I have been madly in love with Milia Jovovich ever since that movie. I even get the missus to say 'pleeeeaayse haaaalp' every now and then. She does a particularly good Milia impression... Back on topic. I can't see the US defaulting, besides I reckon you would see signs way before the collapse. But honestly, gold would up nicely in the event of a worldwide depression. Because of that reason, other countries will prop up the US economy, kinda like palliative care to the dollar.
I think other countries would soon tire of propping up the US especially if the US didn't cut spending. What would be wrong with the Swiss franc becoming the next world reserve currency? Isn't it just a reference point for other currencies? As long as there were only a set amount of francs available and it was backed by gold. It couldn't be printed in any more volumes than gold became available through mining. Problem with a gold standard is that gold reserves are so unevenly distributed around the world - could it result in an audit of all gold reserves and a recall of gold deposits to the country with the reserve currency?
The us has defaulted before when they left the gold standard and in the great depression when they confiscated the peoples gold and devalued the dollar 75% in one hit plus other times i can think of the top of my head. Technically the US is constantly defaulting because they are inflating their currency, eroding savings, letting themselves pay debts with devalued currency and making everything more expensive for the people I think they will continue to do this until the people say enough is enough which will be when living standards are so low people will have nothing to lose and will get very angry, much like in Greece but we are not even near the worst in Greece Eventually they will have to default
There's a report in today's Financial Review that Obama 'stormed out' of the discussion over spending cuts of a little over $2T and raising the debt ceiling by about the same amount The ratings agencies are threatening to downgrade the US AAA credit rating if they don't raise the debt ceiling by the 1st August. The story goes that Obama remarked (and I paraphrase) "enough is enough...Ronald Regan wouldn't have been made to wait this long"
If America defaults, People will lose confident in US Dollar which constitute of 60% of the world currency. Euro which constitute of about 30% of the world currency. What do you think will happen?People will ofcourse rush into GOLD. But as gold goes over 3000,4000,5000 per ounce, average people cannot afford them, and they will switch their preference to the next resort. Which is SILVER. The price increase cannot be imagined. 3 digits, 4 digits, 5 digits or cannot even get them. Who knows.
The tea party members will likely block a deal until after August 2nd. Debts and interest will be paid and there will be no default. Obama will have to cave and a deal will be struck to raise the debt ceiling but probably not enough to go through the next election. Republicans want Obama to face another debt ceiling vote during the 2012 campaign.
If the US defaults, the only ones that'll be hurt are the ones owed money by the US. They'll be without their money or a recourse to get it. They'll just have to suck it up like everyone else whom has a non paying tennant, delinquient debtor or snatch n grab victim. Life will go on as usual in the US!
Except that "growth" will be slowed because the system relies on credit to grow, and credit will dry up since few will want to lend to a country that does not pay it's debts.
The stated plan is stealth default through inflation. default under the normal definition will not ever happen. We can print 14 trillion USD and pay the debt tomorrow. How can the US possibly default?
When the U.S. defaults, major money will move out of there and share prices will plummet like in the 30's and gold and silver mining stocks will skyrocket, like in the 30's. Gold silver physical to go higher, like in the 30's.
I suspect there will be abit of panic at the start and markets will take a hit along with the dollar but when investors realize there is no real suitable currency to move to (euro is not that much of a alternative) then the USD will probably have a rally a short time after default. I don't actually see the USD collapsing from default rather a steep correction in markets were by the smart investors would use it as a buying opportunity for equity's. I think most investors have already taken in the possibility of default by not raising debt ceiling or default by inflating the currency. I would be looking at long EUR/USD if US defaults and then shortly after maybe 2-3 days long USD/EUR for a steep rally in USD. As for markets i would be shorting S&P regardless of debt ceiling increase unless QE3 is announced soon. The USD really still has too far to fall to render useless the catalyzing event i don't think will be a default by the US rather the loss of confidence overtime by investors and lenders to the US.
Living in one of the least GFC effected country's in the world does not give us a free get out of jail card for round 3, be aware if the US defaults"WE ARE ALL f..kd." The entire Western world and its allies will suffer. I would rather see the price of PM's kept artificially down and have the US be the guardian of the Western light than have the USA default traditional style..and i agree thats not going to happen in my lifetime.and thank GOD. Stealth default thru inflation as stated above sounds 1000% more realistic +10 to the above post. REDBACK
The Fed can print that money if they wish and buy up all that debt but at the end of the day the treasury still owes that money. Not to china and Japan anymore but it is still debt that will accrue interest that must be paid. If congress doesn't raise the debt ceiling then Obama has a choice regardless of who owns the debt 1) he cuts spending to allow the debt to be paid from taxes or 2) the US defaults and he continues his spending programs. The US is in the most enviable position having all of their debt denominated in US dollars and technically they should never ever be able to default. However there is this issue of the debt ceiling and if congress plays hard ball there IS a possibility of default. They have Obama by the balls. He either agrees to the terms set to him on spending cuts or he doesn't get his money. About bloddy time too! The US hasn't reduced it's debt in our lifetimes I can't fathom why the world let it get to this stage in the first place.
Can't be like the 30's the US is now the reserve currency of the world totally detached from the Gold standard.The biggest analogy problem with the above is What will people rush into?GOLD..The EUROThe YUANSILVERAUDOIL..COMMODITIES? Its a Pandora's box REDBACK
I am hoping that congress plays hard ball and forces Obama to spend within his means for a month or two. That should be a big deflationary move for a few months, all commodities inclusive. That may provide a "back up the truck" buying opportunity. I would love to be able to get physical under $20.00 an ounce for silver. If that does happen then congress will have no choice but to raise the debt ceiling regardless of what Obama does. Then light the money printing fuse and watch precious metals go parabolic.
Good point L80,but i reckon Ag will again finds its own independent valuation level just as you couldn't pick up ASE's for $37 when Ag went down to around $32/oz. Here's salivating on the hope though REDBACK
