Politics (formerly Election 2012)

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Re: Election 2012

Postby Passionario » Fri Jul 13, 2012 10:06 am

Jabari wrote:"Doomsday" is a good word, actually. We've gotten a bit sidetracked with the health care ruling and discussion, but that's not the actual problem that the country faces. We're staring "Death by Debt" in the face, and none of the candidates (the "L" included) are saying a damn thing about it.

Please read the following two things, and then go look at the US Debt Clock and you'll see why:
1) I'm so pessimistic, and
2) Why the results of this election don't matter in the least.

So do what Russia did in 1998 and default on all your debts. You've got more than enough military strength to deter the creditors from recouping their losses by force, and enough natural resources/territory/industry/manpower to swiftly recover afterwards.

Really, everyone should have the option to declare bankruptcy and become free of debts (although, of course, incurring other consequences), be it individuals, companies or entire nations. That's why interest rates exist in the first place - because lending money carries an inherent risk of not getting it back!
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Re: Election 2012

Postby razul » Fri Jul 13, 2012 11:23 am

Declaring bankruptcy at this time will not help: We still have $1.x trillion deficit.
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Re: Election 2012

Postby Jabari » Fri Jul 13, 2012 11:27 am

Passionario wrote:So do what Russia did in 1998 and default on all your debts. You've got more than enough military strength to deter the creditors from recouping their losses by force, and enough natural resources/territory/industry/manpower to swiftly recover afterwards.

Really, everyone should have the option to declare bankruptcy and become free of debts (although, of course, incurring other consequences), be it individuals, companies or entire nations. That's why interest rates exist in the first place - because lending money carries an inherent risk of not getting it back!


Yep. It's coming eventually - the only other thing would be that the country balances its budget (like, right f'n now), but we (as a nation) have zero fortitude for that. (It would be a huge GDP hit, like 40%, and would be extremely painful for a couple years, but we'd get an actual recovery after that.)

Not sure that China's gonna like that (default, whether by declaration or dollar devaulation) idea much, though. How do you say "Yes, Master?" in Mandarin?

One other side note: Look at how much the big banks are fighting for Greece to NOT simply default (like they should) - they're on the hook for a ton for loaning stupidly to that country. Makes for an interesting ... power struggle of sorts. (And perhaps points to who is really controlling world politics - anyone claiming that the Koch Brothers (for example) has more influence than something like JP Morgan needs to open their eyes a bit...)
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Re: Election 2012

Postby Jabari » Fri Jul 13, 2012 11:38 am

razul wrote:Declaring bankruptcy at this time will not help: We still have $1.x trillion deficit.


Heh, that little problem takes care of itself when nobody will loan you money any longer.

Instant balanced budget!

(Oh, sure, the FSA is going to riot, and big cities aren't going to be very fun places to be, but when you make poor decisions you have to pay the piper sometime...)
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Re: Election 2012

Postby Fivelives » Fri Jul 13, 2012 9:14 pm

I wonder what would happen if the entire world just up and said "okay everyone, CLEARLY this shit has gotten completely out of hand. Let's set the clocks back to 00:00, forgive all debts and grant everyone an AAA credit rating again."
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Re: Election 2012

Postby aureon » Sun Jul 15, 2012 8:03 am

Fivelives wrote:I wonder what would happen if the entire world just up and said "okay everyone, CLEARLY this shit has gotten completely out of hand. Let's set the clocks back to 00:00, forgive all debts and grant everyone an AAA credit rating again."

what you call "money" is "credit", though.
So, everyone's net worth becomes 0? And what about material possessions?

("But just nations"! - No, because the money you've got around is valued on the trustworthyness of the nation emitting it)
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Re: Election 2012

Postby Koatanga » Sun Jul 15, 2012 2:32 pm

So just for fun, assuming the US defaults and all of the other world nations stopped accepting US currency, how would the US change?

Well, technology for one. No more iPhones, laptops, hard drives, RAM chips, etc. Then I guess the auto industry - not a lot of that is made at home anymore. You'd have food, but not many ways to afford it. A lot of the service jobs would go away as the US shifts to manufacturing.

The banking industry would be completely gone, and likely the insurance industry, since that is largely investment-based.

All government jobs would cease to exist as the government would not be able to pay anyone anymore. The military would still exist, but production facilities would shut down for lack of raw materials, so whatever the military currently has is what will have to last through any conflicts.

Far from being able to protect itself with its military might, the US might find its own military turning on it. As the military needs raw matrials, it will simply take what it wants from whoever has it, at gunpoint.

Police will be in a similar position. Clothing, housing, feeding, and supplying officers requires resources, and the police do not provide any saleble goods or services apart from protection. They will be reduced to extortion or theft to keep themselves in operation.

That's really not very pretty. I imagine if I was in the US, had any wealth, and saw that coming, I would be on the first foreign-operated airline out of there.
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Re: Election 2012

Postby Jabari » Sun Jul 15, 2012 6:06 pm

You're probably overstating it a hair (wow - somebody more pessimistic than me!)...

It's not that "nobody would accept US currency" - it's that they wouldn't loan the US money any longer. The currency would probably re-value - to what I wouldn't have a guess though. *shrug*

The existing banks, insurance companies, and such would probably all get destroyed (though, amazingly, there are some that haven't leveraged themselves to criticality). There would be new ones that replace them, hopefully not making the same mistakes. Banking is still profitable, but they'd have to be responsible for what they do from now on.

The general standard of living would go down, and quite a bit. That's what debt is after all - pulling forward demand that you haven't yet earned. An Iphone would go back to being the luxury that it really is, and not the "necessity" that most people mistakenly believe it is.

The biggest issues to me would be the FSA (no more handouts = hungry mobs = angry mobs), and if the "protection services" (police, fire, etc) will actually accept that fact that their pensions were simply an illusion. As I said before, the big cities would be no fun at all.

On the bright side, the coming generations would be very thankful that we didn't borrow them into slavery!


Actually, now that I think about it... Looking through some of Ferfal's stuff might be a good idea - it looks like his blog has turned into more of a pure "survivalist" thing, but that's not what I'm looking for... More of just the descriptions/timelines of what happened after the 2001 Argentina collapse.
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Re: Election 2012

Postby Skye1013 » Sun Jul 15, 2012 6:17 pm

I'm curious what the new global currency would become if the US went bankrupt (defaults, whatever you choose to call it.) I also wonder if that would cause some of the other nations that are teetering (currently Ireland, Portugal, Spain, likely others) to also come crashing down. Not to mention Greece...
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Re: Election 2012

Postby Koatanga » Sun Jul 15, 2012 8:28 pm

Jabari wrote:You're probably overstating it a hair (wow - somebody more pessimistic than me!)...

It's not that "nobody would accept US currency" - it's that they wouldn't loan the US money any longer. The currency would probably re-value - to what I wouldn't have a guess though. *shrug*


You're right - it would revalue, but there can be a fine line between revalued and worthless. See: Zimbabwe. The currency went from 100:1 USD to 100,000,000,000,000,000,000,000:1 USD. If the US experienced hyperinflation, nobody would want US dollars. The US would have to trade in gold or in another currency.

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Re: Election 2012

Postby Fivelives » Mon Jul 16, 2012 2:20 am

Okay, so how about if we went to a true one world currency? Doesn't matter what it's called - for the sake of argument (since I'm pretty sure that nobody is on the gold standard anymore), let's call it credits. I have no idea how the exchange rates are calculated, but if the entire world went to one currency system, then 1 credit from the US would be worth 1 credit in Europe or Mexico, or even Africa.

And I wasn't talking about just the US. I meant EVERY country forgiving all debts. Not just debts between nations, but also things like mortgages, student loans, etc - just start every single person with a clean slate. I don't think it would cause a revaluation - money would still be worth exactly the same - but rather, just wiping out obligations to pay.
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Re: Election 2012

Postby Jabari » Mon Jul 16, 2012 8:03 am

Hold on, aren't both those ideas already in the Bible??

http://en.wikipedia.org/wiki/Jubilee_%28Christianity%29

http://answers.yahoo.com/question/index?qid=20090324222052AAKZWTd

// not totally serious, just having some fun :)

Skye1013 wrote:I'm curious what the new global currency would become if the US went bankrupt (defaults, whatever you choose to call it.) I also wonder if that would cause some of the other nations that are teetering (currently Ireland, Portugal, Spain, likely others) to also come crashing down. Not to mention Greece...


Got a ways to go before the US blows. Greece and Italy are likely to blow up first (and relatively soon), and we'll see what happens to the Euro (and the whole EU, for that matter), along with how much the US banks are tied into that mess.

http://www.businessinsider.com/greece-flails-about-troika-inspectors-paint-awful-picture-merkel-draws-a-line-german-industry-and-voters-back-her-its-almost-over-for-greece-2012-7

Remember who the "Troika" are - the EU, European Central Bank, and IMF. Who holds the real political power again? I think we're about to find out how many tanks those banks control...
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Re: Election 2012

Postby Fivelives » Mon Jul 16, 2012 11:10 am

I'm not sure if we're all that heavily invested in Greece. We've been trying to deal with our own situation, but I've seen more boneheaded moves on the part of the finance "industry".
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Re: Election 2012

Postby Koatanga » Mon Jul 16, 2012 3:24 pm

One of the ways governments deal with short-term monetary needs is simply to print more cash, which results in inflation.

The sum total of US dollars in the world is worth X amount of whatevers. Printing more US dollars does not increase X. Instead it decreases what each dollar is worth.

When looking at the exchange rate between countries, theoretically, that X is considered. If Alphastan maintains the same number of units while Betastan prints more, then Betastan's unit buys fewer units of Alphastan's than it did before the printing.

If you go to a global currency, then governments don't have the option of printing up more money. If they get levelled by a hurricane and need to rebuild, they are pretty much screwed unless they borrow from someone else.

It results in a zero-sum game. Nobody can win unless someone else loses. No one can get a raise unless someone else takes a pay cut. No company can increase profit over the last quarter without another company losing money over the same period. It goes against every principle of modern business. And to top it off, the population of the world is increasing, so the average wealth per capita drops at a similar rate.

Sure, it could be artificially inflated so that everyone feels they are earning more, but the cost of goods would increase at a greater rate than the inflation, due to increasing population, so your purchasing power still declines and still obeys the zero-sum principle.

Until we establish trade relations with another planet, I don't see any way a global unit could work.
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Re: Election 2012

Postby Skye1013 » Mon Jul 16, 2012 4:15 pm

Fivelives wrote:Okay, so how about if we went to a true one world currency?

If you want to see an example of how that wouldn't work out very well... check out what's happening with the EU. Greece is facing harsh austerity measures because they can't do what they've done in the past by devaluing their currency (because that would require the rest of the EU to do so as well.) I think we'd need a global government before a global currency would have any chance of really working, and I don't see that happening any time soon.

Just to compare:
EU - powerful state governments, largely figurehead "federal" government.
US - powerful federal government, considerably less powerful state governments.

That's not to say how the US does it is perfect, but our current setup lends to a common currency far more readily than the EU.
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