What if the Government Defaults?

Economic chaos: Massive unemployment, no credit, depleted savings, long lines at ATMs.

Ordinarily, one might expect House Republicans to blink at this stage of negotiations with the Obama administration over the federal government's debt ceiling. But there is a hard-line minority that actually appears to think that defaulting on government debt would not be a bad thing.

I wish I could copy the entire article, it is 2 pages long and one of damn best explanations I have read about what to expect in the event of a Government collapse. What I awoke this morning thinking and what I now more clearly understand are pretty much worlds apart. For instance I thought that when a Government shuts down it is game over but from what I have read today that is potentially the opposite of what occurs and in fact Government can get even larger.

One of the main problems we will see if this openly happens is the loss of backers into the bond markets, this will cause outside money to stop and when that happens credit as we have always known it to be will also stop. This will cause a run on cash and even limits to what we can draw out of the bank.

Private credit, moreover, would disappear from the U.S. economic system, confronting the Federal Reserve with an unpleasant choice. Either it could step in and provide an enormous amount of credit directly to households and firms (much like Gosbank, the Soviet Union's central bank), or it could stand by idly while GDP fell 20 to 30 percent—the magnitude of decline that we have seen in modern economies when credit suddenly dries up.

With the private sector in free fall, consumption and investment would decline sharply. America's ability to export would also be undermined, because foreign markets would likely be affected, and because, in any case, if export firms cannot get credit, they most likely cannot produce.

I recommend reading this article if you like me are just not really clear on what this all means and how it will affect the Country.

www.slate.com...

reply to post by antar


The last time the Republicans played this game with the debt ceiling, our Nations credit rating was downgraded. Not because we have too much debt, but because Republicans were threatening to default on our debt.

You would think they would have learned the first time, but apparently not. Republicans have one goal and that is to try to make Obama look bad at all costs...even if that downgrades our credit again and puts us into another recession.

They honestly think people and historians are that dumb that they will just blame Obama and not the Republican party for this.

WASHINGTON (AP) — Here's the truth about a government "shutdown." The government doesn't shut down.

So the world won't end if a dysfunctional Washington can't find a way to pass a funding bill before the new budget year begins on Oct. 1.

Social Security checks will still go out. Troops will remain at their posts. Doctors and hospitals will get their Medicare and Medicaid reimbursements. In fact, virtually every essential government agency, like the FBI, the Border Patrol and the Coast Guard, will remain open. Furloughed federal workers probably would get paid, eventually. Transportation Security Administration officers would continue to man airport checkpoints.

But lurking around the corner is far bigger danger: Sometime in late October or early November the government could run out of cash. The U.S. would be unable to pay all of its bills in full and on time for the first time in history if it couldn't borrow more money.

While the Treasury Department probably would make interest payments to bondholders to prevent a catastrophic default on the debt, it wouldn't be able to make other payments on time, which would mean delays in Social Security benefits and in paychecks for federal workers and troops in the field.

Americans would feel the pain.

To prevent a "shutdown," Congress must pass a temporary spending bill before Oct. 1. To prevent a default, it must raise the $16.7 trillion cap on government borrowing.

Just attempting to calm any truly worried souls about what it is we face together in the coming days even in a worst case scenario.

news.yahoo.com...

It's not just America, the global economy is and has to go belly up before the heads in the sand will take it seriously.... calm before the storm....darkest before the dawn.

It's designed to default.

It's designed to fail.

And in the fall... those who designed it to fail gobble everything up for practically nothing.

Has been happening over and over and over for thousands of years.

The only protection people have anywhere is learning to work together locally no matter what is going on elsewhere in the world.

It's mathematically *built* to fail... and has only been sustained at the barrel end of a gun for as long as is needed.

Defaulting on the debt while causing even harder economic times than we already have is probably a good step in the right direction towards fixing our economy. Not to mention it is an inevitability. The more debt we accrue, the more interest we have to pay, and that is on top of the interest already being paid (and increasing) for the debt that already exists.

reply to post by Krazysh0t

I agree with you... just want to add this:

Nobody is going further into debt. The debt is a fiction. It's a fraud. For all intents and purposes the sum total debt in the worldwide financial market is $0 because none of the $ existed in the first place.

We are being scammed into believing we are in debt when we aren't. At least not in the way people who treat their finances and business interactions with others honestly mean debt.

We are *told* we are in debt because someone with "official" sounding titles and ultimately access to bigger guns (physical and social) counterfeited some money and gave it to us in exchange for things of actual value.

We can't pay off a $1000 debt when there is $100 in circulation.

AlienScience
reply to post by antar

 

The last time the Republicans played this game with the debt ceiling, our Nations credit rating was downgraded. Not because we have too much debt, but because Republicans were threatening to default on our debt.

You would think they would have learned the first time, but apparently not. Republicans have one goal and that is to try to make Obama look bad at all costs...even if that downgrades our credit again and puts us into another recession.

They honestly think people and historians are that dumb that they will just blame Obama and not the Republican party for this.

Republicans don't need to try and make Obama look bad, he is doing a fairly decent job of that himself. And are you suggesting that republicans just simply cave into everything the democrats want or should they actually use the tools available to fight for what the half of the country they represent want them to?

And yes, history will not remember the Congress but they will remember Obama as being the president. Similar to how everyone on the left blames Bush for the housing crisis and the Iraq war even though democrats were with him every step of the way.

reply to post by Tinkerpeach

Republicans don't need to try and make Obama look bad, he is doing a fairly decent job of that himself. And are you suggesting that republicans just simply cave into everything the democrats want or should they actually use the tools available to fight for what the half of the country they represent want them to?

And yes, history will not remember the Congress but they will remember Obama as being the president. Similar to how everyone on the left blames Bush for the housing crisis and the Iraq war even though democrats were with him every step of the way.

Apparently Republicans do need to try...because that is all they have done in the House since they took control. I expect Republicans to do their job and not risk the entire economy because of sour grapes of losing.

Obamacare is law, it isn't going anywhere...they need to get over it and move on. Too much of it has already been implemented for it to go away now without a massive replacement bill. Defunding it is just a childlike way for the Republicans to stamp their feet and cry.

Victors right the history. Republicans are a dying demographic, Obama will be remembered as a good President. The Republicans during this time will be viewed as the last racist, homophobic death cry of the United States.

By the way, who writes our history??? Mostly academics do...and what is it that republicans cry about academics all the time??? Oh right...that they are Liberal.

reply to post by antar


with his "drive by shooting" against syria, i figured obama was throwing his party under the bus.
so, this is how the republicans regain the white house, i figured.
nixon won with a secret plan to end the vietnam war.

now the republicans want to shut down the government.

is the future so bleak that neither party want to be in charge after the next election?

or just incompetence by both parties.
if the gods make mad those they plan to destroy, phase one is complete.

AlienScience
reply to post by Tinkerpeach

 

Republicans don't need to try and make Obama look bad, he is doing a fairly decent job of that himself. And are you suggesting that republicans just simply cave into everything the democrats want or should they actually use the tools available to fight for what the half of the country they represent want them to?

And yes, history will not remember the Congress but they will remember Obama as being the president. Similar to how everyone on the left blames Bush for the housing crisis and the Iraq war even though democrats were with him every step of the way.

Apparently Republicans do need to try...because that is all they have done in the House since they took control. I expect Republicans to do their job and not risk the entire economy because of sour grapes of losing.

Obamacare is law, it isn't going anywhere...they need to get over it and move on. Too much of it has already been implemented for it to go away now without a massive replacement bill. Defunding it is just a childlike way for the Republicans to stamp their feet and cry.

Victors right the history. Republicans are a dying demographic, Obama will be remembered as a good President. The Republicans during this time will be viewed as the last racist, homophobic death cry of the United States.

By the way, who writes our history??? Mostly academics do...and what is it that republicans cry about academics all the time??? Oh right...that they are Liberal.

They have submitted an ungodly amount of legislation that Harry Reid simply kills and is currently sitting on his desk. Instead of taking this legislation and opening up debates on it to reach compromises he just does not play ball. What recourse is exactly left to the republicans if the Senate will not negotiate anything?

Mind you, it is not the House drawing lines in the sand, it is the Senate democrats. Republicans have been willing to work with democrats when they actually come to the table such as with the extension of unemployment benefits. They were against it but Harry Reid compromised and the work got done.

Slavery was law at one point also but thank God that Congress didn't just get over it and move on. This is a ridiculous argument.

Republicans are not going anywhere and neither are the democrats. People claimed the GOP was dead after the 5 democratic presidential terms in a row starting with FDR but people got tired of them and picked IKE to bring back more conservative values. To say that the half of the country that are conservative simply are no longer viable in politics is a very rookie comment to make. Its simply not true.

Remember 2010? There is a lot of prediction that we are going to repeat that in 2014. Even the left's lauded Nate Silver is saying that the best the democrats can hope for is to not lose any seats. He's putting it at 50/50 right now that the GOP takes control of the Senate.

And Obama will not be known as a good president, he will be known as the first black president but that's about it. With all the problems surfacing regarding healthcare its obvious that its going to need to be completely reworked and the final product will resemble nothing that Obama originally passed.

Obama probably will also be remembered as being the first president to actually assassinate a US citizen though.

Good? I hardly think so.

Those making this about Republicans/Democrats (regardless of the article content) are part of the problem.

If you're doing it on purpose... ... ... ...

If you aren't... please slow down and just listen for a while about how this debt "we're" supposedly about to "default on" came to be:

commentary.historyguy.com...

The government has shut down many times before and life went on. It is definitely not a doom scenario as it is being made out to be...

reply to post by TorqueyThePig


Shutdown? Yes.

Defaulted on debt? No.

This conversation is talking about a little more than just shutting down the government.

reply to post by Krazysh0t


Brain fart. You are correct. I don't know how, but I forgot about the debt ceiling issue and was just thinking about a shutdown. Thanks for the reminder. It's been a long day.

reply to post by Tinkerpeach


Rush, is that you?

That's quite the spin on things...that it is actually Democrats that are going to shut down the government...LOL.

And did you compare Obamacare with Slavery...wow...talk about desperation.

Republicans tanked our credit last time just to try to make Obama look bad...it didn't work...they can fool their constituents who are not the most intelligent people in our country...but they can't fool the intelligent people who know exactly what is going on.

Obama brought us out of a recession, got us out of Iraq, getting us out of Afgan, killed Bin Laden, and moved us forward on healthcare (whether you like it or not, we are further along than we were before Obama).

I think he will be remembered just fine...of course the haters will always hate him...but they will die out and then only facts and history are left, which will show him as a good President.

We could demand the Chinese pay us back the $800 billion or so they owe us, and if they still refuse downgrade their credit like they did us. Then they wouldn't be able to buy the American parts they need to make their junk products work.

We could always refuse to pay on all those Swiss and Caribbean accounts that are really just tax havens for American corporations and wealthy individuals.

We could ask foreign nations to forgive our debt like we did them, or simply use the Aid they receive to pay them back.

If the U.S. economy fails so does the rest of the world. Debt ceilings credit ratings, government shutdowns? Political jargon and politics. No panic in the streets no global economic meltdown.

The tax revenues continue.

Maybe they finally spend what they take in.

Instead of deficit spending.

You don't pay back a casino by going into a casino to earn the money.

We don't solve this problem by playing by the same rules that created it.

It will never work and will just continue to sink people further and further into perceived subjugation all in the name of "loans" (aka counterfeited inflationary devices) negotiated in private between people who have no intent or motivation to help those who are put up as collateral for the frau... I mean loan.

BardingTheBard
It's mathematically *built* to fail... and has only been sustained at the barrel end of a gun for as long as is needed.

Absolutely true. This system was installed when President Wilson and a small group of Congress sold out our country in 1913. I can't help but wonder if some researcher could determine the increase in net worth of those that participated in this act of treason and national fraud. Just how much was their 30 pieces of silver?

No matter what, there is going to be pain when this criminal clusterf**k collapses. The pain will be a lot shorter if we PHYSICALLY remove the private central banks from our government. Permanently. Criminal charges are in order too. Once we implement an honest method of backed currency and real, transparent accounting, we can secure our financial future. We could learn a lot if we follow the integrity of JFK.