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While sovereign debt can be covered with inflated currency, state government will simply default.
Many states have only three choices, huge and damaging tax increases with budget cuts, a bail-out by the federal government, or default.
As long as we have politicians in charge of taxes, spending, and the budget process we are doomed to default. Maybe we need a different form of fiscal structure... perhaps separate operational management and public leadership structures with improved checks and balances.
wheelsup,
Over the past couple of years, many things said to be "unlikely" concerning the economy have proven true. Unemployment, depth of the housing crisis, even GM before the govt finally stepped in. I did catch that, though, and agree it is unlikely. But I wouldn't rule it out.
wheelsup,
Over the past couple of years, many things said to be "unlikely" concerning the economy have proven true. Unemployment, depth of the housing crisis, even GM before the govt finally stepped in. I did catch that, though, and agree it is unlikely. But I wouldn't rule it out.
Your OP is incredibly misleading. The article title was talking about small governments like Greece and Ireland, not the US.
Germany defaulted after WWI, look where they are now. One of the strongest countries in the world, with a trade surplus.
I doubt the Federal government will ever default. That would not be in the best interest of the upper five percent that own most of the debt. I also expect the Federal Treasury, along with massive cuts in social spending, to bail out the States. Eventually, the primary causes of the problem, along with the primary beneficiary, the very upper level private finance sector, will realize the gamblers have lost all the wealth and will suffer a very devastating revaluation of the their assets. I expect it to be on the order of the Louisiana Stock Bubble crash or the South Pacific crash in the 18th century. Then it will take a while to begin a recovery.
Your OP is incredibly misleading. The article title was talking about small governments like Greece and Ireland, not the US.
Germany defaulted after WWI, look where they are now. One of the strongest countries in the world, with a trade surplus.
Wasn't trying to mislead, and not implying it's imminent. I did find it interesting the article notes we have one of the highest debt as a percentage of revenue (358%).
My thoughts are as various things like healthcare "reform" phases in, more people lose their home, lose their unemployment payments, etc, those will weigh more and more on our already greatly strained system.
Also, Germany walked a long, hard road from WWI to today.
Last edited by WonderingWanderer; 08-26-2010 at 09:29 AM..
Reason: grammar
A government doesn't necessarily need to go into a monetary default before it's citizens and global creditors feel some mighty big pains. The question of US default seems like a straw man argument for those who deem the American economy to be in need of simple tune up and proof of that is the fact that our government hasn't defaulted, yet. Using the standard metrics of the past to measure the present state of our economic health won't work, we'll see the proof of this in forthcoming government reports of unemployment numbers that will become outright laughable.
The Dow's numbers will not be a very reliable measure of the true condition of corporate financial strengths either, thinking that we can sail in the uncharted waters of this very different sea of economic woes could really be our undoing, will we see the truth of things before the consequences of economic short sightedness and ignorance is upon us? We need to devise a new way of measuring the real economic pain of real people and not just that pain experienced by corporate interests. There is a very unique strength that humans can garner from their knowledge that their pain is common among the populace and therefor the cure will have a widespread demand, that's the thing, will we demand anything more from our government than it's bare survival?
We need to devise a new way of measuring the real economic pain of real people and not just that pain experienced by corporate interests. There is a very unique strength that humans can garner from their knowledge that their pain is common among the populace and therefor the cure will have a widespread demand, that's the thing, will we demand anything more from our government than it's bare survival?
Well said. Humbling and true.
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