What Would Happen If The Debt Ceiling Is Not Raised, And the U.S. Is Forced To Default?
Submitted by beesting on Tue, 01/18/2011 - 12:18in
Tim Geithner just warned Congress that if the debt limit is not raised, by March, the U.S. will start to default on it's debt obligations.
Some obligations are long term like the Congress peoples retirement plans and S.S. for the masses. Interest on all government debt, that the taxpayers are forced to pay, may stop....Which in turn would lower taxes.
Maybe, it's not such a bad thing to default and start over with sound money, no Fed, personal debts canceled, and the biggest banks collapsing.
The people are revolting against debt, all over the world:
http://www.zerohedge.com/article/enter-twilight-zone-worlds-...
What do you guys/gals think?
You know, they never talk
You know, they never talk about BUDGETING so that not everything fails..I mean ALMOST ALL of us have had times when we missed a payment, or had to lower what we paid on something and had to ask others to wait a month, and pay SOME stuff..I mean they talk like they even KNOW all their bills. If Geitner has a CLUE, as secty of Treasury, I would be surprised. Grants can be held up, SS can be paid, New buys of cameras and security on US crap can be cancelled, fusion centers stopped being built, medicare and medicaid paid, ...so many things can be paid and not paid. IF they do it right, we would continue cutting and spending LESS til it all works out.
You're funny
If only the real world was like that. I laugh because I know you've been around long enough to know the real deal and putting it in these pollyana tv words cracks me up. lol
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SO WHAT? GREAT! No more debt
SO WHAT? GREAT! No more debt to worry about!
We'll be out of debt!
HIP HIP HURRAY!
I say bring it
Let's see how it plays out.
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The Congress would be forced
The Congress would be forced to cut spending somewhere. This doesn't sound like a bad thing.
Obviously, people who have contributed to Social Security should not be targeted. Rather, we should begin cutting unconstitutional agencies and programs.
Since you asked, I'll give a few suggestions: all foreign aid, the Departments of Energy, Education and Homeland Terrorism. That ought to balance the budget.
Oh, and we can cut the salaries of ALL elected and appointed public service at the federal level. Sell off Air Force One and Marine One and let Obama take public transportation like the Great Unwashed.
I am sure default is never a reality.
The government would only have to make Iraq and Afganistan become States of the United States of America and then tax the oil. Isn't that the real plan? Nothing prevents a country such as Iraq from becoming a State. Then there would be 52 States, just like a deck of cards. Easy to remember.
Sarcasm of course, but with much truth.
grant
The reality is that the government collects over 10 times
What they owe in interest in taxes, so the U.S. would not in fact default, only be forced to cut a percentage of services from welfare to social security to cover their loss of not extending the debt ceiling. It would not be the end as Geithner would have most Americans believe, but if they were forced to cut the socialist programs then it might be over for them politically, and that is what he is selling those that depend on votes for their jobs to convince you; the voter, that the world would end if they do not get their (your) money. For a clearer explanation go here:
http://blogs.reuters.com/felix-salmon/2011/01/13/the-us-wont...
Always remember:
"It does not require a majority to prevail, but rather an irate, tireless minority keen to set brush fires in people's minds." ~ Samuel Adams
Stay IRATE, remain TIRELESS, and set those BRUSH FIRES everywhere you go and in all you do!
There will need to be cuts
There will need to be cuts and no matter how they handle it we will not get out unscathed. The only difference will be that some are impacted more than others and some directly while others indirectly. These spending cuts will ripple through.
In addition, I doubt that it will be managed only via cuts. There will likely be tax increases as well.
My guess is that the least impact action would be to stop all foreign aid & reduce the military empire around the world. Although even this would have some saying that the impact of the cuts is less security & whatever else.
I don't think we just simply stop spending an extra $4-5 billion per day without there being consequences.
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The debt will be increased
the Fed will threaten massive interest rate increases that would dramatically increase the debt service on current debt. Maybe more interest payments than the about of increase in debt level. It will be a wild ride for sure.
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I wouldn't be surprised if
I wouldn't be surprised if the bankers are already making these threats to either increase the debt limits or suffer via higher interest rates instead...
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Actual repudiation of the national debt would be ideal.
The reason politicians don't normally go for that is that it forces governments to balance their budgets for the forseeable future.
Tax revenue would be the actual limit of government spending if no more debt could be sold.
In practice, I think that politicians and central bankers will choose the inflationary route to ruin with all the price controls, shortages, blame shifting, grandstanding and thug tactics you would expect.
There's probably little
There's probably little chance of repudiation unless things get almost completely out of control. I figure they will not repudiate the debt simply because that means millions of US savings bond holders losing $2T or so, millions of US mutual fund investors losing $700B, many millions of people in the US losing their pension fund investments to the tune of $700B, etc.
A more serious risk would be the few hundred billion in government debt which is owned by the oil exporters. Maybe we would risk having our oil supply cut off if we decide not to repay them.
I think there might be $500B or so in state & local governments that own federal debt. The fed gov might get away in repudiating that. But to repudiate debt owed to all the other nations around the world... who knows how they would respond.
Probably the only feasible debt we can repudiate is that which is owed to the Federal Reserve. Back in September the amount was around $5T. Congress would just simply retake control of the Fed, close it, restore functions to the Treasury and... well, not much sense in owing $5T to ourselves, so we simply wipe out that debt. Although the result would likely be a wave of inflation (since there would no longer be a plan to repay the debt) & that would end up taxing everybody.
I agree that inflation is the plan. Our current system was designed specifically for that purpose.
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UNITED STATES OF AMERICA inc (the corporation not country)
What we are dealing with is a foreign owned corporation formed Feb 1871 in London. They have been operating in Bankruptcy since 1933. Study HJR-192 passed June 1933 and learn how the Promissory note standard works. They have pledged our physical bodies via our birth certificates as collateral for the Corporate debt of the UNITED STATES OF AMERICA, INC. This is no different than if Exxon or Burger king did this. It is not our debt. "CONNECTING THE DOTS" by David E Robinson is a good place to start as far as learning the truth about the situation this Republic is in. The Queen of England owns the ten square miles of D.C. people, wake up. Raising the debt ceiling is just an adjustment to the biggest and longest running bankruptcy in history.
Sounds good, does this mean...
... any State joining the union after 1871 is not really a State under the Constitution? Does it mean that people who are born in Hawaii are not really Americans, including the fact that Hawaii is not even on the continent of America?
Seems there is no end to the legal mumble jumble.
Liberty, liberty, liberty.
grant
The states joined the Republic not the Corporation
But they were incorporated not long after. Your correct though the mumble jumble never ends when it comes to the difference between Uniform commercial code and civil law. What a mess. God bless brother.
Scare tactics won't work.
Interesting that the article posted suggests that the government would default on people's retirement plans and SS for the masses. I don't see any reason for the government to have to do any such thing. First of all there could be pay cuts across the board for government employees. Military spending on foreign wars can be cut. American embassies around the world can be downsized and embassies can be sold. I am told the embassy in Iraq is worth millions, so sell it to the people of Iraq, then sell the embassy in Rome worth millions, the embassy in England worth millions, the embassy in Russia worth millions. The services they provide could be managed in a much simpler office and ambassadors can live in cheaper homes or apartments. All kinds of cuts can be made abroad before it would be necessary to cut people's retirement. And if domestic spending needs to be cut, start by selling the White House. Put it up for action and have the president live in his own house. In fact what is the need for representatives to go to Washington, they can surely live and work in their own State capitals where local people can keep a better eye on their representatives. No need to pay for them to travel back and forth to Washington D.C. They can have a local office and with modern technology meetings can be done electronically and votes can be registered at their respective State capitals.
I am not scared by not raising the debt ceiling. I once had too much debt, cut up all my credit cards, and do not borrow money. Had to make many cuts. Have fewer cable stations, eat more rice and beans and walk to the store instead of jumping in the car. It hasn't killed me and in fact has made me stronger and richer, even though I don't make more income, but pay less to bankers.
The country will be stronger if it stops taking on more and more debt.
grant
I agree that the country will
I agree that the country will be more stronger if it stops taking on more debt. But I disagree that these are scare tactics regarding the debt ceiling.
It's unlikely that we'll be able to cut $4-5B per day with minimal consequence. People will be impacted to varying degrees, some directly and others indirectly.
Cutting all foreign and empire spending first is probably a very good idea.
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Do not raise the debt limit.
Cut back on spending.
grant
Of course they will raise it
Is there any doubt they will increase the debt ceiling.
These congressional leaders are living in the lap of luxury. Every American owes about $50,000 on the deficit. Im 56 years old unemployed cant find a job. My gas furnace is broken and I have no money to buy gas for my vehicle or pay my bills . These people are borrowing money in my name with me having no choice in the matter. Why wouldn't they increase it when they are getting richer and some poor person is responsible to pay for it. If that is not slavery I dont know what is. If I am responsible to pay back borrowed money I would like to be the one benefiting from spending it. Of course I cant borrow any money my self . But these people can borrow money and charge it to me
Reggie Brannon
Written just as I see it.
Powerful message: "Why wouldn't they increase it when they are getting richer and some poor person is responsible to pay for it.... these people can borrow money and charge it to me!"
Thank you.
Mark Twain Posts 1835-1910-To-be-continued...
Daily Paul ☑ Ron Paul, 2012 ☑
Chances are, they'll raise the debt ceiling.
If they don't, the only alternative is epic spending cuts and/or epic tax rises. Probably a mixture of both.
As I say, I think they'll just raise the debt ceiling.
Over here in the UK, the coalition is supposed to be implementing austerity measures, which is a total joke because the UK national debt is STILL climbing.
Lew
How many of you agree with Lew's comment on the debt ceiling?
I do; Lew is, as usual, spot
I do; Lew is, as usual, spot on.
Cut military spending and bring our troops home.
Anyone who votes to raise the debt ceiling is a turn coat.
grant
He's absolutely right.
This point is worth repeating. Often!
the zombies come out and pick you clean
your house, your car, everything. the rich will not be affected at all because they are too remote. we, however, are very close and very accessible to all those folks at risk of losing their gov't paycheck, all of them future zombies.
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RON PAUL 2012
hold onto your hats.,folks
Because Congress actually might NOT raise the ceiling debt. I was listening to congressman Mike Wiener of New York {D}
He was saying that he had gotten a news interview with Michelle Bachmann. Where she stated we should not raise the debt ceiling level. With Michelle being completely oblivious to what actually might really happen and that would be total chaos would insue if they didn't raise the debt ceiling level.
Michelle is not the sharpest tool in the shed and might not realize that the Democrats might try to set her and the tea party up and call Her bluff and not raise the debt level.
Mike Weiner is very liberal Democrat said that he would vote with Republicans not to raise the debt level. If other Democrats like him decide that this is a perfect set up to sandbag the tea party.
This might become the worst economic disaster in our recent history and it just might be all blamed on the tea party .
They'll Spend Till the End
Politicians will ALWAYS raise the debt limit. It is in their nature. It will come to an end only when the markets end it. For now the bond market is telling them, "yeah, go ahead and borrow as much as you need, we trust you". When interest rates go parabolic, the game is over. Not a day sooner.
Agreed.
If the government CAN sell bonds, they WILL.
If the private sector won't buy them, the central banks will.
I generally agree.
I generally agree.
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