What would a USA default look like?
- Thread starter foolsgold
- Start date
Welcome to the Precious Metals Bug Forums
Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more.
Why not register an account and join the discussions? When you register an account and log in, you may enjoy additional benefits including no Google ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!
- Messages
- 15,793
- Reaction score
- 10,096
- Points
- 288
Long lines at the food bank...
Are we paying interest now??
Borrowing $35T to pay interest?
Somehow that makes no sense to me!
I follow X22Reports
There's also a 'b'
Typically, the first 2 minutes of each video is a commercial with another commercial midway. I click through them.
Are we paying interest now??
Borrowing $35T to pay interest?
Somehow that makes no sense to me!
I follow X22Reports
Ep 3595a – Trump Confirms We Are Headed In A Whole New Direction, It Has Begun
25There's also a 'b'
Ep 3595b – You Are Seeing The True Domestic Terrorists, Why Did Trump Start With Fraud?
54Typically, the first 2 minutes of each video is a commercial with another commercial midway. I click through them.
It won't happen.
Not that way; not when money-printer-go-brrr.
What will likely happen is, again, QE and ZIRP to enable the "member banks" to launder the fiat into the general economy. Interest get paid BUT...moar fiat chasing the same amount of goods. Prices go BOOM!
Panic sweeps. Aided, of course, by the Nooze Liars.
The Party of Sexual Deviancy and Money-Fer-Nuffin, sweeps in. They honestly believe that MMC insanity; so they'll do it. Dollar collapse is what will come of it...faith lost in the US and the dollar, two ways. Insane leadership, plus hyperinflation.
This is when, historically, war is thrown into the vetch as a distraction. Well, now that the traitor Trump is gone, we can get busy starting a full-on war with Russia-Russia-Russia.
So, the answer is, we get general economic stagflation, followed quickly by political change - for the worse; and finally, the tyrant's answer to all problems of State insolvency.
Not that way; not when money-printer-go-brrr.
What will likely happen is, again, QE and ZIRP to enable the "member banks" to launder the fiat into the general economy. Interest get paid BUT...moar fiat chasing the same amount of goods. Prices go BOOM!
Panic sweeps. Aided, of course, by the Nooze Liars.
The Party of Sexual Deviancy and Money-Fer-Nuffin, sweeps in. They honestly believe that MMC insanity; so they'll do it. Dollar collapse is what will come of it...faith lost in the US and the dollar, two ways. Insane leadership, plus hyperinflation.
This is when, historically, war is thrown into the vetch as a distraction. Well, now that the traitor Trump is gone, we can get busy starting a full-on war with Russia-Russia-Russia.
So, the answer is, we get general economic stagflation, followed quickly by political change - for the worse; and finally, the tyrant's answer to all problems of State insolvency.
- Messages
- 24,219
- Reaction score
- 4,443
- Points
- 288
Grok: what would a U.S. default look like?
A U.S. default, in the context of economics, typically refers to the United States government failing to meet its debt obligations—specifically, not being able to pay the interest or principal on its Treasury securities (bonds, notes, and bills) when they come due. This scenario is unprecedented in modern U.S. history because the U.S. has always paid its debts, earning Treasury securities their reputation as one of the safest investments in the world. However, we can outline what such an event might look like based on economic theory, historical parallels in other countries, and expert analyses.
Immediate Consequences
As of today, there is no specific indication of an imminent U.S. default based on publicly available information up to my last update. However, recurring debt ceiling debates and fiscal challenges (e.g., rising national debt, currently over $34 trillion, and persistent budget deficits) keep the possibility alive as a hypothetical scenario. Any specific developments since my last update would need to be checked via current news sources or posts on X for the latest context.
Conclusion
A U.S. default would be a catastrophic event with far-reaching consequences for both the domestic and global economy. It would likely involve immediate financial market chaos, a severe recession, and long-term damage to U.S. economic credibility. While highly unlikely due to the government's ability to manage its finances and the dollar's entrenched global role, the scenario serves as a stark reminder of the importance of fiscal stability and political cooperation.
If you'd like me to search for recent analyses or posts on X about this topic, let me know!
A U.S. default, in the context of economics, typically refers to the United States government failing to meet its debt obligations—specifically, not being able to pay the interest or principal on its Treasury securities (bonds, notes, and bills) when they come due. This scenario is unprecedented in modern U.S. history because the U.S. has always paid its debts, earning Treasury securities their reputation as one of the safest investments in the world. However, we can outline what such an event might look like based on economic theory, historical parallels in other countries, and expert analyses.
Immediate Consequences
- Failure to Pay Debt Obligations:
- The U.S. government borrows money by issuing Treasury securities. A default would occur if the government cannot make scheduled interest payments or repay the principal when these securities mature. This could happen if Congress fails to raise the debt ceiling, and the Treasury Department exhausts its cash reserves and extraordinary measures to manage cash flow.
- Market Panic:
- Financial markets would likely experience immediate and severe turmoil. Treasury securities are considered "risk-free" assets and are a cornerstone of global finance. A default would undermine this confidence, leading to a sharp sell-off of U.S. bonds.
- Interest rates on U.S. debt would spike as investors demand higher yields to compensate for increased risk, increasing borrowing costs for the government, businesses, and consumers.
- Credit Rating Downgrade:
- Credit rating agencies (e.g., Moody's, S&P, Fitch) would likely downgrade the U.S. government's credit rating, as happened in 2011 when S&P lowered the U.S. rating from AAA to AA+ during a debt ceiling standoff. A full default would likely result in a more severe downgrade, further increasing borrowing costs.
- Dollar Weakness:
- The U.S. dollar, as the world's primary reserve currency, could face a significant decline in value. Investors and foreign governments might diversify away from dollar-denominated assets, weakening its global status.
- Financial System Disruption:
- Treasuries are widely used as collateral in financial transactions (e.g., repo markets). A default could freeze these markets, leading to a liquidity crisis similar to or worse than the 2008 financial crisis.
- Banks, money market funds, and other institutions heavily invested in Treasuries would face massive losses, potentially triggering bank runs or failures.
- Stock Market Crash:
- Equity markets would likely plummet as investor confidence collapses. Companies reliant on credit would struggle to borrow, leading to layoffs, reduced investment, and potentially a recession or depression.
- Government Operations:
- With limited ability to borrow, the government would have to rely solely on tax revenues, which are insufficient to cover all expenditures. This could lead to:
- Delayed or missed payments to Social Security recipients, Medicare providers, federal employees, and contractors.
- Cuts to discretionary spending, including defense, education, and infrastructure.
- With limited ability to borrow, the government would have to rely solely on tax revenues, which are insufficient to cover all expenditures. This could lead to:
- Global Economic Shockwaves:
- Foreign governments and institutions holding U.S. debt (e.g., China, Japan) would face losses, potentially destabilizing their economies.
- International trade could be disrupted as confidence in the dollar erodes, affecting global supply chains and commodity prices (e.g., oil, which is priced in dollars).
- Loss of Reserve Currency Status:
- A prolonged default could accelerate efforts by other nations to reduce reliance on the dollar, potentially elevating alternatives like the euro, Chinese yuan, or even cryptocurrencies. This would diminish U.S. economic influence and increase borrowing costs long-term.
- Higher Borrowing Costs:
- Even after a default is resolved, the U.S. would likely face permanently higher interest rates as markets price in the risk of future defaults, increasing the cost of servicing the national debt.
- Inflation or Deflation:
- Depending on the response, a default could lead to inflation (if the Federal Reserve prints money to cover shortfalls) or deflation (if economic activity collapses and demand falls).
- Political Fallout:
- A default would likely lead to significant political upheaval domestically, with blame assigned to whichever party or leaders are perceived as responsible. Internationally, U.S. credibility could suffer, weakening its geopolitical influence.
- The U.S. has never defaulted on its debt in the modern era, though it came close during debt ceiling crises (e.g., 2011, 2013). The closest historical analogy might be the 1979 Treasury bill payment delay, which was a technical glitch rather than a true default, but it still caused a temporary spike in interest rates.
- Argentina (2001), Greece (2012), and Russia (1998) provide examples of sovereign defaults, though these nations lack the U.S.'s unique economic position. In those cases, defaults led to currency devaluation, banking crises, and severe recessions.
- The U.S. has mechanisms to avoid default, such as raising the debt ceiling or prioritizing debt payments over other spending. However, political gridlock could theoretically prevent these measures.
As of today, there is no specific indication of an imminent U.S. default based on publicly available information up to my last update. However, recurring debt ceiling debates and fiscal challenges (e.g., rising national debt, currently over $34 trillion, and persistent budget deficits) keep the possibility alive as a hypothetical scenario. Any specific developments since my last update would need to be checked via current news sources or posts on X for the latest context.
Conclusion
A U.S. default would be a catastrophic event with far-reaching consequences for both the domestic and global economy. It would likely involve immediate financial market chaos, a severe recession, and long-term damage to U.S. economic credibility. While highly unlikely due to the government's ability to manage its finances and the dollar's entrenched global role, the scenario serves as a stark reminder of the importance of fiscal stability and political cooperation.
If you'd like me to search for recent analyses or posts on X about this topic, let me know!
It would be California everywhere?
Default? I find it interesting when trillion dollars is wiped away in a stock decline. What would 60 trillion, or 30 trillion look like…..
Disagree with this. AS WE SAW, during the GFC 2008, when money-printer-go-brrr, it feeds right into the stonk market for laundering. And to boost asset prices, and make the Elites feel so...so RICH.
Yeah, it's counter-intuitive. But the price of stonx, now, no longer is connected to any reality. It's a money-laundering operation for the Fed, and if it's not owed by the Elites who own assets, they sure like that they benefit.
Yes, I know, this is Grok's answer. This is why AI is not intelligence; just a user-friendly parroting back of what it's told. Often the facts it's fed are incorrect, and often done for political advantage of the nihilists and revolutionaries.
- Messages
- 24,219
- Reaction score
- 4,443
- Points
- 288
Could you imagine a scenario where it dropped by half? That would be some really bad shit. Whole lotta peeps would likely go nuts.
I would have a laughing fit.
EVEN THOUGH it would quickly be followed by a near-crash in PM prices - Elites selling their small stacks to cover margins or pay their high-dollar overhead. THAT would quickly rebound - unfortunately I wouldn't be able to back the truck up; but just seeing the crony-rich brought back to reality, would be worth the show.
What would they do? I don't know. Without all the money-fer-nuffin, it's hard to launch new bribe-and-graft campaigns. They're soft and many of them have had the brains bred out of them - I wouldn't expect street warfare, or a guerrilla campaign against Deplorable office-holders. Not from them; and if/when that happens, only Soros or Kaiser Klaus would have the wherewithal to bribe BLM to start burning city blocks.
No, that show would be worth the price of admission. And it GONNA happen - I just hope I live to see it.
Cigarlover
Yellow Jacket
- Messages
- 1,441
- Reaction score
- 1,663
- Points
- 283
It's coming. Stocks always revert to the mean over the long term. A correction to 22,500 on the dow is reasonable. 2700 on the S&p and 12,000 on the Nasdaq.
The markets are insanely overvalued and have been for years. Any reasonable bear market should get prices back in line. Pe's of 12-15 used to be considered on the high end of things and usually reserved for fast growing companies growing at 20-30% annually. Now we are seeing he's on average in the 30's which just confirms that things are over priced by about 50%.
The markets were headed in the right direction but after the Senate passed the CR my guess is we get a bit of a relief rally but with spending levels staying the same as last year I wouldn't count on any huge gains in the market this year.
TLT may end up being one of the better plays this year. Lower spending and getting spending under control will lower rates and should send the bond prices higher. Someone mentioned that on a program I follow. Makes sense to me so that's where I am putting some free cash rn.
- Messages
- 471
- Reaction score
- 305
- Points
- 168
Uk forecourt fuel price is currently us$ 7.00 a gallon
We have adjusted to it and our roads are generally pretty jammed up, so price could and probably will go up further as we try desperately to dig ourselves out of the giant financial hole called Ukraine .
We have adjusted to it and our roads are generally pretty jammed up, so price could and probably will go up further as we try desperately to dig ourselves out of the giant financial hole called Ukraine .
The USA is a very large landmass and a significant amount of the goods that flow from manufacturers to warehouses to retail stores are transported via the nation's trucking industry. Doubling the cost of gasoline would be extremely inflationary as it would impact the cost of just about everything (including essentials like food) in every brick and mortar store in the country.
Cigarlover
Yellow Jacket
- Messages
- 1,441
- Reaction score
- 1,663
- Points
- 283
Maybe we should equip every home with large tube systems like they have at banks. You pay for the goods you want and they come in via a giant tube in your front yard.
Amazon is trying to develop the next best thing - a drone delivery system.
www.aboutamazon.com
Amazon has launched our most advanced delivery drone yet—here’s everything you need to know
The brand-new MK30 drone underwent rigorous safety and regulatory tests to ensure it’s quieter and can travel farther than any previous Amazon delivery drone.
www.aboutamazon.com
This post may contain affiliate links for which PM Bug gold and silver discussion forum may be compensated.
- Messages
- 24,219
- Reaction score
- 4,443
- Points
- 288
There are 2 Walmarts I use, one in the city, one in a suburb. Both are in decent areas, but both have been locking up more and more stuff (all kinds of stuff.) Maybe trying to drive more peeps to order vs in store shopping? If that's the case, it's a lean towards a cashless society.
BTW...............certain drug stores doing the same crap.
Are there still nice neighborhoods?
What it might do, is rationalize our distribution system.
What did we do before the Interstate Highways? RAIL DISTRIBUTION. Every town of any import had a train station, many more aimed for freight than the once-daily passenger trains. Now, bringing crap in on boxcar is labor-intensive - it's work, even with a towmotor, getting stuff out of there....
....but we have that problem licked. They used to call it "piggyback." That term is obsolete, now, since shipping containers with dollies underneath, mostly have replaced actual semi trailers; but the concept is still there. Send this stuff over the rails, to the nearest city of import. LOCAL drivers can then deliver it to Wally World or China Freight.
In the case of Amazon, they could just load their containers right at their distribution centers, truck them to the intermodal yard, load them on well cars, off to wherever.
Or...I almost forgot about this: Conrail, back when it was an independent road, was experimenting with what they called RoadRail truck trailers. They had castings on their frame to put rail bogeys under; and tie them together. No rail cars per se; those were truck trailers on bogeys, coupled together.
Getting them unhooked and the bogeys out, took about 30 seconds a trailer, with equipment, of course. PERFECT for Amazon. Of course, the rail industry, static, hyper-regulated, devoid of vision, didn't think much of the idea; but IMHO its time has come.
Rail shipment uses an ounce of diesel fuel to move a ton of freight a mile.
Cigarlover
Yellow Jacket
- Messages
- 1,441
- Reaction score
- 1,663
- Points
- 283
Nasdaq is almost 1/2 way there. From 22 down to 17k roughly. I honestly didn't expect this move to happen so fast. Best guess by me is a pause at around 16k. That being a short term support level. Once we head into recession later this year, that should take us the rest of the way down to 12k.
Dow is just getting started really and a long way to go. Short term support levels are 37k, then 33k then 30k roughly speaking. And just as I said above, it will take a recession to get us down to the target of 22k.
Taking another look at the S&P chart the bottom may be around 3k. Slightly higher than I 1st said in my original post.
TLT is doing well but not sure how high it goes. Yields are headed lower, just in time to refinance some debt for the Gov.
So, wealth effect is getting killed which will lead to lower prices and a recession. Debt can now be refinanced at a lower rate and just when people think things are hopeless, manufacturing will kick back in in the US and the turnaround can begin.
Thats my crystal ball view of things anyway. I wouldn't invest based on above analysis, I'm often wrong. LOL.
