Please explain: United States Default

[Texashiker]

Sorry, the federal reserve derives its authority to make notes from the US government and every dollar is an obligation to the US government.

So the only way to pay the debt is to pay in something besides federal reserve notes (dollars).

The only way to do that is through gold, silver, platinum,,, something of real physical value. This right is granted in the U.S. Constitution - Article 1 Section 8.

Congress can mint a 17 trillion dollar coin, give it to the federal reserve, and our debt is paid. Good luck on cashing that coin in for real money though,,,lol.

 

[MiniDoom]

Money has whatever value we all agree it has. Needless to say, use of gold as a currency base is completely arbitrary. BTW, gold's scarcity is one of the biggest reasons why it is terrible to use as a currency.

Why don't we just print 50 million for every person then? that would solve everything, right? gold's scarcity prevents us from carrying ridiculous amount of debt, controlling inflation. Notice how debt has skyrocketed since Nixon Shock?

 

[fskimospy]

So the only way to pay the debt is to pay in something besides federal reserve notes (dollars).

The only way to do that is through gold, silver, platinum,,, something of real physical value. This right is granted in the U.S. Constitution - Article 1 Section 8.

Congress can mint a 17 trillion dollar coin, give it to the federal reserve, and our debt is paid. Good luck on cashing that coin in for real money though,,,lol.

That is real money.

I get the feeling you don't understand how money works. We will add this to the list.

 

[Texashiker]

That is real money.

I get the feeling you don't understand how money works. We will add this to the list.

I like my money to have real value, rather than just faith value.

But none of this has anything to do with the government using borrowed money to pay back borrowed money.

 

[fskimospy]

Why don't we just print 50 million for every person then? that would solve everything, right? gold's scarcity prevents us from carrying ridiculous amount of debt, controlling inflation. Notice how debt has skyrocketed since Nixon Shock?

Why would that solve everything?

The world economy under the gold standard was highly unstable, filled with bank panics, debt crisis, etc. For a good example of what happens under the gold standard, go look at the Eurozone. Countries in it are on a de facto gold standard. The only thing that mitigated the eurozone bank/national debt panics was the ERB stepping in and in effect eliminating the scarcity of "gold" by promising to act as a lender of last resort.

The gold standard was and remains a horrible idea.

 

[Texashiker]

Why don't we just print 50 million for every person then? that would solve everything, right? gold's scarcity prevents us from carrying ridiculous amount of debt, controlling inflation. Notice how debt has skyrocketed since Nixon Shock?

The government (and the people) being in debt is how the current is designed to be.

 

[AViking]

I like my money to have real value, rather than just faith value.

But none of this has anything to do with the government using borrowed money to pay back borrowed money.

As I understand it they are purposefully keeping the dollar incredibly weak since it makes our debt much cheaper to pay off.

 

[Bird222]

You guys can sit here and debate about whether or not we are going to service the debt, but the real damage will not necessarily be the default: It will be the international loss in confidence in the American dollar and the Federal Reserve.

This!!! I would just say that 'defaulting' would be a big cause in the loss of confidence.

 

[Londo_Jowo]

As I understand it they are purposefully keeping the dollar incredibly weak since it makes our debt much cheaper to pay off.

It also helps with making American made industrial goods/equipment a better bargain increasing sales/exports.

 

[GuitarDaddy]

All these 5th grade credit card analogies, comparing the way government financing works to an out of control teenager with tapped out credit cards are not only incredibly niave and just plain stupid, but they are also very dangerous because they embolden the uninformed to believe a default is OK.

If you really think the answer to the problem is as simple as taking little johnny's credit cards away then you need to back away from the grown ups table and go back to playing with your tinker toys.

I'm not going to try and explain it in detail as the treasury secretary and the President have both done a good job of spelling out the reprocusions of a defualt in the past few weeks, but of course you won't believe the experts because your idiotic grade school interpretation better suits your message that big gub-o-ment and our commie socialist ubummer just wants to spends yo money.

 

[Texashiker]

but of course you won't believe the experts because your idiotic grade school interpretation better suits your message that big gub-o-ment and our commie socialist ubummer just wants to spends yo money.

Those so called experts have drove us into $17 trillion of debt.

Maybe its time to stop listening to the "experts."

 

[laspariahs]

So the only way to pay the debt is to pay in something besides federal reserve notes (dollars).

The only way to do that is through gold, silver, platinum,,, something of real physical value. This right is granted in the U.S. Constitution - Article 1 Section 8.

Congress can mint a 17 trillion dollar coin, give it to the federal reserve, and our debt is paid. Good luck on cashing that coin in for real money though,,,lol.

Actually the only real way to pay the debt that doesn't have lasting and egregious consequences is to balance the budget and pay it down over time.

What you describe is nothing more the printing money, printing 17Trillion would be a disaster.

 

[Texashiker]

Actually the only real way to pay the debt that doesn't have lasting and egregious consequences is to balance the budget and pay it down over time.

What you describe is nothing more the printing money, printing 17Trillion would be a disaster.

Why is it ok for the federal reserve to print money out of thin air, but not the treasury?

What do you suggest we pay the debt with? It can not be paid with federal reserve notes, as the federal reserve owns those notes.

 

[jackstar7]

Sell California to some country. I am sure that can go for a lot of money. . . maybe?

Second time I've seen this suggestion recently.

Here's something: California is the single largest federal tax revenue provider in the country. You wonder if it's worth money? Just the single state's economy is about even with the entire nation of Canada.

You lose California and let's say New York (the other chief target of conservatives) and you're done. You'll have Texas and that's about it.

Start noticing who is doing the heavy lifting for this country and stop your petulant bitching, and suppress your impulses to sink the entire union.

 

[dank69]

Those so called experts have drove us into $17 trillion of debt.

Maybe its time to stop listening to the "experts."

Actually, the experts told us not to cut taxes and increase spending back during Bush's term and fools like you ignored them then. Maybe it's time to actually listen to the experts.

 

[laspariahs]

Why is it ok for the federal reserve to print money out of thin air, but not the treasury?

What do you suggest we pay the debt with? It can not be paid with federal reserve notes, as the federal reserve owns those notes.

It's not ok for anyone to just print up some money out of thin air, not even the 85 billion we have been printing up.

 

[Texashiker]

Actually, the experts told us not to cut taxes and increase spending back during Bush's term and fools like you ignored them then.

Spending and taxes have little to do with a default.

The US is not going to default on the money it owes. We will just not borrow any more money to pay for borrowed money.

 

[dank69]

Spending and taxes have little to do with a default.

The US is not going to default on the money it owes. We will just not borrow any more money to pay for borrowed money.

It has everything to do with the post of yours that I was responding to. Namely, your suggestion that we ignore the experts when ignoring the experts is exactly how we got into this mess in the first place.

 

[xBiffx]

Where does that number come from? Are we just taking our annual revenues and dividing by 12 to get that? That's not how it works.

On average, that's exactly how it works. There have been months where its much higher than that, but it about that every month (April comes to mind). On average, that's the monthly revenue for FY 2013.

The debt service works the same way. Its not the same every month, but on average, that's the number for FY 2013.

Averages aren't an absolute indicator but for the sake of showing that we aren't about to default, it works just fine.

 

[Texashiker]

It has everything to do with the post of yours that I was responding to. Namely, your suggestion that we ignore the experts when ignoring the experts is exactly how we got into this mess in the first place.

What are you going to pay the debt off with?

It is not going to be federal reserve notes (dollars), as the federal reserve already owns those notes.

Then there is the interest on the debt.

Every dollar in circulation is owned by the federal reserve. You can raise taxes all you want, lower spending all you want, but you are still dealing with federal reserve notes that the nation is paying interest on.

The only way to pay off the debt is to abolish the federal reserve system, the treasury to print its own money, then pay the debt in the new currency.

Or, pay the debt off in gold, silver, platinum,,,, something like that.

 

[dank69]

What are you going to pay the debt off with?

It is not going to be federal reserve notes (dollars), as the federal reserve already owns those notes.

Then there is the interest on the debt.

Every dollar in circulation is owned by the federal reserve. You can raise taxes all you want, lower spending all you want, but you are still dealing with federal reserve notes that the nation is paying interest on.

The only way to pay off the debt is to abolish the federal reserve system, the treasury to print its own money, then pay the debt in the new currency.

Or, pay the debt off in gold, silver, platinum,,,, something like that.

Pretty sure we make interest payments on the debt with US dollars so that pretty much blows your rantings out of the water.

 

[Texashiker]

Pretty sure we make interest payments on the debt with US dollars so that pretty much blows your rantings out of the water.

Those interest payments are paying debt with debt.

That is like borrowing $10 from someone, then borrowing $5 to pay on the $10.

 

[dank69]

Those interest payments are paying debt with debt.

That is like borrowing $10 from someone, then borrowing $5 to pay on the $10.

Still paid for in US dollars, which you seem to think is impossible.

 

[Texashiker]

Still paid for in US dollars, which you seem to think is impossible.

But now you owe your friend $15 instead of $10.

If you really wanted to pay your friend back, get a job, and pay him back with money you earned, rather than money you borrowed.

 

[dank69]

But now you owe your friend $15 instead of $10.

If you really wanted to pay your friend back, get a job, and pay him back with money you earned, rather than money you borrowed.

So you propose that we ignore the experts and when I point out that ignoring the experts it how we got into so much debt in the first place you change the subject by saying we can't pay off our debt because the Fed owns the notes and when I point out that that doesn't make any sense you revert back to crying about how much debt we are in? What are you going to do next? Suggest we ignore the experts?