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What do you think debt is? Its association is with red ink and negative numbers. But what are negative numbers? Do they represent the void? No. -10 apples actually is an acknowledgment that there must be 10 apples. A -10 dodo bird debt is absurd and must be liquidated into something compensatory or just go into default. North America is as close to -1 dodo birds as one can get. A debt from the US can't really be any more then the US itself. What happens when a sport franchise changes owners? Most of the time, not much. Fire the coach again? The US is not going to be liquidated to book value. Its worth more intact. Its chapter 13. You don't liquidate a company that has a enterprise value of $10 billion , book value of $1 billion with an unplayable debt of zillion. No, the new owner is best off with the $10 billion dollar asset with any owed in excess being absurd.
And that's not all:
There will be no foreclosures or eviction. That's called an invasion. Foreclosures don't mean squat unless there is force:
So what happens if the US "defaults". Since the US runs the courts what does that mean? Even China can do nothing more than stop buying treasuries. All they can claim is a technical default anyway since they can have all the dollars they want.
Loss of power and prestige is what matters. There will never be a fiscal crisis of any concern unless it correlates with a political one. Want any proof then look at the US going off gold in 1971. That was a gold default.
Its nothing like a household, unless that is you have children and you owe them a big debt that you can cancel at anytime.
The short answer is that we just print a bunch of money equal to the debt we owe and hand it over. End of story. It is their bad for using our debt as their money.
So what happens if the US "defaults". Since the US runs the courts what does that mean? Even China can do nothing more than stop buying treasuries. All they can claim is a technical default anyway since they can have all the dollars they want.
I'm of the opinion that rising interest rates and decreasing purchases of treasuries are what will cause huge problems for the US. The inability to borrow and slowing economic activity will burn the candle at both ends. Sure, the US can continue to debase the currency through the Fed to pay bills/spend, but that can only last for so long without repurcussions (e.g. reserve currency implications, deflation, eventual rapid inflation, etc.). What we end up with is stagflation and a weak currency for the forseeable future.
The short answer is that we just print a bunch of money equal to the debt we owe and hand it over. End of story. It is their bad for using our debt as their money.
That it is, our bad. What people fundamentally don't seem to understand is we borrowed trillions of money into existence bidding against each other which now has become the savings of the wealthy. The only way out is public debt, but just look at the brain washing. Almost everyone, to a man, thinks public debt is the problem while drowning in their own private debt being scooped up and loaned out again for even more debt. I doubt they will ever understand because they don't even when its shown to them.
I'm of the opinion that rising interest rates and decreasing purchases of treasuries are what will cause huge problems for the US. The inability to borrow and slowing economic activity will burn the candle at both ends. Sure, the US can continue to debase the currency through the Fed to pay bills/spend, but that can only last for so long without repurcussions (e.g. reserve currency implications, deflation, eventual rapid inflation, etc.). What we end up with is stagflation and a weak currency for the forseeable future.
So answer me this. Is China thriving because of a "strong currency". Can you show me an example where the rising marginal utility of money is good for the real economy. That happened in the 1930s. That's good you say? Japan could "strengthen" their currency anytime they like but they keep weakening it. Why?
If you want a strong dollar just tax it all in until there is one dollar. It will be very strong then because the marginal utility of the last dollar would be to the moon. Why not make everything scarce to make it rise in value then?
So answer me this. Is China thriving because of a "strong currency". Can you show me an example where the rising marginal utility of money is good for the real economy. That happened in the 1930s. That's good you say? Japan could "strengthen" their currency anytime they like but they keep weakening it. Why?
If you want a strong dollar just tax it all in until there is one dollar. It will be very strong then because the marginal utility of the last dollar would be to the moon. Why not make everything scarce to make it rise in value then?
As a person who gets paid in dollars, it's in my best interest to not have its value disappear (at a rate faster than population/economic growth). Take away my earned value and I get nervous and start to save and not spend.
As a country, I would imagine it impacts trade at the very least; I'm not qualified to speak on the specifics of that. A weak dollar as the reserve currency probably creates some concerns worldwide, especially as that decline happens more quickly.
Japan not choosing to strengthen their currency has more to do with their pipe dream to somehow print their way to prosperity IMO. They're the last country I'd look to as a guide for what to do.
As a person who gets paid in dollars, it's in my best interest to not have its value disappear (at a rate faster than population/economic growth). Take away my earned value and I get nervous and start to save and not spend.
You are a person that , as is so often the case with flawed economic models, who is working on side of the equation. You will be paid fewer dollars if other people save. My goal is to lower the cost of financial transactions to as close to zero as possible. If we bought and sold over the phone, your plan is to increase the value of phones. To do that you reduce the amount of phones so that people begin to bid to be able to use them. With one phone then the "value of financial mediums" will be high. That's great for bankers. If you are representing banking interest then my apologies. You are a fine champion for financial interests.
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As a country, I would imagine it impacts trade at the very least; I'm not qualified to speak on the specifics of that. A weak dollar as the reserve currency probably creates some concerns worldwide, especially as that decline happens more quickly.
The you disagree with Triffin , who was very qualified.
Tell me, what would you use to write in a book, a pen created from the feather of a rare and exotic bird or just a pen? In order to use a currency, it must flow out of the country. You cannot use a money supply that does not exist. That is China's opposite dilemma to ours.Any money they would spend get repatriated quickly to China.
To supply the world’s risk-free asset, the country at the heart of the international monetary system has to run a current account deficit. In doing so, it becomes more indebted to foreigners until the risk-free asset ceases to be risk-free.
Triffin's essential insight. Our debt is the world's money supply.
We essentially need to "sell" our money to be used for a credit system.
Yes its a counterintuitive and contradictory mess that could one day destabilize. Yes its' also difficult to create a level of money supply domestically while its also sucked out of the country. If country Z wanted to use $500 billion of our currency , we would need 500 billion in fiscal budget deficits or bank credit just to create enough money to avoid reducing our domestic money supply. If you said you like depressions, them my apologies again....
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Japan not choosing to strengthen their currency has more to do with their pipe dream to somehow print their way to prosperity IMO. They're the last country I'd look to as a guide for what to do.
It has to do with their export industry that controls the country at the expense of the rest of them.
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