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No, they don't, but we appreciate your attempt at humor.
That is unlikely to happen.
What is more likely to happen is the investors will run out of money to buy US debt.
Private pensions and State pensions currently hold $493 Billion and $234 Billion respectively.
State pension plans owe in excess of $1 TRILLION, and don't have it. The States will have to cash in their chips just as the private sector will have to cash in theirs to be able to pay off their pensions, but they won't be able to buy/hold US federal debt.
The same is true for Euro-States.
You do realize that many of the Euro-States have part of their future unfunded liabilities tied up in US securities, right?
You do understand that over the next 30 years, the Germans, Dutch, French et al are going to have to dump their US treasury holdings in order to pay for their social welfare programs, right?
Yeah, 1 Euro = $122
That's not much different than $1 =382 GRD.
That's so 1920's and so wrong.
In the first place, what you claim is true if and only if 100% of the materials originate in-country.
The US cannot manufacture squat without first importing tons of other material, which will cost prohibitive due to the low value of the US Dollar.
In the second place, you're wrong because you're not familiar with something called an "Escalation Clause."
If you read your mortgage contract, the bank can increase the interest rate it charges you to offset any increase due to Monetary Inflation.
You'll have to read the mortgage contract to see what rate triggers an increase.
So, for example, if the Federal Reserve reports Monetary Inflation at a rate of 10%, then it may be enough to trigger a letter from your lender explaining to you that the Escalation Clause is now in effect and your mortgage has increased because your interest rate has increased.
I have heard that GMAC has an Escalation Clause to jack up your auto-payments, but I've only heard that, and don't know it for a fact.
Amused...
Mircea
I can't refute any of this because most of it is so ridiculous I don't even know where to start.
The ONLY thing that is propping us up now is that for some reason other countries are willing to buy our debt. When that stops we are Greece.
All we are doing now is servicing the interest. When rates increase, we are dead.
Greece's position in the world is nothing like ours. We need more exports and more manufacturing, a few more jobs, but we have NOT been depending on the Eurozone for years to allow us to act like four-star financial idiots. They were one of the poorest countries in Europe BEFORE they joined the Eurozone and their money management has been spectacularly bad ever since. We are one of the richer countries and our money management, while not stellar, is pretty OK and getting better. They have 25% unemployment; ours is about 5% right now. They share the debt between 11 million people; we share our smaller debt between over 300 million people. With 25% of their people out of work, a lot of people are not paying any taxes. Most of our citizens are actively paying into the system. There are a lot of differences.
As others have said, we have our own currency so the US has tools at its disposal that Greece lacks. However, the same mentality of entitlement has taken root in the US that got Greece into the mess it is in.
As others have said, the US can never be in that position. We can print money, forever, to survive and pay debt and expenses.
Worse case, our currency gets so diluted and cheap, our exchange rate makes it beneficial for our exports. Manufacturing returns to the USA. Foreign countries buy our products. And we return to prosperity (albeit with some inflation, maybe)
And I wonder what the disadvantage of debt for the USA is. From where I sit, it's all an advantage.
We ended up surviving only BECAUSE of Obama. The deficits he ran were mandates from Bush -- collapsing federal revenues and exploding automatic-stabilizer payments. Just another economic debacle brought to you by the GOP. They do it every time.
Quote:
Originally Posted by Gunluvver2
...and a fiscally responsible President is elected in 2016 we might make it back to fiscal soundness within ten years.
Bill Clinton had run four budget surpluses in a row when he left office. Republicans couldn't wait to upset that apple cart.
Quote:
Originally Posted by Gunluvver2
Other wise, at the rate we are going downhill now, maybe three until total financial collapse or an all out War, probably Civil War.
Still upset about losing the last one, eh. Here's a clue: the next one will turn out the same way.
As others have said, we have our own currency so the US has tools at its disposal that Greece lacks. However, the same mentality of entitlement has taken root in the US that got Greece into the mess it is in.
The entitlement that leaves me wondering is the odd presumption among so many who have no clue at all about economics that they should go ahead and talk about it anyway.
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