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March 14, 2009

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Ron

China should be worried about their dangerous over investment in US Treasury obligations. Washington ’s long-term choice is either repudiation or monetization. For monetization to be effective, the depreciation in the dollar would have to be substantial and this in turn would dramatically raise prices of imports for American consumers which would mean a tremendous drop in foreign imports. Debt monetization would cause more disruption to exporting nations than selective repudiation of Treasury debt.

Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasury bonds, the dollar, gold and the stock market.

The Campaign to Cancel the Washington National Debt By 12/22/2013 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts

Nathan Smith

Hmm. I don't think monetizing the debt would be nearly as bad for us as repudiating it. It's an interesting public choice problem, though: how much debt can a developed democracy pile up before "ditch the debt" becomes a politically viable campaign?

Nato

"how much debt can a developed democracy pile up before "ditch the debt" becomes a politically viable campaign?"

I don't think it ever would - it would destroy retirees, even if we get to the point where we think we don't care about banks. I suppose if we went totally socialist and promised everyone who had been planning on using bond-based retirement vehicles that the government will make up the difference or something, then maybe it would work, but the crisis where people are willing to go that route is so severe as to be difficult to envision.

I suppose it's possible to pretend we could repudiate the debt to certain nations and this wouldn't lead to the utter destruction of international supply chains, but again, I think it would take global catastrophe of some kind for enough people in the right places to think that way.

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