U.S. debt default could wipe out 6M jobs and $15T in wealth(cbsnews.com)
cbsnews.com
U.S. debt default could wipe out 6M jobs and $15T in wealth
https://www.cbsnews.com/news/debt-ceiling-default-6-million-jobs-15-trillion-wealth/
27 comments
It very much is. The author of the article has a very clear liberal bias and it makes me believe she didn't write this cause it's true, but because she just doesn't want to analyze why republicans would vote unanimously for that.
When it comes down to it, the only political faction in the US that actually cares about reducting the deficit are the old school dynasty democrats. Remember, Clinton ran a surplus until Bush spent it all on orphaning iraqis. This is also why the old democrat elites are the most hated faction. Policies that reduce the deficit are boring and unpleasant: raising taxes and cutting spending. Policies that increase the deficit are fun-- Tax cuts! Nation building! Free healthcare! Government stock purchases!?
The debt limit is a completely artificial, political game.
Congress passes laws which have costs associated with them. Then they, separately, decide whether they will authorize payment for those laws. The costs should be automatically authorized.
Republicans get to score political points by pretending to control spending, when in fact they raised the limit every time they wanted to give tax cuts to their wealthy donors. It's hostage taking, because they understand that the Democrats will act responsibly. They get to threaten to destroy things as a negotiating tactic.
Republicans get to score political points by pretending to control spending, when in fact they raised the limit every time they wanted to give tax cuts to their wealthy donors. It's hostage taking, because they understand that the Democrats will act responsibly. They get to threaten to destroy things as a negotiating tactic.
At some point, the US Dollar is going to lose its global reserve status completely, and we'll face a 50% or greater hit to our standard of living[1].
If they default, it'll be better in the long run for man kind, but it'll really suck for the US for at least a generation.
1 - I'm guessing, based on the 50%ish hit the British took when they lost it.
If they default, it'll be better in the long run for man kind, but it'll really suck for the US for at least a generation.
1 - I'm guessing, based on the 50%ish hit the British took when they lost it.
I actually believe 50% is very optimistic. Main reason being we’re talking about a very complex non linear event that is not very well studied and depends on a society that hasn't experienced a default before.
Above could also explain FED's overly protective attitude towards the whole thing.
Above could also explain FED's overly protective attitude towards the whole thing.
Good. Spending $1tn every year on fighting invisible enemies should absolutely have repercussion.
I’m don’t really know how macroeconomics works too well, and no article about this debacle that I’ve read really explains what the repercussions are of the debt ceiling getting raised higher and higher. Surely this must have some end? Or can we just keep going forever?
Well Japan has over twice the debt-to-GDP ratio (the important figure here) as the US, and has done for almost two decades now. The debt isn't one thing, it's millions of bonds being sold all the time, each of which has to be repaid after 1/3/5/10/30 years when it matures. The only reason people wouldn't buy them is if they expected the US economy to collapse within that period and thus be unable to get their money back, and very few people think that is going to happen.
The fact that raising the debt ceiling is an annual political hot potato is down to the US's system of government, in parliamentary systems such as most countries have the government has a working majority by definition and can pass their budget without fanfare.
The fact that raising the debt ceiling is an annual political hot potato is down to the US's system of government, in parliamentary systems such as most countries have the government has a working majority by definition and can pass their budget without fanfare.
We can go as long as people have faith.
As much as we want to view the world (economy) as a financial machine, its really runs on the belief that people have for the system.
I for one, do not have faith in Nation money. I believe in crypto.
As much as we want to view the world (economy) as a financial machine, its really runs on the belief that people have for the system.
I for one, do not have faith in Nation money. I believe in crypto.
As a Brit, can I ask why the US has a debt ceiling, as it seems like when total debt gets close to the ceiling, a vote is passed to raise it - but not before a lot of politician point scoring?
Why not just default on the 'debt'. It's not like the Federal Reserve are gonna send the bailiffs around.
Remember that about 70% of these treasury bills are held by the public. This makes up social security, retirement accounts, they are held by mutual funds, pensions, and banks.
A default would shudder the world economy, and destroy confidence in the USD.
Yes indeed. In the spirit of “know your enemy” (the elite class) I joined The World Economic Forum about a year ago - lots of interesting material!
Just my little opinion, but the economic elites either eventually need to run up inflation or crash global currencies. There seem to be logical reasons for both approaches, so to me it is a coin toss what they will do.
Just my little opinion, but the economic elites either eventually need to run up inflation or crash global currencies. There seem to be logical reasons for both approaches, so to me it is a coin toss what they will do.
When debt service eventually becomes unmanageable the economic elites will most likely pick a technical default instead of inflation that wrecks confidence in the dollar. Essentially they'll force creditors to take a cram down by exchanging their current Treasury bonds at face value for new ones with longer maturities and lower interest rates.
My bet is that they'll swap for something ultimately blockchain based, using Bitcoin's fixed inflation curve to rebase the dollar on going forward. (eg BTC-ETFs, central bank digital currency, etc)
If the protocol is worth anything, the Elite can't control the economy as well. Then what point is there to being elite, if you cant use your 'superior' intellect to direct global trade?
> I joined The World Economic Forum about a year ago
Can you just... decide to do that? How do you go about doing so?
Can you just... decide to do that? How do you go about doing so?
I got a free invite from the Exponential View. Search for digital edition works economic forum.
Is this a serious question? Maybe you should just google the subject before posting such childish take.
Unfortunately, this childish take is now rebranded as "Modern Monetary Theory" and is official FED policy right now.
That isn't remotely what MMT is. It also isn't remotely fed policy.
Not sure if this article is alarmist.
Wiping out 1/3 of the stock-market and spike in unemployment if true would have triggered enough entities to force a resolution.
I remember there was a debt-ceiling crisis during the Obama era as well. Is this the same old political maneuvering seen before?