United States Debt Default

I am absolutely appalled at how average republican voting people can be so hypocritical. Bush expanded the executive power. During his time, they raised the debt ceiling 7 times. And all of that was done without a single voice raising in dissention. Now that we have for the first time a black president, all of the sudden we have the formation of an entire political party for the soul purpose of being against the current president.Where the hell were all the fiscal conservatives during Bush when he turned the biggest surplus we ever had from the Clinton years to the biggest deficit we ever had? Where the hell were all the fiscal conservatives when they raised the debt ceiling 7 times for Bush?I am still convinced the tea party and other conservatives are racist at heart. They just hide it behind the political correctness called fiscal conservatism. This was not a problem during the Bush years even though Bush was spending like there was no tomorrow.Edited by Taz, : No reason given.

The same place they are now - nonexistent.Contrary to the rhetoric there's never, ever been a consistent electorate support for actual smaller government or smaller deficits. Even the conservatives around here only claim to be for smaller government and balanced budgets - it's just a tribal identity shibboleth they have to repeat so people know what group they're in.Conservatives, like always, have supported only that which enriches the elite. That's why Republicans are planning to scuttle the entire American economy to protect tax breaks for corporate jets.

Just read an article in a local rag about this. During the Bush years, Cantor et. al voted in a total of 3.7 trillion dollars of increased debt ceiling. Of all the irony, Obama voted against such measures during his tenure in the Senate. Their fear of "Socialism" is color blind. I don't think it would matter if it were Obama or Kerry. The Tea Party and related movements were built from the hyperpartisanship used during the Bush administration. They are are a product of Fox News, not a racist group, IMHO.

Perhaps cutting some of the funding is fair and necessary, but the soldiers are at a job serving the country and it is a job that they cannot quit. A people with honor would pay them, per contract at enlistment.

There have been plenty of democratic (communist) presidents in the past. Yet, they created an entire party dedicated to opposing the president just as the first black president took office.I don't believe in coincidence.

Didn't you hear? The republicans have been trying to cut medicare and social security in the name of fiscal conservatism.

Just to put this aside to bed, I think it has to do with the hyperpartisanship during the Bush years (a la Fox News). That is the difference between the current movement and past movements. We should probably stop this aside here, or start another thread if you are interested in continuing the discussion.

It makes sense to me. Just like they couldn't pay their bill with, say, a chunk of the Washington Monument, they can't just make coins and have them be legal tender.So what makes something "legal tender" and how does that happen?One of CF's links says this:

quote:

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Congress provided the authority, in legislation passed in 1996, for the US Mint to create platinum bullion or proof platinum coins with arbitrary fiat face value having no relationship to the value of the platinum used in these coins. These coins are legal tender.

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Really!? That doesn't seem right but I don't know. Any idea?

So what is the latest? Still no deal (as I understand it)Is the United States going to default on it's debt and plunge the global financial system into a crisis of never-seen-before proportions?What is now likely to happen?
What could happen (worst case but reasonably possible scenario)?
What are the consequences?
Who can we blame?

Like creationists repubs are really good at obfuscating the matter. They shifted from demanding 400 billion in cuts with no revenue to 900 to 3000 and then walked out of negotiations, and then somehow managed to blame Obama.Congrats republicans for turning me from being against Obama to for him.
PS still a disgruntled Hillary supporter.

Probably not. The political gamesmanship being played is a US form of playing "chicken" to see who blinks first. Both will blink soon to avoid default.However, there is a hardcore group of republican freshman representatives in the House who believe that pushing the situation into default would actually be a good thing. Not to be mean but to scare some fiscal discipline into the system ... on their terms (spending cuts, no tax increase) and their terms only. How far they can push the House leadership remains to be seen. A short term debt ceiling raise coupled with some spending cuts before the Aug 2 deadline meaning we will be doing this again in about 6 months. Oh, joy. No debt ceiling raise by Aug 2. Default on domestic obligations first. Treasury would use all possible funds to pay the Bonds delaying Social Security, Veteran's, Medicare/Medicaid, Tax refund, etc, payments. This "shock" should cause one hell of a ruckus and even the most hardcore will give in to at least a short-term debt ceiling raise before they are tarred and feathered.Just don't expect any $billion Platinum "Geithners" to hit the system. Another dip in the US economy, maybe into mild recession, with a similar impact on other world economies. If this happens expect the European and Asian banks and governments to pump money into their economies to stave off the worst slumps. Americans ... all of us.Edited by AZPaul3, : spelin, agin.

And if that happens won't there be a downgrade on the US credit rating?And if that happens won't it plunge the global financial system into some sort of a crisis anyway?I still don't understand who these credit rating agencies are or why they wield so much power.

X wants to borrow money from you. You are happy lending money but you recognise that it involves a risk. You decide to charge an interest rate based upon the level of risk: the more likely X is to default on his obligation to you, the higher the interest rate you charge. How big a risk is X? What is X's past history? What is X's current financial situation? What possible future events could have an impact on X's future financial situation? You could work all this out for yourself, or using your own team of analysts. Or you use a credit rating agency who has done all the work for you - they will give you a credit rating and you can decide what interest rate to charge based upon that rating.If X is Joe Bloggs come to buy a TV from you on credit, then your CRA is likely to be Experian, or similar. If X is the USA come to find funding for an invasion of Iran, then your CRA is likely to be Moody's.

Where do you think coins come from, CS, and why you're allowed to spend them? How does it always happen to be the case that there's enough dollars to go around, even though the population of the US keeps growing?How could the Treasury Department, the only body legally allowed to print money, print money that was counterfeit? That's what AZPaul is saying is going on, here. The Treasury prints or strikes it such that it says "legal tender" on it. Contra AZPaul, the Federal Reserve doesn't have a monopoly on the creation of dollars and never has. It has a monopoly on reserve notes, which is the predominant form of money in the United States, but it's not the only possible form. If, like most people, you have some $2 bills socked away somewhere, then you're the holder of a Treasury note, which is also a kind of completely legal dollar, the number of which allowed to be in circulation is determined by statute.Unless they're coins. Coins issued by the Treasury aren't reserve notes, they're fiat money. A $1 trillion coin struck by the Treasury has that value because the Treasury says so. That's what "fiat currency" means; that's what Buz is always complaining about, that our dollars are dollars not because they're backed by a dollar's-worth of something, but because the Treasury department says they're dollars. And everybody agrees to play along.

They can push it all the way. Boehner can't deliver a debt ceiling bill without their votes, and they don't want to vote for anything Boehner comes away from the table with.There will only be a debt bill if Eric Cantor and his caucus decide that not busting the debt ceiling is more important than the power of the tea party caucus. Maybe that'll happen. (Frankly the fact that you think it will happen makes me think that it probably won't.) I never said that they would, only that they could and should.