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

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  •  If the U.S. can't default on its debt (9+ / 0-)

    explain how the U.S. already did default on its debt once.

    Whether a government obligation is valid and whether it can be defaulted on are two different and distinct legal questions. And I write this as a retired public finance lawyer.

    •  That wasn't a real default (3+ / 0-)
      Recommended by:
      lunachickie, Odysseus, Simplify

      it was an accounting screwup, quickly corrected.

      “What’s the use of having developed a science well enough to make predictions if, in the end, all we’re willing to do is stand around and wait for them to come true?” - Sherwood Rowland

      by jrooth on Thu Dec 27, 2012 at 06:02:40 AM PST

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    •  Interesting article. Thanks (6+ / 0-)

      "technical" default that is then denied and buried that happened back in the Carter administration.

      Refusing to raise the debt ceiling is the most potent weapon for extortion and madness that was ever deployed by the Republicans and they freaking love doing it!

      I agree with the diarists point that what they are doing is undermining the validity of the US debt. They are doing it for what they perceive to be political gain and screw the consequences for the country and everyone else. The "crisis" and possible default exisit solely because they WANT a "crisis" and a possible default.

      I am not disputing that these immoral ignoramuses could actualy trigger a for real default, but it will be their conscious will to do so. They are like arsonists who pour the gasoline and display a matchbook and then say, " for x trillion in spending cuts we won't light the match."

      America knuckles under to them and then the next year or month or whenever they return and pour some more gasline around and demand more money in order to not light the match once again.

      When will it end? The only way to stop this is for the President and any remaining sane politicians and journalistst to explain to people that what the Republicans are doing is running a protection racket on the public and the nation.

      “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

      by Phoebe Loosinhouse on Thu Dec 27, 2012 at 06:08:21 AM PST

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      •  Or just don't default (1+ / 0-)
        Recommended by:

        Even the tepid House Minority Leader has recommended pulling out the 14th Amendment.

        (But then, she also said she was against Social Security cuts before she was for them.)

        Government and laws are the agreement we all make to secure everyone's freedom.

        by Simplify on Thu Dec 27, 2012 at 09:17:48 AM PST

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      •  Sorry, no (0+ / 0-)

        It means an entirely different thing when a government obligation is determined to be invalid than when that same government obligation goes into default. The holder of an invalid government debt is SOL. They can't sue and collect even partial payment out of the debtor's remaining assets. The holder of a defaulted, yet still valid, government obligation can do that.

        A government debt obligation can be invalid if it is issued without complying with the laws governing the issuance of debt that are applicable to that debt, and for other reasons. When the 14th Amendment was adopted, there had been quite a lot of discussion about whether debt issued by the Confederacy was going to be honored by the federal government (no! as was provided in the language of the 14th amendment's debt clause), and there were also questions about federal treasury obligations that had been negotiated by former Confederate states.

    •  . (3+ / 0-)
      Recommended by:
      Odysseus, cotterperson, Sparhawk

      US defaulted on international trade settlement of gold Aug 15, 1971 as decreed by the Bretton Woods agreement of 1948.  By executive order Nixon technically defaulted on all US international trade 'obligations' by reneging on the agreement for settlement in gold (or fiat dollars).  FDR's raising of the 'fixed' price of gold in 1934 was a decreed devaluation of 'money' but that is another story.  Kissinger convinced the OPEC countries to accept the fiat dollar in the 73-74  oil embargo, another 'side effect' from the technical default.

      In 1979, capital flows were starting to pile into precious metals after almost a decade of stagflation from Nixon's actions (often blamed on Carter), Volcker had to ramp up interest rates to divert capital flows back into the dollar.  They can't do that this time, default would be almost immediate given the massive level of short term debt rollover needed to keep the ponzi going.

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Thu Dec 27, 2012 at 09:33:21 AM PST

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