5. To: jwpegler (#3)
Default would be far less painful.
#6. To: Godwinson (#4)
(Edited)
Default would do the same and worse because it would mean borrowing at higher rates
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#7. To: Godwinson (#5)
You have a PhD in bullshit but not in economics.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#8. To: jwpegler (#6)
A hyperinflation would escalate interest rates even more than a default.
#9. To: mininggold (#8)
(Edited)
Yet you fail to mention the reparations payments mandated by the Treaty of Versailles. The actual catalyst.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#10. To: jwpegler (#9)
#11. To: mininggold (#10)
#12. To: mininggold (#10)
(Edited)
Money going into one's own economy versus money going into other economies, for a start.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#13. To: jwpegler (#6)
Look at Weimar Germany. Their entire economy collapsed and everyone lost their life savings when the hyperinflation destroyed the currency.
#14. To: jwpegler (#12)
Less than 10% of the borrowed "stimulus" money was used for infrastructure, which could help increase future economic activity.
#15. To: mininggold (#10)
(Edited)
And neither Paul can remove anything unless you think they intend to grab dictatorial powers.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#16. To: jwpegler (#15)
Rand Paul and a handful of freshman Senators are going to filibuster any increase in the debt ceiling.
#17. To: A K A Stone (#11)
Then they liberals who did this to us can be prosecuted for treason.
#18. To: Godwinson (#13)
Weimar's problems were due to the world economy collapsing.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#19. To: Skip Intro (#17)
#20. To: mininggold (#16)
(Edited)
I doubt any part of your wet dreams will come true.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#21. To: jwpegler (#12)
Any successful business person will tell you that you don't borrow money to meet current obligations. If you have to borrow money, you borrow it to increase future productive capacity.
#22. To: A K A Stone (#11)
All it would actually take is 5 Americans. 5 supreme court justices to properly interpret the commerce clause.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#23. To: A K A Stone (#19)
#24. To: lucysmom (#21)
Government is not a business
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#25. To: jwpegler (#12)
(Edited)
40 cents of every dollar the U.S. government spends is borrowed from our future.
#26. To: mininggold (#25)
(Edited)
One can print or coin it's own money
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#27. To: jwpegler (#24)
But most of what passes for government today can and should be provided by businesses, charities, cooperatives, and mutual aid societies.
#28. To: jwpegler (#3)
Default would be far less painful.
#29. To: lucysmom (#27)
(Edited)
Then let those entities make government obsolete.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#30. To: harrowup (#28)
put them all on a deserted island
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#31. To: lucysmom, jwpegler (#21)
(Edited)
Government is not a business. Its function is not like that of a business's.
#32. To: jwpegler (#29)
Yes, we should eliminate all laws that restrict their operations, as well as repealing all laws that enable the government to unfairly complete with them through forced taxation.
#33. To: jwpegler (#30)
(Edited)
Robert Ringer wrote about the same solution years ago. Put them all on a deserted island. Give them a bunch of monopoly money. Let them have elections, tax each other, create regulations, and do whatever else they want. At least they won't be able to cause us any more harm.
#34. To: mininggold (#31)
Or maybe jwpegler thinks that the government should be in business to sell a product at a profit and compete even more with businesses.
#35. To: harrowup (#28)
Ditto, except for the hanging part; put them all on a deserted island and let them go Lord of the Flies.****
#36. To: mininggold (#33)
But I hear the niche is wide open in Somalia.
#37. To: mininggold (#31)
Or maybe jwpegler thinks that the government should be in business to sell a product at a profit and compete even more with businesses.
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#38. To: jwpegler (#18)
America in the same situation today (Weimer's problem)-
#39. To: Godwinson (#38)
America lost a World War and was made to accept full blame for said war and all costs associated with?
"Everything that can be invented has been invented."-- Charles Duell, Commissioner of US Patent Office, 1899
#40. To: Godwinson, jwpegler (#5)
You have a PhD in bullshit but not in economics.
"You "say" the most iodtic things..." --our local dummy DwarF
#41. To: mininggold (#25)
Borrowed money is ALWAYS paid off in the future.
you forget the other uncommon denominator between the business versus government. One can print or coin it's own money and the other can't or only can on a limited basis usually using tokens. As much as you guys would love to equate the two their basic accounting systems are not similiar due to that very fact.
And in ten years you will still be on your street corner preaching your doom and gloom scenario.
"You "say" the most iodtic things..." --our local dummy DwarF
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