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Comment: RE: Iceland

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RE: Iceland

1. I apologize I had the Iceland example in my head from another thread on the site that was endorsing the repudiation of US debt (outlined in this article) using Iceland as an example (not in this article).

2. There is a fund for social security, even it if is looted and spent for other purposes: http://www.ssa.gov/cgi-bin/investheld.cgi
The link shows the investments that have been made into Treasury bonds by the social security fund. (interesting note, The Fed QE depressing interest rates is screwing the social security fund as its old high interest bonds are rotating in to new low interest bonds when the expire).

3. I agree that the current tax system is coercive and should be radically changed. However, you can't ignore that the system is in place, the funds have been coerced into the social security fund, and Americans rely on social security payments for their retirement. Even if you eliminated forced social security contributions today (which I support), that doesn't change the fact that people have paid in for the entire lives and rely on that money now. Is your solution that we just default on payments to these people?

4. There shouldn't be a rush to sell treasuries as there isn't an immediate risk. I agree with you that the paper isn't backed by much of anything, but creating a panic by default creates an unnecessary collapse in the market with terrible economic repercussions for every US citizen. With that said, I think the current Fed Policy of QE is deplorable and should be phased out allowing interest rates to rise as the artificial demand for treasuries created by the fed is removed from the market. This will bring the treasury market back into line with actual demand, rather than just collapsing the market all together.

If I understand you correctly, you would prefer to just declare bankruptcy today and let the chips fall where they may. To use an analogy, we have had our foot on the gas pedal speeding out of control and you would prefer to just dive out of the car and let it crash rather than applying the breaks.

peace + liberty = prosperity