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He assumes that the government won't just say "you know what? Fuck that. This guy, this guy, that guy and these three guys don't get their money."

In other words, he's assuming that a sovereign default cannot politically decide to discriminate between politically and economically important creditors (pensioners, medical services, infrastructure) and robber barons.

The obvious solution is to tell the robber barons to take a hike. Preferably off a short pier.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Jun 11th, 2009 at 08:27:52 AM EST
[ Parent ]
correct. There is a play between future payments and real, actual payments. Military spending is real, immediate. Future liabilities are something else. There will be default (as Jake implies)
It's easy for the USA to balance the books. Just rise indirect taxes. But it's easier to get the money from China, and it's just fine with China, busy boiling slowly the American frog through deindustrialization...

Patrice Ayme Patriceayme.com Patriceayme.wordpress.com http://tyranosopher.blogspot.com/
by Patrice Ayme on Thu Jun 11th, 2009 at 02:07:43 PM EST
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