[ExI] Repudiating the national debt

[spike]

From: extropy-chat [mailto:extropy-chat-bounces at lists.extropy.org] On Behalf Of Dan TheBookMan



 

>…I think they would simply lose the ability to borrow for a time, but shift over to relying on taxation, inflation, and direct confiscation to cover some of the shortfall…Dan

 

 

 

Dan, the problem with that notion is that the first two are legal, the third is not.

 

My notion is that as fewer lenders come offering, then taxes increase, but the Feds learned that Reagan was right: increased taxes do not necessarily increase revenue.  It might.  But it might not be nearly enough.  Inflation can be arranged, but the Fed might be reluctant to use it: pensioners suffer terribly.  The third is illegal.  So… the Fed finds it has a choice: raises taxes, not enough revenue.  Raise inflation, create much unhappiness.  Confiscate directly: kick off a civil war.

 

My best guess of what will happen is more of a soft default: they will still give Social Security people their checks, but they won’t amount to much.  We will find that H. Ross in 1992 and A. Gore in 2000 were telling the truth.  They will cut waaaay back on military spending.  They will end all subsidies to O-care, and it is clear enough that it will not and cannot self-sustain (surprise not.)

 

My main difference from most points of view is that we have any choice.  I think we do not at this point.

 

spike

 

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