You're In The Agora
Welcome to the Net's best new source for commentary on current events, culture, faith, science and much more.
Faith
Confessing Evangelical Evangelical Outpost He Lives Mere Comments Mirror of Justice Religion Clause Three Hierarchies Science Dispatches from the Culture Wars In the Pipeline New Scientist Tierney Lab Liberty A Constrained Vision Asymmetrical Information Becker-Posner Blog Hit & Run Instapundit Positive Liberty The Agitator Volokh Conspiracy Economics Café Hayek EconLog Environmental Economics Freakonomics Free Exchange Greg Mankiw J. Bradfor DeLong Marginal Revolution The Right Andrew Sullivan Best of the Web Eunomia Hugh Hewitt Michelle Malkin Power Line The American Scene The Corner The Left After the Future Ezra Klein Matthew Yglesias Political Animal Talking Points Memo Errata Daniel Drezner Democracy in America Dilbert Blog Lilek's Bleat Overcoming Bias The Sartorialist Hoosiers Daily Contentions Indiana Barrister Masson's Blog Matthew Stevenson |
|
« The Best Constituents Money Can Buy | Main | Love Poker? » March 25, 2006We Win By Default!Someone with better economics skills than me is kindly invited to explain why my gut says this is flawed: Could defaulting on the national debt hurt the overall economy? Yes. It would likely crash the stock market. But, it would most certainly shake people's faith in government. And that would be a good thing. Once people realized that the federal government could default on bonds in the future, they would be less likely to loan money to the federal government. That would prevent the government from racking up a huge credit card bill ever again (or at least for several decades). Knowing this, investors would become quite bullish. The American economy would rebound and flourish. Without the federal government driving up interest rates through massive borrowing, companies could afford to expand like never before. And the federal government would free-up the $350 billion it spends every year just paying the interest on the national debt. Congress could give this money back to the American people through major tax cuts, further stimulating the economy. (Bone to socialists: Congress could also spend that money on health care, welfare, etc.).(via Hit & Run) Though I'm partial to the argument that the holders of gov't bonds (which also includes me) deserve what they would get. Posted by Zach Wendling at March 25, 2006 09:19 PM CommentsPosted by: Gregory Travis at March 25, 2006 10:56 PM | permalink Seriously, it's hard to recall (for me, at least) any nation that's defaulted on its public debt that hasn't gone into a permanent economic tailspin. Defaulting on the debt would mean defaulting on Social Security, it would mean defaulting on the trillions of dollars of foreign investment in the country, it would mean, in no short terms, economic apocalypse. Do we really want, can we really afford, to hand the mantle of "safest investment instrument in the world" over to the Europeans? Do we really want to see oil priced in Euros? Frankly, as someone who has a hundred thousand dollars invested in US securities, the idea that it might soon be worth nothing more than the paper on which it's printed is terrifying. greg Posted by: Gregory Travis at March 25, 2006 11:15 PM | permalink Gregory's right as far as I know. It would be a disaster. The opposing argument strikes me as something proposed by a small government libertarian grasping at straws as they seek a way to force the American public to accept something they don't really want when they look at what it actually entails. Posted by: Jim S at March 26, 2006 02:42 PM | permalink Post a comment |
|
---- ADVERTISEMENTS ----
|