If America defaults?

Athlone_Bhoy

SO Putin does away with the dollar, many people like Max Keiser for example saying America will default. What would happen if America was to default?

jank

There are a few ways to "default" one way is inflating the USD. If you think the US will just one day not pay on its bonds then you are crazy. They will choose the other ways...

willietherock

how can America default when it prints its own money?

woodseb

willietherock wrote: »

how can America default when it prints its own money?

presumably when it gets to the point that default is a better option than hyperinflation

all of this is hypothetical though, there's not much point betting on a US default unless you plan to hold something physcially like gold. Any financial products, derivatives etc would be lost in the collapse of the financial system that would make 2008 look like a blip

Athlone_Bhoy

Isn't the thing though that the Dollar is on the way to collapse?

If America prints its own money then why did they have to get a big loan off China?

AstonMartin

Link to chinese loan and american debt amount?

Athlone_Bhoy

Did they not get the money for the banks off China?

Low Energy Eng

Article over on ZH about US debt issued last week

http://www.zerohedge.com/article/treasury-sells-29-billion-bonds-bringing-total-settled-us-debt-14311-trillion-more-debt-ceil

Current government issues with the debt;

http://www.cnbc.com//id/42437284

China hold alot of US debt, biggest holder of US debt if the Fed I think

turbobaby

America (i.e. the people, govt) cannot print their own money. The Federal Reserve prnits the money and lends it to whever they want. They are a private company. They lend money to the US Govt, other countries (Japan are a massive holder of US Debt) as well as domestic and foreign companies.

Substitute America for almost any other country in the world, including our own.

Incidentily the Lybian government can print their own money.

The UScannot possibly repay the 14 trillion debt. They will continue to borrow money topay the interest until the Dollar dies in 2012-2015

grizzly

What would they replace it with?

turbobaby

grizzly wrote: »

What would they replace it with?

Some say that there will likely be another Bretton Woods type meeting to agree on a new world currency like the IMF's SDR which will be backed by gold. There will still be local currencies but they will all be linked to the world currency and the FX rates controlled, not floating freely.

Who knows what will happen, but from my reading the Dollar is dead. Without QE3 the US economy will tank. With QE3 there may well be hyper inflation.

Quiet you

turbobaby wrote: »

Some say that there will likely be another Bretton Woods type meeting to agree on a new world currency like the IMF's SDR which will be backed by gold. There will still be local currencies but they will all be linked to the world currency and the FX rates controlled, not floating freely.

Who knows what will happen, but from my reading the Dollar is dead. Without QE3 the US economy will tank. With QE3 there may well be hyper inflation.

Does that mean we should all run out and buy all the gold we can or would it mean the opposite?

I simply fail to understand what to do about precious metals. It seems everyone has totally differnt ideas about it.

hmmm

Quiet you wrote: »

I simply fail to understand what to do about precious metals. It seems everyone has totally differnt ideas about it.

Which is as good a reason as any to stay away from them, if you don't understand an investment don't invest in it.

I prefer stocks in blue chips, I might not know what the future will bring in terms of inflation but I know that if own a teeny piece of Coca Cola or GE I'll always something of real value. People who buy property are (I guess) thinking the same thing.

If you're getting your investing advice from Keiser you're off your head. He may be right, he may be wrong, but relying on some guy that all the loons I know adore is hardly a good strategy.

Jim2007

turbobaby wrote: »

The Federal Reserve prnits the money and lends it to whever they want. They are a private company.

The Federal Reserve is the central banking system of the USA. It is not a private company, it board is appointed by the President and confirmed by the Senate.

turbobaby wrote: »

They lend money to the US Govt, other countries (Japan are a massive holder of US Debt) as well as domestic and foreign companies.

The Federal Reserve acts as a lender of last resort for the banking system and it some times controls the money supply by buying and selling US government bonds. But it does not simply print money and lend it out to the US government or anyone else for that matter.

The US Treasury raises money for the government via bond auctions, that is how the US Government raises money for it's operations.

turbobaby wrote: »

The US cannot possibly repay the 14 trillion debt. They will continue to borrow money topay the interest until the Dollar dies in 2012-2015

Back in the 1950s US debt reached similar levels as a percentage of GDP and they turned it around, so I would not write them off that fast if I was you.

Good luck with that,

Jim.

Jim2007

turbobaby wrote: »

Some say that there will likely be another Bretton Woods type meeting to agree on a new world currency like the IMF's SDR which will be backed by gold. There will still be local currencies but they will all be linked to the world currency and the FX rates controlled, not floating freely.

And exactly why would any government be interested is such a system? These ideas have all be tried in the past and failed to deliver!

Jim

Athlone_Bhoy

Jim2007 wrote: »

And exactly why would any government be interested is such a system? These ideas have all be tried in the past and failed to deliver!

Jim

What makes you think no country is interested? AFAIK China, Iran, Russia all the big players are buying large amounts of gold and silver. Not because the price is going they believe the dollar is going the collapse.

hatz7

Hi,
Are people serious that the dollar could collapse?
I'm not a total idiot, but I had never thought about the dollar collapsing,
I just seen some dates in a couple of posts, 2013-15, that's close.

Anyone got any links, to sites or articles, (not tabloidy rubbish) that would be worth taking a look at?

Thanks.

turbobaby

Jim2007 wrote: »

The Federal Reserve is the central banking system of the USA. It is not a private company, it board is appointed by the President and confirmed by the Senate.

And who appoints the President of the United States? The investment bankers in and through their massive donations. The mainstream media, who are also controlled, keep it at a two horse race with little differences between both parties. Any alternatives are kicked to the ground.

If you think Obama makes the decisions in the US you have a lot to learn.

If you think the Senate aren't paid off by the same bankers, energy companies, military complex, again you should do some more reading.

Time and time again the lines between the US Treasury and Wall Street are blurred.

The biggest economy in the world is on its knees right now? Why, because private profits are put before public needs, by the people who control government.

Jim2007 wrote: »

The Federal Reserve acts as a lender of last resort for the banking system and it some times controls the money supply by buying and selling US government bonds. But it does not simply print money and lend it out to the US government or anyone else for that matter.

OK, so where does the Federal Reserve get its money from to lend out? Thin air my friend!

Jim2007 wrote: »

The US Treasury raises money for the government via bond auctions, that is how the US Government raises money for it's operations.

Very true that the US Treasury raises money by bond auctions, and yes anyone can purchase, for example Japan, China, the 'friendly' Arab nations all purchase US bonds, but if you do some more research you will find that the biggest buyer of US Bonds is the Federal Reserve, who have the power to print money.

Jim2007 wrote: »

Back in the 1950s US debt reached similar levels as a percentage of GDP and they turned it around, so I would not write them off that fast if I was you.

Here's a chart of US National Debt. They cannot recover.

http://oakshirefinancial.com/images/2008_Charts/united%20states%20national%20debt.jpg

Jim2007 wrote: »

Good luck with that,

Jim.

Enjoy losing money to inflation every day, sucker!

...and please don't categorize me as a conspiracy theorist.

turbobaby

hmmm wrote: »

If you're getting your investing advice from Keiser you're off your head. He may be right, he may be wrong, but relying on some guy that all the loons I know adore is hardly a good strategy.

Correct, relying on any one person is the first step to being a failed investor.

The simple fact is, gold and silver have been the best investments over the last decade, bar none. For good reason too!

Athlone_Bhoy

hmmm wrote: »

If you're getting your investing advice from Keiser you're off your head. He may be right, he may be wrong, but relying on some guy that all the loons I know adore is hardly a good strategy.

So what about Ron Paul (ran for president in 88 and 08) saying its going to collapse and the list is endless its not only Max Keiser saying it.

hatz7 wrote: »

Hi,
Are people serious that the dollar could collapse?
I'm not a total idiot, but I had never thought about the dollar collapsing,
I just seen some dates in a couple of posts, 2013-15, that's close.

Anyone got any links, to sites or articles, (not tabloidy rubbish) that would be worth taking a look at?

Thanks.

http://youtu.be/VcBRr7Yd9iQ

hmmm

Athlone_Bhoy wrote: »

So what about Ron Paul (ran for president in 88 and 08) saying its going to collapse and the list is endless its not only Max Keiser saying it.

An endless collection of wingnuts.

hmmm

turbobaby wrote: »

The simple fact is, gold and silver have been the best investments over the last decade, bar none. For good reason too!

Do you have any facts to back up this assertion?

turbobaby

Beat that:

http://www.kitco.com/LFgif/au00-pres.gif

hatz7

Athlone_Bhoy wrote: »

http://youtu.be/VcBRr7Yd9iQ

@athlone bhoy
Thanks

Low Energy Eng

Jim2007 wrote: »

Back in the 1950s US debt reached similar levels as a percentage of GDP and they turned it around, so I would not write them off that fast if I was you.

Jim.

In the 50's the US was a manufactring powerhouse, thats no longer the case, hence why china has pegged itself to the dollar

hmmm

turbobaby wrote: »

Beat that:

http://www.kitco.com/LFgif/au00-pres.gif

Sure, how about Apple:
http://www.google.com//finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1302362067687&chddm=994704&chls=IntervalBasedLine&q=NASDAQ:AAPL&ntsp=00

Saying that gold has been the "best investment, bar none" is ridiculous.

Quiet you

turbobaby wrote: »

Correct, relying on any one person is the first step to being a failed investor.

The simple fact is, gold and silver have been the best investments over the last decade, bar none. For good reason too!

Well, I haven't been investing, I've been saving but thats not what I was on about.

My point is that where as you've said gold and silver is rock solid the next article I read or poster for that matter could well rubbish your point. I just don't understand how there can be such a massive difference of opinion when in comes to gold and silver as opposed to other forms of investment.

Also, what I had asked originally was if the U.S. defaults would the winners be those with the gold or those with blue chip stock?

hmmm

Quiet you wrote: »

My point is that where as you've said gold and silver is rock solid the next article I read or poster for that matter could well rubbish your point. I just don't understand how there can be such a massive difference of opinion when in comes to gold and silver as opposed to other forms of investment.

Because gold isn't an investment, it is a political choice masquerading as an investment. If you buy a bond, you know how much it is going to pay. If you buy a stock, you have a good idea what the dividend will be. If you buy farm land, you know roughly what the rent will be. Gold has some industrial purposes, but other than that its only value is what someone else will pay for it. It's got as much intrinsic value as seashells or shiny beads.

It doesn't help that the Internet has allowed a bunch of loons have a greater and sometimes equal voice. Seeing people quote Ron Paul and Max Keiser as some sort of all knowing financial gurus on this thread is a good example of this.

Also, what I had asked originally was if the U.S. defaults would the winners be those with the gold or those with blue chip stock?

The knock on effects from a US default would be so profound that there would be no such thing as a winner, only some investments losing less than others. Bonds would obviously take a hit, as would commodities (assuming a recession), emerging markets would take a hit, oil prices, equities.

China would look to find a safer place to put its future surpluses, so you would see other currencies gaining, perhaps the Swiss Franc & Euro would be the biggest beneficiaries.

It's all conjecture, America isn't about to default anytime in the near future.

Quiet you

hmmm wrote: »

Because gold isn't an investment, it is a political choice masquerading as an investment. If you buy a bond, you know how much it is going to pay. If you buy a stock, you have a good idea what the dividend will be. If you buy farm land, you know roughly what the rent will be. Gold has some industrial purposes, but other than that its only value is what someone else will pay for it. It's got as much intrinsic value as seashells or shiny beads.

It doesn't help that the Internet has allowed a bunch of loons have a greater and sometimes equal voice. Seeing people quote Ron Paul and Max Keiser as some sort of all knowing financial gurus on this thread is a good example of this.

The knock on effects from a US default would be so profound that there would be no such thing as a winner, only some investments losing less than others. Bonds would obviously take a hit, as would commodities (assuming a recession), emerging markets would take a hit, oil prices, equities.

China would look to find a safer place to put its future surpluses, so you would see other currencies gaining, perhaps the Swiss Franc & Euro would be the biggest beneficiaries.

It's all conjecture, America isn't about to default anytime in the near future.

Much obliged. I could not see the forest for the trees with this gold lark. Conflicting information is no help whatsoever.

turbobaby

hmmm wrote: »

Because gold isn't an investment, it is a political choice masquerading as an investment. If you buy a bond, you know how much it is going to pay. If you buy a stock, you have a good idea what the dividend will be. If you buy farm land, you know roughly what the rent will be. Gold has some industrial purposes, but other than that its only value is what someone else will pay for it. It's got as much intrinsic value as seashells or shiny beads.

It doesn't help that the Internet has allowed a bunch of loons have a greater and sometimes equal voice. Seeing people quote Ron Paul and Max Keiser as some sort of all knowing financial gurus on this thread is a good example of this.

The knock on effects from a US default would be so profound that there would be no such thing as a winner, only some investments losing less than others. Bonds would obviously take a hit, as would commodities (assuming a recession), emerging markets would take a hit, oil prices, equities.

China would look to find a safer place to put its future surpluses, so you would see other currencies gaining, perhaps the Swiss Franc & Euro would be the biggest beneficiaries.

It's all conjecture, America isn't about to default anytime in the near future.

Very much looking forward to digging this thread up in a couple of years from now and rubbing it in your face!

Athlone_Bhoy

hmmm wrote: »

It doesn't help that the Internet has allowed a bunch of loons have a greater and sometimes equal voice. Seeing people quote Ron Paul and Max Keiser as some sort of all knowing financial gurus on this thread is a good example of this.

So are you trying to tell Max Keiser who has worked for years in the maret knows nothing what he is talking about? Ron Paul who I think is neck to neck with Obama to be next president has maybe 30 years in government.

When I give you proof you put them down to leftwing nutjobs you sound a bit like Glen Beck.

These people are the whistleblowers. You will be one of those people who will simply be saying I couldn't see this one coming.

Low Energy Eng

hmmm wrote: »

Because gold isn't an investment, it is a political choice masquerading as an investment. If you buy a bond, you know how much it is going to pay. If you buy a stock, you have a good idea what the dividend will be. If you buy farm land, you know roughly what the rent will be. Gold has some industrial purposes, but other than that its only value is what someone else will pay for it. It's got as much intrinsic value as seashells or shiny beads.

In steady market conditions I'd be inclined to agree with you, during a financial crises scenario
You buy a bond, you know how much its going to pay in a currency thats being devalued (during a hyperinflation scenario it may aswel be worthless)
You buy a stock, if theres a crisis it will plummet in value, perhaps collapse completly
You buy land, you own a commoditie, somewhat sound investment, but rents can punnet
If there is a crises the masses loose faith in their paper currency there'll be massive demand for gold/silver...its a sound currency that cant be devalued

hmmm wrote: »

It doesn't help that the Internet has allowed a bunch of loons have a greater and sometimes equal voice. Seeing people quote Ron Paul and Max Keiser as some sort of all knowing financial gurus on this thread is a good example of this.

In fairness I've done well taking similar advice that they're plugging

hmmm wrote: »

The knock on effects from a US default would be so profound that there would be no such thing as a winner, only some investments losing less than others. Bonds would obviously take a hit, as would commodities (assuming a recession), emerging markets would take a hit, oil prices, equities.

Is QE'ing not defaulting indirectly? Will america default or keep on QE'ing and keep interest rates stupidly low?

hmmm wrote: »

China would look to find a safer place to put its future surpluses, so you would see other currencies gaining, perhaps the Swiss Franc & Euro would be the biggest beneficiaries.

Or China will keep on buying gold?!

hmmm wrote: »

It's all conjecture, America isn't about to default anytime in the near future.

Get outta that garden. They're currently considering shutting down US government as they hit their debt ceiling.

Athlone_Bhoy

Last minute deal got done last night.

As Clinton said

"The right held the US govt hostage, and O (Obama) paid most of the ransom -- inviting more hostage-taking. Next is raising debt ceiling,"

The next showdown is likely to be over the country's debt ceiling, which will be reached in mid-May. Obama must ask Congress to increase the amount of money the country can borrow beyond the $14.294 trillion authorized, or the government risks defaulting on its debt.
"It's no secret our government has a spending problem," said Republican Congressman Paul Ryan, chairman of the House Budget Committee

http://www.google.com/hostednews/afp/article/ALeqM5gebttLN5lddqp4iXowySYSBq2S1Q?docId=CNG.ee20d778e749c722a328c597fa2fd103.ff1

Low Energy Eng

Athlone_Bhoy wrote: »

Last minute deal got done last night.

As Clinton said



http://www.google.com/hostednews/afp/article/ALeqM5gebttLN5lddqp4iXowySYSBq2S1Q?docId=CNG.ee20d778e749c722a328c597fa2fd103.ff1

Thanks for the link...

Hostednews wrote:

The late Friday deal "was not even act one," Israel said. "This was just the overture."

So many people in the know have been "hinting" of the beginning of the end...they just cant come out and say it outright to prevent an overnight run on the dollar
We shouldnt rule out a world war though...

hmmm

Athlone_Bhoy wrote: »

Ron Paul who I think is neck to neck with Obama to be next president has maybe 30 years in government.

Ron Paul has as much chance of becoming President as I do. Will we have to (again) have to put up with 2 years of Paul worshippers clogging up every online forum with their hero worship? I feel weary at the thought of it.

Jim2007

turbobaby wrote: »

...and please don't categorize me as a conspiracy theorist.

Well if the cap fits. I'm not wasting any more time on this topic.

Good luck with that,

Jim.