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What will happen when the US defaults on the national debt?

Discussion in 'The Okie Corral' started by rock_jock, Feb 14, 2013.

  1. Flying-Dutchman

    Flying-Dutchman

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    This could also be said of people, who prepare their entire life for retirement; who view life as a destination not a journey.

    You can prepare for tough times without being a miserly Scrooge.

    Do not keep your entire wealth in dollar denominated assets.

    Resist being brainwashed by advertisers influencing you to buy this car, clothes or house to keep up with the Joneses.

    Get off the gerbil wheel of debt.

    Resist what someone else’s definition of what fun is or what retirement is.
     
  2. czsmithGT

    czsmithGT

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    Don't be so sure

    Is the Dollar Dying? Why US Currency Is in Danger
    http://www.cnbc.com/id/100461159

    "Bove uses several metrics to make his point, focusing on the dollar as a percentage of total world money supply.That total has plunged from nearly 90 percent in 1952 to closer to 15 percent now. He also notes that the Chinese yuan, the yen and the euro each have a greater share of that total."

    "The No. 1 security issue we have as a nation is the preservation of the U.S. dollar as the world's reserve currency," said Michael Pento, president of Pento Portfolio Strategies. "It's a thousand times more important than a nuclear bomb being tested by North Korea. It's a thousand times more important that we keep the dollar as the world's reserve currency, and yet we are doing everything to abuse that status."

    The dollar's seemingly precarious status is why Pento remains bullish on gold and believes the dollar's demise as the premier reserve currency could end even sooner than Bove predicts -- perhaps by 2015.

    "Five to 10 years -- that would be an outlier," he said. "I would say 2015, 2016, that would be the time when it becomes a particularly salient issue. When we're spending 30 to 50 percent of our revenue on debt service payments, we enter into a bond market crisis. The dollar starts to drop along with bond prices. That would set off the whole thing."
     

  3. certifiedfunds

    certifiedfunds Tewwowist

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    Part of preparedness is being prepared for things to go on as normal because that is the likely scenario.


    Posted using Outdoor Hub Campfire
     
  4. devildog2067

    devildog2067

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    From the beginning of the article you link to:

    This article is junk. This paragraph at the beginning says "here's why this can't happen" and then the rest of the article is about "yeah, but IF it did..."

    World holdings of the US dollar dwarf those of any other currency. The yen is in big trouble. The Swiss franc is not, but Switzerland simply isn't a large economy and the only thing that Switzerland really sells is secrecy (I exaggerate, Switzerland is a manufacturing nation too, but they're just not that big). China holds too much in USD reserves to mess with the USD right now.

    Is the dollar in trouble? Yes, yes it is. Will it lose its status as the world's reserve currency? Maybe. In my lifetime? Perhaps. By 2015? Not on your life.
     
  5. czsmithGT

    czsmithGT

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    I wish you were right, I really do. But unfortunately you are wrong. Is 2015 the magic year? Who knows. Will it happen within the next 3-7 years? It is almost a certainty. Nothing can stop the acceleration of the negative dollar trajectory.
     
  6. devildog2067

    devildog2067

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    As long as the US keeps making stuff that the rest of the world wants to buy, I'm not wrong.

    No.

    Everyone with any sense at all.

    No.

    Again, I'm not saying the US dollar isn't in trouble. It is. I'm saying, as long as the US makes the world's best locomotive engines and industrial turbines and passenger jets and medical imaging devices, the dollar will survive. China isn't going to get awesome at building MRIs in the next 7 years.
     
    Last edited: Feb 18, 2013
  7. SouthernRaider

    SouthernRaider

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    No, no, no, and no.
     
  8. SouthernRaider

    SouthernRaider

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    The swaps don't pay and it will be a disaster.

    I don't care if they pay or not......fact is the books of many financial entities is full of junk backed by worthless CDS's.

    How big? Who knows?
     
  9. SouthernRaider

    SouthernRaider

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    This nation is a powder keg.

    When guns and whiskey are the two industries really doing well be concerned.
     
  10. SPIN2010

    SPIN2010 Searching ...

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    Riddle me this: How many chinese (sic) NAVY ships can you dock or anchor in close proximity to a Gulf oil rig?

    Clue: I hear that Nexen Incorporated has taken on the task to find out via your politicians in Washington D.C., the CANADIAN prime minister, and China National Offshore Oil Corporation (CNOOC Group Chinese: 中国海洋石油总公司)

    What debt?
     
  11. devildog2067

    devildog2067

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    Then why did you imply that they were relevant to this discussion?
     
  12. G29Reload

    G29Reload Tread Lightly

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    this is true but balance of payments in the supply chain are the problem.

    If inflation kicks in to high gear, imagine value changing daily, or several times a day.

    You are producer x and have a commodity. That commodity is needed at the supermarket for people to eat. You put it freight on board expecting Y price for it.

    By the time its handed over to a distributor to go to market 5 days later, its market value has gone up …50, 75%.

    Have you taken payment up front? 2/10Net 30? payment on delivery? The product left your farm at one price and now its almost doubled. Meantime, you have to buy seed and pay laborers or whatever…at the NEW higher prices because everything else is skyrocketing too.

    How about our military? Will our fighting men want to fight when their paychecks become worthless overnight?

    And the food we have to give them…that is not made at some factory labeled Government Factory. Nor does it come from the PX fairy. We buy it on the open market. One aircraft carrier has 5000 guys on it, who eat 3 times a DAY, times 60 or 90 day deployments. We have one carrier now that is having maintainence and refueling delayed, and another having a cruise canceled. And we're not even at a crisis yet.

    It is going to get BAD.

    It will affect National Security.


    Mark Levin floated an idea Friday night as to why Homeland security has 5 bullets for every American. They're just wargaming the likelihood of society unraveling.

    The spark will come in the food chain. People have to eat before they can do anything else. We don't tolerate our kids starving in this country, but that's what will happen. The supply chain for food will be disrupted by a crisis in payments, loss of trust in the credit system and rampant inflation.

    Our military will look down on a worthless paycheck and when its food supply gets disrupted it will get ugly.

    If you're smart, you will stock a YEAR's supply of food at home. Everyone reading this message. I am not kidding. Food riots are not pretty.
     
  13. Z71bill

    Z71bill

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    Why does the world even need a reserve currency?

    Lower the cost of / make it easier to trade between countries sure - why else?

    It is not like without a reserve currency the world would stop turning.

    What else am I missing?
     
  14. SouthernRaider

    SouthernRaider

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    They appear to be setting up for a global currency.

    Crash the dollar......set up the UN central bank
     
  15. certifiedfunds

    certifiedfunds Tewwowist

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    I have no qualms about eating progressives if needed. There will be plenty of them lying around.
     
  16. G29Reload

    G29Reload Tread Lightly

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    no cannibalism or rancid meat for me, thanks. Buzzards gotta eat too.
     
  17. certifiedfunds

    certifiedfunds Tewwowist

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    I expect most of them to be very tender with good marbling. Some are vegetarians like rabbits and deer too.

    Stock up on cajun injectors and marinades and learn to make a roux.

    And there's always sausage.
     
    Last edited: Feb 18, 2013
  18. gommer

    gommer

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    It really depends on how long the US defaults on it's debt.

    Think of it like not paying a credit card payment - then expand the consequences * 300 million ish. I completely pulled that number out of my rear but the point was it's going to hurt us all. Even the leaches who don't pay taxes.

    What it would do, more than anything, is create mass civil unrest. Finally, FINALLY, all of the uneducated tax paying dimwits that voted this doofus into office would be forced to open their eyes and see... the emporer has no clothes.

    Yes, they'd all try to blame it on the House again - like they always do, but holy crap - even liberals are getting sick of listening to that garbage. They know it, too.

    So, what do I think would happen?

    Well, I think it would get a stop-gap fix rather quickly. Consumer confidence would crash, stocks would crash, lending would halt, inflation would explode, and we'd be in the great depression - and we'd take the rest of the world on the ride with us.

    Doom and gloom, I know - but that's really what would happen. Because if we did truly DEFAULT on our loans - it would show the whole world that our government is so broken it can't even pay it's own bills.

    Which, shocker, it actually IS so broken it can't pay it's own bills.

    Here's the real problem. These tools in Office, the lot of them not any particular party, have cried wolf on this type of thing for so long that the public is numb to it.

    It wasn't that long ago that a million dollars in bad spending went under the journalistic microscope. Bush turned that million into a billion, and Obama turned the billion into a trillion.

    We literally have become numb to the amount of money wasted by our government. It's tragic, really. People now talk about a trillion dollars like it's nothing. Just flows off the tongue.

    Worse, the only problem our dear leader sees with 16 trillion dollars in debt is that he needs 20 more and the pesky peasants are getting in the way of his grand plan.

    So, yes, if we did default all the doom and gloom you hear about is probably an understatement of what the real *human* impact of it would be. It would be a global disaster, truly.

    Do I think it will happen? Not a chance. But, again, my sheeple mind has become numb because they talk about the end of our world every six months because these idiots can't run a government without Fear, Uncertainty, and Doubt. FUD. It's the way of all tyrannical governments.
     
  19. Z71bill

    Z71bill

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    This is not really possible - but just as a what if --

    What if all of a sudden the government could not borrow any ADDITIONAL money.

    So we would not default on existing debt - but would only be able to spend the amount that is collected in taxes.

    We currently collect about $2.75 trillion - and spend about $3.75 trillion.

    Consider cutting $85 billion (sequester) is seen as an absolute disaster - TEOTWAWKI by many - imagine a $1 trillion cut.


    Post office will shut down - many hospitals would close (medicare payments would stop) - welfare checks - not today - anyone with a government contract would stop work - many school systems depend on the federal money to make teacher payroll - airports would shut down -

    You get the idea.

    Forget about a debt default - a forced balanced budget would cause riots in the streets.
     
    Last edited: Feb 18, 2013
  20. Atlas

    Atlas transmogrifier

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    Was it last year that some bookkeeping error caused welfare payout in one local office to cease (in Georgia?) for a single day, and there was nearly a riot?