[ExI] Repudiating the national debt

Dan TheBookMan danust2012 at gmail.com
Thu May 12 03:26:25 UTC 2016

On Wed, May 11, 2016 at 7:45 PM, John Clark <johnkclark at gmail.com> wrote:
> On Wed, May 11, 2016 Dan TheBookMan <danust2012 at gmail.com> wrote:
>> >
>> how many people given his inheritance, go on to make it that much bigger?
> I don't know. How many people put their inheritance in a S&P index fund?

Please, going forth, leave in the whole chunk of text. Let me help you:

"I don't disagree with that view of Trump. One thing one might say, though,
is that how many people given his inheritance, go on to make it that much
bigger? (That said, though, again, some of this was gotten by being able to
rely on government -- subsidizing deals via eminent domain takings and
being able to walk away from debts he racked up.)"

>> How many nuclear wars have happened so far?
> One, in 1945.

Okay, if you're going to count the two uses in 01945, then were those
conditions unusual or typical? How many nuclear powers were there in 01945?
One, right? So, given your beliefs, would expect some kind of increase in a
nuclear war given that more nuclear powers were added since 01945? For
instance, by 01949, there were two nuclear powers. Might that have
increased the probability? By how much? By the end of the 1960s, there were
four or maybe five nuclear powers. How many nuclear wars were there in that

>> How many near nuclear wars?
> One, in 1962. How many presidents have been madmen in the nuclear age?
> None. My answer could be different in 8 months.

While I wouldn't want to risk it, my guess is other folks in the chain of
command would likely not follow orders. However, let's set that aside.
Let's say you're right: Trump in office would increase the odds of a
nuclear war. By how much? Maybe Caplan is right about the overall 2.5 times
risk. Let's say 2.5 times whatever the base rate would be or, better, than
Clinton or Sanders. (My guess is Sanders would be less bellicose than
either Trump or Clinton.) Now, what can you do about this? Panic? Build a
bomb shelter? My guess is very little aside from get worked up.

>> One analyst said, IIRC, that India and Pakistan having nuclear weapons
>> lessened the chance of a major war between them.
> That might be true. I think in general nuclear weapons decrease the
> of  major wars, but the trouble is they increase the possibility of a
global war.
> And a major war could kill several hundred thousand people but a global
> could kill several billion people.

I take it you mean global nuclear war -- and not merely a global war. I can
easily imagine a global conventional war where none of the nuclear powers
opt to use their nuclear arsenal. (Think about the last world war where it
seems none of the major powers, thankfully, used all their chemical and
biological weapons.)

>> A problem here, though, is Clinton stated she wanted to expand NATO to
>> include the Ukraine and Georgia. Wouldn't this alone increase the chances
>> of a confrontation with Russia?
> I honestly don't don't know, unlike Donald's nuclear Saudi Arabia
> this isn't obviously a bad idea, although it might be. But even if it is
a bad
> idea it isn't as bad as Donald's idea.

I grant the Trump's idea is far-fetched, though, again let me assist your
creative trimming, but quoting myself:

"(And having a nuke seems to be a means of keeping from being coerced by
other powers, no?) I'm not saying I agree with Trump here, though this view
on nuclear proliferation was put forth long before he start flapping his
gums on this issue. (IIRC, Ted Galen Carpenter thought a nuclear armed
South Korea and Japan would be a better security guarantee in Northeast
Asia than having US alliances there.)"

Again, regarding expanding NATO, don't you think that it's obviously bad to
increase the likelihood of war with Russia, especially over Georgia and
Ukraine? How is this less sane than, say, the 01914 Russian guarantee for
Serbia after the assassination of Archduke Ferdinand?

>>>> And as for defaulting on the national debt ...that too scary to even
talk about.
>> Let's see. We discuss topics like hostile AI, gray goo, and other
>> level catastrophes, but this one topic is unthinkable.
> The thing is in 2013
> just rumors about defaulting on the debt crashed the stock market.
> care about grey goo but few others do.

So your argument is folks will get panic and that's it? Well, to be sure,
folks do panic, though perhaps the way to prevent a panic is to have a
reasonable discussion of the idea and lay out all the likely outcomes. That
would have the effect of cooling some down, no? Talking reasonably about
the possibly would also help some people to strategize better around it.
For instance, those with lots of government debt in their portfolio might
consider lightening that load. (Okay, you might say that'll set off a
panic. Maybe, though such panics tend to peter out -- just as the market
didn't stay down since 02013.)

And let me help again with the stuff you trimmed:

"Let's see. We discuss topics like hostile AI, gray goo, and other
extinction level catastrophes, but this one topic is unthinkable. This
sounds almost like those conservative types who fear Mexicans and Muslims
will overrun their small town in Idaho unless there's a border wall. :)
Instead, consider that were the debt repudiated, yes, there would be
financial shocks. There have been such before. Why would this one be so
severe compared to all others? Why couldn't it be something the world
recovered from in due time? There would be pain, especially for big
institutional lenders, especially for folks whose have a big portfolio in
federal government securities. (Those folks are, naturally, going to want
to make it seem like the worst possible scenario -- even an unthinkable
one. But this is no different than folks heavily invested in oil or airline
stocks want their favored sector to not go down in value.)

"By the way, debt repudiation has happened before and not just in foreign
countries, but here in the US. See Rothbard's 01992 piece on this:


"Note that Rothbard mentions state -- not federal level -- debt
repudiation, but the same "sky is falling" fears happened back then. Did
any of those states cease to exist? Did their denizens all die of
starvation? What happened? They more or less recovered and their lenders
grew more weary of supporting idiotic debt financing schemes. Was this
painless? No, but it was probably far less painful than continuing to rack
up the debt and eat up more wealth in the process."

I don't think you responded to any of that because it undercuts your case
here. Sure, it might not be lethal to your view, though that public debt
repudiations have happened before and human civilization didn't collapse
seems to show debt repudiation might not be the worst thing ever -- save
for nuclear war. Again, AND I HAVE TO REPEAT THIS given your penchant for
misinterpreting my words: I'm not saying debt repudiation would be painless
or have no problems. But I would liken it to stopping eating junk food cold
turkey after decades of living on the stuff: it'll be painful, but not
fatal. That said, even were Trump to win -- and my guess is he won't -- my
guess is he won't actually go forth with it.

For me, the sad thing is debt repudiation now is linked with Trump. I'd
rather it have come from Sanders' mouth than Trump's.


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