I was being, ahem, conservative. There is the risk of higher chance of bankruptcy, and there is the risk of the zombies being at your door ready to eat your brains.
Maybe someone should write a dystopia where the cause of the collapse is Donald Trump defaulting on US debt. It’s a more likely scenario, alas, than lots I’ve seen.
There would be a period of adjustment. This is what happens after every bubble. Malinvestment is liquidated. The debt enablers will take a bath. Resources will be diverted to more productive ends. Your scary stories are just not backed up by facts.
Think of default as the popping of a bubble.
Seriously?
That’s one hell of a bubble. I mean, it makes sense. People lent the American government money. That was a bad investment, because the government isn’t trustworthy. So, in order to rationalize the market the government should do something to help bondholders understand that the government isn’t trustworthy. And the best way to do that is to default on the debt! That’s gonna bust the market bubble in government debt, and put things where they ought to be, with people not trusting government debt and finally prove the goldbugs were right all along.
Or…maybe the government shouldn’t deliberately implode the global economy just to prove that the goldbugs who believed in the imminent implosion of the global economy were right?
Like, if you were riding on an airplane, and you felt the airplane was unsafe, and all the other passengers ignored you and kept telling you that the airplane was safe, the pilot should start chucking grenades into the passenger compartment to change their minds? Or not do that?
I see you don’t believe in the market. Government debt has the lowest interest rate of pretty much anything, which shows that the market considers it safe. But you think that it is malinvestment, so the market is wrong.
Kind of what like the rabid socialists say. Or the Communists.
Neither is your reassuring one, since it’s never happened.
A bubble on which the global market system is based. Somehow I don’t share your optimism. But this is all just a cover for justifying adding a trillion and a half to the debt anyway. “No, really, it’s not all that much!”
Do you understand bubbles at all? Bubbles evolve from a cluster of errors on the market. Do you deny bubbles? (There are (were?) some Chicago flavored economists who deny bubbles). Yes, the market can be “wrong” it’s been wrong on many occasions.
The “market” is shorthand for the summation of voluntary interactions between economic actors. The government is not big on voluntary interactions. It’s creditworthiness is a function of how well its prey society is producing and its ability to skim some off the top, to use a euphemism.
You could argue that slavery was a bubble in a similar way. The plantation owners probably had pretty good credit as long as they had productive victims.
Uhhh, what?
Thank you for taking the time to understand the argument.
The purpose wouldn’t be to prove goldbugs right. It would have the following positive outcomes:
-the only moral decision: generations of Americans should not be responsible for Boomer foolishness
-starve the beast: this default would considerably handcuff the government for quite some time. No more military adventures and other poor spending choices.
-resource allocation, increased supply: this default would shake up global capital allocation and increase investment in productive capacity.
“This government doesn’t work, and I’ll prove it…even if I have to destroy it myself!”
“This government works, and I’ll prove it…even if I have to impoverish generations in order to pay for my generation’s incompetence and profligacy.”
It is no coincidence Boomer educators and politicians are pushing democratic socialism and government indebtedness so fiercely. There is no way the government will be able to take care of Boomers, who lived selfishly and without foresight, without increased spending. The realities of resource scarcity will hit Gen X and Millenials like a punch in the face and default will be the option for economic renewal. The other option will be to print like mad and die slowly (Japan).
I see. When it is convenient for your argument, the national debt is completely divorced from the finances of individual Americans. Also when it is convenient for your argument, the national debt is a crushing load on the finances of individual Americans.
In a way Will is right.
If in the future the debt ever does become a crushing burden on future taxpayers, the debt will have to be managed in ways that will screw over the debt holders. Governments have for millennia borrowed money, and when the time came to pay back the money, found ways to avoid having to do that, and these ways are well known.
However, for America outright repudiating the debt is extremely unlikely. What is vastly more likely is simply to pay off our creditors their full nominal value, but using highly devalued dollars to do it. The one big advantage the United States has compared to Greece or Medieval princes is that our debts are denominated in dollars, not Euros or gold. Greece can’t print Euros, princes can’t spin straw into gold. But the United States can very easily print dollars.
Of course there are other solutions. Round up some oligarchs, accuse them of treason, and confiscate their fortunes. If we owe money to some other country, just declare war on that country.
Or a smarter way to get the money from the oligarchs is to just raise taxes on the super-rich. Once we explain that although they’ll have to pay a lot more in taxes nowadays, at least they get to keep their heads and a very large fraction of their fortune to boot. We’ll see how they prefer to play it out.
But as of March 23, 2018 the current level of debt is not a crushing burden. Interest rates are near zero. We don’t currently have to pay crushing taxes to finance the debt. It makes no sense to default or take drastic steps now. That will wait until the crisis actually comes. And the crisis might be decades in the future, and might never happen.
And if we do need to take drastic steps now, a much better method would be to cut spending and raise taxes. I know, I know, that’s crazy talk. Much more sensible to just keep borrowing and spending like there’s no tomorrow and then declare national bankruptcy.
Perhaps it was flukey. I certainly was surprised by the result, and I am hardly alone in that. Then again, there are other theories out there, see Trump Hacked the Media Right Before Our Eyes
For all that, the author does agree with your point that it would be a tough trick to pull off twice.
Thing is, in the context of the debt debate, the issue hardly starts with Trump. People commonly say that the ‘modern’ GOP’s position on debts and deficits goes all the way back to Reagan. It may actually go back much farther than that, seeHow Republicans Learned to Sell Tax Cuts for the Rich
I’ll let you read the rest of the article and decide for yourself, but it brings us back to the notion that we are dealing with classic bullshit, promulgated from the top and targeted at vulnerable suckers, and that the solution to the debt problem is really figuring out how to counteract this effect. But it has been going on for at least 100 years, and enough of the population falls for it every time that we are now in the situation of having substandard education, health care, infant mortality rates and many other problems relative to the rest of the world, and $21 trillion in debt to boot. Cynical, selfish wealthy people who don’t give a rip about the welfare of the general population drive policy on this issue over and over and over again.
It reminds me of another line from The Federalist 1, describing how (necessary) vigorous good government is easily demonized by those with less worthy motives:
What a perfect illustration of my last point! Yeah, the government is motivated by anti-volition sentiment, and is a predator of the public in the same way the slavers were predators of black people. Therefore, when a well-intentioned leader like Obama proposes higher taxes on people with incomes above $250k, the people to whom a greater and greater share of the national wealth is being directed at the expense of everyone else, it’s equivalent to SLAVERY! Yeah.
But people swallow this. Persuasion is the issue. Hearts and minds, man.
OMG! You must be a socialist! 
I know bubbles quite well, having lived through a few of them. They involve the commodity being bid up in price. Are government bonds bid up in price? Unreasonably? Is there any reason to doubt the inherent safety of bonds, besides the irrational actions of the moron in the White House that is?
Explain how the government forces anyone to buy bonds? I’m not counting Social Security.
If you consider yourself a victim of the US government you are free to leave - unlike the slaves.
Oh, I see, Trump and the Republicans in Congress who pushed through the tax cut that will balloon the deficit are pushing Democratic Socialism. Riiiight.
I’m pretty sure Goldwater complained about the deficit over 50 years ago. I don’t feel a crushing burden yet. If you do, I’d advise you to get a better job.
Now, I’m in favor of shrinking the deficit now while times are good, the way Bush should have when times were good. Because a deficit is useful in a recession, but the stimulus is unnecessary in good times.
But that is basic Keynesian economics, which is like kryptonite to conservatives.
The US government does not have the ability to push taxes higher than 20% of GDP. There is no way the government can cover its debt without money printing. There is no reason the government couldn’t pay the nominal value on its bonds in US dollars, but this little more than a tautology. Bondholders are going to be soaked. Either the dollar will be debased, or there will be a default.
They don’t force anyone to buy bonds. They force taxpayers to pay off their bonds. The better they are at doing this, the safer the bonds appear to investors. This is not a voluntary situation.
What’s your point? How does that address my claim at all?
What do you call it?
Your anecdotes are always thrilling.
Your generation ballooned the debt to insane levels never seen in US history. I blame Vietnam and public schools for how fucked up they are, but facts are facts.
Millennials and GEN Xers will suffer if they don’t wise up politically and cut off the perennially coddled Boomers from the government teat.
Too bad the Boomers never followed this strategy. Indeed no government has followed this strategy. Even if it worked, it is simply not politically feasible.
Here is a list of countries with tax revenue as a percent of GDP. Lots of countries - including third world shitholes like Australia - have tax revenues much higher. Our supposedly super high tax rate is more conservative bullshit. So explain why we couldn’t have a higher tax rate.
The rest of this paragraph is just about incomprehensible. Government paying nominal value on bonds in US dollars? You realize that bonds can be called in and paid face value in dollars, right? What do you think the government pays off bonds in? Quatloos? Where the money would come from to do this is another matter. Bondholders who get bonds paid off at face value, even if early, are not soaked. Has happened to me for municipal bonds, and I felt fine.
Dollar debased? Is that another whine for the gold standard? Search any of a hundred threads to find out why that is a stupid idea. Or does it mean that the exchange rate drops. I thought that kind of thing stopped being a problem when the dollar was high under Obama. And our exchange rate dropping helps exports, and any one who took Econ 101 knows. Or do you have another meaning for debased?
Taxpayers elected the people who are spending the money, so I fail to see the scandal in them having to pay the bills. Now the non-citizen immigrants who don’t get to vote but still have to pay taxes might have a beef.
You brought up slavery. If you feel so oppressed you can split.
I wish we had some democratic socialism around here, like in Europe where the average person gets reasonable health care for a reasonable price.
But Republicans are pushing the deficit, in case you hadn’t noticed.
Mitch McConnell is not a boomer. Trump is just barely one. Obama was too young to be one. So your boomer conspiracy theory does not hold water.
Or do you mean Social Security and Medicare? Social Security of course predates WW II and any boomer, and Medicare was passed before any boomers could even vote. Now perhaps you think Reagan was for democratic socialism because he did a good job in leading the revision of Social Security that made it viable much longer. And of course getting more money by raising or eliminating the cap would be easy. I hit the cap every year for the past 20 or so, and I would have been happy to pay more.
Boomers got shot at in Vietnam, they did not start the war. You can blame the greatest generation for that. And the deficit ballooned under Reagan, remember?
And an insult doesn’t explain why government bonds represent a bubble. Try again.
I’m confused. Do you hate democratic socialists like Ronald Reagan, or do you just hate old people?
Clinton did. Remember the budget surplus? Remember how Bush increased the deficit in good times so that when Obama needed to spend to reduce the impact of the Bush recession it was more painful than it should be? And how the deficit decreased under Obama as times got better, just as it should?
Maybe you should confine your hate to Republicans, not boomers.