Sharon, you and others keep coming back to this, but the government is the only one that can cause a hyperinflation.

Now tell me again why you think the government is going to commit suicide.

I am actually no True Believer in the big plot to create a North American Union and a new currency--the Amero, I believe it is. I am actually unfamiliar with the details of this theory.

I'm just asking if it would work and if there is a historical precedent or three for this approach. (I'm no historian either.)

Go ask the folks in Argentina (or Weimar Germany) how this all turned for them.

The scenario I described is not a case of the government committing suicide. It is more a case of the government faking its own death. To--you know--avoid paying its debts. Private individuals have been known to do this.

Moonbat alert.

Thanks for the education a few posts ago Gen. What I was looking for was the explanation and got it. But what I am wondering is when do we get to the point that we can't repay and what happens then? I see that day coming this time if people and governments fail to trust our ability to repay the debt and rates double on gov debt then we are truly ****ed.

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Thanks for the education a few posts ago Gen. What I was looking for was the explanation and got it. But what I am wondering is when do we get to the point that we can't repay and what happens then? I see that day coming this time if people and governments fail to trust our ability to repay the debt and rates double on gov debt then we are truly ****ed.

The excess spending is forced to go away.

Think entitlements; its where the problem is.

The public debt I see is 60.8% of GDP and with future entitlements figured in is much larger. Doesn't this effectively mean everyone has to pay an extra mortgage payment every month. Now don't get me wrong in some respects this is not a bad deal. We have schools, roads, water treatment facilities and all this infrastructure in place that I don't mind paying for. The gov does have assets so a mortgage against them that I have to pay for is reasonable. But don't we have to draw the line somewhere. And if we don't doesn't bankruptcy or hyperinflation become an inevitability?

So are you saying that while Paulson increased the national debt by $800 billion for his blank check to $10.6 trillion, eventually the debt will be paid by eliminating entitlements?


edit:
Isn't one of the problems these bailouts to shareholders?

Blue: Yep.

Blunt: Consider that ultimately the government's ability to exist is dependant on the ability to tax. You can't tax someone who is getting an entitlement check (they're producing nothing; you're just shuffing money from one hand to the other) so you must tax those who produce.

Hyperinflation casnnot work because it increases prices hwile wages remain stagnant. As such it is ultimately impossible to sustain; as you engage in it the taxing power of government disappears, leading to the government's collapse.

Governments that have attempted it have been dictatorships in one form or another that believe they can simply take what they want. This works for a while but eventually even that sort of government fails as all external trade capability disappears.

TMD, the public can't make an extra mortgage payment every month. Compound interest guarantees that this spiral will end and when it does the pieces of the budget that are large enough to "fix it" (specifically, Medicare including prescription drugs and Social Security) WILL get cut, because they're the only places you can find the money.

And with more corporations sending our higher earning jobs (auto, computer) to foreign countries, some people have to take minimum wage jobs or unemployment, which ultimately results in less taxes being collected which results in fewer police/fire/schools. And now minimum wage jobs are being eliminated, this is not a pretty picture.

So we need to fix these things now. If we would raise Social security to age 70 and tax all earnings for social security that would most likely save Social security. But what in the world do you do with government health care plans. Hate to say it but maybe we need to let some people die. Does it really make sense to prolong the life of somebody an extra 6 months at the cost to the taxpayers of several thousand dollars only so that person can continue to draw social security benefits and have a very poor quality of life anyway for that period? Some things we can not afford, would be an interesting way of looking at things for McCain in the campaign. I'm an old guy, and I'm going to die, hopefully not in these next four years - but if I or any other grey haired dude gets deathly sick we shouldn't be using your tax dollars to prolong a low quality life anyway. Hell I'd vote for that.

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But what in the world do you do with government health care plans.

Reality is a bitch.

You've hit the nail on the head Mortgagedude. When social security was established the average life expectancy was 60 years and the 'retirement' age to get benefits started at 59. Now, one can start collecting benefits at the age of 63, but the average life expectancy is 76.

Doesn't take a rocket science or someone with an actuary background to figure out what's going to happen.

Recently, I have had first hand experience is seeing how health care costs have spiraled and how messed up the system is.

I have an 87 year old grandmother with multiple myleoma (bone cancer). She went from one illness (on top of the cancer) to another - pneumonia, infections, kidney failure, congestive heart failure... She has supplemental insurance from my grandfather's old employer (he worked at Crescent tool for 40 years), so every expense was covered. Four months in the hospital, intensive care, a life flight to a better hospital - the whole shebang came to $1.2 Million. She's now in and out between the hospital and nursing home, and the bills keep adding up, but Medicare and her private insurance keep on paying the bill. But her quality of life is absolute ****.

On the other side of the coin there was an ongoing fundraiser in my neighborhood for a 3 year old boy who has leukemia and needs a bone marrow transplant, but the insurance his parents have won't cover a good portion of it.

I'm not advocating a Robin Hood approach here, but there has to be a limit where some level of common sense starts to kick in.

You're right there. I just think it would be a refreshing approach for the grey haired old dude to take. Hell we can't live forever we gotta draw the line somewhere. I'm not so sure that we can't handle the truth. Maybe the voters are smarter than we give them credit for.

In a prior post, Karl said:

"The excess spending is forced to go away.

Think entitlements; its where the problem is."

Thank goodness somebody said it. In the real world also known as Mother Nature, the weak are either cast out or neglected. I love animals, but I understand that if I a watch a nature program, the weak lion cub cannot keep up and eventually will be sacked by predators.

This is really ratcheting up the upcoming decisions this country faces. Either REALLY step up and pay for all the promises; or eliminate them. Some will say where is your compassion? I might answer that it is for the young that have no idea what they face.

I'm trying to imagine either candidate pushing for entitlement reforms and tossing out their chance for reelection next time. Just not seeing it happen.

I guess the question is really how bad will it get before the lemmings realize a cliff isn't just on the horizon anymore, but at their feet. Not untill then is there even a possibility.

(No offense to real lemmings who are bright enough not follow the urban legend.)

What happens if we default on the national debt?

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What happens if we default on the national debt?

Isn't this what Russia did some years ago? About the time of the big Long Term Capital Management hedge fund collapse? Didn't Russia default on their bonds?
What happened to them? Did the country collapse? Was it invaded? Did it lose all of it's military? Has everyone now boycotted doing business in Russia?

Can the US selectively default on payments to foreign countries but not on payments to say the Social Security fund?

um if i remember correctly things got pretty bad over there