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View Diary: There will be no default on the national debt (113 comments)

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  •  Different kind of default (11+ / 0-)

    This default scare is far less important than the real default risk.

    The real default risk is not that creditors (including those on Social Security) will not get paid. The real default risk is that the dollars they will receive will not buy what it was thought they would buy due to a debasement of the currency.

    Bernake (Helicopter Ben to some) has already said the Fed wants to generate inflation. So far they have been relatively unsuccessful, but lately they have redoubled their efforts. Combine this with the push to reform the CPI calculation in Social Security and you can see where this could go.

    Remember the real question after the financial crisis is who will pay. There is too much debt in the system and this debt must be made to go away. One way is to write it off, another is to pay it down and the third way is to inflate it away.

    Obama and Bernanke have decided on the third way ... meaning that all will pay, including those who can not afford to pay. The folks that should have paid (bankers and their creditors) will walk away harmed far less than they should have been.

    There's room at the top they're telling you still But first you must learn how to smile as you kill If you want to be like the folks on the hill

    by taonow on Thu Dec 27, 2012 at 04:10:59 AM PST

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