What if there is no deal on the U.S Default?

Discussion in 'General Discussion' started by 33percent, Jul 24, 2011.

  1. 33percent

    33percent Monkey+

    I have a sense there will be a deal on the default regardless of the childish behavior that is going on. What if there is no deal what will exactly happen right after?

    I was talking to someone the other day about it basically the "Greens" in our wallet will be worthless, and we have to exchange them for new ones ten cents on the dollar. With the inflation still soaring as well.

    Our treasury bonds will be downgraded to a D, foreign investors will stop buying, dumping them. The dollar will collaspe soon after, and from there everything will go to hell.

    It's a scary thought, but it can become reality. With this happening now, who can not say this will not happen again in a year or two from now.
  2. VisuTrac

    VisuTrac Ваша мать носит военные ботинки Site Supporter+++

    33 a question of the ages.

    If you ask 10 different economists you'll get 11 different answers.

    basically if the debt ceiling is not raised, the gov't can borrow no more money.

    that means there will be no more 'new' treasury or freedom bonds.

    The government will still have money coming in but not enough to pay it's liabilities of :
    Interest on bonds
    Social Security
    govt payrolls
    military expenditures

    It will have to make choices on what to pay. My guess it that they will continue to pay the interest to bond holders and screw us little folk. As this has been their current Modus Operandi.

    To prevent rampant inflation and internal dollar loss of purchasing power. they will probably invoke price and wage freezes as a Zimbabwean Crisis here would get them lynched.

    Interest rates on Variable interest loans (Variable rate Home loans, Credit cards, auto, home equity LOC) will sky rocket because a number of lenders base their rates on the 10 year treasury. Investors will demand higher interest rates from treasuries in order for them to part with their money. Greece right now is having to offer 20% interest to investors. Whereas the US is a measly 3-4%.

    Anyway, the point will be moot as no one will be able to get credit. Investors won't want to touch our debt instruments. People on fixed social security payments will be very much screwed and those not able to move in with relatives are pretty much done for.

    You could probably come up with your own scenario and it may or may not happen. We are moving into uncharted territory. I think someone cursed us with the line 'May you live in interesting times'

    Even if they do not default, I think that just because the gov't is braking this late into the last corner before the checkered flag, the damage has been done by allowing the world to see that our currency is not 'almighty' and that we could potentially falter.

    My crystal ball of economics says that at some point in the future China will have converted enough of their US debt into hard assets and is willing to take a bath on the balance held that they dump US debt instruments all together. That is when we should get really worried.

    Full disclosure: I am not an economist nor hold any US bonds (as i sold them to buy Canadian currency)

    Cinch up that belt cause if they default it's gonna be one hellova ride.
  3. Seawolf1090

    Seawolf1090 Retired Curmudgeonly IT Monkey Founding Member

    Basically, "same old same old"..... not much changes.
    What happens when a person has their credit card maxxed out and can't make payments? Their 'credit rating' goes bad, but they can STILL borrow - at greatly increased interest rates and penalties. Other credit card companies still send them applications.....

    So, if this 'debt ceiling', a totally ficticious and made up construct anyways, is not 'raised', prices go up as our 'money' is lowered in value. Life continues, Joe Sixpack still sits back in his Lazyboy watching the NASCAR, his wife is making dacqeries and watching "American Idol" in the other room, Junior plays the not-so-latest game on his Game Master 2000 (Daddy couldn't afford this year's new GM 5000) and Daddy's paycheck doesn't buy as much as last month.......

    And the Senate hooligans laugh all the way to The Beijng First Nationlized Bank..in the back of the New WalMart....
  4. Alpha Dog

    Alpha Dog survival of the breed


    Why couldn't they just cut the billions and billions we are giving to forien aid and within a few months things would start to level out. Well thats probally to simple and the goverment would have to have another 5 or 6 Guru's come in and plan it.
    BAT1 likes this.
  5. ColtCarbine

    ColtCarbine Monkey+++ Founding Member

    That makes sense but sensibility is not part of a politicians vocabulary
    VHestin, Sapper John and beast like this.
  6. Seawolf1090

    Seawolf1090 Retired Curmudgeonly IT Monkey Founding Member

    That's why bobo and his Senate hatchetmen want to increase taxes - fully knowing that more taxes will NOT help one bit! "Cutting spending" is NOT their way.
    I look for, at best, the RINOs will back off and 'compromise', giving the Demonazis their way, at least in part. What I don't want to see is that plan to let bobothe clown be able to set that debt ceiling himself with NO control or constraint. Pretty soon, we will learn what comes after 'TRILLION' as our debt goes beyond orbit!
  7. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    We have all the money we need to pay our debt bills and many others. Just 10 cents of every dollar collected monthly goes towards debt service. If we don't raise the debt limit, we will not be able to go further into debt and we will achieve a backdoor balanced budget without the amendment. So, we will simply cut about $2.0 trillion out of the budget going forward (give or take a trillion here or a trillion there over 2 years!)

    The economy will not collapse. The markets won't like it, but that is ok since I shorted the market.
    VisuTrac and Cephus like this.
  8. wags_01

    wags_01 Monkey+

    They'll make some sort of deal. All this nonsense is just a political dog and pony show, positioning for the 2012 election.

    Like Clyde, I'm not afraid of an all-out economic collapse. Those whose assests are all paper though, they should be worried.
  9. Idahoser

    Idahoser Monkey+++ Founding Member

    "what if there is no deal on the US Default"

    try it this way

    "What if there is no money, and the 'deal' is a big show to make you think there's a problem"
  10. BAT1

    BAT1 Cowboys know no fear

    We are taking in enough to make it for basic services. It's political posturing by both sides
  11. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    China and the US are inextricably intertwined and dependent upon one another for survival. They produce, we consume -it's the metaphorical farmer and the pig. Just keep in mind that eventually, this method always results in the pig being led to slaughter.

    And if you believe nothing else I say, then know that it will be of a time and method of their own making. Nothing is by accident; for if it is ever conceived so, the manner at which the instance can be capitalized upon shall remove any doubts.
  12. Tikka

    Tikka Monkey+++

    As Rahm Emanuel said "you never let a serious crisis go to waste"
    dragonfly, VisuTrac and Brokor like this.
  13. dragonfly

    dragonfly Monkey+++

    Worse case scenario...
    I'm still broke, either or!
    Now, if the sun refuses to rise, then we might have a slight problem!
  14. -06

    -06 Monkey+++

    So tired of the same old BS every few years. We elect these traitors to govern but they sit on their grossly overpaid/perked butts till the last minute to do anything. They are too busy giving money away to study the habits of how a South American bug has sex to do the work they were elected to do. The Jerry Springer/Ophra/dancing with the stars/sports fans crowd of "dependents" will forget/not care and vote for the same crowd next election with their same old tired promises of reform. The tax load has been getting progressively worse the last fifty years (faster lately) and the unchecked spending increasingly out of control. It has to stop or they will completely wreck the country. Beginning to think they do not care but are interested in only padding their own pockets with siphoned off millions.
    VHestin likes this.
  15. Seawolf1090

    Seawolf1090 Retired Curmudgeonly IT Monkey Founding Member

    Well, as many 'plans' have been put forward by both Parties, and the Dictator-In-Chief adamantly refuses to sign ANY of them, I believe the First Fool will wait until the wolf is howling at the door and then sign an illegal EO to ramp up the "debt ceiling" along with a few other things he's been wanting to put into play. He'll claim it had to be done due to "The Crises" and the average sheeple will accept that 'the president' knows what he's doing....... sadly they fail to realise his totally inept approach to government - "Crises Management".
    Welcome to "The New Greece".

  16. Falcon15

    Falcon15 Falco Peregrinus

    <dl class="discussion clear i0 xg_lightborder"><dd> To answer the OP's question: Social Security checks are backed by bonds. Treasury Bonds. The Treasury does not have enough cash to outlay, period, by August 15th, without raising the debt "ceiling", so they can sell additional bonds to the Fed for liquid cash to pay the SS outlay (which in turn raises what we owe - interest wise to the Fed). IF they raise the debt ceiling, the Fed gets to print more money further devaluing the US Federal Reserve Note - which leads back to China, the rest of Asia, and Europe creating a cascade sell off of US Treasury bonds, as they have been threatening to do in light of the weakening dollar. The Fed would have to print MORE money to buy those bonds back, again further devaluing the Federal Reserve Note, leading to - you guessed it - hyperinflation.

    IF the US does NOT raise the debt ceiling, the credit agencies downgrade the credit rating of the US to just above toilet paper, again triggering a massive sell-off of (what is already) toxic US Debt. See above for Fed solution to bond sell off. Obottom raises the debt ceiling, invoking PDD 51, and we are all screwed see above.

    This is a zero sum game, folks as the MSM and the dotgov want the sheeple to believe they have a solution, it's just that one side or another is being unreasonbable. There is a solution to this, it would HURT for the short term, but it would allow us as a nation to regain our economic prosperity.

    End the Fed. Repeal the Income Tax Act - those two suckers are what got us here in the first place. Review and rescind every Constitutional amendment that is tied to individual and business taxation and central banking. Push our nation back to a CONSTITUTIONAL government, with ONLY Constitutional rights, as apportioned BY the Constitution, for the protection of the PEOPLE. Recall every stinking Federal Reserve Note and burn them for the trash they are. Remove the US from the world credit ponzi scheme. KICK THE UN THE HELL OFF US SOIL. Tell them to go play elsewhere. Revoke ALL UN TREATIES, AGREEMENTS AND ANY OBLIGATION TO THAT SUPPOSED "BODY OF UNIFICATION".
    Require all foreign nations who buy any US goods, real estate, or food - even if bought through a US Agent - to pay in gold, silver, or platinum, and I am not talking SHARES, I am talking cold, hard, metal. Re-issue a NON-fiat, representative currency backed 100% by precious metals. PAY OFF what we owe. Raise interest rates to REASONABLE levels, thereby limiting future credit and borrowing to companies, not people. Abolish personal credit, credit buying, and dismantle the current wall street. The stock exchange is not beneficial to any of us. It benefits those who control this country - the banks.
    Just my humble opinion, YMMV.

    dragonfly, Brokor and Sapper John like this.
  17. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    I agree with everything you said Falcon, my friend -with exception to only one point. Currency.

    Precious metals-backed currency is FINE, but there is an even better solution, especially for our modern age. Lincoln had it nailed with the greenback, and far too many ignore the reality of a debt-free fiat currency authorized by our Congress. If we could ever maintain control over the monetary system and keep it out of the hands of private interests, I personally do not care which form of currency we use, we could go back to using the tally sticks from England for all I care...but, the precious metals backed currencies are highly volatile in that they are easily corrupted. This is why England forced the colonists to alter their payments from colonial scrip to silver. In fact, every time the United States used gold and silver, the European banking interests always gained control with very little scheming and created a panic through gold shortage by manipulating the market. Most people probably do not know that every bank we have ever had, from the "First Bank of the United States", to current day have been privately owned, and every time they have been given the funds to start up their enterprises by the government -and never paid back. With Andrew Jackson, the banks were halted and the scheming came to a stand-still. This still wasn't good enough, because by the time Lincoln entered the scene, he was faced with yet another WAR (the bankers favorite way to endebt a nation) and high interest rates from the vipers who offered a solution to lend him money. The reason the Greenbacks were so dangerous to the bankers, was that they were entirely debt-free and as long as the amount of bills in circulation could be maintained, and counterfeiting kept to a minimum, it would prove to be the greatest monetary system ever devised. We all should know by now that "debt", as in "national debt" comes entirely from the government borrowing money at interest in the first place. Remove this single form of usury, and shield it from private interests, and it will stand the tests of time.

    We need to downsize the current government by 70% or more, no matter the choices, however.
    Falcon15 likes this.
  18. VHestin

    VHestin Farm Chick

    I heard yesterday that the Social Security 'fund' is solvent, til 2038. Also looked up numbers about the budget, and ones I got are that government is expected to take in between 130 and 170 billion dollars. Debt payments=30 billion. Social Security=50 billion. Leaving 50-90 billion for other government costs. Friend of mine was saying yesterday that they almost wish Obama was (politically) suicidal enough NOT to let SSI checks get sent out, just to have all the millions of people, whose sole income their checks are, finally wake up and let the government have it.
  19. Falcon15

    Falcon15 Falco Peregrinus

    The Social Security fund is not solvent. It is broke. It is paying out far more than it takes in, and for accounting purposes, the system’s accumulated revenue is placed in Treasury Securities.

    In regards to SSI fund:
    From the NYT:
    Social Security Payout to Exceed Revenue This Year - NYTimes.com
    From Forbes:
    What Happened to the $2.6 Trillion Social Security Trust Fund? - Merrill Matthews - Right Directions - Forbes

    As for how much money the Treasury has, which is the basis for the securities which the SSI fund monies are "invested in" for "accounting purposes" (don't buy that, the government has been borrowing from SSI for 50 years, and using Treasury Securities as IOUs). Let us look at real numbers - how much in Millions, does the Treasury have on hand?


    That final number on August 15th is NEGATIVE 15.506 Billion Federal Reserve Notes. The US Treasury is broke.

    As for your debt numbers...what is your source, because they are very incorrect. The numbers in the "Withdrawal" column above range anywhere from 10.6 Billion to over 100 Billion per day, and those numbers represent our total governmental debts, from paychecks to grants. One thing that chart above is not showing is the massive amount of INTEREST we are accumulating on what we have borrowed from the Federal Reserve Bank to begin with. Go to usdebtclock.org and check out the national debt. It is enough to make you want to cry.

    What the Treasury is taking in (the Deposits column) show that a sizable amount of cash is flowing in. The amount is far exceeded, however, even when adding in what the Treasury has "cash in hand" as it were.

    We, the People are BROKE as hell because we the people fell asleep at the wheel and let the Federal Reserve and Politicians on BOTH sides of the fence spend us into oblivion. Is it time to water the Tree of Liberty? We shall see.

    As with anything I post, don't just take my word on it. Research these things yourself. It will turn your hair white and curl your toes what you can find out about what the dotgov is hiding in plain sight.
    Alpha Dog and Brokor like this.
  20. Falcon15

    Falcon15 Falco Peregrinus

    I actually have been trying to elucidate on these very points - check out my blog posts:
    The Real Cause of the American Revolution? - Survival Monkey Forums
    The Real History of the United States - Part 2 - Survival Monkey Forums

    However you will note in my first post the un-backed, non-fiat currency first issued by our Government - the Continental - was absolutely destroyed by over printing - inflation. A PM backed currency would serve to reign in the volatility - those price fluctuations are prices of gold ounces for fiat cash. When the fiat values fluctuate, the PM prices seem to fluctuate. Gold and silver are finite, quantifiable sources of wealth. There is only so much of it and the earth is not making any more. It would also serve to reign in inflation, because you can never have more representative currency than you have physical wealth in precious metals.
    Brokor likes this.
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