I don't know what planet you're living on, but sovereign debt defaults happen all the time. It doesn't involve some vast coordinated conspiracy. If you were a trader, you would know this...
Death to Traders: Bernie plans Financial Transaction Tax on Wallstreet Speculation
- Thread starter achilles28
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We wouldn't default in that impossible scenario anyway, since we can print more dollars.
We need capital moving freely to it's highest and best use. A transaction tax is just another impediment, just like the bailouts were, in preventing capital moving to where it needs to go.
The result is less effective price signals and slower economic growth. All while we pile up trillions more debt. Brilliant.
The result is less effective price signals and slower economic growth. All while we pile up trillions more debt. Brilliant.
That 'impossible' scenario has happened literally almost a thousand times in the past 800 years.
http://www.reinhartandrogoff.com/
Anyway, this thread is about Bernie and his transaction tax. Which Im sure you support. Because you don't trade.
That refers to sovereign defaults. I'm saying it's impossible the hundreds of thousands, if not millions, of foreign entities who have purchased US bonds, could coordinate their demand for payment (a logistical impossibility) and could ignore the fact that their bonds matures in, for best example 30 years, not today. It will never happen. And if it did, we could print money and hand it to them. But it will never happen.
No one has to coordinate anything. All that would have to happen is a general loss of faith in US denominated debt. If everyone sold Treasuries, rates would rise and the interest payments on new debt would force the scenario you're talking about.
You're right. That would never happen. But that's not how a sovereign default works. Bond holders look at the price of their bonds. As sovereigns amass more debt, bond holders slowly lose their risk appetite - fear of not getting paid back. Buyers push back from the table > bond prices drop > yields jump sharply > causing interest on rolled over debt to surge > which further results in more selling. Vicious cycle. Nobody coordinates anything. Debt holders simply look at the price of the debt, see it collapsing and their capital wiped out, much like an underwater stock trade. So they throw in the towel and cut their losses. That's it. Then, next month, country xyz can't make bond payments because interest carry costs on the debt consume half their budget = default. I don't understand why this is so hard to understand?
Thank you.
Yes, I was thinking of including that point, but didn't see why I should arm achilles.
Still impossible, we are so far from being considered that unreliable (notwithstanding rep efforts to change that) that foreign investors would never do it en masse. They could have done it several times in decades past, when our debt load to foreigners was even higher, and didn't. And interest rates have a long way to go.
All the things he's "good" on won't matter one wit if he can turn America into a socialistic shithole while destroying everything that made America what it was.