Why we will not have a Greece-like crisis

Glenn Quagmire

Veteran
Apr 30, 2012
4,841
4,429
Rather than drifting off on the topic in the Boehner curses Reid thread, here we go:

This article is from October, but it is still relevant.

No, The United States Will Not Go Into A Debt Crisis, Not Now, Not Ever

[background=transparent]If there’s one article of faith in Washington (and elsewhere), it’s the idea that the United States might get into a debt crisis if it doesn’t get its fiscal house in order.[/background]​

[background=transparent]This is not true.[/background]

[background=transparent]The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars–something that the United States government can produce infinitely and at no cost....[/background]


[background=transparent]....You don’t have to take my word for it. How about Alan Greenspan? He said (PDF): ”[A] government cannot become insolvent with respect to obligations in its own currency. A fiat money system, like the ones we have today, can produce such claims without limit.”.....[/background]​

[background=transparent]....[background=transparent]A lot of people still think that the US is under some risk of one day becoming like Greece, and it’s distorting our public debate.[/background][/background]

[background=transparent]It’s especially distorting it on the Right, where hysteria about deficits, and debt, and becoming like Greece has reached a fever pitch. Paul Ryan, especially, has framed his entire message on entitlement-cutting on the flawed premise that the US needs to cut its entitlement or it will suffer a debt crisis. This message, in turn, has infected broad swathes of the conservative movement (including very smart people in it), a movement that I consider myself a member of and want to see in strong intellectual health.[/background]
http://www.forbes.co...t-now-not-ever/
 
  • Like
Reactions: 1 person

SparrowHawk

Veteran
Nov 30, 2009
7,824
2,706
Keep in mind that these folks are the same ones who MISSED the dot com and housing bubbles.

Inflating away the debt through such mechanisms as QE 1, 2, 3 and on and on will do a great deal to avoid some of the crisis. Money like physics has at least one trait in common. "For every action there is an equal and opposite reaction" Avoid the crisis by printing money out of thin air and you create commodity inflation which not only just screws the average Joe but allows for wealth to accumulate at the top. It happened before the Great Depression and it's happening now..

Use of fiat currency allows for the creation of a rigged deck. This is why prior to 1913 we had the dollar grow 8% in value from 1791 to 1913 while from 1913 to present that same dollar LOST 93% of its value.

The world is on the verge of both economic and currency collapse. Whether it happens or not remains to be seen. We are closer now then we ever were before. Debt and unbalanced budgets hurt our chances to avoid a collapse. More importantly is the Greece style crisis should it multiply to other nations and collapse the Euro, we will be sucked down the drain with them and oddly enough the Chinese as well.

We are in grave danger of something horrible happening. If we avoid it this time, the next crisis will do us in and maybe the worlds economy as well. The warning signs are there and the printing presses won't totally solve the issues. What the presses will do is ensure the demise of our middle class.
 
  • Like
Reactions: 1 person
OP
Glenn Quagmire

Glenn Quagmire

Veteran
Apr 30, 2012
4,841
4,429
Avoid the crisis by printing money out of thin air and you create commodity inflation which not only just screws the average Joe but allows for wealth to accumulate at the top. It happened before the Great Depression and it's happening now..
From the article:
[background=transparent]while in theory printing tons of money could create inflation, in practice demand for the dollar is so high–and for structural reasons that have very little to do with how the US economy is doing at a particular point in time–that it’s hard to imagine a circumstance under which the US government would have to print so much that it would cause significant inflation.[/background]​
[background=transparent]And even if it did–well, for all the bad memories we have about it, the Stagflation of the 1970s was many things, but it was not Greece. Life in the 1970s was still relatively okay, despite the stagflation. That is to say, even in the extremely unlikely event that the government had to print so much money to get out of its debt that it caused moderate inflation, it still would not be a debt crisis of the kind that Greece and Spain are under right now. (Hyperinflation, meanwhile, is even less of a danger, since in recorded history it only happens in cases of not just reckless money printing, but also extremely serious exogenous shocks such as war, regime change, etc.)[/background]​
 
  • Like
Reactions: 1 person

southwind

Veteran
Jan 22, 2008
7,722
3,963
Visit site
Raise the debt ceiling and print more money ! Hell, this is better than playing Monoply !

From Quag's intro:
[background=transparent]"The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars–something that the United States government can produce infinitely and at no cost...."[/background]

[background=transparent]If so facto, why does the Fed want to stop producing the penny because it cost too much to produce ?[/background]

[background=transparent]Besides, it doesn't matter what happens now, as long as we were able to stick it to them Evil Rich Bastards, I'm content ![/background]
 
OP
Glenn Quagmire

Glenn Quagmire

Veteran
Apr 30, 2012
4,841
4,429
Raise the debt ceiling and print more money ! Hell, this is better than playing Monoply !

From Quag's intro:
[background=transparent]"The reason why it’s not true is because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars–something that the United States government can produce infinitely and at no cost...."[/background]

[background=transparent]If so facto, why does the Fed want to stop producing the penny because it cost too much to produce ?[/background]
That intro was not written by me. It was written by the author of the article.

As for your penny production that has nothing to do with the topic: but the reason is that the cost to produce one cent, is well, more than one cent. I think that explains it. Canada stopped producing the penny last year.
 

delldude

Veteran
Oct 29, 2002
29,084
6,050
Downrange
www.youtube.com
Look the other way then......

sunglasses.jpg


 

SparrowHawk

Veteran
Nov 30, 2009
7,824
2,706
From the article:

I know Glenn and I reject that notion as it's pure Keynesian School gibberish. Here's proof that the inflation numbers are lies. Price of gas, Price of food, Price of clothing. All are way way above the so called rate of inflation.

Commodity Inflation is the end result of our monetary policy, \http://www.econbrowser.com/archives/2009/11/commodity_infla.html

From the article:

The average commodity in this list has appreciated 37% since the start of the year
 

Ms Tree

Veteran
Jul 13, 2010
9,731
9,025
I read something a long time ago (forgot where) but I always thought the idea was interesting. Nothing has intrinsic value. Things only have value because we agree that they do. The only reason a one dollar bill has any value is because we agree that it does. If two people are stuck on a island, that dollar bill has no value. If you have a bottle of water, that has value.


I have heard that once we go past 80% of GDP it's bad. Well we are well past 80% and we are still here. Point being is I do not know what the numbers actually mean/. I think what means more is what we believe. I am starting to wonder if the fact that we believe this will work is what makes it work. Value is what we believe it is, nothing more.
 
  • Like
Reactions: 3 people

SparrowHawk

Veteran
Nov 30, 2009
7,824
2,706
I read something a long time ago (forgot where) but I always thought the idea was interesting. Nothing has intrinsic value. Things only have value because we agree that they do. The only reason a one dollar bill has any value is because we agree that it does. If two people are stuck on a island, that dollar bill has no value. If you have a bottle of water, that has value.


I have heard that once we go past 80% of GDP it's bad. Well we are well past 80% and we are still here. Point being is I do not know what the numbers actually mean/. I think what means more is what we believe. I am starting to wonder if the fact that we believe this will work is what makes it work. Value is what we believe it is, nothing more.

The first paragraph is essentially correct.

The 80% number is widely accepted in economic circles. The idea is to avoid a crisis not respond to one.
 

700UW

Corn Field
Nov 11, 2003
37,637
19,488
NC
You mean 100,000 layoffs just in the airlines is a good economy?

Almost every major airline filing bankruptcy after 9/11 and several smaller ones going out of business, is that a good economy?