[ExI] Repudiating the national debt

John Clark johnkclark at gmail.com
Mon May 16 21:05:06 UTC 2016

On Mon, May 16, 2016  Dan TheBookMan <danust2012 at gmail.com> wrote:

​> ​
> I'd like to get back to considering what one person here believes is
> unthinkable: national debt repudiation.

​Yes, suddenly making 20 thousand billion dollars worth​ of debt that had
been considered the safest in the world worthless is unthinkable. Or at
least it should be unthinkable, but unfortunately Donald Trump thought
about it. A dollar is only valuable because the government promises to
stand behind it and people trust them to keep that promise, but if that
trust proves to be unjustified then a dollar is just a piece of paper with
some green printing on it, the dollar collapses and the world economy with

> ​> ​
> Recall I offered that there might be a sunny day outcome: the debt gets
> repudiated, lots of immediate pain especially for large lenders who hold
> most of this debt,

​And pain for anyone who has stocks or bounds, or a mutual fund, or a
insurance policy, or has a bank account, ​

​or is on Social Security, or is receiving a annuity, or a pension or... ​

​> ​
> and the national government finding it hard to borrow money for some time

​It wouldn't be ​
hard to borrow money
​ it would be impossible to borrow money. If it's now legal for the USA to
renege on its promise to repay what it owes it must be OK for corporations
to do so too, and individuals. If even the safest debt in the world, US
government treasury bonds, are worthless then no debt is safe and nobody in
their right mind would loan anything to anybody under any circumstances.

> ​> ​
>  John Clark believes it would 'collapse the world economy,' presumably in
> a fashion that would set everything back decades or more. I'm not sure if
> he means a replay of something like the Great Depression or something far
> worse.

Something far worse.
​ ​T
he Great Depression
​was caused by a series of stupid decisions but it was stupidity within
normal parameters. Repudiating the
national debt
​would be an entirely different type of type of stupid, ​it would be
paranormal stupidity the like of which this country has never seen before.

  John K Clark

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