What do you think of default on the national debt?

[heavenlyboy34]

Gary North argues that default is a good idea and an inevitability here. (he is referring to both the US and the EU, btw) IMO, default is going to happen in one way or another-I agree with RP on this.

[Black Flag]

I agree, the key word

Inevitable.

[Sola_Fide]

We’re going to default one way or the other. There are two ways we can default: we can just honestly do it by not paying, or we can print money and pay back our creditors with monopoly money which is probably more likely. Sometime in 2011, if we make it out of 2011, maybe in 2012, we’re going to have a crisis. You know, they didn’t have a crisis in Ireland last year — they still had all this debt — what happened was interest rates rose because the bond market got nervous. Well, the bond market is going to get nervous, they’re going to start to realize the position that they are in, that they are not going to get their money back, or that they are going to get paid in inflated dollars, and interest rates are going to rise sharply in the United States, that’s going to destroy the ability of the federal government to pay its bills, that’s going to crush U.S. homeowners who have mortgages, particularly adjustable rate mortgages, it’s going to crush people that have credit card debt, auto loans, student loans, our whole debt-financed economy, is going to come crumbling down the minute the cost of that debt service rises.

-Peter Schiff

http://www.economiccollapse.net/pete...y-or-the-other

[emazur]

Voters refuse to acknowledge the cost and revenue of entitlements and politicians won't do anything about it. There will be no structural changes (even Paul's plan doesn't do much about entitlements - he focuses on balancing the budget so I don't blame him for not wanting to slay 2 dragons at once). The default will come suddenly between now and 2025 and it will be initiated not by the U.S. government, but by foreign creditors. This report doesn't come from Peter Schiff or the Libertarian Institute for Doom, Gloom, and Kicking Grandma to the curb. It was co-headed by a former Fed vice-chair:
http://bipartisanpolicy.org/sites/de...0SUMMARY_0.pdf

Moreover, by 2025, federal revenues will be completely consumed by the combination of interest payments, Medicare, Medicaid, and Social Security. The Treasury will have to borrow money to finance all of its other obligations – including defense, homeland security, law enforcement, food and drug inspection and other vital operations. These projections are based on fairly moderate assumptions about future interest rates. The nation’s outlook will grow far more ominous if America’s creditors lose confidence in the federal government’s commitment to address its debt problem – which will increase interest rates. A loss of confidence in the markets could also send the value of the dollar plunging overseas, which could trigger runaway inflation and still higher interest rates.
Rising debt and rising interest costs could evolve into a “death spiral,” with the two feeding off one another in an ever-more vicious cycle.

[WilliamC]

Bondholder haircuts will be all the new fashion.

Ron Paul has stated that the Treasury bond bubble will be the largest of all.

As the equities market comes crashing down during the next engineered flash crash or whatnot trillions will flee into the 'safe haven' of treasury bonds.

Then comes the haircut.



Peter Schiff explains it here.



Call it pump and dump, rope-a-dope, or plain ole fashion ponzi scamming, that's what's in the works.

Supposedly.

[Acala]

We won't default because that gives the banks fewer opportunities to squeeze the last drops of wealth into their own pockets. We will inflate the currency until it collapses.

[Individualism]

I think it would be a good thing, a default means that you can't borrow money or buy with anything that is not accepted currency which is fine, think about, goverment couldn't overextend itself when it couldn't borrow more money, goverment would be forced to be small cause it wouldn't have the ability to borrow money. if Ron Paul becomes president lets get him to default on the debt or get our reps, senators and president to default on the debt.

[thoughtomator]

The sooner we default out the odious debt, the better. It will kill the twin moral horrors of intergenerational debt and too-large government, in one fell swoop. The federal government should never have been given the power to borrow, and giving it the power to coin money doesn't look like it worked out too well either.

[ctiger2]

Debasing the monetary unit IS defaulting.

[Acala]

Debasing the monetary unit IS defaulting.

The result is similar, but the losers are different. If the government refuses to pay those who loaned it money, bond holders take the brunt. If the government pays the debt with newly printed money, people who live on a fixed pension and have never owned a bond in their life, just as an example, could be ruined. Inflation is a strategic maneuver that allows government to pick winners and losers more than an outright default. Also, monetary expansion is not a default event for purposes of credit default swaps, to my knowledge anyway.