Notice each time the U.S. defaulted it brought economic turmoil, something The Hill didn't point out. Also, the U.S. has never defaulted under the current global financial system. If they do then they can expect even greater pushback on continuing to use the U.S. dollar as the world's reserve currency and Americans can expect to see significantly higher inflation for the next several years.
The four times the United States government defaulted on its debt (2021)
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Re: The four times the United States government defaulted on its debt (2021)
#72The last default is the most significant one https://wtfhappenedin1971.com
So the intent here is clearly to blame all these problems on ending the gold standard. But on a lot of these graphs they really fudge it. The dual income trend began in 1965, as did the home value vs. income one. It's unclear to me why they view the words 'peer review' as a negative, but if you zoom in on ngram you'll find that spike also occurred before 1971. Some of the 'positive' trends also continued well after t…
There are multiple factors that contribute to economic trends, it's rarely accurate to attribute them to a single cause. The website doesn't really say the reason for this trend in 71, gold standard could be a reason or theory.
Some of the graphs do start before 1971, the trends in the graphs may have accelerated or become more pronounced after the end of the gold standard.
Re: The four times the United States government defaulted on its debt (2021)
#73Earlier quoted context omitted.
I answered that in my second paragraph. They've proven they're incapable of developing a budget that doesn't balloon. Non-discretionary spending is through the roof, as evidenced by their demand of latching spending to the 2022 budget levels. That's last year. How is this extreme or outside the realm of even negotiation?
Recall that the largest contribution to the budget shortfall is not increased spending, but tax cuts. If this were not simple gamesmanship, the proposed solution would include tax increases to pay for that which we have already agreed to purchase.
That's absolutely false. Federal revenue increased by nearly 20%.
Re: The four times the United States government defaulted on its debt (2021)
#74The US Government has never defaulted on its debt under the current (~50 year old) global financial system. It HAS defaulted when transitioning off the gold/silver standard, when the world moved off Breton Woods, and during the Civil War. I’d note that each of those defaults were related to the total collapse of the existing rules for national/global finance. So ultimately, these defaults do bolster the case for the…
Is it (a US default) at all possible given all we know? and if yes, is it possible to envision what would happen specifically? If it will have global repercussions then maybe it is something the global community should insure against, somehow? These are questions I'd like to have have a grip on. Not an economist, obviously.
Literally nobody knows the answer to these questions beyond the obvious answer of 'yes it's possible, and no it's not probable.' Everything beyond that is speculation, which is going to be more driven by ideological worldview than the unique specifics of the current situation.
People who think things won't change (not only referring to this specific issue) because the USD is still quite strong, remains the world reserve currency, and has survived rough waters in the past have a perfectly reasonable argument, even if it will inevitably be wrong one day. And those who take a bearish outlook on the situation also have a reasonable argument - we're obviously living through a major inflection point in history, the world has been de-dollarizing for decades, and the global economic (and geopolitical) winds are shifting. It's quite reasonable to see a storm on the horizon right now.
The hedging/insuring is "real" stuff. In an economic collapse any sort of financial vessel will become worthless. But after all is said and done, land, rare metals, and "things" in general will all maintain their value. Bill Gates and Ted Turner are currently the top 2 owners of farmland in the US. [1]
[1] - https://www.farmlandriches.com/largest-farmland-owners/
Re: The four times the United States government defaulted on its debt (2021)
#75Is it time to start diversifying my retirement money into international company index funds?
I seem to recall in 2021 when the last debt ceiling issues emerged the same political cosplay took place. It's being used as leverage, last time it was close too, they ultimately got it across the line. House approves debt ceiling extension through early December: https://edition.cnn.com/2021/10/12/politics/house-vote-debt-... White House rules out concessions over debt ceiling while GOP refuses to help avert crisis…
Yeah but the Dems were in majority.
Re: The four times the United States government defaulted on its debt (2021)
#76Earlier quoted context omitted.
Allegedly they have some 2068 tons. For an economy of their size, this isn't that much. Italy claims 2452 tons. https://www.gold.org/goldhub/gold-focus/2023/04/chinas-gold-... . I'm more in the Brent Johnson camp on the de-dollarization hype.
That number is suspect. China imported 1343 tons in 2022. The source for that import number doesn't say it was added to the government coffers though. The quantity reportedly added to reserves was only 25 tons. China also has extensive gold mining operations in Africa and South America. I doubt the quantity of mined gold is counted in numbers based on market purchases. https://oilprice.com/Metals/Gold/Reopening-Of-Ch…
Personally I suspect all of these official figures. The unofficial speculation isn't much better either. The theme is something like, "The PBoC secretly buys gold to avoid driving prices higher", "Fort Knox is empty! They've been dumping to suppress the gold price" and one of my personal favorites, "The London bullion market is is rigged. Unbacked paper gold is used to suppress prices. When you ask for delivery, you can only get the currency equivalent".
None of this is impossible. I find it all interesting, but it is worth noting that it is heavily biased. The PBoC secretly has more gold than stated while the west is secretly bankrupt. A gold backed CNY will emerge as the new dominant currency.
Also of interest is the emergence of the BRICS as an acronym dates back to 2001 at Goldman Sachs. There's definitely more than meets the eye and the official numbers are suspect, but the alternative numbers are speculative. Not to say that I don't find the fringe theories interesting. I just find it hard to believe either side. For me the de-dollarization hype is too orchestrated. Meanwhile the Peter Zeihan theories are too neat and tidy.
https://www.goldmansachs.com/our-firm/history/moments/2001-b...
http://www.goldmansachs.com/our-thinking/archive/archive-pdf...
https://www.gata.org/node/20925#:~:text=Why%20have%20Western...
Re: The four times the United States government defaulted on its debt (2021)
#77Earlier quoted context omitted.
So the intent here is clearly to blame all these problems on ending the gold standard. But on a lot of these graphs they really fudge it. The dual income trend began in 1965, as did the home value vs. income one. It's unclear to me why they view the words 'peer review' as a negative, but if you zoom in on ngram you'll find that spike also occurred before 1971. Some of the 'positive' trends also continued well after t…
There are multiple factors that contribute to economic trends, it's rarely accurate to attribute them to a single cause. The website doesn't really say the reason for this trend in 71, gold standard could be a reason or theory. Some of the graphs do start before 1971, the trends in the graphs may have accelerated or become more pronounced after the end of the gold standard.
> The website doesn't really say the reason for this trend in 71, gold standard could be a reason or theory
Well, per the site owner[0], the assumption came first, and the poorly fitted graphs came later.
> I believe Richard Nixon’s closure of the gold redemption window in 1971 was the largest driving factor in the inflection points you can see in our data.
> As I stated previously this is an a priori assumption, as we did not gather the data first and then form a hypothesis based on the correlations.
[0]https://wtf1971.com/2023/03/21/reader-qa-why-did-you-create-...
Re: The four times the United States government defaulted on its debt (2021)
#78Earlier quoted context omitted.
But doing so when you are at the top of said system; for no reason other than politcal gamesmanship?
I'm curious who is engaging in the gamesmanship in this scenario. This has been an issue long in the making with our deficit ballooning, even after significant increases in federal revenue. The bill signed by Republicans is hardly extreme, and when we considering the amount of expenses being paid to interest alone, it's clear the federal government needs to do something at this point. Legislators across both aisles h…
Without including meaningful tax increases, I don't think that the Republican bill can really be said to be a serious proposal. "We get everything we want and you get nothing" isn't a good faith negotiating position.
Re: The four times the United States government defaulted on its debt (2021)
#79Our politics is so dysfunctional. We waste tremendous amounts of time making the same arguments over and over and over, like somehow this time will be different. I assume both sides want it to continue, though I don't really understand the motivations from the left. The right is super easy to understand, it's a huge win for them every time.
The Republican party depends on unification while the Democratic party depends on diversity. There is no coherent Left in the US: instead we have one tent for every person who isn't conservative.
That's a weird flavor of kook-aid you're drinking there.
Re: The four times the United States government defaulted on its debt (2021)
#80This entire fiasco is stupid.
Treasury bonds/bills are just “future dollars”, while physical cash and electronic deposits are just “today dollars”. The idea that a sovereign government can somehow default on obligations denominated in the currency it creates and controls is absurd. It can no more default on treasury bills than it can default on dollars, or accounts at Fed - either can be created at will, physically via printing press/mint OR electronically via crediting an account at the fed.
The “debt outstanding” is just the number of dollars the government has created. But the way we calculate this number doesn’t include ”today dollars” the government has printed, only “future dollars”, so it seems quite meaningless to fixate on it.
And it is not per se irresponsible for this number to be high. It only becomes irresponsible if there are negative effects on the broader economy, primarily via inflation but also other effects like crowding out private investment and reducing growth.
Right now we are in an overly inflationary environment right now, and the government should be printing fewer dollars (“austerity”) via lower spending, higher taxes. It would be reasonable to insist on changes to spending/taxation policy.
It is irresponsible to take money (today or future-dated) and imply the government may no longer honor it as money. You are destroying the public’s faith in money, and losing the ability to buy goods and services with it. This is why many countries can’t get others to accept their money as payment, and have to issue bonds in a currency they DON’T control. This is not a good situation to be in.
People take the intuition that it is irresponsible for a household to have too much debt because it might not be able to repay it, and apply that to the government which can create those dollars. It is not the same.
It is like saying Starbucks can default on “Starbucks points” that it owes to people. So long as Starbucks exists, it can hand out however many Starbucks Points it likes, because it decides what a Starbucks point is and maintains the records of who has how many points. There might be Starbucks Points inflation if they hand out too many, but it is always possible for them to meet Starbucks Point obligations.