What will really happen when the US Defaults?


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Message 1127200 - Posted: 13 Jul 2011, 14:22:15 UTC

Just kind of curious what all this POLITICS will bring to America and the World? Could this be the catylist that makes the Euro the World currency while the US slips into mediocrity?
I for one would rather see Oil and other Big business pay it's fair share before Soc. Sec. takes a hit so in this one I believe I blame the Republicans the most. I don't really understand the whole thing so I won't take a stand quite yet...Like to hear what others with more knowledge think.
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Message 1127271 - Posted: 13 Jul 2011, 16:42:14 UTC

There's no way the Euro will ever become the world's No 1 currency.

Greece has fallen, the following countries on the brink....

Italy
Spain
Portugal
Ireland

just any one of those four falls, & one of the remaining three will definitely fall...

...& that definitely destroys the Euro for good!
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Message 1127283 - Posted: 13 Jul 2011, 17:10:27 UTC

http://www.nydailynews.com/blogs/dailypolitics/2011/07/poll-americans-want-congress-to-vote-against-raising-the-debt-ceiling

Poll: Americans Want Congress To Vote Against Raising The Debt Ceiling

A majority of Americans don't want Congress to raise the national debt ceiling, despite bipartisan agreement that such a bill is crucial, a new Gallup poll reveals.


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Message 1127295 - Posted: 13 Jul 2011, 17:50:15 UTC - in response to Message 1127283.

http://www.nydailynews.com/blogs/dailypolitics/2011/07/poll-americans-want-congress-to-vote-against-raising-the-debt-ceiling
Poll: Americans Want Congress To Vote Against Raising The Debt Ceiling

A majority of Americans don't want Congress to raise the national debt ceiling, despite bipartisan agreement that such a bill is crucial, a new Gallup poll reveals.


But what really happens if we default?
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Message 1127302 - Posted: 13 Jul 2011, 18:02:39 UTC - in response to Message 1127295.

gov't shuts down. we default on every treasury bill passed on in good faith to its holders. Holders such as China, Japan, Britain, and germany will now be holding worthless debt.
by holding the worthless debt we basically bankrupt all these countries because this was supposed to be cash in hand when the bills matured. So we enter a great depression. Nobody trusts the US for anything and we likely end up with multiple wars breaking out in Europe and Asia. Not good not good
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Message 1127314 - Posted: 13 Jul 2011, 18:37:44 UTC - in response to Message 1127302.

It gets worse from there Gary. Retirements are wiped out, increasing the number of people who need to work when there are not enough jobs to go around..

oh the list goes on and on. Even threatening is far beyond reason. The possibility is one of many things driving the unreasonable surge in gold prices.
There are speculators thinking economies will be driven back to the gold standard. Not impossible, but I doubt this as well.

The ironic part is the doom and gloom of those predicting the second coming are also those advocating gold, even though it conflicts with their own writings of
"A piece of bread will buy a bag of gold". And if you have watched bread prices lately this seems more likely.
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Message 1128102 - Posted: 16 Jul 2011, 0:00:51 UTC

This happened under Cinton and the government will only default if Obama decides to. The government can send home all unneeded workers and delay many contracts while taking care of what must be payed. In the end, after a deal is done, the government worker will be payed for their time off so nobody will lose. If Obama wants to make a political point, he will stop payments to people on Medicare and Social Security and keep the government workers. As he is in political mode all the time I wouldn't put it past him.

I am not happy that it has come to this but I will be far less happy if the Republicans don't but a stop to the enormous increase in spending that has happened in the last 3 years. Yes, Bush spent to much money but at the rate Obama is going, Bush is starting to look like a Piker.
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Message 1128137 - Posted: 16 Jul 2011, 1:27:15 UTC

What happens, is what is Obama's political order. He can grand stand and make it horrible and cause wars. He may be stupid enough to do this.

The government stops paying suppliers net 30. It stops paying interest on the bonds and notes the Federal Reserve and the Social Security trust fund own (which is a pile and they are reinvested anyway so the principal isn't being paid out.) Essentially everyone who isn't FBI, Secret Service, TSA, ICE or agent gets a temporary layoff notice. The people who open the IRS mail looking for checks are kept on. Medicare stops cutting checks to doctors. This should be enough to keep the country afloat. It won't default on the Foreign or domestically held bonds and notes.

People will learn to live with the only functions government should supply.

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Message 1128138 - Posted: 16 Jul 2011, 1:46:48 UTC - in response to Message 1128102.
Last modified: 16 Jul 2011, 1:52:46 UTC

This happened under Cinton and the government will only default if Obama decides to. The government can send home all unneeded workers and delay many contracts while taking care of what must be payed. In the end, after a deal is done, the government worker will be payed for their time off so nobody will lose. If Obama wants to make a political point, he will stop payments to people on Medicare and Social Security and keep the government workers. As he is in political mode all the time I wouldn't put it past him.

I am not happy that it has come to this but I will be far less happy if the Republicans don't but a stop to the enormous increase in spending that has happened in the last 3 years. Yes, Bush spent to much money but at the rate Obama is going, Bush is starting to look like a Piker.


WHAT? Dena. Are you really that clueless?

This is absolutely NOT what happened during the Clinton Administration! All that happened then was the US Government's discretionary program budget expired. The mandatory programs kept on purring along. A budget is nothing more than spending authority. So, for a short time, the National Parks were closed and non-essential personnel were sent home. When the budget was finally passed, everyone eventually was made whole. What's happening now is unprecedented in the history of the United States!

In order to pay its people and bills, the US Government must have real money (not budget, CASH). Since old George "W" passed his tax cuts, the government has not collected enough money in taxes, levies, and fees to pay the bills each month. To make up the difference, the government borrows money from citizens and other countries. Recently, for every dollar the US Government spent, forty cents of it was borrowed. The total amount the government can borrow is capped by law. We reached that cap last spring. Since then, the government has taken money from every trust account and mattress they can find to pay the bills each month. The cap can only be raised by an Act of Congress signed by the President. On August 2, those "piggy banks" run dry.

Unless the debt limit is raised, starting on August 3, the Federal Government will not have enough real money to pay its people and bills and the Treasury will not be able to borrow to make up the difference. Needless to say, the entities that have loaned the US money are now very concerned that we will not have enough cash to make interest payments on the money we have already borrowed. As a result, the credit rating of the United States is in jeopardy of being lowered for the first time ever.

What will happen? Easy. First, interest rates on EVERYTHING will jump. Mortgages, credit cards, bank loans, car loans, everything. Next, the value of the dollar will plummet, causing a major spike in commodity prices and inflation. Worst of all, the 'full faith and credit of the United States of America' will no longer mean squat. This will impact our economy for years to come. Oh, and one more thing is certain: we will be plunged back into another recession.

Call or e-mail your representatives to knock off the political BS and reach a deal.
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Message 1128143 - Posted: 16 Jul 2011, 2:08:15 UTC - in response to Message 1128137.
Last modified: 16 Jul 2011, 2:28:46 UTC

What happens, is what is Obama's political order. He can grand stand and make it horrible and cause wars. He may be stupid enough to do this.

The government stops paying suppliers net 30. It stops paying interest on the bonds and notes the Federal Reserve and the Social Security trust fund own (which is a pile and they are reinvested anyway so the principal isn't being paid out.) Essentially everyone who isn't FBI, Secret Service, TSA, ICE or agent gets a temporary layoff notice. The people who open the IRS mail looking for checks are kept on. Medicare stops cutting checks to doctors. This should be enough to keep the country afloat. It won't default on the Foreign or domestically held bonds and notes.

People will learn to live with the only functions government should supply.


Yeah, Gary. We'll all just party like it's 1799.
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Message 1128152 - Posted: 16 Jul 2011, 2:30:16 UTC

The government always has some money coming in through prepayment on taxes. The piggy bank never runs dry but at times it is not producing enough to cover everything. They have the money to pay interest and that's all wall street worries about. If they pay that first then wall street will be happy then use what remains to keep the voters happy. Some people will have a delayed check until the deal is done but unless the government decides to make and issue of this, it will not be an issue. I recall what happened under Clinton well because all those government workers got a free winter vacation out of it and the public wasn't able to use any of the features of government that were given time off. What we are seeing now is a big game of chicken. If the Republicans give in, Obama will be reelected and our economy will be destroyed, not through wall street but through massive inflation. If Obama give in, all his spending programs will be destroyed and the left will not support him in the next election.
The limit will have to be increased as much as I don't like the idea but this needs to be the last time and a deal must include some way to solve the problem or we will will see this again after the next election.
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Message 1128156 - Posted: 16 Jul 2011, 2:40:48 UTC - in response to Message 1128143.
Last modified: 16 Jul 2011, 2:43:06 UTC

What happens, is what is Obama's political order. He can grand stand and make it horrible and cause wars. He may be stupid enough to do this.

The government stops paying suppliers net 30. It stops paying interest on the bonds and notes the Federal Reserve and the Social Security trust fund own (which is a pile and they are reinvested anyway so the principal isn't being paid out.) Essentially everyone who isn't FBI, Secret Service, TSA, ICE or agent gets a temporary layoff notice. The people who open the IRS mail looking for checks are kept on. Medicare stops cutting checks to doctors. This should be enough to keep the country afloat. It won't default on the Foreign or domestically held bonds and notes.

People will learn to live with the only functions government should supply.


Yeah, Gary. We'll all just party like it's 1799.

We are above a 20% tax rate which is where the Laffer curve indicates the government gets the most return from the economy. The government is providing more services than the economy is willing to pay for. The only way the government can continue providing this level of service is through massive inflation by expanding the money supply.
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Message 1128166 - Posted: 16 Jul 2011, 3:40:55 UTC - in response to Message 1128156.

What happens, is what is Obama's political order. He can grand stand and make it horrible and cause wars. He may be stupid enough to do this.

The government stops paying suppliers net 30. It stops paying interest on the bonds and notes the Federal Reserve and the Social Security trust fund own (which is a pile and they are reinvested anyway so the principal isn't being paid out.) Essentially everyone who isn't FBI, Secret Service, TSA, ICE or agent gets a temporary layoff notice. The people who open the IRS mail looking for checks are kept on. Medicare stops cutting checks to doctors. This should be enough to keep the country afloat. It won't default on the Foreign or domestically held bonds and notes.

People will learn to live with the only functions government should supply.


Yeah, Gary. We'll all just party like it's 1799.

We are above a 20% tax rate which is where the Laffer curve indicates the government gets the most return from the economy. The government is providing more services than the economy is willing to pay for. The only way the government can continue providing this level of service is through massive inflation by expanding the money supply.


The Laffer Curve? What is this, 1980? The Laffer Curve was debunked long before Reagan left office. That was why he raised taxes 11 times in 8 years. It didn't work.

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Message 1128197 - Posted: 16 Jul 2011, 5:13:53 UTC - in response to Message 1128166.

The Laffer Curve? What is this, 1980? The Laffer Curve was debunked long before Reagan left office. That was why he raised taxes 11 times in 8 years. It didn't work.

I don't know where you learned your economics but you were badly cheated. While the Laffer curve was named after Art Laffer, it wasn't his creation and he admits the fact. It was first used after World War I by Mellon and gave us the Roaring Twenties. After that it was forced on Truman and caused the expansion of the 1950's instead of the recession that would have happened by bringing all the GIs back into the economy and then it was used by Kennedy. When Reagan used it, it pulled us out of the Nixon/Carter recession and gave Clinton and economy that was able to handle the abuse that Clinton gave it for the first two years of the Clinton administration.

As for the tax increases, they totaled far less than the initial cut and they targeted small areas of the economy instead of a general increase. Today this might be called loop hole elimination.
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Message 1128344 - Posted: 16 Jul 2011, 15:34:00 UTC - in response to Message 1128143.
Last modified: 16 Jul 2011, 15:34:11 UTC

Yeah, Gary. We'll all just party like it's 1799.

Yep, government will finally be out of the entitlement business! Reason for a rip roaring party!
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Message 1128546 - Posted: 17 Jul 2011, 0:37:56 UTC - in response to Message 1128344.

Yeah, Gary. We'll all just party like it's 1799.

Yep, government will finally be out of the entitlement business! Reason for a rip roaring party!

thats right no more free money for the big business friends of the Republican party.
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Message 1128566 - Posted: 17 Jul 2011, 1:36:45 UTC - in response to Message 1128546.

Yeah, Gary. We'll all just party like it's 1799.

Yep, government will finally be out of the entitlement business! Reason for a rip roaring party!

thats right no more free money for the big business friends of the Republican party.

That's right, nothing for the Chrysler or GM big union democrat employers. It will be so wonderful. Oh, they still have to cover the banks, remember that thing called FDIC, backed by the full faith and credit of the USA.

Interesting that FSLIC went under several times and that when the institutions were investor owned. FDIC hasn't gone under but has been under pressure. SIPC has lots of reserves. 1+1+1 = ?

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Message 1128644 - Posted: 17 Jul 2011, 7:27:42 UTC - in response to Message 1128566.

Yeah, Gary. We'll all just party like it's 1799.

Yep, government will finally be out of the entitlement business! Reason for a rip roaring party!

thats right no more free money for the big business friends of the Republican party.

That's right, nothing for the Chrysler or GM big union democrat employers. It will be so wonderful. Oh, they still have to cover the banks, remember that thing called FDIC, backed by the full faith and credit of the USA.

Interesting that FSLIC went under several times and that when the institutions were investor owned. FDIC hasn't gone under but has been under pressure. SIPC has lots of reserves. 1+1+1 = ?

Please to us non USA people can you please use the full words and not the abbreviations.
No clue what FSLIC or SIPC means. Remember this an international Community. Get my drift.
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Message 1128708 - Posted: 17 Jul 2011, 13:07:54 UTC - in response to Message 1128644.

neither do I and I live here /me rolls eyes
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Message 1128711 - Posted: 17 Jul 2011, 13:15:10 UTC - in response to Message 1127200.

Just kind of curious what all this POLITICS will bring to America and the World? Could this be the catylist that makes the Euro the World currency while the US slips into mediocrity?
I for one would rather see Oil and other Big business pay it's fair share before Soc. Sec. takes a hit so in this one I believe I blame the Republicans the most. I don't really understand the whole thing so I won't take a stand quite yet...Like to hear what others with more knowledge think.


US will default on Dec 21st 2012, and what will happen then is already known. So a US default is a non issue.
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