InvisibleBlack
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quote:
ORIGINAL: cuckoldmepls
Well it's obvious to see who the globalists and big spending liberals are in here. Globalists and liberals would rather we degenerate into a 3rd world country, before we declared bankruptcy on the national debt, and returned to fiscal conservatism. When you have half a trillion in interest per year going to wealthy people and other countries, I would think a big spending liberal would rather we have that money to spend ourselves on social programs, rather than it going to wealthy individuals and other countries. So even the liberal philosophy that debt doesn't matter doesn't make sense.
Let me repeat myself. By declaring bankruptcy, and transferring redundant federal agencies to the states, we could free up almost $10 billion for each state annually. According to the 10th amendment most of the laws and agencies Congress have created are unconstitutional anyway. That's exactly why we are $10 trillion in debt. Take for example, the national park system. This is insane. Completely unconstitutional. There's no reason why 90% of these agencies can't be transferred to the states.
Bankruptcy is not a bad thing. Take the individual bankruptcy for example. When people live beyond their means just as the federal government has, a day of reckoning eventually happens. You either lose items 1 by 1 and delay your recovery by years or in the case of our country by decades or you declare bankruptcy and get a fresh start immediately, hopefully learning a valuable lesson. The only problem with personal bankruptcy is that no one will give you any important credit access, but for someone who can't handle credit responsibility that is a good thing. That's exactly what caused the mortgage crisis. Bankers loaning money at the drop of a hat, and people not willing to live within their means by a comfortable margin caused the crisis. People have been doing what the federal government has been doing, simply because they were allowed to get away with it. Then we have the acorn nut, who called the bankers in and told them they should start loaning money again at the drop of a hat. Are we living in bizarro world? Bear in mind, that corporations declare bankruptcy, and the government is simply the largest corporation in America. As long as the keep the utilities on, temporarily halt foreclosures, and make sure people are fed, I think most people would be willing to go through this restructuring for the sake of future generations.
The fact is, when you have to borrow money for something that you know you can never pay off, you are living an illusion. The people who loaned you the money are just as big an idiot as you are. That's why we shouldn't be concerned about the people who bought our debt. The question becomes do you put 300 million people first or do you put the wealthy elite first.
Even a socialist big spending liberal would say the people come first.
http://babelishere.webs.com/liberals.html
Well ... now I'm a globalist and a "big spending" liberal ... my friends will be so surprised. Personally, I think that choosing not to default on debt obligations that you've willingly accumulated would be considered "fiscally conservative" and follows a tradition going back to Alexander Hamilton in United States history - but that's neither here nor there. I also don't believe that choosing a course based on its political position nor based on tradition is the optimal method.
Let's look at this pragmatically. Debt isn't just a drain, it's a revenue stream. On the other side of your debt payments is someone getting a credit. So who, exactly, is dependent on that United States debt?
Well ... according to recent (2008) figures, Social Security is owed about 40% of it (think about that one for a while). Another 10% is owed to a batch of agencies (notably the Federal Housing Administration, the Federal Savings and Loan Corporation's Resolution Fund and the Federal Hospital Insurance Trust Fund). So 50% of it the government has stolen ... *ahem* "borrowed" from some trust fund it holds for the public.
Of the remaining 50%:
28% is owed to foreign governments (the top 3, in order, being Japan, China & the UK)
5.5% is owed to state & local governments
5% is owed to mutual funds
2.5% is owed to private pension funds
2% is U.S Savings Bonds in private hands
...and I'll just kind of glom the rest into "other" - like insurance companies, state & local pensions, etc.
So. If we were to default on the U. S. debt Social Security would immediately go bankrupt and every person receiving it would be cut off, the Federal Housing Agency would go under and so would all FHA insurance and mortgage loans and the Federal Savings & Loan Resolution Fund (which supports FDIC) would be insolvent and so FDIC would cease to operate. Japan's economy would completely melt down as I doubt they could handle the sudden loss of 6 or 7 hundred billion dollars. China would probably cease to loan us any money. The United Kingdom would suddenly lose something like 250 or 300 billion dollars (you can figure out the impact on their economy from that on your own, I'm not up on UK fiscal solvency). Along with this, a large number of state and local governments would become bankrupt, mutual funds and pensions funds would become worthless and collapse, all U. S. Savings Bonds and their holders would lose all their money and no one would ever be willing to loan a nickel to the U. S government again.
I wasn't kidding when I said that this would disatrous both for the nation and the world. It would probably tip everything over into the next Great Depression that everyone's trying to avoid. It would make last year's meltdown look like an afternoon social on the promenade.
You could argue that the United States government shouldn't be involved with mortgages and housing and insurance, and maybe shouldn't have issued all those bonds and securities and borrowed all that money from pensions and investment firms, and that maybe it should never have been allowed for the Treasury department to dip into the Social Security funds and the mortgage market funding and the FDIC funds and "borrow" that money ... and I would more or less agree with you.
But it's too late, it already has.
You can't just unwind this debt overnight or wish it away. It's intertwined itself all through the financial system of the entire planet (much like Goldman Sachs). It's going to take years to undo all this and it's going to cost a lot of money and the people who are going to pay that money are you and me and anyone else who earns a living or does something productive.
That's it. That's all there is to it. You're not getting out of it unless you want to leave the country and abandon your citizenship.
The current plan seems to be to print up enough money to pay off all these debts and hope nobody notices. I don't think that's going to work but it's less drastic and damaging than just trying to walk away from it.
Smaller countries have been able to walk away from their foreign debts because someone (notably the United States but sometimes the World Bank or the IMF) was willing to vouch for the loans so the banking system didn't crash. No one is capable of backstopping the loss of the United States' debt. We're just too damn big.
[Edit: As an aside, the elite and the mega-rich and the like don't invest in the U. S. government. It doesn't pay well enough. As it is, their money is leaving the country at record rates right now. The biggest holder of U. S. debt is the poor, via Social Security.]
< Message edited by InvisibleBlack -- 12/29/2009 12:34:31 PM >
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Consider the daffodil. And while you're doing that, I'll be over here, looking through your stuff.
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RE: Declaring Bankruptcy on the National Debt - 
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