the US were to default on it's debt or to simply refuse to pay it back?

There are really only two things the creditors can do
1) refuse to loan any more money
2) collect (ie invade the US)

as for 1: that's great but you go down with them if they refuse to help/trade with you

as for 2: you want to invade a country that can blow up every single population center on earth 10-15 times over before even deploying a single boat/tank/airplane?

now, we know what happened to the last major world power that had massive monetary issues...

Germany?

USSR?

Japan?

Germany. The USSR simply did umm "wealth transfers" to certain individuals as it dissolved itself:P

What would happen if rating agencies, IMF and the world bank werent just manufacturing the collapse(s)?

What does it even mean that the Fed loaned out 16 trillion to domestic and foreign companies via the discount window? (you know, more than the entire US debt)

What would happen if North america revoked NAFTA, and also actually started implementing foreign policy that was designed to retain manufacturing jobs in the US and Canada while at the same time protecting/preventing the explotation of 3rd world labour markets?

What if the babyboomers hadnt fallen asleep and let the world go to fluff?

What if?

we need a recession.... but they will not let it happen... and why should they? they be getting R$CH

and good point martian ;)

Rating agencies, the IMF and the world bank don't manufacture collapses. The IMF and world bank tends to make things worse.

To put it simply, guns dont' kill people; people kill people:P

"What if the babyboomers hadnt fallen asleep and let the world go to fluff?"
To which I can only say:
"http://www.youtube.com/...KWw542g&ob=av2e"

The last country to try Isolationism was Japan... didn't work out so well for them...

It worked for Japan for about 350 years until the US appeared with a gunship and said trade with us or else. Then they decided a different way of doing things was in order:P
It worked for China for longer than that, until they got Omgwtfbbq'd by European Colonial powers, mostly the British.

Refusing to cooperate with the IMF or pay back your debts isn't isolationism by any stretch. Certain countries who have done it in the past still continued to trade afterwards.

really? because i was under the impression that the US was adopting an isolationist stance before WWI and WWII.

the entire staircase and the footings on which is rests are utterly rotten - would anyone here seriously try to renovate such a staircase ?

the ratings agencies haven't been remotely near showing the real state of affairs

argentine or some other country in that area.

About thwo thirds of the debt is domestic. So no more retirement funds and social security trust fund and a whole lot of americans and institutions would get a big hole in their wallet.
Maybe those would get their guns and travel to d.c? Bang-bang.

The third who are foreigners would get rather upset and from across the seas shake their hands in the general direction of usa.
All stockmarkets around the world would take a tumble off the cliff, banks around the world would go bancrupt, companies would follow. Mass unemployment. Recession. Usa would be a bit more disliked.

Myself I'd try to occupy a gold mine.

THE UNITED STATES CAN PAY ANY DEBT WE HAVE BECAUSE WE CAN ALWAYS PRINT MONEY!

So cool to be able to pay back all your debts with your own currency.

http://www.youtube.com/watch?v=q6vi528gseA

Yes the bigger question is what would happen if we printed a 13 trillion dollar bill and paid off all of our debt to become debt free!

Henrik's right.

Most of the US debt is held domestically. If the US simply refused to pay it's obligations, the entire US economy would seize up and everyone in the US would be broke.

-Fooglmog
Guy with no clue.

na.. we had decided to stay outa everyones political business aka not butt in.

if most of the US debt is indeed domestic then if you printed money to pay it off you would simply cause hyperinflation and impoverish a lot of folks. You end up pushing a giant reset button, printing new currency and starting over. Hope that everything holds together and people don't go too bananas in the mean time. The foreign held portion of the US debt would still be there as printing money only makes the US dollars worth less vs foreign exchange so you don't really gain from it (sort of)

@marshal: yes, argentina, which is now doing fairly well economically... but that is because they have mineral wealth that they were able to trade and use the funds to invest in themselves..

@mr ford: technically North Korea and some very small countries still do it for a variety of reasons including being embargoed. Communist China almost did it but I believe that during Mao's time they did trade with the USSR at least for a while. Also I believe that the US restricted itself to trading within North/South America and didn't shut off trade completely. I could be wrong about that.

Political isolation and economic isolation are two completely separate things.

Seriously the only way out of this debt crises, as shown in history is a massive war which sucks up resources and manpower. It is the only true way you can resolve this current economic situation.

Things will get a whole lot worse before this happens, but mark my words, as long as the whole 2012 theory doesnt happen a world war will happen eventually, my theory, it will start in the middle east and once again russia will be on the same side as America, only this time it will be China and co which is the axis...

China will win.

ffs. people, quit buying Fox conspiracy theories.
First of all, default is NOT a bad thing. Look up the recent history of Argentina and Iceland. The only reason default is associated in the media with BADBAD is because each media company is a part of large conglomerates whose financial sides have made bets that politicians will continue to sell out their own people. Make no mistake: The only entities that actually suffer are the overleveraged financial institutions who made bad loans. So the "fear" around a national default event is the same as the "moral imperative" for a family to continue making payments on a bad home loan. Wrong: There is no moral imperative, it's a contract with specified terms.

In Greece right now, the country continues to suffer because the politicians have not yet declared default.. the question isn't if but rather when.

Remember, there's lots of policies that keep the US in a trade deficit, and enacting wage and environmental parity tariffs would immediately reverse that. Also, equalizing the import tariff with each country-- China right now has a 25% tariff on all goods from the US, while the US tariff on goods from China is only 1.5%. When you equalize that, jobs come back.

But make no mistake about it: the reason the US doesn't do that is bc multinationals rape more profits from US citizens with those one-sided tariff policies.

The immediate effect of a default will simply be a rise in interest rates charged to the .gov -- an annual expense directly the fault of whoever causes the US to default needlessly. Don't forget:: The Republican politicians who trumpeted "bad US debt levels" are the same ones responsible for passing the bills authorizing that spending.

Yes, it is that simple: Equalize tariffs and jobs come home. If the market is actually level, the US competes and wins. But in today's world of FoxNews lying about the realities we confront, I doubt that will happen.

Do you realize that usa's GDP is about a quarter of the entire world?

The dollar also being the international currency and that US bonds are the anchor of security in the global economy?

Defaulting on, or refusing to pay back, a debt which is equal to or larger than that GDP is not equal to the default of a tiny fly speck economy's.

What is the event you are talking about?

Default is the term used to mean "A single interest payment which is due is not paid."

Are you referring to something else?

If so, please state that event, because the thing you're calling "default" is absolutely not that.

Words matter.

If you're talking about repudiating all debt, then go hang out with the insane people over at the Rand and Ron Paul Crazyspace. Free tip: That won't happen, get over it.

Isn't most of the US foreign debt repayable in USD? So you could print money and make that disappear at the same time. You gain freedom from foreign debt at the cost of domestic hyperinflation and you screw your trading partners because they hold more of your debt than you do of theirs. You probably meant something along those lines...?

IE

US Owes England 2 billion (or 1.5 bil GBP equivalent)
USD/GBP exchange rate is 1:1.33
US Prints 2 billion dollars to repay the debt
USD/GBP falls to 1:1.5
GB gets their 2 billion USD repaid but when they convert it to GBP it's only worth 1.33 bil GBP instead of 1.5 bil.

Right, which is why the Fed is abusing the fact that the US is the currancy reserve for the world. And printing money brings down everyones purchasing power. That is why china is getting pissed. Well one of the reasons.

Stop. Just stop.

China is not pissed - if they let their currency actually float, they lose millions of jobs.

If the US actually prints to cover all debt, prices paid must rise to maintain purchasing power of the commodity companies.. and basically all business gets screwed because nobody can buy anything. with salaries not rising, this is the way US .gov actions are restrained.

Jobs are created based on increases in margin per product, so to reduce that is extremely irresponsible.

Unsympathetic , in Martian’s initial post which started this thread he mentioned; refuses to pay back the debt and collecting it by invading usa. I assume that is something we all think won’t happen. I therefore also assumed this is a thread where we have a purely academic what if discussion about such a topic. Apparently I wrongly assumed you did as well.

it is purely an hypothetical argument. There are a whole range of reasons both economic and political why it's extremely unlikely this would actually happen. No sane country would try to invade the US and the less sane ones don't have the ability to do it.
In finance "default" does not mean a missed payment but the continued inability/refusal to make payments. If I miss a mortgage payment that doesn't immediately put me into default.

@oats: not quite that simple although in some cases it's true.

Civil war is more likely in the us.

Which will probably be started by the US police state murdering innocent protestors.

Would it be reasonable for the US' trading partners to just take the loss of US debt on the chin in favour of continued trade?

Assuming the US has trade deficits with its major trade partners/lenders it would be like the choice between having the cake and eating it.

IE those trade partners want to continue to have the associated current revenues and productivity from trading with the US, but they can't hold onto former financial obligations. Or they hold onto the financial obligations hoping for payment and stunt their economies by refusing to trade and lend to the US.

Everyone would like things to continue as normal but can't take the psychological trauma of losing all the stored wealth they thought they had. But everyone wants the psychological safety of the stored wealth, though that means messing up the economy and bracing for a real-time shock to their everyday life.

Is that somewhere near the root of what the problem with option #1 would be?

nah, better to just downgrade the US and make the interest 1 trillion then 2 trillion then 5 trillion per year.

You can still "exist" for 3-10 more years before they impose auserity measures on you.

But there are other economies to focus on like canada, germany, UK, China who have to be brought down abit to match the crisis in USA before they completely collapse the US economy.

im sure we will see a formal

North American Union and an Asia union before too long.

Doubtful Maverick because we have had the unique opportunity to observe why a union of currency without a union of monetary policy can epically backfire.

To the greater thread subject--the US seriously defaulting without means of fixing the problem equates to destroying our economy. The other countries holding debt in us are also countries we buy from so they'll fall into horrible depressions. I'll be the doomsday guy saying you will probably see the end of modern market-democracies as we know them. It would not be pretty.

Printing our way out of it doesn't work either.

maverickmd: Canada wouldn't integrate with the US. we may have a decade or two ago, but there is no way there would be public support in Canada for an economic union with the US today.

like trumper said, shared currency with disjoint monetary policy = bad news.
i have 0 trust in the US's ability to manage it's fiscal house anymore and I don't want my livelihood to be tied to the US economy any more than it already is.

<3 Canada.

There was never enough support in Canada for serious economic integration in the US. The historical experience and mentality of the two countries are just too different. Plenty for both to gain from being close allies and trading partners but not enough to get "married" so to speak. Even a common currency never gained serious public support.

If you actually merged the two countries under some kind of decent government that most could agree with (fat chance), you would probably create an unstoppable global power that could probably bend over and have it's way with most of the world. You effectively would create a power that would have leverage over a huge portion of the world's food, fresh water, and energy supply in terms of oil, coal, uranium, natural gas and hydroelectric.

The only resource it would not be self-sufficient in would be aluminium, but it's easy to get that from south america:P

Pretty scary, no?

I would like to tell you that after blackberry's epic fail, we've decided we don't want an economic union ;).

Well the question is: was the EU just an experiment to gain support for futher integration? That as you mentioned - monetary integration isn't enough?

Isn't it just another step in the New World Order and one world goverment?

Im not saying that one goverment is a bad concept. I think that the problem is, that the people with the money, the power and the ability to make the change will make sure the new system is equally setup in their favor as the current system.

There will be no real solution, or change unless the actual people fight. And WW3 would just be another false flag war that large companies make 50 trillion from producing weapons for both sides.

So you will see WW3 to end the recession and accumulate more national debt for the world. Or you will see complete integration of EU, then other unions starting to form up, then one world union in 20 years.

oh and "one world currency"

We will see one world union only so long as there is one immminent global threat that would destroy all human civilization overnight--and even then we may not see it because some wackadoodles will be convinced it is some sort of religious sign. So, no, no world order.

tbh I don't see any advantage to there being one world order or one currency. Removing choice and (real) competition is never good.

WW3 will kill every last human being on earth. No one would really profits from that.. well maybe the bunnies and roaches.

A war on the level of WW2 minus the nuclear/chemical/biological weapons would last less than 30 days because everything would be destroyed.

An all out war with everything would probably last less than 48 hours.

Ironically the development of increased weapons technology has been the largest contributor towards avoiding another WW2 scale conflict, which prior to WW2 seemed to happen once every 70-100 years or so. We may finally have broken that cycle for all the wrong reasons..

some genuis has said hhe doesn't know which weapons are used in ww3 but ww4 will be fought with stones and sticks.

we're going to make it legal to shoot protestors?
how much is the hunting license going to cost?
when does the season start?
how many are we allowed to bag per season?

dibs sounds like he follows FOX news on twitter to get the latest.

hehe. i get my fair share of tweets on here. don't need twitter.
i have an aversion of mob mentality.

Unfortunantly if the lil guys are to keep polotics level on the playing field they need to group up to voice their opinions or they won't be heard with all the money makers blocking their view.

just because they have a right to voice their opinion, doesn't mean people are required to listen to it.

correct Dibs....the gov does not listen to us already....they set a great example...

http://upload.wikimedia.org/.../06/The_Simpsons_5F14.png

maybe they ain't supposed to listen to arm chair quarterbacks who have the attention span of a gnat.