[ExI] Repudiating the national debt

[Dan TheBookMan]

On Tue, May 17, 2016 at 4:54 PM, spike <spike66 at att.net> wrote:
> 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.

Since the law can be changed, why does this matter? Since the government
legislature and courts determine what's legal, why would this matter? My
guess is direct confiscation wouldn't be done on a wide scale, since the
push back would be much more even than higher taxes.

> 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.

Things learned are often forgotten. The lesson of the 1960s should've been
that inflation didn't work, especially by the late 1970s. Economist Roger
Garrison believes that governments, especially the US national one, tend to
shift between taxes, inflation, and borrowing -- though almost always
having a mix of the three. One, though, tends to be more favored than the
other time at any one time. Then it falls out of favor and one of the
others then falls back in favor. For instance, since debt is starting to
cast a long shadow be prepared to hear some people saying taxes or
inflation are the way out. (Debt repudiation, of course, is a way out of
debt too, though, as we're discussing, it has its risks and costs -- even
if your don't buy the Mad Max end game John worries about.:)

> Inflation can be arranged, but the Fed might be reluctant to use it:
pensioners
> suffer terribly.

One can argue that's already happened, time and again, and that we've
experienced it in recent years. Or am I the only one noticing prices rising
in many different areas (not all, but inflation tends not to raise all
prices equally or at the same time).

> The third is illegal.

See above. By the way, one means of direct confiscation now practices is
eminent domain, though that's unlikely to be used for widespread revenue
enhancement.

> 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.

Well, let's look at this another way. You believe those would be the
outcomes. Do you believe policymakers would think the same way you do? Have
they thought your way in the past?

> 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.)

Are you saying not really a soft debt repudiation, but rather just lowering
the budget? After all, we're talking about lenders who bought US debt --
not people who were promised benefits, right?

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

To be honest, if you mean we here, we don't have much input anyhow. But if
you mean the entire nation, well, you might be right in terms that public
spending is unsustainable as is -- or so it would appear. Of course, on a
moral responsibility note, the debt doesn't belong to or was not created by
us, but by the ruling class. That the ruling class created debts doesn't
mean anyone else is morally obligated to pay them -- any more than, say,
you going to the track on borrowed money means everywhere else here owes
your bookie when you lose. Right?

Regards,

Dan
  Sample my Kindle books via:
http://www.amazon.com/Dan-Ust/e/B00J6HPX8M/
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