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What if US defaults?

  • #21
  • Apr 19, 2011 8:36am Apr 19, 2011 8:36am
Quoting Custos
you are comparing apples with pears.

Large debt being the apples, and the dollar being the pears.

Yes, a low dollar would allow exports to increase.
But a large debt which can't get paid back will make the US default regardless of how high the usd is. Once the lenders are not willing to lend anymore, or once the premiums for US bonds go up, then guess what, the debt burden will be higher and higher until finally nobody thinks that the USA can ever pay that debt back.

Anyways, I hope that they can avoid a default it by increasing exports, since...
Like the rest of the world, US has sold itself to China for the cheap, cheap, cheap materials. It will be interesting to see how long it lasts, the corporate and industrial greed to bulk profits by getting children in foundaries to pour your steel for far less that you can do so in your own country. Seems moronic that you can do something like export, produce and imports cheaper than just doing it yourself.

RT
  • #22
  • Apr 19, 2011 8:44am Apr 19, 2011 8:44am
Quoting LasVahGoose
The world is already preparing for the US to default or simply not have the USD as the worlds reserve currency. It's a done deal as far as I can tell.
From what I have heard there are banks (Mexico was a recent one that I heard or read) that no longer accept US dollars anymore and there are places in the US that actually take Silver or Euros as payment over the US dollar. Could be rumour but its an interesting one to say the least. Once China offloads there bulk $US reserve we should see the ship sink. Its kind of like the titanic at the moment, big arse in the air after breaking and just kind of bobbing around waiting to sink. Gonna be a massive global shift.

Kind of makes me think of the Mayans in alot of ways. Today we have so much uncertainty in finance and even mother nature seems very uneasy. Huge earthquakes of late in Asia, massive tornado season so far for US, recent flooding throughout Australia, volcanoes in Euro. Just seems really eerie in the calender context. Its going to be an intesting few years thats for sure.

RT

RT
  • #23
  • Apr 19, 2011 8:53am Apr 19, 2011 8:53am
Quoting GEfx
There is a zero percent chance that the US will default on its debt. Option #1: Print enough $1,000 bills to pay off all or part of the debt. Causes a lot of inflation but who really cares? Option #2: The US Government officially states that the value of gold is $10,000 an ounce. Then, the US transfers a portion of its 8,800 tons of gold reserves to pay off all or part of the debt. Again, there are negatives to doing this, but who really cares? Option #3: Impose a tax on anyone holding US debt, up to a number equal the amount of debt you hold. Just...
Option 1: The US has been doing this and the currencies is becoming worthless. There will be a time when the world just no longer accepts it

Option 2: The US may hold the largest gold reserves but that doesnt mean it can just say 'right gold is now worth $10000 an oz just so we can dump out reserves to pay off our debt'. While it might be attractive to some, I cannot see other countries just saying 'hey sure thats fine' (except maybe Russia, China and France who are the other major holders).

Option 3: you cannot impose a tax on the world for your countries debt, who in there right minds will conform to it just so the US can be bailed out. The most likely thing to happen is that the US will be removed by the world as the reserve currency, it will be left with its growing issues without the abililty to just print money to pay back the world, it may have to sell its gold reserves just to get out of jail but then what do you have.

You have a consumption country, with a worthless dollar, no gold and hyperinflation. I am no economist but I think that sounds more likely that 'the US will never default because of my reasons'
  • #24
  • Edited 1:10pm Apr 19, 2011 9:09am | Edited 1:10pm
I know it seems like doomsday--- but life will go on. The USA is a very, very, rich country. It's just paper money, after all. Yes, there will be wringing of hands gnashing of teeth. Yes, the USA will be forced to get its physcal house in order and stop running huge deficits... and that will be painful to some degree. But the rest of the world will quickly forgive our sin because, quite frankly, they need us. The world cannot afford a US with closed borders only thinking about its own well being. Now that would be doomsday...for the rest of the world. China would be in deep trouble with no market to sell its products. Many would starve around the world if the US stopped exporting food. The world energy market would crumble if the US became self-sustaining for its energy needs, and the US could do it with just a little effort. Also, what would happen if the big, bad US military were not there to act as policeman to small conflicts and as MR. Deterrent to large conflicts? I don't think anyone in the world (except a few extreme Jihadists) want to contemplate a world with the USA not being what it is and not doing what it does. I really can't see how doomsday is going to occur in the USA. I can see a period of turbulance and inconvienence, but not doomsday.

Regards,
  • #25
  • Apr 19, 2011 10:04am Apr 19, 2011 10:04am
Here is what I think:
- One day the Asian giant will dump or threaten to dump the US$ in an economy warfare and US$ will be replaced by some other currency as the world reserve.
- With that US will find it hard to import oil at the current cheap price
- US economy is mostly import oriented and this will lead to major protectionism within US, especially to appease the public
- Natural resources will save US from the crisis. Oil will be eventually replaced by other energy sources. US will transform from a country of excess to a country of self-sufficient.
- I dont think US will go down as a third world country, because world still needs US, it's leadership in some areas.
- US will no longer be attractive to Jihadis and you guys will have peaceful life
  • #26
  • Apr 19, 2011 10:49am Apr 19, 2011 10:49am
Quoting PipMaxzz
Here is what I think:
- One day the Asian giant will dump or threaten to dump the US$ in an economy warfare and US$ will be replaced by some other currency as the world reserve.
Don't you think China is in too deep? If they make a move dumping only 10% of their dollars reserves, the dollar will drop, making the other 90% of their reserves worthless. I think China is pursuing a gradual approach. They have announced that they are looking into building non-dollar reserves (euro, gold, etc), but this really is a gradual process.

Anyway, the fact is that the people of the US have been living above their standards (really sorry to say this, as there are so many people in the US that live in poverty), and this will change. How does this change? A real depreciation of assets and income: inflation and decreased real wages, or increased taxes. Something will have to change, and it is out of they Fed's or the US government's control, because once the world stops buying US debt, the current account deficit has to become a surplus.
The nail that sticks out gets hammered back in
  • #27
  • Apr 19, 2011 12:01pm Apr 19, 2011 12:01pm
War.
  • #28
  • Apr 19, 2011 3:57pm Apr 19, 2011 3:57pm
Quoting FX-Petra
I know it seems like doomsday--- but life will go on. The USA is a very, very, rich country. It's just paper money, after all. Yes, there will be wringing of hands gnashing of teeth. Yes, the USA will be forced to get its physcal house in order and stop running huge deficits... and that will be painful to some degree. But the rest of the world will quickly forgive our sin because, quite frankly, they need us. The world cannot afford a US with closed borders only thinking about its own well being. Now that would be doomsday...for the rest of the...
In other word, if the US sink, due to its massive debts the whole world with sink with it. It is a double sword, the whole universe has been in agony with the US$ being manipulated as the world currency reserved. I am sounding like seeking justice, but the truth is, one can never find one in this life. We are made in earthen vessel, a sinner that needs redemption.

Just for thought,

Edd
  • #29
  • Apr 19, 2011 5:13pm Apr 19, 2011 5:13pm
What can i do to protect my Forex account cash encase the dollar collapses? Without taking the cash out in buying gold is what i meant ofcourse. Can't i just open a 0 leverage account and open a position in another currency or gold? But then i would have to worry about margin calls if I open a position which is 90 percent of my account, right?
The trend is my friend? The world casino is my friend!
  • #30
  • Apr 19, 2011 5:17pm Apr 19, 2011 5:17pm
We may end up paying $5 a gallon for gas, but we won't default. When you own the printing press you can print as much money as you want
  • #31
  • Apr 19, 2011 5:29pm Apr 19, 2011 5:29pm
Quoting GulfCoastPip
We may end up paying $5 a gallon for gas, but we won't default. When you own the printing press you can print as much money as you want

nothing is that simple, i think all the doom and gloom as of late, will be forgatten later.

the world always continues.
i dont believe the US will default, we have had times of higher debt to GDP inflation adjusted.

this is a big crisis, and the system run by BANKS needs to change. hopefuly we can adapt and adjust.

for now protect your capital, but we aware and be ready to change if USD strengthens ,and the economy picks up,as gold, silver, and comoditties will be down.

play what you see prepare for the worse, hope for the best and be ready to change gears when the time comes for both.

RIGIDITY KILLS, we must adapt.

the world will go on.

EGYPT fell
ROME fell
The AZTECS fell
The MAYANS fell
the CHINESE fell
The MONGOLS, THE PERSIANS, THE BABYLONIANS,
THE ASYRIANS, THE BANTU, NUBIANS, THE HITTITES, THE BYZANTINIANS, THE TURKS, THE BRITISH, THE RUSSIANS, THE PRUSSIAN/GERMANS, THE AUSTRIANS, THE FRENCH,

and the list goes on and on and on.

they all fell the world adapted and went on.

the US as powerful as it seems. brought CAPITALISM, representative democracy, military power, and technology.

but with out CAPITAL there is no MILITARY, and you could use your MILITARY to continue to stay afloat in this CAPITALIST world.

where ever might happen, lets just be ready and flexible
AVT INVENIAM VIAM AVT FACIAM
  • #32
  • Last Post: Apr 19, 2011 8:50pm Apr 19, 2011 8:50pm
Redlion,

The Chinese never really fell. They've been around for thousands of years but have evolved over and over again. Also, the British Empire never really fell either. They just diminished into what they call the commonwealth. My last response to you statement is that history never repeats itself... but it rhymes.
The trend is my friend? The world casino is my friend!
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