Monday, December 14, 2009

Would U.S. Debt Default bring Armageddon?

Frankly, overblown rhetoric about the economy is perhaps the greatest obstacle facing economic and currency reformers. When a U.S. debt default is publicly declared by an Australian lawmaker to lead to Armageddon and the collapse of the world, it is hard to imagine a steeper wall to climb for Jubilee advocates.

To speak plainly, after a debt default, the main victims of economic collapse would be the banking classes, who profit obscenely from the current system of mass usury and financial manipulation, keeping massive debt loads piled on the backs of the common workers.

THE OPPOSITION finance spokesman, Barnaby Joyce, believes the United States government could default on its debt, triggering an ''economic Armageddon'' which will make the recent global financial crisis pale into insignificance. Senator Joyce said yesterday he did not mean to alarm the public but there needed to be a debate about Australia's ''contingency plan'' for a sovereign debt default by the US or even by a local state government. ''A default by the US means complete economic collapse around the world and the question we have got to ask ourselves is where are we in that,'' Senator Joyce said.

Senator Joyce said that if the US recovered, global funds would flow back into North America. ''There will be only one way Australia will be able to keep funds here and that is by putting up interest rates, which will therefore bring real costs back to households,'' he said. ''That is the first scenario, which is extremely bad for Australia. The worse scenario is where the US doesn't repay its debt - the $2 trillion in debt it owes to the Chinese, the $1 trillion in debt it has to the Japanese and the $US1 trillion in debt to others - and then we are really nailed.

''The outcome is a shift away from the US dollar as the international trading currency and a shift to the Chinese yuan, and China becomes an immensely powerful player overnight. It's the real financial crisis, and the real financial crisis will mean this preamble we have just had pales into insignificance.''

Asked what sort of contingency plan he would advocate, Senator Joyce said it was like trying to prepare for a tidal wave but the local economy should have more self-reliance.


wraft said...

The collapse of the US dollar would be the best thing that could happen as it would instantaneously disempower the banksters.

I make wine and have a tasting room. If the dollar was suddenly worthless, I would print up my own money saying "good for a bottle of Chardonnay" or whatever.

The people who would be hurting would be pensioners, although people holding stock from productive companies would still be owed dividends. I don't know what would happen to them in a transition.

Todd White said...

Have you read a book called "Web of Debt?" It's eye-opening.

Justin said...

Yes, I like that book. I think the one glaring weakness is her explantion of the hyperinflation problem. Which is, unfortunately, the central critique of those opposed to the type of national banking she advocates.

bgamall said...

Armegeddon would be unnecessary. We don't have to default to the Chinese or Japanese, but only to the banksters and the Fed and those associated with the Fed. We send the marines over to Basel and occupy the Bank of International Settlements and take control of all the central banks that are hurting us and things should work out fine.