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Author Topic: Speculation requested  (Read 1250 times)

Offline J_A_B

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Speculation requested
« on: October 15, 2004, 03:59:52 PM »
Ok, here's the scenario:

I am wondering what you think would happen if the US government one day just announced that it would not repay the US national debt in any way, shape, or form.

Our national debt is well over $7 trillion and increasing constantly.  While it can go up a lot more before defaulting becomes a possibility (probably decades), it can't increase forever.


J_A_B
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Offline cpxxx

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« Reply #1 on: October 15, 2004, 04:06:58 PM »
Higher taxes for all. Unemployment. Recession. Worldwide recession. Civil war?  No I don't know either. Higher taxes for sure though
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Offline Thrawn

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« Reply #2 on: October 15, 2004, 04:15:21 PM »
The US economy would collapse, stand of living would fall dramtically.  Canada would have a big refugee problem, as well as a big security/sovereignty problem.
« Last Edit: October 15, 2004, 04:18:07 PM by Thrawn »
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Offline Lizking

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« Reply #3 on: October 15, 2004, 04:17:05 PM »
Thrawn, would it collapse any faster if it could not pay, or if it just refuses to pay?
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Offline Thrawn

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« Reply #4 on: October 15, 2004, 04:19:34 PM »
Quote
Originally posted by Lizking
Thrawn, would it collapse any faster if it could not pay, or if it just refuses to pay?


The collapse would be worse if you couldn't pay it.  The sooner the US defaulted, if it was going to, the better.  The longer, the more damage that is being done.

Of course the only thing that is preventing the US from paying it off is uncontrolled spending.
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Offline Lizking

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« Reply #5 on: October 15, 2004, 04:20:05 PM »
We can't pay it now.  Why is the economy not collapsing?
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Offline Thrawn

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« Reply #6 on: October 15, 2004, 04:22:44 PM »
Quote
Originally posted by Lizking
We can't pay it now.  Why is the economy not collapsing?



Because you can still service it.
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Offline Lizking

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« Reply #7 on: October 15, 2004, 04:23:37 PM »
Here is a mind exercise for you, then.  How much debt can the US service?
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Offline capt. apathy

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Speculation requested
« Reply #8 on: October 15, 2004, 04:23:37 PM »
not having the money to pay off the total debt, and defaulting on your loans is a completely different thing.

most people don't have enough liquid assets to pay of their mortgage at any given time, but they aren't defaulting so there's no problem.  let most people actually default on their mortgages at the same time and it would have a economic impact.
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Offline Thrawn

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« Reply #9 on: October 15, 2004, 04:24:54 PM »
Quote
Originally posted by Lizking
Here is a mind exercise for you, then.  How much debt can the US service?


How much do you want to get taxed?
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Offline Lizking

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« Reply #10 on: October 15, 2004, 04:26:57 PM »
Assume what you will.  How much can we service?
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Offline Thrawn

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« Reply #11 on: October 15, 2004, 04:31:01 PM »
Quote
Originally posted by Lizking
Assume what you will.  How much can we service?


Okay, lets assume that US federal government is taxing 100% of the GNP, that's about 10 trillion.

So you can pay 10 trillion in interest on the loans a year.  What does the US government borrow at?
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Offline rpm

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Re: Speculation requested
« Reply #12 on: October 15, 2004, 04:33:49 PM »
Quote
Originally posted by J_A_B
Ok, here's the scenario:

I am wondering what you think would happen if the US government one day just announced that it would not repay the US national debt in any way, shape, or form.

Our national debt is well over $7 trillion and increasing constantly.  While it can go up a lot more before defaulting becomes a possibility (probably decades), it can't increase forever.


J_A_B
Isn't that what caused the collapse of the USSR?
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Offline Lizking

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« Reply #13 on: October 15, 2004, 04:34:05 PM »
Max is about 5%, I think, right now.
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Offline Thrawn

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« Reply #14 on: October 15, 2004, 04:38:18 PM »
Quote
Originally posted by Lizking
Max is about 5%, I think, right now.


That's what I was thinking.

So, about 200 trillion.  Of course, we just killed over 99% of US population.  :eek:
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