We often talk about the US tanking and not being able to pay out its 19 trillion loan. Should this happen, does the Fed, and its bank owners take ownership of the country? What are the ramifications?
Firstly, I would expect that the US will just keep printing money to meet interest payments and then when it finally becomes untenable, either an agreed "write down" of the debt or if there is a way to compartmentalise some of the debt with a particular creditor(s) (eg, China) and then screw them (eg, start a war) then that would do the job too. Alternatively, a global financial system collapse triggered by an irresponsible banking sector (not unlike 2008 GFC) would also give politicians cover to be able to wipe the debt via a financial system "reset" I can't see the US going into administration or liquidation like a typically insolvent business would. The voting public wouldn't stand for it.
Following on from the above, if global interest rates were to spike, the Australian housing market would have the mother-of-all callapses. .
Yes. I think that's the whole point just like Greece. Banks help governments run up massive unpayable debts that when they cant be met a countries assets are ceased and sold for cents in the dollar to the people with access to 0% money (banks) and then everything is privatised. Beaches, Roads, National parks. The great barrier reef should fetch a few million
Trust on money created from debt lies on the capability of the issuer to provide future goods and services in exchange for the issued money (which is used to purchase present goods and services). If a creditor thinks that his debtor will not be able to fulfil his promises of future deliveries, he should -normally- rush to acquire present g&s because.... better an egg today etc. etc. If a lot of creditors get worried and start competing for the debtor's resources and if the amount of resources cannot meet demand at current prices, inflation usually kicks in. The US$ situation is a bit different, though. In virtue of being the world reserve currency it represents -partially- also future goods and services of other countries using $ as reserves. I.e., non-USD countries are willing to exchange tangible value among them for USD and this has not much to do with the ability of the USA to deliver on future promises (USA is just the global banker in this case) So, before anything really bad happens to the USA in isolation, I believe that the USD must lose its status of main world reserve currency.
Remember this........... 30 October 2015 The U.S. Senate Averts a Default Senators passed a two-year budget deal in a late-night vote that will raise the debt ceiling until March 2017 and keep the federal government open. http://www.wsj.com/articles/u-s-senate-passes-budget-bill-averting-risk-of-default-1446190025
put the crack pipe away Sammy it is that time of year it seems like $36 by Easter predictions this is a fantasy The USA's debt is all in US$$$ so IF they get in trouble they can just print their way out, then reset the currency like has happened many many times the world over already.
Has any nation ever defaulted on debt denominated in their own currency (fiat currency printed by the government) ?
How about transformation into a repressive domestic police/surveillance state where people are conscripted to fight and die in overseas military actions?
^ a police state will likely happen if the US goes broke and that could be another reason for causing civil wars. Too many guns in the US. Imo people there will not tolerate a police state for long if it is against their stupid constitution.
