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More seriously, it depends very much on how targeted it is. If you simply walk away from all sovereign bonds and let the chips fall where they may, then there's a realistic possibility that you'll break the global monetary system. And even if you don't, the hysterical children on the capital markets almost certainly would.
A more targeted default... that's a different kettle of fish, and depends very much on how you do it, how you justify it and how many of the hysterical children you manage to put out of business in the first blow.
Austerity can only be implemented in the shadow of a concentration camp.
there's a realistic possibility that you'll break the global monetary system.
How can you break something that already belongs in an asylum? I suppose you could have an extended period of Extreme Bad while something better had the chance to organise itself.
But I still think controlled demolition followed by a rewrite of the rules is the best way to avoid future crises.
I meant "break the monetary system" as in "causing wheat to not be shipped from Ukraine because the seller doesn't trust the buyer's escrow service."
Having the largest (and arguably most trusted) GDP on the planet simply walk away from its sovereign debt overnight is not "controlled" in any version of the English language with which my thesaurus is familiar.
People still seem to think the system is not just workable, but almost the best of all possible worlds - even though it explodes regularly, with increasing oscillations.
I think that's quite an unusual point of view.
Wheat continues to be shipped from the Ukraine for the moment, but that's not a consolation if you're one of the long term unemployed in the US, or about to become one of the long term unemployed in Greece.
Politics aside, the most pressing criticism of the system is that it simply doesn't work for many people, and is close to not working for anyone.
However, as much as the "nuke and pave" solution appeals to the part of my brain that's schooled in engineering, there is an appalling number of things that could go Seriously Wrong with that strategy.
And if you're in a political position to prevent disastrous fallout, you are also in a position to engineer a new system without having to nuke and pave.
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