dagblog - Comments for "So, We Default?"

Thanks. He is right that we

EmmaZahn — Tue, 08 Oct 2013 19:02:07 +0000

Thanks. He is right that we need a better conversation about the debt. While his suggestions are certainly doable, they really only kick the can down the road for a while.

There is just so much money in accumulated savings not making its way back into the general economy. The whole system needs rethinking, not just the debt.

Thought some arguments in

artappraiser — Tue, 08 Oct 2013 17:57:27 +0000

In reply to In case my identifying the

Thought some arguments in this piece might interest you:

America Needs a Debt Ceiling—But Not This One
Everything about today's debt limit is wrong, from its awful measure of debt to its egregious trigger of national default. We could do better.
Michael Shapiro, The Atlantic, Oct 8 2013

Note the author byline: served as a senior policy advisor at the White House National Economic Council.

At our house we have the

trkingmomoe — Tue, 08 Oct 2013 17:48:45 +0000

In reply to Oh I have fewer and fewer

At our house we have the "piss pants award." My grand daughter is more than happy to pass the baton on to you for the day with a kiss. {{{SMOOCH}}} She is certain she will get the award back before the week is over because nobody never likes her or will be her friend. It has to do with the fact that she is the middle child between two brothers who adore her.

In case my identifying the

EmmaZahn — Tue, 08 Oct 2013 17:45:55 +0000

In reply to The national debt is

In case my identifying the national debt as savings sounded strange, I just found some information that may make it sound more reasonable. From a recent treasury.gov report:

The U.S. asset management industry oversees the allocation of approximately $53 trillion in financial assets (see Figure 1).

Add together national debt/savings ~$17T, equity market cap ~$20T and money supply, ~$12T and it comes really close to the that total.

Nice post, MM. To echo, Emma:

Doctor Cleveland — Tue, 08 Oct 2013 04:51:02 +0000

In reply to So, We Default?

Nice post, MM.

To echo, Emma: our national debt is all virtuous, prudently invested government bonds.

What happens to our economy if US government bonds cease to be a solid investment cannot be predicted in full detail, but it cannot be good.

You know we have been trying

trkingmomoe — Tue, 08 Oct 2013 03:04:03 +0000

In reply to So, We Default?

You know we have been trying to keep Yahoo Ted Yoho hidden here in Florida since we have not gotten over the embarrassment of Wrong Way Allen West. Yoho thinks if we crash and burn the economy that world finances will be more stable afterwards and everything will be much better. I wonder if he is that stupid in front of the owners of all those race horses that winter their horses in and around his district.

The US dollar is the reserve

NCD — Mon, 07 Oct 2013 21:41:41 +0000

In reply to So, We Default?

The US dollar is the reserve currency of the world, and has been since WW2. Every commodity, from corn to oil, is priced in dollars. Reserve status allows the US to run an import/export deficit year after year, as foreign individuals, businesses and nations hold US paper and dollars in exchange for shipping the US real goods.

There is a lot more in a default than damage to bondholders. Interest rates on US debt would rise, the dollar would fall as inflation rises, government checks would be delayed or canceled for SS, paying contractor bills, Medicare etc.

The privileged position of the US /reserve currency would be seriously damaged.

Boehner doesn't want a vote on a 'clean CR'. If it passes he looks like an idiot. If it doesn't pass, due to the 'suicide vest lemmings' of the GOP, markets crash.

When markets start into free fall, the GOP will be forced to vote again, and pass it. GOP fingerprints will be all over the crime scene.

Pass the debt ceiling and get nothing in return from the Democrats, or don't and watch the Dow melt down. That's why Boehner doesn't want a vote. He wants to play out his game of chicken as long as possible.

That's also why Obama wants the House vote now, while there is still time for at least 17 of the GOP crazies to come to their senses before the Treasury does run out of cash.

Oh I have fewer and fewer

Richard Day — Mon, 07 Oct 2013 21:41:29 +0000

In reply to Default lies not in our stars

Oh I have fewer and fewer cronies lately. hahahahaha

I'll take it!

Default lies not in our stars

Verified Atheist — Mon, 07 Oct 2013 20:34:08 +0000

In reply to Ah hell with it. Let us use

Default lies not in our stars but in ourselves!

I hereby grant you the … wait, are you eligible for the award, or does that stink of cronyism?

The national debt is

EmmaZahn — Mon, 07 Oct 2013 19:37:26 +0000

In reply to So, We Default?

The national debt is different because it is not really debt at all but private savings. It is the accumulation of several decades of budget deficits that gave people and institutions the safest place in the world to 'invest' their hard earned savings. A lot of people (really a lot) would rather hold Treasurys than cash especially in uncertain times. Close that channel and the money starts looking for the next safest things to hoard, usually commodities like aluminum making Coke cans more expensive and grain harvests bumping up the price of bread.

And despite how how outrageous $17T in debt sounds, it pretty much matches the year's Gross National Income, same as it has for many years now. Anyone with a home mortgage probably borrowed more than one year's income so why set the debt limit so low for all of us combined?

And, btw, that $17T also closely tracks the current combined market capitalization of the NYSE and NASDAQ which is not included in the the GDP because that, too, is savings.