1979 US default on bonds

[Thump553]

You often hear commentators say the US has never defaulted on it's obligations, but apparently that is not true. Yesterday I heard a NPR story about a 1979 incident when $120 million of US bonds were temporarily not paid when due because of a "technical error." According to the two economists that studied that mistake ended up costing the USA roughly an additional six tenths of a percent in interest costs for at least the next year on the one trillion in debt outstanding-an additional cost to the USA of SIX BILLION DOLLARS.

Something for the GOP to think about as they seem hell bent on fillibustering our country into deadbeat status-for no reason other than partisan political advantage. They are going to cost our kids and grandkids a fortune, and I predict the backlash will be greater than when they forced the government shutdown in '96.

Link to NPR article (audio link and transcript): http://www.npr.org/2011/07/11/137773341/looking-at-when-the-u-s-last-defaulted-on-treasury-bonds

 

[a777pilot]

You talk like there is no income into the Federal government to make our debt payment obligations. We take in around $2.3 trillion so how in the world does this equate to default?

Do try to think for a change and not just listen to the lies and propaganda of the MSM and the White House.

 

[Macamus Prime]

Vulture capitalism is heavily practiced by American investment managers. Our courts usually enforce rulings in favor of vulture capitalists.

We will one day reap what we sow.

Granted, out future is fucked, but that is due to the elite of this country. They screwed over thousands of other governments and global entities to make their money. Now, one day, we will be taking it just as bad as we gave it.

You can thank the "leaders" of this nation.

 

[fskimospy]

You talk like there is no income into the Federal government to make our debt payment obligations. We take in around $2.3 trillion so how in the world does this equate to default?

Do try to think for a change and not just listen to the lies and propaganda of the MSM and the White House.

Yeah, because I'm sure the debt markets will take a look at the US reneging on all the other obligations it has and just ignore those.

Jesus people, think.

 

[Thump553]

You talk like there is no income into the Federal government to make our debt payment obligations. We take in around $2.3 trillion so how in the world does this equate to default?

Do try to think for a change and not just listen to the lies and propaganda of the MSM and the White House.

Do you have the slightest idea what you are talking about? FACT-THE US government is currently spending money at a faster rate than it takes it in-that is the reason the increase in the debt ceiling is necessary (absent monumental cuts in spending beyond what even the GOP is talking about, or immediate increases in revenue). So you are such an expert, please explain to me how the US can pay down its debt backlog by decreasing taxes (as the GOP wants) in a recessionary time of declining employment? You're living in candy land if you believe that is feasible or even rational, despite how often the GOP repeats the trickle down mantra. Start to use some common sense.

 

[GuitarDaddy]

You talk like there is no income into the Federal government to make our debt payment obligations. We take in around $2.3 trillion so how in the world does this equate to default?

Do try to think for a change and not just listen to the lies and propaganda of the MSM and the White House.

Nevermind the fact that we pay out 2.6 trillion in SS payments alone, not counting Medicaid/Medicare, the interest on the debt plus everything else the govt spends money on.

Seems your the one not thinking there ace.

 

[CallMeJoe]

You talk like there is no income into the Federal government to make our debt payment obligations. We take in around $2.3 trillion so how in the world does this equate to default?
Do try to think for a change and not just listen to the lies and propaganda of the MSM and the White House.

Do you imagine that Federal debt obligations are somehow like your mortgage payment? It isn't an amortized paydown, it's a sale of bonds whose interest and principal are both due on maturity.

Another idiot who learned all he needed to know about national debt from Michele Bachmann...

 

[matt0611]

We have defaulted in a sense before that as well, we promised to pay other countries in gold at 1 oz per $35 dollars, then we changed it to 1 oz per $38 and then $42. Then we finally totally abandoned on that promise to pay gold. The dollar then took a nose dive in value after that.

 

[piasabird]

At what point will we no longer be able to pay the interest on our loans? We are headed for default right now! Anyone with half a brain knows you cant keep paying your bills using a credit card. Sooner or later you have to pay your bills, or the banks (China) will no longer lend you money.

I would not be buying any government or municipal bonds.

 

[theeedude]

SS checks are not going to go out on Aug 3 if GOP doesn't raise debt ceiling on Aug 2.
I guess we'll see how the "Hands off my Medicare" crowd likes small government.

 

[Deeko]

You talk like there is no income into the Federal government to make our debt payment obligations. We take in around $2.3 trillion so how in the world does this equate to default?

Do try to think for a change and not just listen to the lies and propaganda of the MSM and the White House.

Arithmetic is not your forte, eh?

 

[drebo]

FACT-THE US government is currently spending money at a faster rate than it takes it in

So stop spending so much money?

 

[drebo]

Nevermind the fact that we pay out 2.6 trillion in SS payments alone, not counting Medicaid/Medicare, the interest on the debt plus everything else the govt spends money on.

Seems your the one not thinking there ace.

So your solution is to borrow more? Digging the hole deeper?

Sounds like a wonderful plan.

 

[CallMeJoe]

So your solution is to borrow more? Digging the hole deeper?
Sounds like a wonderful plan.

So much more logical to risk a major downgrade of the government's credit rating so that we can turn the Great Recession into a true Depression, eh?

 

[drebo]

So much more logical to risk a major downgrade of the government's credit rating so that we can turn the Great Recession into a true Depression, eh?

No, dumbass.

It's much more logical to stop the Great Drain of the federal government from continuing to spend money they don't fucking have on programs and bullshit that we don't fucking need.

 

[ShawnD1]

So stop spending so much money?

need more Common Sense legislation (similar to Bush's common sense judges)
-legalize and tax drugs
-legalize and encourage suicide (reduce SS and medicare obligations)
-reduce the prison population by making 10 years the maximum sentence and everything over 10 years gets the death penalty
-increase income taxes

Debt would be gone in 5 years. You can all thank me later

 

[the DRIZZLE]

SS checks are not going to go out on Aug 3 if GOP doesn't raise debt ceiling on Aug 2.
I guess we'll see how the "Hands off my Medicare" crowd likes small government.

If that happens it's Obama's choice. If the debt ceiling isn't raised the treasury will have to decide which obligations to pay and which not to pay. Nothing says SS has to be in the later category.

 

[ShawnD1]

If that happens it's Obama's choice. If the debt ceiling isn't raised the treasury will have to decide which obligations to pay and which not to pay. Nothing says SS has to be in the later category.

Just ditch Medicare already. Why does such a useless program exist? If your job doesn't have health benefits, get a real fucking job. Old people are all the same. They jump the border, wear stupid oversize hats, take "siestas" in the afternoon, they refuse to learn English then they have anchor babies so they can't be kicked out.

My job sucked so I pulled myself up by the boot straps and I went back to school (using a loan from my parents while living with my parents and eating food paid for by my parents). If I can bootstraps myself like that, then old people can do the same. Now I have good health and dental benefits and it's all because I was completely self sufficient and determined to better my own life.

 

[CallMeJoe]

No, dumbass.
It's much more logical to stop the Great Drain of the federal government from continuing to spend money they don't fucking have on programs and bullshit that we don't fucking need.

Someone incapable of realizing that the federal government already has incurred obligations that shall require additional borrowing regardless of any steps taken to reduce deficit spending calling someone else "dumbass"?
Where are those <irony> tags?

 

[Thump553]

The purpose of this thread was to try to post solid evidence on the scope of the damage that will be caused to the US economy by a default, not to have yet another debate over the causes of the debt or whether you would fund certain programs or not. There are a couple dozen other threads to argue those issues.

The point I was trying to convey was that a default will drive US interest rates up thus increasing the costs of paying off the deficit-so intentionally forcing the US into a default is counterproductive and will drive up the expense, both now and to our future generations.

 

[ShawnD1]

The point I was trying to convey was that a default will drive US interest rates up thus increasing the costs of paying off the deficit-so intentionally forcing the US into a default is counterproductive and will drive up the expense, both now and to our future generations.

You mean it's possible for interest rates to go up and make it impossible to pay off existing debt?

Sadly it doesn't shock me that some people still don't understand this. They miss a credit card payment and their CC rate goes way up. They have bad credit and their lending rates for cars and houses goes up. For some reason those same people think the government is completely immune to those rules of economics.

 

[a777pilot]

What was the entire national budget just three years ago? That would be FY 2008 and the projected total Federal Spending was $2.9 trillion. We are in FY 2011 and we are rapidly approaching FY 2012. The estimated spending for FY 2012 is $3.729 trillion (That's a deficit of $1.101 trillion.)!

Why not just use the FY 2008 budget as a guide and spend no more than what we did then. One would think that $2.9 trillion dollars would be more than enough for this nation to spend in one year.

 

[Anarchist420]

They should repudiate that shit so we can have a depression.

 

[ShawnD1]

What was the entire national budget just three years ago? That would be FY 2008 and the projected total Federal Spending was $2.9 trillion. We are in FY 2011 and we are rapidly approaching FY 2012. The estimated spending for FY 2012 is $3.729 trillion (That's a deficit of $1.101 trillion.)!

Why not just use the FY 2008 budget as a guide and spend no more than what we did then. One would think that $2.9 trillion dollars would be more than enough for this nation to spend in one year.

In other words you don't know what a baby boomer is. That explains pretty much everything.

1946 + 65 years = 2011
free healthcare and social security w00t w00t

 

[ElFenix]

Why not just use the FY 2008 budget as a guide and spend no more than what we did then. One would think that $2.9 trillion dollars would be more than enough for this nation to spend in one year.

partly recession so social spending must increase, partly inflation as dollars are worth less now than then, partly increase in population. just inflation and population increases get 2.9 up to ~3.27