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Guest Post: The Ethics Of Repudiation

Tyler Durden's picture


Submitted by John P. Cochran of the Ludwig von Mises Institute,

Do you ever get the feeling that no one in the Washington power elite is willing to seriously deal with the major economic threat to future prosperity facing the United States today: mounting government debt and the associated deficits? The problem, as pointed out by Murray Rothbard over 20 years ago:

Deficits and a mounting debt, therefore, are a growing and intolerable burden on the society and economy, both because they raise the tax burden and increasingly drain resources from the productive to the parasitic, counterproductive, “public” sector. Moreover, whenever deficits are financed by expanding bank credit—in other words, by creating new money—matters become still worse, since credit inflation creates permanent and rising price inflation as well as waves of boom-bust “business cycles.”

In 1992, when Rothbard wrote the above, the US debt was approaching $4 trillion (now nearing $17 trillion) and Federal Reserve policy was relatively benign compared to the current quantitative easing, which is effectively monetizing a significant portion of newly created government debt. The “peace dividend” from the end of the Cold War and the false prosperity from two Fed-created economic booms made the problem appear less urgent and allowed politicians to kick the can down the road. A solution is now urgent, but not likely. David Henderson’s “Must Default Be Avoided at All Costs?” is a great place to start in order to reinvigorate a serious discussion on a moral approach to shrinking the size of the federal government down to a less destructive level.

Henderson wrote,

Bruce Bartlett, in The Benefit and the Burden, his book about taxes, writes that default “would constitute a grossly immoral theft of trillions of dollars from those who loaned money to the federal government in good faith.” In my review of his book, I commented, “Really? It’s worse to default on creditors who took a risk than to forcibly take money from taxpayers who have no choice? [emphasis added]

Henderson sees default as likely to occur eventually and, given current trends and other alternatives, the more moral alternative. Jason J. Fichtner and Veronique de Rugy make a case that “Default must be avoided at all costs and should not be an option on the table” ("The Debt Ceiling: Assets Available to Prevent Default," January 25, 2013). But Henderson disagrees:

I’m unconvinced. The U.S. government has dug itself a deep hole. Commitments that it has made to various people must be broken. There is no plausible way, for example, that the U.S. government will be able, 20 years from now, to pay for all the Medicare, Medicaid, and Social Security benefits that it has committed to pay. One such commitment to consider breaking is the commitment to pay the debt. [emphasis added]

For a sustained case in favor of default, Henderson recommends Jeffrey R. Hummel’s “Some Possible Consequences of a U.S. Government Default.” As in many areas, Rothbard was a leader. Writing in the June 1992 issue of Chronicles (pp. 49–52), Rothbard made the case for “Repudiating the National Debt.” In this extended discussion, which I frequently used as a reading assignment for Principles of Macroeconomics during the 1990s, Rothbard clearly lays out the difference between public debt and private debt, as well as the moral case for public-debt repudiation or default.

First, there is no moral problem with private debt, and private debt repudiation is morally reprehensible. As Rothbard explains,

To think sensibly about the public debt, we first have to go back to first principles and consider debt in general. Put simply, a credit transaction occurs when C, the creditor, transfers a sum of money (say $1,000) to D, the debtor, in exchange for a promise that D will repay C in a year’s time the principal plus interest. If the agreed interest rate on the transaction is 10 percent, then the debtor obligates himself to pay in a year’s time $1,100 to the creditor. This repayment completes the transaction, which in contrast to a regular sale, takes place over time.

So far, it is clear that there is nothing “wrong” with private debt.

In essence: you borrowed it, you spent it, and you should be responsible for repayment.

Per Rothbard,

In a profound sense, the debtor who fails to repay the $1,100 owed to the creditor has stolen property that belongs to the creditor; we have here not simply a civil debt, but a tort, an aggression against another’s property.

What about public debt? Rothbard provides the answer:

If sanctity of contracts should rule in the world of private debt, shouldn’t they be equally as sacrosanct in public debt? Shouldn’t public debt be governed by the same principles as private? The answer is no, even though such an answer may shock the sensibilities of most people. [emphasis added]

The reason is that the two forms of debt-transaction are totally different.

Rothbard continues,

[W]hen government borrows money, it does not pledge its own money; its own resources are not liable. Government commits not its own life, fortune, and sacred honor to repay the debt, but ours. This is a horse, and a transaction, of a very different color.

How is it a different horse?

The public debt transaction, then, is very different from private debt. Instead of a low-time-preference creditor exchanging money for an IOU from a high-time-preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state.

Both parties [the politicians doing the borrowing and the members of the public loaning funds to the government] are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people’s property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract.

In summary, as a taxpayer, you did not borrow the funds, you did not spend the funds, and you have no moral obligation to repay the funds.

Rothbard’s recommendation: “I propose, then, a seemingly drastic but actually far less destructive way of paying off the public debt at a single blow: outright debt repudiation.” Repudiation is not only a sound economic solution to our fiscal crisis, but it is also the morally correct solution. Rothbard’s more detailed proposal, which was a “combination of repudiation and privatization,” should be considered a blueprint for an effective debt-reduction plan. As Rothbard argued, such a plan “would go a long way to reducing the tax burden, establishing fiscal soundness, and desocializing the United States.” As an added bonus, default would be as effective, if not more effective, than a balanced budget amendment, in reducing the likelihood of a future reoccurrence of the problem.

But “[i]n order to go this route, however, we first have to rid ourselves of the fallacious mindset that conflates public and private, and that treats government debt as if it were a productive contract between two legitimate property owners.” The commentary by Hummel and Henderson are evidence that some are seriously addressing this issue, alas, after over a 20 year lag.


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Fri, 03/01/2013 - 20:33 | 3292175 dadichris
dadichris's picture

preemptive, phased default is the only viable option

Fri, 03/01/2013 - 21:03 | 3292232 Careless Whisper
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The Careless Whisper Friday Evening News Update & Threadjacking


Manhattan, NY Jury: "Occupy" Protester NOT GUILTY On All Counts; Video Discredits NYPD Sworn Testimony On Witness Stand


Fri, 03/01/2013 - 22:25 | 3292407 MisterMousePotato
MisterMousePotato's picture

Actually, some did benefit from the debt ... comes to mind politicians, government employees, and the ebt crowd, for example. I could see justice and morality in having them pay it, or at least relinquishing their illgotten gains; for example, the properties acquired with the stolen monies.

Fri, 03/01/2013 - 22:29 | 3292415 Papasmurf
Papasmurf's picture

You left out the banks that were at the top of this pyramid scheme.

Sat, 03/02/2013 - 09:01 | 3293137 prains
prains's picture

This article makes the mistake of confusing debt repudiation as some type of "signing off" the debt over lemonade at the country club. NO he's right there will be debt repudiation

but there will also be LIFE repudiation. Bloody, shitty, messy, evil bankster style give me your child to bash against the wall repudiation. Ain't no fucking lemonade gonna be shared at the club my friends

Sun, 03/03/2013 - 02:04 | 3294886 Boris Alatovkrap
Boris Alatovkrap's picture

What is all talk about lemonade? Debt Repudiation must is require vodka or at least high alcoholic content of beer.

Fri, 03/01/2013 - 23:17 | 3292525 DoChenRollingBearing
DoChenRollingBearing's picture

Actually the government could do what FOFOA has suggested they might do: Buy any and all gold for an arbitrary high number ($5000 or $10,000 per oz, for example).  Poof!  Our Treasury owned gold can almost pay off the whole debt at a stroke, AND there is a new worldwide price floor for gold.

Freegold soon follows...  $55,000 per oz if you are smart to buy and hold the physical...

Fri, 03/01/2013 - 23:51 | 3292632 ATM
ATM's picture

I'm missing where the debt is paid off in that example. Isn't the reprice of gold to save the Fed and thus the dollar from total destruction as the Fed balance sheet holds nothing of value except gold?

Sat, 03/02/2013 - 08:56 | 3293132 Sean7k
Sean7k's picture

Nice catch, plus the VALUE of those dollars would be what? You want to look for the last pie on the shelf: 19 trillion in retirement savings and investments.

Sat, 03/02/2013 - 11:07 | 3293322 caShOnlY
caShOnlY's picture

19 trillion in retirement savings and investments.

.... and everyone wonders how the FED is going to "unwind" it's balance sheet?  muhahahaha..... muhahahahahahahahaaha

Sat, 03/02/2013 - 19:38 | 3294279 jonjon831983
jonjon831983's picture

Technically yes - but an almost similar analogy would be to purchase some illiquid penny stock at $1000 /share and then trying to use those shares as collateral.  Sure you could artificially bump up your networth by a lot.  However, the point is will anybody else buy your penny stock at $1000?  Your bid/ask spread would be ginormous.  What matters is what someone else will accept it as collateral/buy it for from you at that price.


Now obviously gold would be a different matter compared to a penny stock.  But at that scale, the government artificially buying at a high price like $5,000, or $10,000, or $55,000USD would itself be creating a massive inflation and currency devaluation as more money must be created to purchase additional gold at that ever increasing prices.  In addition, anybody selling gold would smell this disconnect and might not even allow for the payment of gold in USD.  The US gov't would need to pull up almost Trillions of USD out of thin air in order to pay the sellers at escalating prices.  These sellers who receive USD then need to turn around and use the USD in some way.  This process of transmitting new gold prices would cause a shockwave of currency devaluations/inflation throughout the world as a flood of USD is unleashed.

Then of course if the government is dumb enough to sell off all their gold at the new artificial price to pay off debts a) they won't have any gold left to back up their currency for real and use for FX transactions, b) there could be a smackdown on the price of gold as buyers would smell desperation and low bid for it (on open market at least. Private CB to CB I guess they could strike a private placement type of deal in order to avoid this), c) FX problems for international trade - good luck trying to buy oil and crap from elsewhere in the world because other currencies will be buying it up ahead of the US and cutting links to USD pricing.


Basically, to sum it up mayhem would ensue if the government went on an open-ended unlimited gold (or anything) purchasing mania JUST to get the price of their gold to be able to pay off their debts.  The end result of these actions would be worse.  They could just as easily declare the price of gold in current reserves worth many multiples higher instead of the current $42 (?) / oz... or even better just declare a default and renegotiate the US debt in an orderly fashion that would reduce the risk of being cut out from the global market.

Sat, 03/02/2013 - 08:53 | 3293128 Sean7k
Sean7k's picture

The comments are as good as the article. People are losing any respect for the police. This leads to a loss of acceptance for law in general and without that acceptance, the State cannot govern. 

Thanks CW.

Fri, 03/01/2013 - 23:12 | 3292429 philipat
philipat's picture

I guess that is why the vasy majority of new debt is now just printed by The Fed? Nobody else would take the risk of actually buying it, irrepsective of "Repudiation".

When do you actually project this default? Sorry, I mean Repudiation?

Sat, 03/02/2013 - 14:49 | 3293725 tango
tango's picture

Actuallly, several Europeans have called for a debt repudiation.  I see two problems - separating the participants ( banks, companies, individuals, trusts, states) and secondly and far more important, what next?  I mean, if all European debt was repudiated but the social system (decreasing kids/workers, increasing pensioners/ increased spending) is not modified they will quickly find themselves in the same mess. 

Sat, 03/02/2013 - 03:30 | 3292951 jeebus
jeebus's picture

I'll defer to Peter Schiff on this one:


The US will either default honestly or dishonestly. I think it will be dishonestly. The US will continue doing what it's doing until there's a crisis.



Sat, 03/02/2013 - 09:47 | 3293199 Henry Hub
Henry Hub's picture

The only debt that's going to be defaulted is the Social Security "trust fund". The oligarchs will never allow the bonds and treasuries that they hold to be defaulted on.

Fri, 03/01/2013 - 20:38 | 3292178 Room 101
Room 101's picture

Repudiation?  NOW we're talking!

Why should generations that are not even born be yoked to a debt that is simply unrepayable?  Because they were born within a specific geographical location?  

In private contracts, I have a right to demand a copy of the note showing that I agreed to pay a debt.  Where is that note?

Show Me The Paper, bitchez!

<edit: Fuck you bernanke>

Fri, 03/01/2013 - 20:52 | 3292210 Stoploss
Stoploss's picture

Always is a debt jubilee in there towards the end anyway.


I guess im fucked on that part.

Fri, 03/01/2013 - 21:12 | 3292245 Sean7k
Sean7k's picture

This article is a total mess. 

I am a great admirer of Murray Rothbard, but you cannot do his views justice is two paragraphs. There are chapters of material on this idea. Worse, the breaking of a contract is not a tort. Torts and contracts are two completely different actionable complaints.

Repudiation, then what? Do you really think the State, fully robed in all its' tyranny and fascism would allow or consider repudiation? If it did, then what? You could no longer finance bonds or print currency or trade with other economies. Without any funding, the State would require a remodel (to say the least). Who defines the parameters of this project?

Did we sign a contract? Do you really think contract law was discovered after the pen and paper? Established law does not require a signature (remember the oral contract). A contract requires the acceptance of a benefit. Bank account, SS, insurance, federal reserve notes, Roads, etc Did you use any of these? You entered into a legally binding contract with the State. 

Is the State limited in its' power to tax? Have you read English common law and the powers of the king? The courts have.

Do you really think the Rothschilds have spent hundreds of years creating the perfect slavery system, just to have it repudiated? 

Nothing less than total revolution and the destruction of the central banking concept as well as the rule of law would create the conditions favorable for the elimination of slavery.

Fri, 03/01/2013 - 21:17 | 3292265 davidsmith
davidsmith's picture

Well, you're right about this idiot ignorance of the difference between contract and tort law. But this is clearly wrong:


You could no longer finance bonds or print currency or trade with other economies.


States (including U.S. States!) have defaulted time and time again, quite successfully.  You could easily argue that the remedy is pricing into the debt, the probability of default.


The real point is that repudication becomes just as much a tool of corruption as anything else.  The result of THAT is that it rapidly becomes impossible to price the debt, and THAT is why no one will buy the debt.  There are many tools government has to force debt purchases even AFTER default (among other things, they can close their markets selectively or establish tariffs).


The problem is not that repudiation would be draconian, but instead, that repudiation would become commonplace, be factored in, and soon fail to accomplish the goals of those who promoted repudiation in the first place.  It's like every economic device: if you target it, it can work.  But if you use it as broad brush, it probably won't get rid of any of the problems you want to eliminate.


No, enough tricks.  I say, overthrow the U.S. Government.  That opens up every option.  Repudiation is a narrow solution which produces widespread failure.

Fri, 03/01/2013 - 21:31 | 3292294 Sean7k
Sean7k's picture

Sorry, repudiation of all debt when you are the reserve currency for the global economy is nothing like hungary, argentina or zimbabwe. 

When the global community harbors trillions in debt as well as the banking cabal, repudiation takes on a whole other meaning.

Fri, 03/01/2013 - 22:26 | 3292408 Matt
Matt's picture

And on top of that, just how well are Argentina and Zimbabwe doing these days, anyways?

Zimbabwe, people are still using flecks of gold to buy bread. Argentina is going into high inflation, leading up to its next hyperinflation.

Fri, 03/01/2013 - 22:22 | 3292401 Room 101
Room 101's picture

An even more interesting post. I think I'll skip right to your conclusion:

"I say, overthrow the U.S. Government.  That opens up every option. Repudiation is a narrow solution which produces widespread failure."  

No narrow solutions for you, eh?  Just sedition and treason instead.  I think I'll take a pass on following you in your keyboard revolution as well. 

Isn't this fascinating? The posters tonite seem to want to avoid any rational discussion of the merits or drawbacks of repudiation and instead want to talk about things like overthrowing the U.S. government and revolution. It's almost as if there were a few agent provocateurs about.

In any case, let's address a few of the points you made before going fishing.

"You could no longer finance bonds or print currency or trade with other economies." 

And being able to finance bonds is a good thing?  If you look at countries that have defaulted, they are left out of the capital markets. For a few years.  Trade continues as does the ability to coin a currency.  

"The real point is that repudiation becomes just as much a tool of corruption as anything else."  

Maybe you have to look deeper.  Like at whether the loaning of money at interest is itself corrupt.  And whether there might be a good reason why major religions (e.g. Islam, Christianity) have viewed usury as a sin.

Fri, 03/01/2013 - 23:19 | 3292532 sun tzu
sun tzu's picture

Overthrow of the government is not treason. Overthrow of the consitution is treason. Who has subverted the Constitution? Is it the people or the government?

Sat, 03/02/2013 - 01:45 | 3292841 aka Gil
aka Gil's picture

Points taken. First point, let us not be distracted from the issue of public debt repudiation. It will be necessary for the survival of our nation and it is morally correct. As an example, just look at the debt (100% shit) that the Fed has purchased from the banks and added to their balance sheet. Does anyone believe that the US taxpayer won't eventually get stuck with that shit? Second point, debt repudiation without dispatching with the entire lot of criminal fucks masquerading as politicians and leaders would be a wasted effort. If we're going to right the ship the dead weight must be jettisoned, and it should be jettisoned with extreme prejudice imo.

Sat, 03/02/2013 - 04:27 | 3292991 putaipan
putaipan's picture

odeious! i tells you .... odeious!


btw- 1871 seems to be at the heart of what really needs to be repudiated, much less 1913.

Sat, 03/02/2013 - 09:57 | 3293214 ItchyBeard
ItchyBeard's picture



you speak the troof brother!

Sat, 03/02/2013 - 13:30 | 3293570 nofluer
nofluer's picture

And whether there might be a good reason why major religions (e.g. Islam, Christianity) have viewed usury as a sin.

Having looked into Sharia Banking, if the rules of it were separated from religion, I'd consider it a viable alternative.

Sat, 03/02/2013 - 14:07 | 3293637 Harbanger
Harbanger's picture

How does that work, who would lend anyone money without charging some form of interest?  It sounds illogical.   Maybe there's no lending of money allowed at all.

Sat, 03/02/2013 - 14:39 | 3293689 nofluer
nofluer's picture

No one borrows, no one lends.

What would be the "borrower" and the bank ("lender") actually become "partners" with the "borrower" having control of the subject of the un-loan (a business, a car, a house) and the bank puts up the money for it. An agreement is reached going forward as to the cost up front of the "partnership" to what would have been the "borrower."

YOU want to buy a car. The car costs $10,000. You go to the bank and present your proposal. The bank then offers to put up the money (amounts are subject to up-front negotiation), and you agree to buy the bank's ownership interest in the car at a specified rate making payments until after a specified period you are the sole owner.The total amount you pay is predetermined and does not go up as it would in an interest/loan situation if the bank raised the interest rate. Your total "indebtedness" is known in full from the first day of the partnership relationship.

YOU want to start a business. You go to the bank and demonstrate your competence in the industry (ie you can actually run the business at a profit.) The bank provides "start-up" money and you and the bank are partners in the enterprise. You and the bank agree on a fixed amount for the banks' interest and you pay the bank out of profits until you've bought the bank out and it's your business.

In neither case does the amount owed to the bank go up over time. (That would be interest which is defined as the time value of money.)

If you cannot make your payments on the bank's ownership interest, I'd presume that you and the bank would re-negotiate the amount that said ownership interest is worth.

So it's all buying and selling. No lending.

Sat, 03/02/2013 - 15:26 | 3293799 Harbanger
Harbanger's picture

There must be a time frame in which to pay back the loan, it may be a long timeframe, but it's something agreed upon at the negotiation. Otherwise there's no reason to pay it back. If they don't pay it back within a time frame or they die, then they take back the car or business.  Same as banks here, they're not just a lender but your partner until you pay back the loan.  Then the only difference is that you agree on the amount of interest up front, which is predetermined at the negotiation. Which isn't a differrence really because that's just a fixed rate loan.  What you owe doesn't go up over time, what you owe in interest is spelled out in the loan documents, you can pay it all back at any time before it's due.   So maybe the problem we have is the open-ended variable rate credit like you find in credit cards and low qualification loans.  They probably don't give those out under sharia banking. That's how they can milk you with interest forever. 

Sat, 03/02/2013 - 14:58 | 3293743 tango
tango's picture

Sharia banking is a myth.   Until recently no Muslim took it seriously.   Muslims have ALWAYS paid and charged interest - sometimes under other guises (percent of profits, "gift", property, marriage contract, etc)  Besides almost all Islamic loans were PERSONAL - not business - and this allowed these pseudo contracts to be performed.  No one in their right mind will give their money to another without assurances or payments.  

Believe me, Kuwait, Dubai, Saudi Arabia, Oman - all lend and pay interest,  Without lending we have no great enterprises and the goodies - medicines, food for the masses, electronic toys, bridges, roads, water plants.   The end of lending would mean the state would effectively control all monetary exchanges through bonds and other legalistic means.    

Sat, 03/02/2013 - 15:20 | 3293791 nofluer
nofluer's picture

As I understand it, it is not permissible to charge interest to another believer (Muslim). I believe that it IS permissible to charge interest to a non-believer... and as you indicate it is done all the time.

Sat, 03/02/2013 - 19:53 | 3294335 shovelhead
shovelhead's picture


Sharia banking is calling a pig a dog. It still oinks instead of barks but it's dog to Mohammed.

A dog that makes bacon.

Mohammed is pleased.

Fri, 03/01/2013 - 22:07 | 3292366 Room 101
Room 101's picture

My, my, how the talk of repudiation brings out the best. 

"Did we sign a contract? Do you really think contract law was discovered after the pen and paper? Established law does not require a signature (remember the oral contract)."

So?  Where are the basic elements of any contract - oral or written?  Where is the mutual consideration?  Where is the agreement of the parties? In the case of a new born babe, are you arguing that there is competence to engage in a contract?

 "Nothing less than total revolution and the destruction of the central banking concept as well as the rule of law would create the conditions favorable for the elimination of slavery."

Now isn't that interesting?  Pooh-poohing the relatively benign idea of debt repudiation and jumping straight into "total revolution" and "destruction...of the rule of law."

Thanks, I think I'll take a pass on following your keyboard revolution.    


Fri, 03/01/2013 - 23:12 | 3292509 Sean7k
Sean7k's picture

The basic element of a contract is receiving a benefit. When you receive it, you acknowledge the contract exists and reciprocity is a part of every contractual agreement. Just because you are ignorant of contract law doesn't change how a court will rule.(or do you even pay attention to tax law rulings). Do you have an insurance policy? Does it contain elements of limited liability? Where do you think the benefit of limited liability comes from? The State. Did you even read your contract that notices that banks and insurance agencies act as agents of the State? Therefore, when you accepted the benefit of the reduced insurance cost, in a legal contract, you indentured yourself to the State. 

I realize this is difficult to digest, but it would be to your benefit to study the law and its' consequences in this area.

A child cannot enter into contracts until they are 18. Do you even think before you open your mouth? 

I was "poo pooing" nothing but your absurd construct. If you have no idea the level of slavery you have entered, how can you begin to comprehend the amount of action necessary to eliminate it? 


Sat, 03/02/2013 - 00:22 | 3292712 Anusocracy
Anusocracy's picture

Law is just another weapon of government.

Look at how well the Constitution has been destroyed.


Sat, 03/02/2013 - 02:40 | 3292908 Totentänzerlied
Totentänzerlied's picture

I prefer the Articles of Confederation, but the Founders had as little problem nullifying the Articles as they did creating the Constitution, or as their heirs had in ignoring it/repurposing it into White House toilet paper.

Sat, 03/02/2013 - 09:04 | 3293142 Sean7k
Sean7k's picture

There are arguments in favor of the idea that the Artilcles were NEVER nullified, but became part of the State contract. To accept them as nullified would require us to recognize the acceptance of the Constitution as a coup d'tat. Both documents were voted into being by those allowed to vote at the time and accepted by the colonies.

Sat, 03/02/2013 - 13:36 | 3293578 nofluer
nofluer's picture

Both documents were voted into being by those allowed to vote at the time and accepted by the colonies.

Sorry Sean. Not true. The requirements of changing the Articles of Confederation required that agreement to change them must be unanimous. It was not. So it can be said that, accademically, the articles are still the law of the land, and the US Constitution was never lawfully ratified... which doesn't make much difference today as the Constitution has been raped, stabbed and left bleeding in an alley by the US Federal government and the banking system.

Sat, 03/02/2013 - 19:49 | 3294324 Sean7k
Sean7k's picture

Excuse me, what is not true? Voting was restricted by land and wealth requirements, meaning between 3 and 13% of the population voted on either document. Most people would say the articles were nullified when the Constitution was ratified, but there was never a vote taken to nullify the articles. 

That is what I said, what is not true in light of your comment? The Constitution WAS lawfully ratified by the requirements set forth by the Convention. All thirteen colonies ratified the Constitution as well (even if Rhode Island and South Caroline had to be economically blackmailed). 


Sat, 03/02/2013 - 13:20 | 3293554 nofluer
nofluer's picture

Two things -

1. "Commitments that it has made to various people must be broken."

The US government never signed a treaty or agreement that it couldn't (and didn't) break. So why should the US Government Debt ba different than any other agreement, written or implied?

2. Repudiation, then what?

The answer to that is amazingly easy to find... just look at the US Continental Congress and the default on the "Continental" dollar - which was a repudiation/default in fact. The US government at the time simply issued new money, and "redeemed" the old at pennies to the dollar (and the only reason they redeemed it at all was because the honorable members of Congress had been running around buying up the old script at really low prices and looked to make a killing on the redemption of the worthless script.)

What? Our wonderful Founding Fathers and the Congress were CORRUPT? You bet they were. Study some of the things they did back then and you'll see that today's bankster crooks could maybe pick up a new trick or three when it comes to stealing from the people.


Fri, 03/01/2013 - 21:13 | 3292252 bank guy in Brussels
bank guy in Brussels's picture

A lot of both government debt and private debt is immoral and based on fraud, and should be repudiated

Any public debt of any nation, that is not in the best interests of the people of that nation, is 'odious debt' and not binding on the people after the oligarchs or dictators who contracted the debt have been pushed aside ...

Only the oligarchs or dictators are obliged to such debt ...

As creditors learn this, and to hesitate about playing 'Economic Hit Man', the world would be a better place

Any private debt based on a significant fraud and deception of the borrower, such as being an excessive burden on the life of a person who does not understand that burden, is likewise something that should always be able to be repudiated

Such as American student loans for worthless 'educations' by lying 'colleges' ... And mortgage loans to simple Eastern European citizens, binding them to repay in Swiss francs ...

Bankruptcy and jubilee ...Yes !

Maybe the religious Muslims, and many Christians and Jews of the past, and the Greek philosopher Aristotle, were all correct, in the idea that interest-payment obligations are immoral ...

It actually does work, and is being implemented in communities in Sweden, for example. Consumer finance is done by leasing and rent-to-own, and business finance is done by shared risk and shared profit or loss.

Interest-free finance would be better than the world of shite we are in now ... 150 trillion in world 'debt' which can never be repaid

Fri, 03/01/2013 - 22:26 | 3292410 Room 101
Room 101's picture

Usury is a sin. 

Just one more reason to say: fuck you bernanke. Not that you really need one.    

Fri, 03/01/2013 - 23:35 | 3292586 Sean7k
Sean7k's picture

Unfortunately, interest free financing ignores history and economics. Time preference comes with a cost, whether it is built into the product cost or as an interest rate. The Catholic church did not allow christians to practuce usury, but since jews were going to hell and ship captains needed credit- guess what happened? 

Why would you lend money or product for payment in the future unless you receive an incentive? You won't unless you have no hope of selling the product otherwise- inwhich case it is priced too high and the interest payment is built in.

The problem is not interest, it is central banking, fractional reserve banking and control of currency  through legal tender laws. Debt has always existed, because some people can't wait to spend money they haven't earned and others save so much, it behooves them to put it to work. 

Why do you think debt jubilees were PERIODIC? 

Sat, 03/02/2013 - 13:46 | 3293598 nofluer
nofluer's picture

Study Sharia banking and see how it works. Banks can make a profit without charging "interest". The borrower partners with the bank to purchase something or start a business, and the bank puts up the money....

Sat, 03/02/2013 - 19:54 | 3294341 Sean7k
Sean7k's picture

Sharia law allows muslims to charge interest on infidels. Yes, banks can make a profit without charging interest,( see the first Dutch and Venician banks), however, you still fail to grasp the concept of time preference. Why loan money to be paid back in the future without receiving a benefit?

What makes you think I don't understand Sharia law? Are you always this arrogant and ignorant? 

Sat, 03/02/2013 - 02:33 | 3292904 Totentänzerlied
Totentänzerlied's picture

Well, maybe, maybe not. You cannot run an advanced economy, or, therefore, support an advanced modern society, without lots of loans, they are as much the core of capitalism as labor, entrepreneurship, and investment. Without interest there is very little or no incentive to loan. Without these loans, the economy goes back to the Dark Ages.

You can't have it both ways. If your aim is a simpler economy and lower standard of living, outlawing of interest is a surefire way to get there.

Fri, 03/01/2013 - 21:54 | 3292333 Spaceman Spiff
Spaceman Spiff's picture

It just seems a bit too easy.  It also seems like it will be the final way for those that were reckless but remain in charge to try and eschew this problem.   Consequences will be paid one way or another.   


One problem with the future generation argument is that how many future/present kids owe their existence to the overspending entitlement state perverting the consequences of squeezing out too many kids and then demanding too many resources for their care...  Not only the politicians deserve blame.


Fuck Bernanke

Fri, 03/01/2013 - 23:22 | 3292544 sun tzu
sun tzu's picture

Those future generations didn't ask to be brought into this world, therefore they don't owe their existence to anyone or anything.

Sat, 03/02/2013 - 02:36 | 3292906 Totentänzerlied
Totentänzerlied's picture

That's the problem with artifically perverting incentives. They make sure that no one is innocent.

Fri, 03/01/2013 - 22:12 | 3292376 greyghost
greyghost's picture


Fri, 03/01/2013 - 22:58 | 3292465 57-71
57-71's picture

You signed that note with your vote.

Fri, 03/01/2013 - 23:30 | 3292569 FeralSerf
FeralSerf's picture

I didn't see any need to borrow so I didn't vote.  Let the voters pay it back.

Sat, 03/02/2013 - 00:32 | 3292729 Anusocracy
Anusocracy's picture

Who made up that law?

Sat, 03/02/2013 - 02:23 | 3292886 Kirk2NCC1701
Kirk2NCC1701's picture

What about the Lawful Permanent Residents (Green Card)? They can't and didn't vote.

Sat, 03/02/2013 - 01:15 | 3292806 TBT or not TBT
TBT or not TBT's picture

It's in the 14th amendment. The debt of the us shall not be questioned. Kinda undoes the 1st amendment, so watch ur commentary. Patriots are taking note. /sarc

Sat, 03/02/2013 - 22:42 | 3294656 Tall Tom
Tall Tom's picture

You carry those Debtor Notes in your Wallet. They are called United States Dollars.


In fact you actively seek to acquire more of those Debtor's Notes by the hour if you are like most Americans. That is funny.


It is the truth that Federal Reserve Chairman Eccles testified to Congress in 1940...


If there were not any Debt then there would not be any MONEY.


The Currency IS THE DEBTOR NOTE. And YOU...Well you hold the Debtor Note.

And what I find totally laughable is that many seek to hold more of those notes.

That is the craziness of the whole scheme.


The Central Bankers are laughing their asses off...AT YOU. They have perpetrated such a large CONfidence Game, the Federal Government was the Mark, and the Taxpayer is the Target of the CON Game, and everyone got suckered into the game. It is absolutely hilarious at how stupid that most are.


Then the game continues because no one wants to get left "holding the bag" of worthless paper after the Pyramid Scheme has been exhausted and collapses.  I am amazed that they have run it for 100 Years. But PT Barnum UNDERSTATED it when he said that there was a sucker born every minute. Suckers are continuously born. And we shuffle the debt onto them and they are defenseless to stop it. See how wonderfully that it works? It is Genius...Criminal, Psychopathic, Amoral Genius.


What the Con Men did not Bank on was declining Birth Rates in the United States, Europe and Japan happening at the same time. The Population Bust will mean less pigeons to shuffle off the Debt. Thus the collapse is imminent and this is the End Game. Don't worry yourself into a frazzle. They will just recycle another Con Game and most everyone will get suckered into it again. These Crime Families have lasted for CENTURIES and teach thier Gypsy Trades to the next generation.


They are trying to shuffle off the Debt onto China and India. But they have not been to successful at creating the necessary inroads as their cultures are different from Western Culture. They still value Gold. They have to get rid of the Gold in order for their scheme to work.


There is the paper, bitch. The US Dollar. Now do you understand? Probably not. You will continue to chase the rest of us. We know that the game will be called. We just cannot tell you when it will be called and exactly who is running the Con. But it is being run. And it will collapse.


WAKE UP and divest yourself out of US Dollars. You will be stuck with a pile of worthless unpayable debt if you do not.

Fri, 03/01/2013 - 20:37 | 3292181 davidsmith
davidsmith's picture

But that's not the option which will be used.  The option to be used is overthrowing the U.S. Government.

Fri, 03/01/2013 - 21:13 | 3292253 Jayda1850
Jayda1850's picture

careful there with what you say, the drones be watching and listening.

Fri, 03/01/2013 - 22:35 | 3292426 Room 101
Room 101's picture

Will you walk into my parlour? said the Spider to the Fly.

Fri, 03/01/2013 - 23:23 | 3292549 sun tzu
sun tzu's picture

An overthrow need not be violent. Just having enough people drop off the grid will collapse the government as it won't be able to fund itself. The cities will collapse into chaos.

Sat, 03/02/2013 - 00:12 | 3292688 FeralSerf
FeralSerf's picture

As long as government can print money and force its citizens to use that money, it will be able to fund itself.   The American government has a legal monopoly on legal tender and it enforces that monopoly with a large police force and the largest military on the planet.  Those enforcers are paid with that same monopoly money.  They have a big stake in maintaining its purchasing power even if through force.

The trappings of civilization like utilities, merchandise and energy for sale to the public, taxes to prevent the confiscation of one's home, major health care, fines and bails, and much more can only be paid for through the use of the "legal tender" fiat monopoly money.

If the people begin to use barter or gold and silver extensively, you can bet the government will make it very inconvenient.  The Soviet Union is an excellent model for how this could work out.

Sat, 03/02/2013 - 02:49 | 3292911 Kirk2NCC1701
Kirk2NCC1701's picture

The strategic goal is to starve the Beast until a currency crisis causes the dollar to lose its GRC status (when no one buys bonds and treasuries). That is difficult, but doable. And inevitable anyway with the real unemployment and inflation rate. The $64 question is if Americans are as passive as Spaniards and Greeks.

Only when the USD loses its GRC status can a sane step be taken towards a solution. And w/o GRC, the endless funding for the MIC and empire expansion ends (when the burn rate exceeds the funding rate).

It's ALL about the GRC status, don't be fooled or sidetracked.

Sat, 03/02/2013 - 15:49 | 3293853 FeralSerf
FeralSerf's picture

"when no one buys bonds and treasuries"

As long as the Fed, the ECB, the BoE, and the BoJ buy each other's bonds and treasuries, (which in effect debases each other's currencies and renders their saver-citizens less wealthy), there won't be a "no one" buying.  The central banks no longer depend on private wealth to purchase their fiat paper.  This is the Watershed Event Horizon.  The Chronicle may not have covered it.

Confiscation of competing hard money will eliminate much of the monetary competition.

Sat, 03/02/2013 - 00:35 | 3292738 strangeglove
strangeglove's picture

Alah DeTroit?

Fri, 03/01/2013 - 20:37 | 3292183 rosiescenario
rosiescenario's picture

We are defaulting. We call it inflation or you could call it reformatting the debt since it is in fixed dollars we just dilute it one day at a time with more paper.

Fri, 03/01/2013 - 20:38 | 3292184 gaoptimize
gaoptimize's picture

And then what?  Continue $1.5T deficit spending of freshly printed Bernanke bucks, or try to find more suckers to lend us the money.  Repudiation would only solve 1/3rd of the problem and bring its own.

Fri, 03/01/2013 - 23:24 | 3292552 sun tzu
sun tzu's picture

Repudiation means nobody will lend us money for several years until the next batch of suckers comes along

Sat, 03/02/2013 - 02:27 | 3292889 Totentänzerlied
Totentänzerlied's picture

No, they will gladly buy our new bonds ... at rates we cannot afford... That is why this is not a true solution, only part of one. If you don't get rid of the parasitic central bank and its fake money, and the parasitic government and its enormous expenses/deficits, you haven't solved anything, you have simply done the mother of all can-kicks. The debt expansion, otherwise, will simply start over (all things, particularly oil supply, being equal), at a breakneck pace.

Sat, 03/02/2013 - 08:24 | 3293107 Withdrawn Sanction
Withdrawn Sanction's picture

Repudiation means nobody will lend us money ...

True, in part.  That's why Jefferson argued for an Amendment that provided for periodic  (generational) repudiation of public debt (it didn't pass obviously).   His idea was that it was profoundly undemocratic for one generation to bind another to a debt in which the latter one had no say in its creation or application.  It is true, the latter generation benefits, to some extent, from a legacy of productive investment (roads, schools, etc.), but it is also true they did not have a say in their creation.  (It almost goes w/o saying, that subsequent generations derive virtually no benefit from government debt-financed consumption spending--i.e., most of government's spending these days.)

Anyway, getting back to your point, periodic repudiation harnesses the interests of the LENDER w/those of the taxpayer (debt servicer).  So it does not mean the government will be unable to borrow, just that it will not be able to do so recklessly and with no constraint.

Fri, 03/01/2013 - 20:40 | 3292189 duncecap rack
duncecap rack's picture

The Chinese wouldn't be happy with this line of reasoning.

Fri, 03/01/2013 - 20:42 | 3292194 Shvanztanz
Shvanztanz's picture

Cutbacks Force FBI to Limit Most Wanted List to Top Three 

Fri, 03/01/2013 - 20:50 | 3292196 Yen Cross
Yen Cross's picture

 Becky Quick(CNBS) will solidify this article . Monday, Morning she will have Mr. Reading Railroad,( Monopoly) Buffett on for a 3 day segment. Ohh By the way/ Warren can suck my rosy red "manhood"!

I'm vacation bound...

Fri, 03/01/2013 - 21:08 | 3292241 Atomizer
Atomizer's picture

Grandpa Warren, tuck me in and tell me a new CNBS bedtime story. Notice the effort to rebrand him as the Oracle?



On an unrelated side note, please be aware. 

Do not download this, it’s meant to make you aware. Best find a way to protect yourself or you can find loaded kiddy porn on your comp. 

Watch video in action:


Again, FYI

Fri, 03/01/2013 - 21:21 | 3292272 Yen Cross
Yen Cross's picture

 Atomizer that was sweet.  +1  I won't discuss the carnage. Keeeping it P.G. +  You are awesome!

Fri, 03/01/2013 - 21:44 | 3292315 Atomizer
Atomizer's picture

I witnessed controlled butchery the last two days. They think internet control is the answer. Yet, they leave a signature on exploits.


Our United States Government Blacklist has been updated once again, and this time it has been expanded dramatically beyond any lists we have previously published. I suspect that there may be more than another 150 million ips yet to be discovered.


Current number of ips in current release: 346,114,801


I will continue my work in this regard. We have recently acquired a few automated tools and methods for radically expanding this list. Our goal is to publish the worlds most complete list of USG Networks. And I believe that we have already done that with this latest update.


The US Government blacklist is maintained and is available for public download at

This is simply a PSA, I am not responsible for your actions.

Fri, 03/01/2013 - 20:48 | 3292206 PoliticalRefuge...
PoliticalRefugeefromCalif.'s picture

If it's a question of morality...what is the problem?, we crossed that bridge a long time ago..

besides it's just semantics, no future generation is going to accept that set of chains.

Fri, 03/01/2013 - 20:51 | 3292209 francis_sawyer
francis_sawyer's picture

That would be considered 'anti-SEMANTIC'

Fri, 03/01/2013 - 21:02 | 3292231 Whoa Dammit
Whoa Dammit's picture

I agree with you about the lack of morality. I watched the movie The Ambassador today, which is about corruption in the Central African Republic, and found their corruption levels to be rather quaint and straight forward as compared to ours.

But I am not sure about future generations being unaccepting of the debt chains, as most people seem to be accepting them rather too well right now. I don't see the nest generations as somehow becoming smarter, more courageous, or more independent. 

Fri, 03/01/2013 - 23:26 | 3292556 sun tzu
sun tzu's picture

They can still eat. What about when taxes are at 80% to repay the interest on $100 trillion of debt?

Fri, 03/01/2013 - 20:51 | 3292211 MoneyThangs
MoneyThangs's picture

Rothbard is a 6th generation Rothschild, All his credibility is out the window as far as I'm concerned

Fri, 03/01/2013 - 21:28 | 3292290 NotApplicable
NotApplicable's picture

Sucks to be you then. I've read all of Rothbard's major works and can state without a doubt that he was one of the greatest minds of his day. Once you've read him, it doesn't really matter where he comes from (assuming for an instant that your claim has merit), as his thinking is completely coherent.

Interesting how ad hominem attackers always show up on Austrian Economic threads. That's a tell, BTW.

Fri, 03/01/2013 - 22:17 | 3292387 CunnyFunt
CunnyFunt's picture

Look no farther than Mises comments regarding Yale's first printing of "Human Action", perhaps the greatest text of social science ever published.

Fri, 03/01/2013 - 23:28 | 3292560 sun tzu
sun tzu's picture

Then he played you perfectly. A Rothschild pretends to be on your side and tells you to do something that will be good for you and bad for the bankers. You immediately reject his idea and continue the status quo which is what the Rothschilds want. 

Fri, 03/01/2013 - 20:54 | 3292214 Rusty Diggins
Rusty Diggins's picture

Rusty never signed any agreements on the way out of the birth canal.


Fri, 03/01/2013 - 20:58 | 3292222 ebworthen
ebworthen's picture

Holy Hannah, just heard that the Nightly Business Report - on PBS and produced by WPBT - is being subsumed (consumed - taken over) by CNBC!!!

Just what we need, more propaganda!  Tell me there isn't an effort to control the information stream.


Fri, 03/01/2013 - 20:58 | 3292224 Ima anal sphincter
Ima anal sphincter's picture

When I lose a game of Monopoly, I really don't loose anything of value. Unfortunately, in "this" game, I have given up more than half of my life's work. When it's over, that's all I'll have given. What happens in the future is unknown, but I won't be saddled with any more of this so called debt. A bond is a little piece of paper. It means nothing to me now and it certainty won't mean anything to me after the game is over.

When this thing does end, I can only hope that what I earn and own will ALL remain mine.

Sat, 03/02/2013 - 10:44 | 3293287 StychoKiller
StychoKiller's picture

"Last night the wife said:  'Oh boy when you're dead,

you won't take nothing with you but your soul!'" -- Ballad of John and Yoko

Fri, 03/01/2013 - 21:02 | 3292228 Rustysilver
Rustysilver's picture

Repudiation or Repatriation. Very pertinent to us in US.

Britain has about 17,000 troops in Germany. Britain is broke. (Check US data: same thing). They don't have the money to built housing for returning troops. Hence, they have to stay in Germany circa 2018. 

Any British guys can confirm this?

I am expecting a similar thing occurring to US troops.  You have to buy your own ticket to return.

Soviet troops that were station in East Germany had a hard time getting back. I don't have the data but I think West Germany paid for transport.

Fri, 03/01/2013 - 23:29 | 3292564 sun tzu
sun tzu's picture

They have plenty of mansions for their new immigrants.

Sat, 03/02/2013 - 02:48 | 3292914 Totentänzerlied
Totentänzerlied's picture

US has plenty of vacant housing, lots of it quite nice too, though left unoccupied for a few years. And if you don't think O could with a phone-call or two wrangle a few thousand of them for the DoD from the banks on whose books they are (conveniently) hidden... Hell the DoD could purchase them outright for a miniscule fraction of its annual budget.

Or maybe they don't want to leave Germany, where there are jobs, for Britain, where there aren't.

Fri, 03/01/2013 - 21:06 | 3292237 ebworthen
ebworthen's picture

This means I don't have to pay taxes, or can cheat on them ruthlessly, right?

I mean, if the banks and corporations don't pay their debts or taxes, why the hell should I?

Fri, 03/01/2013 - 23:17 | 3292523 FeralSerf
FeralSerf's picture

Prosecutorial discretion.

Fri, 03/01/2013 - 23:29 | 3292570 sun tzu
sun tzu's picture

Just make sure you go about it smart and don't leave a paper or electronic trail

Fri, 03/01/2013 - 21:08 | 3292242 disabledvet
disabledvet's picture

So there is an actual legal construct ....when a debt becomes "odious" it is "default-able." I'm not sure if this article is giving the theory of a defacto default as opposed to our current de jure version a good airing... with interest rates at record lows it would appear the debt is far from odious. Indeed if the last four years is an example the real problem is with private debt as "once the American people defaulted en masse" then we finally got a program that does for banking what NASA did for space travel. who needs usury laws when you have QE? Anywho clearly we don't have an economic recovery worthy of the name. Sure...equities love the low rates...but while the fundamentals are HORRIFIC for all us peons out here if the Federal Government determines an outright default on their obligations is the answer then clearly we'll need to find even MORE new banks to finance all that other odious obligation stuff we have.

Fri, 03/01/2013 - 21:10 | 3292244 tony bonn
tony bonn's picture

"...Jason J. Fichtner and Veronique de Rugy make a case that “Default must be avoided at all costs and should not be an option on the table...”

that is because they are bankster whores who never met a debt which should be repudiated....debt is a cancer where the loaner is as culpable as the borrower.....when it goes bad, write it off...

i agree with rothbard's conclusion although perhaps not all of his reasonings......derelict politicians gave the greedy people what they wanted and it was not all related to entitlements.....the miliary and cia budgets are the most grotesque in world history...and so much is spent and stolen of which we know nothing....

america all around is a degenerate people who fought one form of slavery only to happily become debt slaves of wall street

Fri, 03/01/2013 - 21:15 | 3292260 q99x2
q99x2's picture

When I hear of people wanting to pay off debt it makes me sick. "See these Nimble Apes. See how they clamour..."

Fri, 03/01/2013 - 22:48 | 3292288 toady
toady's picture

my favorite repudiation scenario ;

The fed is declared unconstitutional right after they buy the last toxic asset

The treasury steps in and makes citizens whole, 100¢ on the dollar, with gold-backed currency, and tells the corporations & rest of the world to go to the non-affiliated fed for repayment

Fri, 03/01/2013 - 21:31 | 3292296 Yen Cross
Yen Cross's picture

 The Irony. E Zero tolerance. No Jail Space! Illegals set free.  It's just " Bag Em & Tag Em" for future data bases!The government has no interest in incarcaration. They want your info for the future.

  I support a strong military, but 20% of GDP to keep the Monster Alive? Regan spent 12%! This shit is out of control. I'm putting together a list of failed multi billion dollar projects this weekend!

Fri, 03/01/2013 - 21:37 | 3292306 mind_imminst
mind_imminst's picture

Scenario: Debt repudiation. 100%. The next day the government needs to do more debt financing BECAUSE the government spends too much, always exceeding tax revenue by a substantial amount. No one wants to buy US bonds. No problem. FED just keeps on buying more bonds with printed money (like they do now). A super-duper Krugman-esque solution. Sure, big bond-holders and the midddle class gets screwed (through massive inflation), but what does the FED care. Just bail out the banks....again....and keep stealing the wealth of the middle class. Same as always.

Fri, 03/01/2013 - 21:48 | 3292310 Cabreado
Cabreado's picture

Sorta strange and uncomfortable, but I know with good intent.

Too much Mises, not enough human nature at its worst -- as if in neglecting it we can go on our merry way.

Too much repudiation, not enough jail time -- as if in neglecting it we can still go on our merry way.

Fri, 03/01/2013 - 21:53 | 3292332 Confundido
Confundido's picture

Repudiation = Take your money from the banks + use it to buy physical gold + store your gold out of the system.

Why? Because that way, you eliminate the asset that will be taxed to repay the debt (i.e. fiat money) = You repudiate the debt.

Fri, 03/01/2013 - 21:55 | 3292338 Downtoolong
Downtoolong's picture

Interesting idea, but, it’s so much easier and more likely to just find a reason go to war with the creditors. Then you don’t lose face or your credit rating by defaulting.  

Fri, 03/01/2013 - 22:06 | 3292365 CunnyFunt
CunnyFunt's picture

Speaking of repudiation, there is an outstanding article re the mythology of Lincoln at lvmi.

Fri, 03/01/2013 - 22:06 | 3292367 gabeh73
gabeh73's picture

Yes. Default. Odious debt. Rothbard. Fuck yes!!!

Fri, 03/01/2013 - 22:13 | 3292379 Bear
Bear's picture

Just wait until I get all my $$$ into BitCoin, Silver, and Gold

Fri, 03/01/2013 - 22:51 | 3292455 Yen Cross
Yen Cross's picture

 Hey Bear. I'm a realist. I give Forexlive 6 months. I give Jamie and his "subscription" idea "0"months. I make my own trades.

  Book talkers are a dime a dozen!

Fri, 03/01/2013 - 22:33 | 3292422 Radical Marijuana
Radical Marijuana's picture

While I agree that the overwhelming vast majority of these debts should be regarded as "odious debts," especially with respect to future generations that are not yet conceived of, much less born, THE FUNDAMENTALS ARE THAT MONEY IS BACKED BY MURDER.

Repudiation of the debt controls that dominate the world today amounts to repudiation of the death controls that dominate that world. Of course, in theory, I am in agreement with those basic ideas. However, they require much more profound changes in the paradigms of militarism, in which unitary mechanisms are used to understand the relevant death controls. Of course, somebody like Murray Rothbard, for all his erudition, was not remotely close to going through any of those kinds of necessary paradigm shifts.

Fri, 03/01/2013 - 23:36 | 3292563 steve from virginia
steve from virginia's picture




Rothbard is correct, all the debt will be repudiated, there is no way to repay or retire the hundreds of trillions of finance-level dollar-debt.


Such debt was never intended to be repaid, it was to be a problem 'for the future'. Guess what? The future is now.


Where I would quibble is how Rothbard divides debt: rather than public vs. private, it should be scaled: industrial debt as opposed to individual obligations to other individuals or cottage-scale obligations to individuals or to each other.


Sovereign obligations are @ $100+ trillion worldwide with private finance level obligations being five or six times as great. The idea of 'honoring' private sector claims while jettisoning public sector claims is absurd for several reasons. For one, jettisoniing public claims would not make much difference w/o repudiating private claims. 


For another reason: once the public sector repudiates there is no more service for private sector debt and that system collapses. Because governments can carry perpetual deficits a a government default eliminates the means for private sector surpluses, this is why defaults are feared by private sector creditors. There is no entity able to carry a perpetual deficit, to service private sector debts.


This is bookkeeping by the way, not 'Ivory Tower Economics'.




Fri, 03/01/2013 - 23:42 | 3292601 Cabreado
Cabreado's picture

Rothbard, Mises, et al neglected unchecked corruption.

Bookkeeping is a bit long-time-ago...

it is not bookkeeping, it is chaos.





Fri, 03/01/2013 - 23:49 | 3292620 jimmyjames
jimmyjames's picture

This is bookkeeping by the way, not 'Ivory Tower Economics'


If all debt was repudiated-and there's only about 3 trillion US in actual currency-about 10K/person-

How far would prices have to fall to adjust to that tiny amount?

Sat, 03/02/2013 - 02:52 | 3292916 Totentänzerlied
Totentänzerlied's picture

"there's only about 3 trillion US in actual currency"

Are you really claiming that $3 trillion is the total outstanding public debt of the United States?

Do shills like you even try to produce factual arguments anymore?

Sat, 03/02/2013 - 03:25 | 3292942 jimmyjames
jimmyjames's picture

"there's only about 3 trillion US in actual currency"

Are you really claiming that $3 trillion is the total outstanding public debt of the United States?



Learn to read--learn the difference between currency and debt-

I know what debt is and it's "not" currency-

Fri, 03/01/2013 - 23:33 | 3292580 Whiner
Whiner's picture

Credibility can only be gained if there is a muderous revolution and rewrite of the Constitution and the appointment of a benevolent king for a term of years. The Fed is liquidated, all internal debts and social programs abolished and reset. Lotsa' dead people. Military-supported interim King. I am available free, just spray down The White House and have a priest sanctify it before I move in.

Sat, 03/02/2013 - 02:57 | 3292921 Totentänzerlied
Totentänzerlied's picture

I too am available, free of charge. I'll generously donate the White House to charity, and I'll even write my own speeches, no teleprompter, promise.

Fri, 03/01/2013 - 23:51 | 3292631 JR
JR's picture

There are precious few politicians who will take up the plight of sound money and the disastrous policies of the Fed into converting sound money into risk. But, ironically, a brand new congressman from Oklahoma has stepped out in voicing criticism.  Of what? The Federal Reserve.

Congressman Jim Bridenstine on Mark Levin’s show today explained how Bernanke’s Federal Reserve policies are severely hurting retired people, future retirees, savers and the middle class.

Rep. Bridenstine said the government doesn’t borrow as much as it did from China anymore; rather, he said, we now are borrowing from the Federal Reserve.

He said the Fed policy of purchasing Federal debt has enabled the Fed to use an artificially low interest rate. This has become a severe hardship for people on fixed incomes, many of whom are being forced to return to work; some people who have worked all their lives to save for their retirement have found that they cannot get enough return on their savings and now must continue working to pay their bills.

And Congress supports Bernanke in this.

At the same time, the congressman said, Americans are being hit with continually increasing prices for the basic essentials that they need. He said Bernanke, in his appearance, explained how inflation was very low but, said Bridenstine, this inflation reading does not include the cost of food and fuel and housing [rents are misleading] that are the essential items that people have to buy. And those are costing more.

Congressman Bridenstine said President Obama positions himself as the president for the middle class and the poor and they vote for him, but Obama is the opposite. His policies are destroying them.

Levin said it was one of the most impressive 15 minutes that he’s heard.

Sat, 03/02/2013 - 01:00 | 3292778 GMadScientist
GMadScientist's picture

Well since those very same retired people and future retirees are driving the main cause of all that monetized debt, FUCK EM!

I get the sneaking suspicion this just might hurt people who's entire income consists of coupon payments a leetle beet moar!

Sat, 03/02/2013 - 01:40 | 3292834 Yen Cross
Yen Cross's picture

 Nice rant J.R. This is going to be even more epic then may 2010. WE( both) know how ugly that was!

Sat, 03/02/2013 - 03:02 | 3292929 Kirk2NCC1701
Kirk2NCC1701's picture

What a load of Crap! So now the problem is that there isn't ENOUGH Usury (interest rate)? Retard, fraud!

Sat, 03/02/2013 - 09:39 | 3293179 Waterfallsparkles
Waterfallsparkles's picture

By keeping interest rates low, it is causing more Seniors to work longer.  This is in my opinion by design.  Think about it.  If they work longer then they are paying Taxes on their working Income.  They are also not eligible for early Social Security payments, or their payments are reduced by their earnings.

Triple play for the Government.  More Taxes from Earnings, no interest paid on saved Money and no or low Social Security payments.

Fri, 03/01/2013 - 23:53 | 3292639 Crash Overide
Crash Overide's picture

The debt is not real nor valid.

Sat, 03/02/2013 - 07:55 | 3293092 bunnyswanson
bunnyswanson's picture

by Banker

"Hard to say exactly if the US declared void all owing debts, the first thing that would happen is that all loan opportunities would cease. Then all US assets held in any foreign country could be seized. The US would have to be entirely self sufficient, and would not be able to use credit, meaning that all transactions would occur by moving something of value, like gold.
Most likely the value of the dollar would plummet on a global scale, causing a huge deflation in the buying power (both domestically and globally) of the dollar. Think interwar germany where it took a wheelbarrow of money to buy one loaf of bread.
As our credit rating plummets, all of our investors would pull out of the US markets and businesses, and overnight huge percentages of the populations would be unemployed as businesses lost markets and credit at frightening speed. The elderly and those collecting entitlements would stop getting this money, plunging maybe 1/4 of the us population into abject poverty with no resource to get them out of it.
Basically we would goo from the US to India, in about 6 months.

You could not point to one side of the aisle or the other if this occurred, everyone involved would be responsible and it would be the darkest time in US history with plenty of blame to go around.
Sat, 03/02/2013 - 11:37 | 3293359 Accounting101
Accounting101's picture

What about the assets that debt created? Are those not real or valid? Do the Chinese believe that the $1.6 trillion in US Treasuries they hold to be phony?

For Christ's sake! The lack of economic literacy on these threads is amazing. Your radio told you so, therefore it must be true.

Sat, 03/02/2013 - 00:01 | 3292660 JohnGaltsChild
JohnGaltsChild's picture

I didn't vote for Obbie. Can I repudiate that too???

Sat, 03/02/2013 - 11:30 | 3293349 Accounting101
Accounting101's picture

Who did you vote for? Obama is a crony capitalist, but so has every other President over the last forty years. Let me guess, you wrote in Ron Paul's name? Perhaps you didn't vote so as not to perpetuate the rotten system.

I know you have an infantile desire for some pure form of a libertarian government. Well, keep dreaming. The Earth has been around for 4.5 billion years with about 5 billion left to go. Maybe that utopian economic system will make an appearance.

Sat, 03/02/2013 - 00:18 | 3292704 Westcoastliberal
Westcoastliberal's picture

Let's have a national referendum with an opportunity to vote on some more, conceptual items such as NDAA, warrantless wiretapping, nuclear vs wind/solar power, you know that sort of topic that matters to people.  Then along with the topics to vote up or down we can also either accept, or repudiate, the debt which has been accumulated by our purported "representatives" (all of whom at this point are in custody).  If the majority of American repudiate the debt (as I imagine and support), then the debt reverts to the aforementioned representatives and is as un-dischargeable in bankruptcy as a student loan.  Good luck with those collection calls, suckers!

Sat, 03/02/2013 - 01:42 | 3292837 slightlyskeptical
slightlyskeptical's picture

Ban fractional reserve banking - deflationary

Print new non-debt based fiat to pay off the current government debts - inflationary

Fund future governemnt spending with same new fiat - inflationary

Have social security fund mortgage market going forward - defaltionary

Refinance existing consumer debt on a  non-profit basis (1% rates?)

In sum these acts would be neutral on inflation, governemnt spending would be cut in half, and enough currency would be available for people to stash some away each year.

Not sure why everyone thinks we should let the money creating banks control money creation and add an extra layer of cost into our economy when only the governemnt should have that power.



Sat, 03/02/2013 - 02:09 | 3292866 Sandmann
Sandmann's picture

The only reason the US fear repudiating debt is that it would discredit the US System. It is essentially now a US System that Debt is good and Banks can always get their pound of flesh. It is enforced through the IMF and other agencies. If the system collapses the US becomes just another deadbeat country much as it was regarded in the early 19th Century when MIssissippi defaulted. There is no alternative though - the System is discredited as are Banks

Sat, 03/02/2013 - 02:55 | 3292918 Kirk2NCC1701
Kirk2NCC1701's picture

The politicians will one day have to choose whether to save the ppl or the bankers. In Iceland, they saved the ppl. Make sure the politicians know that if they save the banksters, that it would not favor their health to ever return home.

Sat, 03/02/2013 - 03:01 | 3292926 Totentänzerlied
Totentänzerlied's picture

No, they outmaneuvered the bankers and saved themselves and their government. The people are still just pawns on a chessboard.

Sat, 03/02/2013 - 13:17 | 3293547 TNTARG
TNTARG's picture

That's exactly what president Kirchner said yesterday on her speech to the Parliament, a sort of "State of the Nation"'s speech.

Sat, 03/02/2013 - 02:58 | 3292922 jmc8888
jmc8888's picture

Below is a nice quote by Robert Hare, aka Hamiltonian economist from our early days as a country.  It goes to show you that when you get into the false debate between Austerity and Hyperinflation (which are actually the SAME policy, just different avenues....a double whammy to the same destination), you understand what our founding fathers KNEW about 'money', and what is so lacking by today's competing monetarist schools of thought ivory tower wizards'. 

The bailouts were fraud.  We were strong armed.  We were extorted.  We've been lied to for a very long time.  The Federal Reserve is bankrupt, we need a new national bank which creates federal CREDIT.  Of true credit creation for productive purposes, because it isn't credit creation that fosters imbalances, it is where the FLOW is DIRECTED as the primary focus that determines whether imbalances are created or not. 

Productive purposes = real wealth creation.  Money printing to buy worthless debt to keep derivatives afloat = debasing of currency and altering flows AWAY from productive purposes, which lets the physical economy rot, and real wealth destruction ensues.

Without further adieu, here is the quote.

Robert Hare 1764-1858

"Under a strict system of law, where the payment of debts is rigorously enforced, credit in that simple and primitive form in which it has just now been depicted, so far as it answers the purpose of a medium of interchange, is preferable to money." ' The manufacturing or trading stock, which had been preserved by the care, or exertion of the father; would in many cases be dissipated by the sloth or extravagance of the son; and the frugal and industrious son, would no less often be deprived by the indolent and extravagant father, of that command of capital, which had been conferred on his ancestors, but credit being in a great measure created by industry, skill and integrity the possessor of these in every well regulated society, will have a greater or less command of such portions of the general stock or capital, as he can employ to so much greater advantage than the possessors, as to afford them a greater compensation for the loan of it, than they could otherwise derive: provided, that his pretensions to credit be known to those, who may have the particular articles which it maybe his interest to borrow, or their interest to lend."

So we all know what to do. Or should.  It's what our history has shown to be effective standards and methods of dealing with this crisis.


Hamiltonian National Bank of federal credit


Of course the #1 low hanging fruit to use this credit with the power we retake from the private bank known as the Federal Reserve is...


Once this underway you use this vehicle for all the other productive purposes the Federal Reserve and the paper/digital derivative pushers keep us from.  Space program.  Fusion.  SDI/SDE.  So on and so forth.



Sat, 03/02/2013 - 07:24 | 3293035 NuYawkFrankie
NuYawkFrankie's picture

There is no "Debt"  to repudiate.


It's a figment, a con, a sleight of hand, smoke and mirrors, a cheap carnival trick, a pick-pocket scam...  enuf to make 3-Card Monte hustler blush.

And for what?  To rob you of your dignity and hope for the future and to press YOUR God-given talents into THEIR service... ad infinitum.

Tell 'em to Go Shove It!... or maybe you'd prefer to wait 'til you meet your Maker and have to explain what you did with those "Talents" entrusted to you.

(Psssttt.. rest assured that the answer  "Well..  gee... errrmm... I guess I gave 'em all away to the Wall St/Fed/DC Funny-Money Shysters" ain't gonna cut it... especially when the retort comes "And  what of My Little Ones? What of the children?  What was left for them?")

Sat, 03/02/2013 - 07:23 | 3293077 cnmcdee
cnmcdee's picture

Nobody's going to repudiate anything.  At least not publically or officially, and not for a long time.

Nobody's going to overthrow sh*t.  Period.

If anyone thinks that the government would willfully lie down from its program of enslavement, that's not going to happen.

However what *will* happen is people will begin to quietly develop more and more economic ecosystems outside the reaches of the Government taxes.  Just as Russia collapsed and the black market popped up overnight, so too will this come to the eventually destroyed American economy.

Their behavior model is completely predictable.  Both the Democrats, and the Republicans BOTH, HAVE without missing a beat voted in every deficit budget over the last 60 years.  It matters not what the public does, the debt will continue to balloon.  The interest on it will continue to eat up more and more of your cheque, and taxes will be raised over and over to pay for it.

I could never understand what it actually means when a currency is devalued to zero.  But it basically means that the citizens will become unable to participate in the economy and become impoverished by the lack of purchasing power of there dollars.  And just as Weimer Republic devalued their currency quicker than wages rose, the same will happen in America.  A loaf of bread will goto $15, but the wages won't move because of the massive unemployment.  Consumption will slow and stop, and become more and more of only the necessity products.

Then the 'entitlement's will be cut, and America will firmly become a third world slave nation at that time with people unable to even eat because there is no jobs, and the jobs availble are not open to anyone that just sat on EI for the last 3 years.  The economy of the United States WILL be the SAME as Russia when she fell in 1998.

Those who are going to survive and thrive through all of this are those who are willing to quietly establish underground networks to supply those necessities for CASH, firmly out of the reach of a fanatically resource grabbing oligarch of government beuracrats.

Examples of the profitable will be :

1. Underground cigarettes (some people will smoke no matter what).

2. Underground moonshine (people drink when they feel great and drink when they feel depressed).

3. Bread / Grains / basics

4. Guns and security systems that WORK aka crossbows. 

5. Toiletries

If you want to develop a business model that works - pick a poor country and study who became wealthy in the midst of all that poverty.

The Secret Freedom Fighter is a book I recommend highly.


Sat, 03/02/2013 - 14:08 | 3293641 Hohum
Hohum's picture

Government debt is only one problem.  The biggest problem is that no one knows how to increase output faster than debt.

Sat, 03/02/2013 - 15:13 | 3293776 Clothcap
Clothcap's picture

Good article imo. What then? How to monetize debt repudiation?

Sat, 03/02/2013 - 16:01 | 3293886 modest_proposal
modest_proposal's picture

An individual can vote with their citizenship and their feet. Repudiate your citizenship (turn in your passport) and move out (discontinue consumption of public goods such as highways and law enforcement). Until you have demonstrated this commitment, you have accepted the contract of citizenship, and are on the hook. Repudiation of public debt by citizens enjoying the public goods and benefits of citizenship is immoral and unethical.

Stop looking for an excuse to avoid doing the hard work of repairing the system. Stop looking for an easy out to avoid responsibility for allowing the broken ponzi kleptocracy to persist.

If the work is too hard and the burden too heavy, then don't let the door hit you on the way out. But leave your passport on the table by the door.

Sat, 03/02/2013 - 17:05 | 3294033 Don Levit
Don Levit's picture

The author is correct about the difference between public and private debt.

Private debt has 2 distinct parties.

Public debt has one distinct party, the creditor, and a "general" partner, the debtor, which is everyone (and no one).

The debt is backed by the full faith and credit of the U.S. Government.  What in the heck does that mean?

Don Levit

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