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Is a “technical” default on U.S. government debt a good idea?
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An increasing number of Republicans believe that a brief, “technical” default on U.S. government debt is an acceptable way to force the Obama administration to agree to deep federal spending cuts. These Republicans believe a failure to increase the debt limit by Aug. 2 would not trigger an immediate economic catastrophe.
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Any form of default on our obligations is a horrible idea and entirely non-sensical. It is equivalent to saying that because we might default on our obligations in the future if we can’t control our spending, we should therefore default on our obligations now to force us to control our spending. What kind of an idiot would run their business or personal finances that way?
This is a terrible idea. We are not dealing with a misbehaving child. We are dealing with the world’s largest economy and the anchor of much of the rest of the world’s economies. Playing chicken with it just cuz’ is an absolutely idiotic irresponsible notion.
Do the damn jobs we elected you to do!
The 20% or so of people that ar voting this as a good idea, don’t understand the widespread devestation that it would cause. I hope they, and anyone in power thinking this get their head’s out of their rears because default will mean borrowing in the future will be much more expensive and it will not help the debt situation at all. No doubt we need to stop spending and I also hope most people realize that “tax cuts” or “tax expenditures” as they are sometimes called, are essentially government spending as well. If you lower tax rates for people and especially businesses, it has a negative effect on our revenue streams. This is contrary to republican lies that tax cuts pay for themselves. We need a complete govt. overhaul to fix out problems. We keep looking for patches for a sinking ship. What we should consider building a completely new and improved ship and once its all designed and built, jump aboard.
Irrespective of the real or perceived economic impacts, a “techncial” default would set a bad precedent. It would only serve to prove that not only is the debt limit irrelevant (the Govt. can choose to ignore it at will), but that Govt. is (and has been for 25 years on this issue) incapable of working toward a real solution that combines spending reform with appropriate sustainable tax revenues that do not hinder enonomic growth.
Is this a trick question?
Is this a trick question?
It depends on your position in Treasuries.
Great idea! There is no way this debt can be paid off, so why wait!?
Bad idea if real action is taken to get spending under some kind of control without it. The questions are will that ever happen before those buying US debt eventually lose confidence and stop buying, and what options will there be if that happens? The US debt market has the advantage of accomodating huge investments, but I think it is a mistake to think the rest of the world will not find alternatives if long-term confidence in the US is lost.
If the standard is whether a default would “trigger an immediate economic catastrophe,” then these guys are completely out of touch with reality. The immediate effect would be to increase the price paid by the U.S. government to use money, and that increase in price would act as an increase in the cost of everything the government does.
Think of this “technical” default as a proposal by anti-spending fanatics to force the government to spend 1% more for everything it does. Where’s the fiscal responsibility in that? Can we pass a law requiring these guys to get GEDs?
When debt grows faster than GDP default is the only outcome. Does it depend on anybody’s “idea”?
It is a good idea, because it will bring republicans to understand that there is no such concept as “to big to fail”.
To make things more understandable, imagine US economics on a household scale: Every year, a family earns 100’000. It spends 175’000 and borrows 25’000 to pay the interest on the 650’000 it borrowed in previous years. Who, in their right mind, would lend money to such a family?
A republican would blithely argue that this is a normal situation; the family owes 650’000 on its house, which backs the debt.
The fallacy is that America has no house.
I think we may have to default to get the country stabilized. There are too many entities sucking blood out of the destabilized systems.
Since money is not actually earned in the US, instead the markets are merely gamed in order to create the volatility needed for the plutocrats to timely get in and out. Slam, bam, thank you mam.