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Preparing for a potential US debt default
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Dr. Howard Offline
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Post: #51
RE: Preparing for a potential US debt default
It won't default. Remember who the real masters are of politcs, the economy/GDP. The government will turn off the taps for program funding and lay off instead of 'furlough' employees before they default on a loan and explode their currency.

I don't know for sure, but I'm going to assume that previous examples like hyper inflationary germany didn't have hundreds of thousands of government workers on payroll and SSI and farm bill programs on the go at the same time that they were printing money.

They, smartly, devalued their currency so they could make war reparations payments more easily. If they didn't I bet they would still be on a payment plan today.

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10-08-2013 11:28 AM
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MattW Offline
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Post: #52
RE: Preparing for a potential US debt default
Josh Barro is pretty sharp and he briefly explains here how long until the fed govt misses a payment of any kind (not interest):

Quote:People have been talking a lot about Oct. 17. That's the day the Treasury Department expects to exhaust "extraordinary measures" that allow the government to finance itself without issuing Treasury bonds, such as borrowing from various government trust funds.

But even when that happens, the federal government will have about $30 billion in cash left on hand, and every day it will collect more revenue. That means it will be able to go a few more days, or possibly as long as two weeks, without missing payments....

So sometime between Oct 22nd and Nov 1st is when they will have to start prioritizing payments unless some kind of budget is passed. On November 1 there are a whole slew of bills due that will be impossible to cover (SS benefits, Medicare payments, military pay and more).

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10-08-2013 06:10 PM
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Tex Pro
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Post: #53
RE: Preparing for a potential US debt default
^This is good analysis.

Another idea I have heard is that the treasury could pay the bond holders and delay everything else until enough money comes in, so instead of picking and choosing which parts of government to fund, treasury would simply withhold payment for 2-3 weeks until there is enough tax receipts to pay everyone who has IOUs.
(This post was last modified: 10-08-2013 06:41 PM by Tex Pro.)
10-08-2013 06:34 PM
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Thomas the Rhymer Offline
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Post: #54
RE: Preparing for a potential US debt default
6 days away from default and there are only talks about talks to resolve the issue.

At this point I think the USA will temporarily default for a few days and then quickly catch up on all late payments. This will create a temporary window of chaos, but also of opportunity.

Watching the Democrats and Republicans fight each other, I can't help but think that there is some third party who is deliberately playing the two sides off on one another.

Kind of the way the Russians paid off opposing sides in the Polish parliament in the 1700's, to keep it in permanent deadlock.

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10-11-2013 01:40 AM
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Tex Pro Offline
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Post: #55
RE: Preparing for a potential US debt default
(10-11-2013 01:40 AM)Thomas the Rhymer Wrote:  6 days away from default and there are only talks about talks to resolve the issue.

At this point I think the USA will temporarily default for a few days and then quickly catch up on all late payments. This will create a temporary window of chaos, but also of opportunity.

Watching the Democrats and Republicans fight each other, I can't help but think that there is some third party who is deliberately playing the two sides off on one another.

Kind of the way the Russians paid off opposing sides in the Polish parliament in the 1700's, to keep it in permanent deadlock.

I wish this were the case, but our politics is very divided. I know it is hard for someone not from the USA to believe, but there really is a lot of rancor in American politics.

As for the debt ceiling, I am pretty sure they are going to raise the debt ceiling within the next few days.
(This post was last modified: 10-11-2013 05:19 AM by Tex Pro.)
10-11-2013 05:13 AM
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