[MonteQuest]

$this->bbcode_second_pass_quote('C8', ' ')In theory, I can see nothing wrong with it- after all, we could just vote for austerity and pay it down or off.

[MonteQuest]

$this->bbcode_second_pass_quote('C8', ' ')Or is this just a tragedy of the commons (and the weakness of democracy)?

[Tanada]

$this->bbcode_second_pass_quote('C8', '')$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('Cog', '
')Basically the US government will not be in a default situation as long as we can pay the interest on the debt.

[MonteQuest]

$this->bbcode_second_pass_quote('ennui2', 'I') am still not satisfied with the explanation of who is owed this money to whom. If you follow the debt, it seems like it leads to an actor that itself is holding just as much debt, like China who (according to Monte) owes over 300% GDP. It seems to me that if everyone called in their debts simulataneously that you'd probably just cancel everything out without any clear winners or losers.

[MonteQuest]

$this->bbcode_second_pass_quote('Plantagenet', 'O')r, more realistically, the US government will not be in default as long as we can borrow more money to pay the interest on the money we already owe.

[MonteQuest]

$this->bbcode_second_pass_quote('C8', 'B')ut, at some point, don't the lending nations realize that the amount of money they are loaning (the principle) is in danger of not being given back? At that point I would think they would be more concerned about the principle- this is a much larger sum of money than the interest. I would think they would either:

1. demand shorter term loans
2. scale back on principle loaned
3. demand the principle back

At some point- a lender becomes fearful of losing the principle and this fear overcomes the greed of making money on the interest- am I wrong? What happens then?

[MonteQuest]

$this->bbcode_second_pass_quote('Tanada', ' ')Unfortunately the Federal Reserve then proceeded with QE 3-infinity.

[yellowcanoe]

$this->bbcode_second_pass_quote('C8', '
')
But, at some point, don't the lending nations realize that the amount of money they are loaning (the principle) is in danger of not being given back? At that point I would think they would be more concerned about the principle- this is a much larger sum of money than the interest. I would think they would either:

1. demand shorter term loans
2. scale back on principle loaned
3. demand the principle back

At some point- a lender becomes fearful of losing the principle and this fear overcomes the greed of making money on the interest- am I wrong? What happens then?

[MonteQuest]

$this->bbcode_second_pass_quote('yellowcanoe', ' ')There is no country in the world that would be able to help the US in similar circumstances.

[frankthetank]

There is no solution. It can't be repaid. Do the math..its a huge amt of money per every man/woman/child. I say let it go..borrow, put digits in the money computer and print print print... if other countries want to take our dollars for goods/services...that is their problem..and if they don't...they are terrorists and need to be invaded

I hear people say...your kids kids are going to be paying for this...no they aren't...the debt will just be deleted and someone holding it is going to be SOL.

[MonteQuest]

$this->bbcode_second_pass_quote('frankthetank', ' ')I hear people say...your kids kids are going to be paying for this...no they aren't...the debt will just be deleted and someone holding it is going to be SOL.

[PrestonSturges]

Right now our annual deficit is pretty close to historical averages.

If we collected all the taxes that are owed, the annual deficit would nearly vanish.

But hey folks, this is the cost of having a global empire. As I always tell folks that want to invade a different random country every week, they should be prepared to surrender their standard of living and be subject to WW2 or Soviet-style rationing and work double shifts in a defense plant.

[MonteQuest]

$this->bbcode_second_pass_quote('PrestonSturges', 'R')ight now our annual deficit is pretty close to historical averages.

[PrestonSturges]

The GOP candidates are promising a massive defense buildup. tax cuts, and probably a couple new wars (maybe we'll attack another planet or something). As usual, they intend to put it on the credit card.

[C8]

So is the USA too big to fail? Does the world need us so much to fuel growth and maintain the world monetary system that we can force the world to eat our debt? Where else would they invest? Who else would they sell to? If we are bad- but everybody else is even more risky- do we win by default?

[MonteQuest]

$this->bbcode_second_pass_quote('C8', 'S')o is the USA too big to fail? Does the world need us so much to fuel growth and maintain the world monetary system that we can force the world to eat our debt? Where else would they invest? Who else would they sell to? If we are bad- but everybody else is even more risky- do we win by default?

[Outcast_Searcher]

$this->bbcode_second_pass_quote('yellowcanoe', ' ')Since most governments are trying to minimize the cost of servicing their debt by financing a large part of it with short term, low interest bonds a jump in interest rates will very quickly lead to a substantial increase in the cost of servicing the debt.

[C8]

$this->bbcode_second_pass_quote('Outcast_Searcher', '')$this->bbcode_second_pass_quote('yellowcanoe', ' ')Since most governments are trying to minimize the cost of servicing their debt by financing a large part of it with short term, low interest bonds a jump in interest rates will very quickly lead to a substantial increase in the cost of servicing the debt.

[Outcast_Searcher]

$this->bbcode_second_pass_quote('PrestonSturges', 'R')ight now our annual deficit is pretty close to historical averages.

If we collected all the taxes that are owed, the annual deficit would nearly vanish.

But hey folks, this is the cost of having a global empire. As I always tell folks that want to invade a different random country every week, they should be prepared to surrender their standard of living and be subject to WW2 or Soviet-style rationing and work double shifts in a defense plant.

[copious.abundance]

Not this again ...

It Is Impossible For The US To Default
$this->bbcode_second_pass_quote('', 'W')ith so many economic, political, and social problems facing us today, there is little point in focusing attention on something that is not one. The false fear of which I speak is the chance of US debt default. There is no need to speculate on what that likelihood is, I can give you the exact number:

There is 0% chance that the US will be forced to default on the debt.

We could choose to do so, just as a person trapped in a warehouse full of food could choose to starve, but we could never be forced to. This is not a theory or conjecture, it is cold, hard fact. The reason the US could never be forced to default is that every single bit of the debt is owed in the currency that we and only we can issue: dollars. Unlike Greece, we don’t have to try to earn foreign exchange via exports or beg for better terms. There is simply no level of debt we could not repay with a keystroke.

[...]