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Our credit rating would plummet, we wouldn't be able to refinance our debt, we couldn't borrow money except for exorbitant interest rates, we would have product short-comings until our manufacturing sector is rebuild, the resulting products would be much more expensive than currently.
Slow down vamos!
Things are expensive because we keep financing our own debt with paper monopoly money making the dollar ever weaker.
When we stop spending more than we have and refuse to pay our debt, exactly nothing will happen because our credit rating is ruined.
That only counts if we pay on our debts.
A stronger dollar, made possible by increased productivity, higher interest rates with respect to inflation and reduced deficit spending, will help lower the cost of domestic goods even if we pay more because things are made in the USA.
How specifically do you think China would respond to this scenario? Are you implying China would attempt some kind of invasion of the USA?
If that is the case, I would say your assumption that no nukes would be involved in this situation is incorrect and in that case China would very much be on the losing end.
Who do you think Russia would side with under this scenario ? I doubt it would be the U S after we started it by stiffing China. The 2 countries have a lovey dovey relationship now and many investment deals. Any war with China that involves nukes the Russians will put one on Palin's porch and other places inside the U S.
This thread is silly. THIS ASSUME WE ARE SELF EFFICIENCY, which we are not. In order to be self efficiency again, it will take decade if not longer. We have to undo all these regulations in the last 30+ years to make this country so "great". AND, we have to cut down all the military spending, which none of these is going to happen in the current path.
The problem is not China, Japan, German, etc. The problem is with Washington. If we take the power away from them, then there will be no lobbyist, there will be no big wars after wars. No "Too big to failed" BS.
Our credit rating would plummet, we wouldn't be able to refinance our debt, we couldn't borrow money except for exorbitant interest rates, we would have product short-comings until our manufacturing sector is rebuild, the resulting products would be much more expensive than currently.
We don't have to borrow money, that is the propaganda you have been fed by the FED.
So we just stay stagnant in this lost decade with a debt burden that will keep a cap on any future recovery for the foreseeable future.
the money we owe china is not what is causing the economic crisis.
Quote:
Or, we do something really bold that might work in the long run
my opinion is that we should replace fractional reserve banking with something more populist, and more friendly to the american household. Pumping it from the fed to the private banking system and having it 'trickle down' isn't working so hot.
basically we have a government that's supposed to print new money. We have a private banking system that is for-profit, and run to take big risks for its executives, and to a lesser extent, its shareholders. Over the years these two systems have merged, and now we need to take the same steps America has done in the past, and work to split them up again.
Paul Volcker has some good ideas that all the "big money" folks are terrified of, but his ideas need popular support from people outside the existing corrupt system.
Last edited by Cletus Awreetus-Awrightus; 10-31-2011 at 06:41 AM..
Take the most familiar and egregious case. The huge
external surpluses of China reflect its perceived
desirability of rapidly growing export industries to
support employment growth. Its willingness to build up
trillions of short-term dollar assets at low interest rates
to finance its surpluses kept the process going.
Conversely, the United States happily utilized that inflow
of low interest dollars to sustain heavy consumer spending,
a growing budget deficit, and eventually an enormous
housing bubble.
...
Those were fundamentally matters of public policy –
taxing, spending, and exchange rate decisions, not a
reflection of financial market characteristics. But neither
can we ignore the fact that financial practices helped
extend the imbalances. In the end, the build-up in
leverage, the failure of credit discipline, and the
opaqueness of securitization -- all the complexity implicit
in the growth of so-called “shadow banking” -- helped
facilitate accommodation to the underlying imbalances and
to the eventual bubbles to a truly dangerous extent. In the
end, the consequence was to intensify the financial crisis 5
and to severely wound the real world economy.
I really believe that perhaps the biggest reason our economy sucks and incomes of the middle class have been stunted is all the money going to China and to the middle east. If all that money stayed here, unemployment would drop and everyone's quality of life would improve quickly.
Screw the Chinese, we don't need to buy their stuff, we don't need to pay them back. If they are this great rising power, let them do it without us.
I say:
1. Default on the Chinese Debt
and
2. Stop all things imported from China
or - tariff the goods to the the point where we can make the items here for
about the same price.
If one of the big issues is paying back our debt, of which China is the biggest lender, why do we have to pay it? Why do we worry about our credit rating unless we are spending more money than we have, forcing us to borrow elsewhere.
And, if one big reason that the middle class is shrinking and manufacturing jobs are disappearing is all the cheap imported Chinese goods, lets stop buying them or at least make them on an equal price level as US goods. Use the tariff money to pay down the rest of our debt, balance the budget and give loans or credits to companies willing to make these items in the US.
Yes, there would have to be a major transformation in the economy here. Yes that would mean some things would get more expensive. But mostly discretionary items that are not vital. You have a cell phone, TV, computer, etc. The basic stuff like food, gas, electricity, cars, etc would stay about the same. If someone really needs to be the first to get the new Iphone 10 or whatever it will be, they are going to have to pay the price of U.S. jobs lost to make the product in China.
And if we are going to import products at all, lets import from Mexico, not China. More jobs in Mexico instead of China would help their economy, shrink immigration and make the cartels less powerful because more people would have jobs instead of working for the cartels.
Then get congress to concede two things:
1. Agree to all the oil drilling everywhere to greatly increase production.
2. Fund heavily all alternative vehicles to lower oil usage so we won't need to but any more foreign oil.
Both the left and right would have to give in on this to make it happen.
Putting all this together would get us on the right track and keep our dollars here where they belong!
Well we can't really default on debt. However, an alternate solution would be to place higher tariffs on Chinese products to make american products competitive. Use the tariffs (taxes) received to pay down the national debt. In essence, make the Chinese pay off their own debt. Achieves the same goal except we don't have to default.
That would obviously make prices higher but would be worth it in the long run. Of course the politicians have to have somebody to buy up our debt so they can spend it and this would make china mad. Can't make the teet mad. I used to be completely against isolationism but the way things have been going it may be time to circle the wagons and let the chips fall and reset this entire mess.
I think it's pretty simple, if you borrow money you are obligated to pay it back.
You are not obligated to buy the products the lender is selling.
This will not solve our problems or straighten out our economy by itself but we do have to put working class people back to work.
We cannot have a great economy with 200 million computer operators, somebody has to do actual work.
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