This is why the Democrats cannot - will not - "negotiate"

[laspariahs]

Funny, I thought it was people creating goods and providing services that gave our currency value.

No. Not by a long shot.

Very simply money has value because people have faith that it holds value. Once the government who backs the money defaults the faith will be damaged or lost, no more value. Or it prints up 16.9 trillion to pay it's debts, no more value. Money only has value because of the government backing it.

 

[werepossum]

No. Not by a long shot.

Very simply money has value because people have faith that it holds value. Once the government who backs the money defaults the faith will be damaged or lost, no more value. Or it prints up 16.9 trillion to pay it's debts, no more value. Money only has value because of the government backing it.

True, but that faith is already steadily eroding, and has been for decades. We already owe more than our entire GDP. Our deficit in FY2013 is being touted as the Second Coming because it's around and possibly even a little below $700 trillion. (That's more than $2,000 extra debt for every man, woman and child in this country, most of whom don't even pay federal income tax, in a "good" year.) We're increasingly financing our debt by simply willing money into existence and then buying bonds with it. We've given up even an unbelievable promise to one day pay it back, merely arguing that we can borrow ever more money to service the old debt plus the new debt forever.

If you think the principle threat to the value of our money is the prospect of a debt default, thinking isn't your thing.

 

[ivwshane]

True, but that faith is already steadily eroding, and has been for decades. We already owe more than our entire GDP. Our deficit in FY2013 is being touted as the Second Coming because it's around and possibly even a little below $700 trillion. (That's more than $2,000 extra debt for every man, woman and child in this country, most of whom don't even pay federal income tax, in a "good" year.) We're increasingly financing our debt by simply willing money into existence and then buying bonds with it. We've given up even an unbelievable promise to one day pay it back, merely arguing that we can borrow ever more money to service the old debt plus the new debt forever.

If you think the principle threat to the value of our money is the prospect of a debt default, thinking isn't your thing.

Yep might as well destroy it now! Clearly we should just get over the inevitable now instead of a slow transition into it.

 

[werepossum]

Yep might as well destroy it now! Clearly we should just get over the inevitable now instead of a slow transition into it.

If it is truly inevitable, then yes, let's destroy it now when we merely owe a little above our GDP rather than in twenty years when we owe vast multiples of our GDP.

 

[kage69]

Jon Stewart nails it- "Don't fart & point at the dog"-

http://www.huffingtonpost.com/2013/...blicans_n_4069528.html?utm_hp_ref=mostpopular

In Boehner's own words, they "took a stand" over the ACA, but now Repubs seem to say it's not about the ACA anymore, but about something more nebulous, but cloying, like whatever mileage they can get out of dog farts...

I posted that clip two pages ago, and so far only one resident brain donor has acknowledged it, but he clearly didn't watch it. Are none of these guys going to nut up and admit they're being played?

On the plus side, this has turned into a new benchmark for me though. All I have to do is look for the posters blaming Obama for lying and causing this bullshit and voila, partisan chicken shit found.

 

[laspariahs]

True, but that faith is already steadily eroding, and has been for decades. We already owe more than our entire GDP. Our deficit in FY2013 is being touted as the Second Coming because it's around and possibly even a little below $700 trillion. (That's more than $2,000 extra debt for every man, woman and child in this country, most of whom don't even pay federal income tax, in a "good" year.) We're increasingly financing our debt by simply willing money into existence and then buying bonds with it. We've given up even an unbelievable promise to one day pay it back, merely arguing that we can borrow ever more money to service the old debt plus the new debt forever.

If you think the principle threat to the value of our money is the prospect of a debt default, thinking isn't your thing.

Well the principal threat right now is a default. In the long term if we don't default then I would agree, as I said in my first post, that we need to spend less and tax more and balance the budget because the long term financials aren't good and will destroy the economy if left untouched. Edit: By long term I would give us another 5-10 years of running the country like we have since Clinton.

If it is truly inevitable, then yes, let's destroy it now when we merely owe a little above our GDP rather than in twenty years when we owe vast multiples of our GDP.

It doesn't matter how much we owe when we default, even owing "only" 16.9 Trillion when we default would destroy the economy, and perhaps worse. Owing twice that wouldn't make a difference. It's like defaulting on a 1.2 million dollar home or a 500,000 dollar home either way your home gets taken from you.

 

[MagickMan]

If it is truly inevitable, then yes, let's destroy it now when we merely owe a little above our GDP rather than in twenty years when we owe vast multiples of our GDP.

True. If it crashes now it'll be less painful, "not as far to fall" and all that.

 

[BoberFett]

No. Not by a long shot.

Very simply money has value because people have faith that it holds value. Once the government who backs the money defaults the faith will be damaged or lost, no more value. Or it prints up 16.9 trillion to pay it's debts, no more value. Money only has value because of the government backing it.

Money has value because people have faith? OK genius, whatever you say. I'm sure it has nothing to do with the fact that people can trade it for goods and services. 🙄

 

[IGBT]

More then likely the obama is window dressing the government shut down / public services, as a front to attempt to make Americans believe that they need the government, and that the government needs your money. However, the shutdown has cost over $2 billion and is costing thousands more every second. The mere threat of loosing Big Gov control over the population is enough to put the liberals in a cold sweat thus the chicken shit panic tactics.

 

[Jhhnn]

Money has value because people have faith? OK genius, whatever you say. I'm sure it has nothing to do with the fact that people can trade it for goods and services. 🙄

Money has value only because people believe it will do what you say.

 

[berzerker60]

Money has value because people have faith? OK genius, whatever you say. I'm sure it has nothing to do with the fact that people can trade it for goods and services. 🙄

And why do you think people are willing to trade goods and services for pieces of paper?

 

[Jhhnn]

More then likely the obama is window dressing the government shut down / public services, as a front to attempt to make Americans believe that they need the government, and that the government needs your money. However, the shutdown has cost over $2 billion and is costing thousands more every second. The mere threat of loosing Big Gov control over the population is enough to put the liberals in a cold sweat thus the chicken shit panic tactics.

What is this "control" you speak of, my son?

That's an honest question. Yeh, sure, we live within the reasonable constraints of a social framework & the law, not perfect, but this isn't exactly the DPRK, either.

 

[laspariahs]

Money has value because people have faith? OK genius, whatever you say. I'm sure it has nothing to do with the fact that people can trade it for goods and services. 🙄

Well it doesn't take a genius to understand fiat currency's such as the US Dollar. http://lmgtfy.com/?q=fiat+currency+

Yes, it is biased solely to faith, it is not backed by reserves and has no intrinsic value of any kind, unless you really like green rectangles. As others have tried to lead you down the path, I will simply tell you, it only has the ability to buy say a car, because the people with the car think or in other words have faith that the dollars you are giving them in return have equal value. This faith again is baised on the power and stability of the US government and nothing else. The US government issues the money people think it has value, this is all that allows you to buy your goods and services with it. Once people no longer think it has any value, it no longer carries the ability to buy goods and services with it.

 

[ivwshane]

Well it doesn't take a genius to understand fiat currency's such as the US Dollar. http://lmgtfy.com/?q=fiat+currency+

Yes, it is biased solely to faith, it is not backed by reserves and has no intrinsic value of any kind, unless you really like green rectangles. As others have tried to lead you down the path, I will simply tell you, it only has the ability to buy say a car, because the people with the car think or in other words have faith that the dollars you are giving them in return have equal value. This faith again is baised on the power and stability of the US government and nothing else. The US government issues the money people think it has value, this is all that allows you to buy your goods and services with it. Once people no longer think it has any value, it no longer carries the ability to buy goods and services with it.

I find it sad and disturbing that this has to be explained to adults.

 

[laspariahs]

I find it sad and disturbing that this has to be explained to adults.

Somewhat a modern commentary on the educational system.

 

[BoberFett]

What's sad is simple-minded buffoons pretending there are simple answers to complex questions.

Are you claiming that if faith in the US government is lost due to default, that Walmart will stop accepting USD? That they'll repost all the prices on their shelves in CAD?

The only thing lost in a default by the US government is faith in the US government. As the standard currency used by the American people, dollars will still be in demand because Americans accept them in trade for goods and services. The only losers are the idiots in congress when people stop buying their bonds to pay for our ridiculously oversized federal government.

 

[ivwshane]

What's sad is simple-minded buffoons pretending there are simple answers to complex questions.

Are you claiming that if faith in the US government is lost due to default, that Walmart will stop accepting USD? That they'll repost all the prices on their shelves in CAD?

The only thing lost in a default by the US government is faith in the US government. As the standard currency used by the American people, dollars will still be in demand because Americans accept them in trade for goods and services. The only losers are the idiots in congress when people stop buying their bonds to pay for our ridiculously oversized federal government.

You know that thing the fringe has been screaming about for decades, that thing that is supposed to be so high right now but isn't? You know that thing that the US is able to control because we control the money supply?

Do you know what it is? It's inflation mother fucker! Do you understand economics?!

Yeah Walmart will still take US dollars, they will just require more of them for the same shit!

 

[BoberFett]

You know that thing the fringe has been screaming about for decades, that thing that is supposed to be so high right now but isn't? You know that thing that the US is able to control because we control the money supply?

Do you know what it is? It's inflation mother fucker! Do you understand economics?!

Yeah Walmart will still take US dollars, they will just require more of them for the same shit!

Ah, so now government default will cause hyperinflation?

You're just a different breed of nutter...

 

[ivwshane]

Ah, so now government default will cause hyperinflation?

You're just a different breed of nutter...

Aww that's cute! Another straw man from a straw brained poster. I didn't say hyperinflation, I said inflation, and yes, there is a difference.

A downgrade in our credit results in higher interest rates, higher interest rates leads to a rise in inflation.

 

[BoberFett]

Aww that's cute! Another straw man from a straw brained poster. I didn't say hyperinflation, I said inflation, and yes, there is a difference.

A downgrade in our credit results in higher interest rates, higher interest rates leads to a rise in inflation.

Inflation?!? Oh dear, it's not like we've ever had that before...

Interest rates, both high and low, have positives and negatives. Maybe YOU should do some reading.

 

[laspariahs]

Actually fiat currency is pretty simple.

The downgrade isn't really the scary part, it's if the market gets flooded with US treasury bonds.

 

[BoberFett]

Actually fiat currency is pretty simple.

The downgrade isn't really the scary part, it's if the market gets flooded with US treasury bonds.

The concept is simple, but the system for determining its value is extremely complex, because that system by definition IS the economy.

And what's scary about a flood of treasury bonds? The fact that we couldn't sell any fresh ones? Some people might see that as a plus, forcing us to balance our budget.

 

[glenn1]

T minus two days and counting. What do you think the over/under is that 100 Senators will pass by unanimous consent whatever deal Harry Reid is willing to agree to?

tl;dr We are going to hit the debt ceiling, and there's not a fucking thing Obama can do about it.

http://thehill.com/blogs/on-the-mon...-already-put-debt-limit-deadline-out-of-reach

 

[Jhhnn]

The concept is simple, but the system for determining its value is extremely complex, because that system by definition IS the economy.

And what's scary about a flood of treasury bonds? The fact that we couldn't sell any fresh ones? Some people might see that as a plus, forcing us to balance our budget.

Unless you plan on paying off all debt as it comes due through some magical mechanism, borrowing must continue, even after default raises the rate of return for bondholders. Even with a balanced budget, rollover of debt demands borrowing. Basically, default compounds the problem, intensifies it by raising the interest rate.

In fiscal year 2013, the govt paid ~$416B in interest on the debt, at record low rates. If we default, even temporarily, that bill will go up, even if we quit borrowing entirely.

http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

Who benefits in the long run? Only holders of US govt securities, which comprise the backbone of nearly every great portfolio. Or, only the ultra wealthy who hold those securities, which is why right wing billionaires are financing Teahadist chumps in the first place.

Meanwhile, Rand Paul suggests that we prioritize paying the rich over nearly everything else-

http://thehill.com/video/senate/326265-paul-theres-no-reason-to-raise-the-debt-ceiling

It's easy to tell who's financing him, and it's not the teatards out waving signs.

 

[laspariahs]

Unless you plan on paying off all debt as it comes due through some magical mechanism, borrowing must continue, even after default raises the rate of return for bondholders. Even with a balanced budget, rollover of debt demands borrowing. Basically, default compounds the problem, intensifies it by raising the interest rate.

In fiscal year 2013, the govt paid ~$416B in interest on the debt, at record low rates. If we default, even temporarily, that bill will go up, even if we quit borrowing entirely.

http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

Exactly, only a fool thinks that simply balancing the budget is going to make all of our problems go away. While as I keep saying balencing the budget is necessary the most dangerous thing to our economy right this moment is default.

If you are pro balancing the budget than defaulting is simply not an option for you, since it'll make it far more difficult to do so.