Sovereign Default is now on the table

[IanMacQuaide]

Quote from achilles28:

Yup.

I think Keynes intended to smooth out the business cycle. Problem is, he didn't foresee the political opportunism rampant with deficit spending and controlled interest rates. Each newly-elected hack runs up the credit card and nominates ambitious Central Bankers who agree to juice the economy (in return, for their reappointment). So the deficit never returns to a surplus and the debt always grows. This is why politicians are devout Keynesians - because it empowers them with the financial tools to buy votes. Which is why it's so hard to change the system. All the fuckers in DC "bribe" voters with their money, from the public purse.

When the people find they can vote themselves money, that will herald the end of the Republic.
Ben Franklin

 

[Stok]

Quote from IanMacQuaide:

When the people find they can vote themselves money, that will herald the end of the Republic.
Ben Franklin

+1.

And the democrats have mastered this game plan going back 50 years now. The question is it too late to even turn the boat around, or have we become the EU?

 

[Gabfly1]

Quote from achilles28:

...This is why politicians are devout Keynesians...

Politicians are devout Keynesians as Mafiosos are devout Catholics.

 

[morganist]

Quote from Gabfly1:

Politicians are devout Keynesians as Mafiosos are devout Catholics.

Why do people assume that either keynesians of monetarists or austrians are right. They are all wrong.

 

[achilles28]

Quote from morganist:

You don't have a choice with SDRM. It happens because you can't make the maturity or interest payments. The only other option is to pump prime. Both are bad. In my opinion a SDRM if done properly is better.

My point addressed the timing of the eventual default. Not the possibility of it.

Bad mouthing the dollar and US credit rating unnecessarily hastens a dollar collapse by undermining market confidence before due course. Sure, the collapse will come. But we're talking economic Armageddon. The US will go into a severe Depression (20%+ gdp contraction). At this rate of spending, the US Government has another 4-5 years before market rumblings. They should use it to prepare the country. Not force the disaster, then cram through all types of emergency legislation in the ensuing panic. But again, that's my point. If Congress continues to invite destruction, then I would conclude that's their intention. Voters are loathe to change during normalcy while calamity is proven expedient for dramatic change. God Knows what types of reforms we'll get in an economic collapse. Look at 911 and '08 crash.

At this point, this is the first talk of default from a high-ranking US official. He may be playing games, political brinkmanship, posturing.