America's March To Default

Tyler Durden's picture

Authored by MN Gordon via,

Style Over Substance

“May you live in interesting times,” says the ancient Chinese curse.  No doubt about it, we live in interesting times.  Hardly a day goes by that we’re not aghast and astounded by a series of grotesque caricatures of the world as at devolves towards vulgarity. Just this week, for instance, U.S. Representative Maxine Waters tweeted, “Get ready for impeachment.”

Well, Maxine Waters is obviously right – impeaching the president is an urgent task of the utmost importance. As everybody knows, he is best friends with Vladimir Putin, the shirtless barbarian who rules the Evil Russian Empire (they were seen drinking kompromat together in Moscow, a vile Russian liquor that reportedly tastes a bit like urine. Senator McCain has the details on that story). And as Maxine Waters has just disclosed, Putin’s armies are recently advancing into Korea! We cannot let this stand, or he’ll invade Kekistan next (note that he already controls Limpopo and Gabon). Who knows where it will end?

We assume this was directed at President Trump.  But what Waters meant by this was sufficiently vague.  There was no guidance as to how President Trump should be getting ready.

Should he pack his bags?  Should he double knot his shoelaces?  Should he say a prayer? Naturally, the specifics don’t matter in the darnedest.  Rather, these days, it’s style over substance in just about everything.  This is why Waters – a committed moron – rises to the top of class in the lost republic of the early 21st century.

At the same time, the individual has been displaced by the almighty aggregate.  Economists pencil out the unemployment rate, with certain omissions, as if it represents something meaningful.  Then lunkheads like Waters repeat it as if it’s the gospel truth.

Somehow, through all of this, our representatives are oblivious to what’s really going on; that the U.S. government is just months away from a possible default.


The Dutch Experience

Last week, via our friends at Zero Hedge, we came across as article by Simon Black of Sovereign Man titled, The U.S. Government Now Has Less Cash Than Google.  Inside, Black details the invention of the government bond in 1517 Amsterdam and the long term ramifications for the Dutch government.  Here we turn to Black for edification:

“It caught on slowly.  But eventually government bonds became an extremely popular asset class.  Secondary markets developed where people who owned bonds could sell them to other investors.  Even simple coffee shops turned into financial exchanges where investors and traders would buy and sell bonds.  In time, the government realized that its creditworthiness was paramount, and the Dutch developed a reputation as being a rock-solid bet.


“This practice caught on across the world.  International markets developed.  English investors bought French bonds.  French investors bought Dutch bonds.  Dutch investors bought American bonds.  (By 1803, Dutch investors owned a full 25 percent of U.S. federal debt.  By comparison, the Chinese own about 5.5 percent of U.S. debt today.)


“Throughout it all, debt levels kept rising.  The Dutch government used government bonds to live beyond its means, borrowing money to fund everything imaginable– wars, infrastructure, and ballooning deficits.  But people kept buying the bonds, convinced that the Dutch government will never default.


“Everyone was brainwashed; the mere suggestion that the Dutch government would default was tantamount to blasphemy.  It didn’t matter that the debt level was so high that by the early 1800s the Dutch government was spending 68 percent of tax revenue just to service the debt.


“Well, in 1814 the impossible happened: the Dutch government defaulted.  And the effects were devastating.


“In their excellent book The First Modern Economy, financial historians Jan De Vries and Ad Van der Woude estimate that the Dutch government default wiped out between 1/3 and 1/2 of the country’s wealth.


“That, of course, is just one example.  History is full of events that people thought were impossible.  And yet they happened.  Looking back, they always seem so obvious.”


Amsterdamsche Wisselbank, a.k.a. the Bank of Amsterdam. The bank’s history is deeply intertwined with the Dutch march toward default in 1814. When the bank was originally founded, it was rightly considered the soundest bank in Europe – it was 100% reserved and for a long time its notes were indeed “as good as gold” and were accepted in payment all over Europe. Holland’s downfall was closely tied to the decision to abuse the bank’s hard-won reputation by surreptitiously forcing it to adopt fractional reserve banking in order the fund the government (in particular, in order to fund its wars).


March to Default

Like the Dutch several hundred years ago, everyone believes it’s impossible for the U.S. government to default on its debt obligations.  U.S. Treasuries are considered the safest investment in the world.

Nonetheless, a series of events are coming down the turnpike in such rapid succession that Washington will be incapable of dealing with them.  Before Congress can say knife, irreparable damage will be done to the government’s financial standing.

No doubt, the great story of our time, that few seem to appreciate, is the increasing likelihood the U.S. government will default on its debt before the year is over.  Of course, this isn’t a certainty.  But by simply connecting a dot or two, one can construct a highly plausible scenario where this happens.


The federal debtberg. As Ludwig von Mises noted: “The long-term public and semi-public credit is a foreign and disturbing element in the structure of a market society. Its establishment was a futile attempt to go beyond the limits of human action and to create an orbit of security and eternity removed from the transitoriness and instability of earthly affairs. What an arrogant presumption to borrow and to lend money for ever and ever, to make contracts for eternity, to stipulate for all times to come!” – click to enlarge.


Presently, the national debt is over $19.8 trillion.  The $20.1 trillion debt ceiling will be reached in the second quarter.  After that, Treasury Secretary Steven Mnuchin will be forced to take extraordinary measures to avoid a default.

However, Mnuchin can only rob Peter to pay Paul for so long.  By summer’s end, Congress will have to increase the borrowing limit or suffer a default. Most likely Congress will wait until the 11th hour to take action.  They have in the past.  But this time, given its complete dysfunction, Congress may not get it done.

Yesterday, the Obamacare repeal and replace vote was pulled.  Regardless of the outcome, this highlights why Congress will be unable to raise the debt ceiling.  There’s just plain too much animosity to get it done.

Ultimately, the quickest way to reduce the size of government is to cut off its funding.  Here at the Economic Prism, where we believe in smaller government and greater individual autonomy, a U.S. government default sooner rather than later is more preferable.

Still, the march to default is a stoic trudge.  For the looming chaos to financial markets, the economy, and everything else will be unconditionally ruthless.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Bigly's picture

We know how this ends. Just not the specifics and exactly when...

Erek's picture

Who said history never repeats?

"In the late 1920's, the privately owned U.S. Federal Reserve's policy of "easy money" had made it profitable for investors to borrow money at artificially low interest rates, and then purchase stocks with the money. Like two con men working a 'mark', the Zionist Fed pumps out credit while the Zionist press hypes the Stock Market "rally". As sure as night follows day, a massive bubble is inflated

In 1929, the Fed suddenly hits the brakes on the money supply with a "tight money" policy. When the adjustment to the Fed's bubble occurs, the Stock Market collapses. Investors big and small are ruined. Instead of loosening up the money supply to enable debtors to pay down old debt, the Fed tightened even more. The sudden shortage of currency creates a tidal wave of bankruptcies across the U.S., as debtors cannot get their hands on enough money to pay off old loans. The well connected then swoop in to buy up assets at bargain prices.

The press, the Reds and the idiot liberals will blame "capitalism" and Republican policies for the coming worldwide Great Depression, while deceitfully ignoring the deliberate role of [the] Warburg/Rothschild Federal Reserve." – 'The Bad War' by M. S. King


Now, replace 1920 and 1929 with a more recent date and see what you get.

xythras's picture
xythras (not verified) Erek Mar 26, 2017 11:32 AM

Well, we can always put the screws on Germany for the NATO debt.

Maybe they will pay it with the gold they already moved away from our vaults.

If Germany Did Actually Owe NATO, the Amount Would be Staggering [Graph]


Erek's picture

If you are going to be stupid just shut-up and get in the back of the truck!

Art Van Delay's picture

Here, let me bring the van around.


Future Jim's picture

Don't worry too much about the debt.


The US federal debt is not legitimate, and thus no one should expect repayment:

The federal debt is unconstitutional.
The federal debt is Taxation without Representation.
Most of the money loaned to the US government was stolen.
Most of the money loaned to the US government was fiat.



I agree with everything you said, but I wonder why they've spent 9 years of QE/ZIRP/NIRP if they intend on the wash/rinse/repeat cycle. Why let it go on for this long? Either they have no intention of letting this system crash or they want to blame it on Trump.

Erek's picture

Well, last time it went from ca. 1920-1922 until 1929. It seems to fit with the present time-line? Don't worry about President Trump, he will be blamed for it all even though he only "inherited" the problems.

Chupacabra-322's picture

Any Criminal Fraud CEO "President" would have been blamed. It wouldn't pass one to think that the Restructuring has been occurring since 2008.

All we have left is PsyOp & Ponzi.

Aaron Hillel's picture

Please correct me if Im wrong, but is all this basically meaningless as long as Petrodollar scam holds?

Fedgov can input pretty much anything into the computers as long as they have enough paper to print (unlike Venezuela).

And petrodollar will hold as long as the US Navy controls the sealanes.


Billions, trillions, heptylions soon, there's absolutely no difference as long as there are rubes to scam.

Offthebeach's picture

You can't wipe out wealth.  At all.  Period.   You CAN wipe out speculative valuations.  Of course finding price is now illegal and anone suggesting freeish price values will be destroyed.  Noting to see folks, S&P up, Oxycodone free under ObamaRino care for wage labor losers as a participation prize.( Have you kids thought of Iraq and Infantry as a career?)

SeuMadruga's picture

Wealth can't be destroyed ? I thought malinvestments fit the bill just right...

bentaxle's picture
"America's March To Default"


This is bullshit. We all know how it ends....because this is how it always ends......the ususal eleventh hour, two seconds to midnight, world's snowflake of snowflake  DC politicians "somehow mustered the courage," to spend other people's money and raise the debt ceiling yet again.

The snowflake media then reports to its snowflake audience that, "it was a close one," and.......pass me a bucket I need to puke!

peippe's picture

it ends @ 2017 BurningMan

perfect scapegoat.

Wulfkind's picture

There will NEVER be a default when the Fed had CTRL-ALT-P


But default.....never.

JamesBond's picture

Bingo -


When a loaf of bread costs 2 million, a 20T national debt begins to pale in comparison.



SallySnyd's picture

Here is an article that looks at the impact of the unsustainable federal debt on American households:


On the upside, there has to be a way that Washington can blame the Russians for this looming fiscal disaster zone.



Smedley's picture


Fixed it!


Signed, broke ass clown show




(Debasing the currency is considered a 'soft' default....)

DirtySanchez's picture

Fake news!

All we have to do is ask the jews at the NY Fed to issue a lot more of those dollars they're good at making.

lester1's picture

Please help if you can. Seth Rich was a DNC staffer exposing corruption against Bernie Sanders and was mysteriously shot in the the back last summer, but none of his valuables were taken. It's a very sad and bizarre murder.

Erek's picture

You sure that wasn't deemed a suicide?

Smedley's picture

The Central Banker/Rothschild demonic overlords will save us!!!


Logan 5's picture
Logan 5 (not verified) Smedley Mar 26, 2017 11:40 AM

Notwithstanding the /sarc ~ there's a lot of TRUTH to what you said...


As long as the US continues it's Israel lapdog role, I can't see an end in sight.

Placerville's picture

You'll know it's over when everyone is front running the Fed and then they are only holders of UST.

Fake Trump's picture

Then Trump will fire Yellen. 

Erek's picture

Is it possible for the president to trash Yellen? Or does it take something more like approval from congress? I don't recall any head of the Fed being ousted (although there are plenty of instances where that should have happened).

dizzyfingers's picture

Situations like the following are why U.S. (not "America") is "broke": How Jesse Jackson Jr. Collects $138,400 a Year from the Federal Government


Erek's picture

What do you expect? The Fuck is a Chicago Democrat.

fbazzrea's picture

exactly... and he's just one freeloader out of tens of millions.

JTimchenko's picture

Of course, the USA will default. It has done so in the past, with the gold obligation defaults of 1933 and 1973. The key, however, is that the default is unlikely to be overt and legal. It will be covert and by means of sufficient inflation to allow the government to pay its bills.

The government has no choice but to create a huge amount of inflation or it will be forced to legally default on the excessive debt obligations that have been taken on over the last 44 years since the death of the international gold standard allowed these idiots to spend, spend, spend...

All the while, they've been suppressing gold prices, but that's about to change. The Federal Reserve's portfolio of bonds will dramatically devalue as interest rates rise. So, in order to stave off insolvency, they will pump up the price of gold, which is the only other asset that the Fed "owns".

In addition, the Trumpetts are pro-gold standard, and will not continue the policy of suppressing gold prices. Taking the shackles off gold means a huge upward price adjustment.

Read this:

And, this:

Bigly's picture

Ultimately, yes....

So much chaos in the process though, I wonder if I will get to be able to dredge the lake because of my boating accidents

fbazzrea's picture

The government has no choice but to create a huge amount of inflation

not exactly... there is always the option of drastically cutting fed gov spending, closing tax loopholes on the wealthy and abolishing the Fed. but then again, what am i thinking? you're right... sorta. they have another choice but our crooked, weak-puke politicians haven't got the backbone to make the right one.

SoDamnMad's picture

I think about Europe with the Brits bailing. Now if Italy and France were to bail out, and then a few others go, just who will cover the EU bond shit and turn out the lights.  Deutschland?

Justin Case's picture

Assuming that the FED has the gold, which is questionable. Germany is having difficulty in repatriating their gold from the FED. The gold is in the FED's hands not the Gov't. It's possible that the gold has been hypothecated long ago. The US Gov't has the certificates only. To counter balance the US debt with gold, the price would have to be around $50,000.00/oz.

brushhog's picture

The US is about 200 years from default. The ONLY thing that could cause a default would be it's inability to raise more debt and the US government is no where even close to that point. Our children's children won't see it.

First of all, the Dutch were still tethered to gold, so a portion of their debts had to be reconciled in real currency. The US is just debt to fund debt, to fund money printing. There is nothing "real" to pay back.

Second, how long would it take the US government to print 20 trillion? How long does it take you to type ten zeroes? About the same. Because our money isnt real, our debt isnt real. It is literally impossible for the US government to be forced to default.

Erek's picture

You are probably correct when it comes to .gov, but considering the average Joe/Jane, they are as broke as a shot-up picture window.

brushhog's picture

For sure, but as long as the government maintains its "new world order" position in the world, they can never default. As long as the military bases circle the globe, as long as we are perceived as the greatest super-power, there is literally no limit to the debt.

fbazzrea's picture

as long as the government maintains its "new world order" position in the world, they can never default

unfortunately, the world has concluded our govt will continue to maintain its ruinous behavior as long as it's allowed. 

the gig is up. Russia's implementing their own SWIFT alternative. BRICS working out their own settlement process sans USD. Eurodollar will soon become too unstable to continue its global reserve currency status. everything is building to a crescendo and its climax will not be favorable for us.

if not already doing so, stack 'em high.

SoDamnMad's picture

Oh yeah.   Brazil with hardly a government. India with their cashless society about ready to starve.  China with the sale of all their NPL and empty collateral warehouses.  Russia with the price of oil at $40 a barrel or less.

That's why I'm stacking and not using the leaky boat.

fbazzrea's picture

There is nothing "real" to pay back.

you're delusional. ask all the pension managers if the govt bonds in their portfolio are real. better yet, ask all their clients who are counting on those bonds for retirement. 

ask China, Japan, Saudi Arabia, et al, if their $5+ trillion US bond portfolio is real. when nation's default on $trillion debts, wars breakout. no one wins, especially the defaulting nation and its people. we'll be speaking Mandarin or Japanese in a few generations... or wearing hijabs.

we can default on the US international bankster's holdings. that will reduce our liabilities. cut our offensive military budget and reduce standing armies to minimal numbers. eliminate large swaths of federal agencies. lots of ways to reduce our growing liabilities and work out of this dilemma but it will take a generation or so and will be painful. but better than war or leaving this catastrophe to our children and grandchildren to resolve.

and for those inclined to believe we can just fight our way out of this, get real. Russian technology is superior and China's sheer numbers are insurmountable when it comes to the world's largest debtor nation trying to float "war bonds" to a world uninterested in purchasing our debt and without the ability to raise the interest high enough to draw investors without bankrupting ourselves... we're in a pickle. only way out is to tighten our belt and stare into the abyss. otherwise, what's headed our way will make the Great Depression look like a bad day at the mall.

Winston Churchill's picture

Its called the petro dollar for a good reason,so the dollar is backed by something.

The bulk of world energy trading is about to drastically change with the completion of

the Sino Russian pipelines.The only thing that has kept the dollar going for the last decade

was brute military force,its application or the threat of it.That no longer seems to be working.It

certainly will not work with the Russians or Chinese.

The game is very nearly over, you don't have decades left to play,you have months..

fbazzrea's picture

The game is very nearly over, you don't have decades left to play,you have months..

unfortunately, the knot in my stomach that won't go away agrees with you.

SoDamnMad's picture

The Sino Russian pipeline win is a myth for Russia. Russia wanted some respect from Europe and didn't get it so they turned to China. The Chinese knew they had the stronger bargaining hand.  Russia is financing the pipeline and China get's bargain basement prices for the oil. How does Russian win?

They lose a little on every barrel but they make it up on volume.

Winston Churchill's picture

You're entitled to your own opinion, not your own facts.

Just remember where the price of energy was when that deal was signed.Far above its current level.

The Chinese are funding the pipelines, and  now Artic oil development as well.

2rigged2fail's picture

Agreed.  Article calls it back from 2009 the Petro$ will be gone by 2018.  Many major oil producers/consumers, france, russia, china, supposedly agreed to this.  Economist 1988 magazine predicted 2018 too.  SHTF before 2020.


Justin Case's picture

Throughout history, hundreds of paper fiat currencies have collapsed. There are no exceptions. When people lose faith in the Gov't issued paper money, they move to the proven real money, gold.

In merica as in Weimar Germany, the Gov't printed money to pay the Banksters reparations for WWI. The German economy could not support the amount that the Austrian banksters hoisted upon the German people.

The German Gov't just printed the amount they needed to pay all the bills. This eventually went into hyper-inflation. The principle debt was never reduced and the interest was compounding. Year after year the Gov't printed moar and moar money to pay for everything. The debt grows exponentially as the interest is compounded. Understanding that magic, the US is doing nothing different than spending unabated. Inflation starts to become visible and people start to lose faith in the Gov't issued currency. People start to buy goods ASAP because price rises are becoming moar frequent and higher in the local currency. Some people will move to PMs to retain value as paper loses it daily.

Generally currencies have a life span of 60 yrs. Merica has gone longer, but the end result is always the same for paper currencies, they go into the dust bin of history. 

They can print all the currency they want, but countries do not have to accept it as payment. Zimbabwe is a recent example of the local currency rejected for payment in trade with other countries.

You should invest some time to read about fiat currencies and the history of money, you'll have a better understanding how money dies.

The petro dollar is being displaced by China and Russia. Payment for oil is quickly growing in Yuan and Rubles, displacing the USD.


VWAndy's picture

 Just print baby. Its the answer to all the governments problems.

  Barter on the other hand only solves the honest peoples problems.

Smedley's picture

The chapter of the American decline will be a short chapter, one page in fact. Simply post the picture above with the caption 'Senator' and it will be self explanatory!!


chubbar's picture

Well, I don't usually cheer for a catastrophe. However, in this case, being able to watch the SJW's suffer is going to be sweet revenge, even though I know it will hurt some innocent folks as well. Essentially it's unavoidable so I guess I'm just looking towards having some fun even though I know it'll suck for everyone.

Maybe these fucking cunts that think the world ought to revolve around what pronoun is used or making sure that some homicidal maniac from some shithole country gets into this country illegally will finally figure out what is important after a few days without food. These precious little snowflakes need to go out right now and invest in some knee pads because they are going to learn how to properly suck cock before this is over.

earleflorida's picture

Indeed, paying for those imperialist colonies is a losing proposition...! As a finite [defined] inquisition tymeline imposed of 'Fiscal Responsibility' deteriorates into obscurity... and, the next  candiate's fate will have a halved`life [?] tymeline, as histories sordid tale returns unto a fragmented globe, coalescing once again the mistakes of our ancients`darwiniz'd mindfulness of 'no doubts[?]WINNING!?!