Remember that about 70% of these treasury bills are held by the public. This makes up social security, retirement accounts, they are held by mutual funds, pensions, and banks.
A default would shudder the world economy, and destroy confidence in the USD.
Yes indeed. In the spirit of “know your enemy” (the elite class) I joined The World Economic Forum about a year ago - lots of interesting material!
Just my little opinion, but the economic elites either eventually need to run up inflation or crash global currencies. There seem to be logical reasons for both approaches, so to me it is a coin toss what they will do.
When debt service eventually becomes unmanageable the economic elites will most likely pick a technical default instead of inflation that wrecks confidence in the dollar. Essentially they'll force creditors to take a cram down by exchanging their current Treasury bonds at face value for new ones with longer maturities and lower interest rates.
My bet is that they'll swap for something ultimately blockchain based, using Bitcoin's fixed inflation curve to rebase the dollar on going forward. (eg BTC-ETFs, central bank digital currency, etc)
If the protocol is worth anything, the Elite can't control the economy as well. Then what point is there to being elite, if you cant use your 'superior' intellect to direct global trade?
>"In real terms, the nation would soon return to high unemployment rates, approaching 9% compared with its current rate of 5.2%. Also, come November 1 checks for millions of Social Security recipients would be delayed, Zandi noted. And stock prices would likely plunge by one-third, sparking that $15 trillion loss in household wealth. Meantime, mortgage rates and other interest rates for things like credit cards and auto loans would spike."
Not sure if this article is alarmist.
Wiping out 1/3 of the stock-market and spike in unemployment if true would have triggered enough entities to force a resolution.
I remember there was a debt-ceiling crisis during the Obama era as well. Is this the same old political maneuvering seen before?
It very much is. The author of the article has a very clear liberal bias and it makes me believe she didn't write this cause it's true, but because she just doesn't want to analyze why republicans would vote unanimously for that.
What jobs? You know this stuff is alarmist and complete nonsense because it's written by a reporter, not within the institutions that be. She's picking random numbers, and based off of some things written on her home page, clearly has a liberal bias to make the article seem more pressing to discredit republicans.
I'm not saying "red good blue bad" but jesus maybe don't make it so damn obvious you're trying to write a biased article that you're opinions are right because they go against the conservatives. I mean the past two years have encouraged the greatest amount of inflation in the US in well over a decade. Prices more than doubled in just two years of absurd stimulus and rent controls. The halted economy and over reliance on China as well has caused egregious supply chain problems as a whole.
This isn't a "republicans are evil cause they wanna default" issue. This is a "government is so big and autocratic that they're playing with gasoline stoking our retirements" issue.
I’m don’t really know how macroeconomics works too well, and no article about this debacle that I’ve read really explains what the repercussions are of the debt ceiling getting raised higher and higher. Surely this must have some end? Or can we just keep going forever?
Well Japan has over twice the debt-to-GDP ratio (the important figure here) as the US, and has done for almost two decades now. The debt isn't one thing, it's millions of bonds being sold all the time, each of which has to be repaid after 1/3/5/10/30 years when it matures. The only reason people wouldn't buy them is if they expected the US economy to collapse within that period and thus be unable to get their money back, and very few people think that is going to happen.
The fact that raising the debt ceiling is an annual political hot potato is down to the US's system of government, in parliamentary systems such as most countries have the government has a working majority by definition and can pass their budget without fanfare.
When it comes down to it, the only political faction in the US that actually cares about reducting the deficit are the old school dynasty democrats. Remember, Clinton ran a surplus until Bush spent it all on orphaning iraqis. This is also why the old democrat elites are the most hated faction. Policies that reduce the deficit are boring and unpleasant: raising taxes and cutting spending. Policies that increase the deficit are fun-- Tax cuts! Nation building! Free healthcare! Government stock purchases!?
The debt limit is a completely artificial, political game.
Congress passes laws which have costs associated with them. Then they, separately, decide whether they will authorize payment for those laws. The costs should be automatically authorized.
Republicans get to score political points by pretending to control spending, when in fact they raised the limit every time they wanted to give tax cuts to their wealthy donors. It's hostage taking, because they understand that the Democrats will act responsibly. They get to threaten to destroy things as a negotiating tactic.
I actually believe 50% is very optimistic. Main reason being we’re talking about a very complex non linear event that is not very well studied and depends on a society that hasn't experienced a default before.
Above could also explain FED's overly protective attitude towards the whole thing.
As a Brit, can I ask why the US has a debt ceiling, as it seems like when total debt gets close to the ceiling, a vote is passed to raise it - but not before a lot of politician point scoring?
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[ 0.22 ms ] story [ 65.0 ms ] threadJust my little opinion, but the economic elites either eventually need to run up inflation or crash global currencies. There seem to be logical reasons for both approaches, so to me it is a coin toss what they will do.
Can you just... decide to do that? How do you go about doing so?
Not sure if this article is alarmist.
Wiping out 1/3 of the stock-market and spike in unemployment if true would have triggered enough entities to force a resolution.
I remember there was a debt-ceiling crisis during the Obama era as well. Is this the same old political maneuvering seen before?
I'm not saying "red good blue bad" but jesus maybe don't make it so damn obvious you're trying to write a biased article that you're opinions are right because they go against the conservatives. I mean the past two years have encouraged the greatest amount of inflation in the US in well over a decade. Prices more than doubled in just two years of absurd stimulus and rent controls. The halted economy and over reliance on China as well has caused egregious supply chain problems as a whole.
This isn't a "republicans are evil cause they wanna default" issue. This is a "government is so big and autocratic that they're playing with gasoline stoking our retirements" issue.
As much as we want to view the world (economy) as a financial machine, its really runs on the belief that people have for the system.
I for one, do not have faith in Nation money. I believe in crypto.
The fact that raising the debt ceiling is an annual political hot potato is down to the US's system of government, in parliamentary systems such as most countries have the government has a working majority by definition and can pass their budget without fanfare.
Republicans get to score political points by pretending to control spending, when in fact they raised the limit every time they wanted to give tax cuts to their wealthy donors. It's hostage taking, because they understand that the Democrats will act responsibly. They get to threaten to destroy things as a negotiating tactic.
If they default, it'll be better in the long run for man kind, but it'll really suck for the US for at least a generation.
1 - I'm guessing, based on the 50%ish hit the British took when they lost it.
Above could also explain FED's overly protective attitude towards the whole thing.