• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: This Country Defaulted Long Ago

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Fri, 07/29/2011 - 11:22 | 1504943 midtowng
midtowng's picture

It's not officially a default if the debt is priced in paper that you can just print in whatever quantity you want.

Fri, 07/29/2011 - 11:27 | 1504970 markmotive
markmotive's picture

America has been trapped in an economic quagmire since it's peak prosperity around the end of the 20th century.

http://www.planbeconomics.com/2011/07/27/america-is-stuck-in-an-economic-quagmire/

Fri, 07/29/2011 - 11:32 | 1504997 Josh Randall
Fri, 07/29/2011 - 11:43 | 1505007 Ahmeexnal
Ahmeexnal's picture

CHF is soaring to historical highs.

euro humpty dumpty about to fall off the wall

 

greenback ain't in better shape: the first domino of dollar dumping starts.

Cambodia shuns the greenback:  http://www.marketwatch.com/story/cambodia-edges-away-from-us-dollar-2011...

Fri, 07/29/2011 - 20:04 | 1506888 Jalaluddin
Jalaluddin's picture

My friend says Kampuchea is a very nice country - very peaceful and safe, has internet.

Why not take some of your gold coins with you, brace yourselves for a groping by the TSA and head off for an extended holiday?

Sat, 07/30/2011 - 00:53 | 1507297 Vlad Tepid
Vlad Tepid's picture

Better not say that too loud.  High Plains Drifter will get his panties in a twist over your personal decisions and wax eloquent about how he will not let you back in after he's done remaking the country.

Fri, 07/29/2011 - 11:42 | 1505044 Version 7
Version 7's picture

Peak credit expansion you mean. The peak prosperity goes back to the 50's.

Fri, 07/29/2011 - 12:05 | 1505168 markmotive
markmotive's picture

Agreed that relative peak prosperity happened in the 1950s.

But I'd say we felt 'richest' (regardless of how it happened) in terms of global purchasing power around 2000. Some would argue that 2006 was when we felt 'richest', but I discount that because of the destruction of DXY since 2000.

Fri, 07/29/2011 - 12:32 | 1505295 Don Keot
Don Keot's picture

The housing bubble gave the appearance of wealth.  Just think about all the refinanaces that bought pools, toys, cars(SUVs), to pull those toy trailers and boats, trips to Disney, Hawaii, Sandals etc. life has been great.  Now just default.  Even works at the personal level.

Don't you just love BHO's new comment.  "I will not allow those who pay no taxes bear the burden of those who are not paying their fair share"

Fri, 07/29/2011 - 13:08 | 1505464 AldousHuxley
AldousHuxley's picture

http://www.smbc-comics.com/comics/20061114.gif

 

"I want change!" ---says the homeless guy

Fri, 07/29/2011 - 16:48 | 1506399 UncleFester
UncleFester's picture

I'm pretty sure he meant Emmelt and GE will not bear the burden.

Fri, 07/29/2011 - 11:43 | 1505048 TorchFire
TorchFire's picture

Encore presentation:

 

Dark Harbor

Where has she gone

with her lamp held high

beckoning outcasts who would live free or die?

There, in the east!

What? She stands as if caged...

her eyes remain steady yet her heart's disengaged

Once revered by the nation

(those who would not be ruled)

but her people grew weaker and now they are fooled

“Liberty!” they greet her

for they seem well acquainted

but she views them as strangers, with her wisdom untainted

While yet in her youth

the year nineteen thirteen

she was tied to an altar by hands so unclean

As freedoms were stolen

from that day to this

her children sat idle and did not resist

Now forced into shadows

for one hundred years

she stands in the harbor imprisoned by fears

She waits for the hour

for her torch reignited

by the courage of people from a nation united

When truth is revealed

from the flame in her eyes

those who once chained her will see their demise

And the elegant lady

once more we'll defend

and her principled nation will rise once again

 

© TorchFire 2011

Sat, 07/30/2011 - 10:20 | 1507588 pops
pops's picture

Giggidy, giggidy!

 

Fri, 07/29/2011 - 11:35 | 1505012 tempo
tempo's picture

The President said repeatedly this morning..."we don't have to do this". Translated this means the President wants to continue and expand deficit spending, more Govt regulation, less jobs in the free market, more outsourcing, higher Corp profits, more power for the elite, etc. The President knows the country is on a high, sub prime on drugs and coming off the drugs will mean his defeat in 2012. So hell yes, he wants to continue and expand, pretend and extend...whatever it takes to get reelected. Then he can do whatever he wishes.

Fri, 07/29/2011 - 13:43 | 1505660 AGuy
AGuy's picture

He's kidding himself, if he believes he has even the remotest chance to win in 2012. He's renegged on ever campaign promis he's made:

 

Shutdown Gitmo? No

End the Wars,Remove troops from the Middle East? No Started three new ones:Libya, Pakastan, and Yemen

Prosecute those that commited fraud in Wall St? No, instead promoted them and gave them immunity from criminal prosecution

Shutdown gov't spying on Americans? No, Doubled down with increased spying

End BAU in Washington? No, Doubled down on making much worse

 

Obama did everything Bush did wrong times 10. I don't think even his wife will vote for him!

Obama has assured the destruction of the United States and the beginning of the Divided States of America!

 

Fri, 07/29/2011 - 14:23 | 1505812 Rhodin
Rhodin's picture

I share your general opinion of Obummer with less intensity. (I only think he is twice as bad as Bush, not ten times) but that does not disable his chance for re-election.

The Powerz/owners have the media and money to select his opposition.  Effectively they run both campaigns  They will certianly have many agents in their puppet's campaign staffs.  Depending on what dirt they have on the candidates, whether they decide to use it, what campaign gaffes are engineered and the media spin on these, they get to pick the winner most of the time.

 

Fri, 07/29/2011 - 14:28 | 1505835 DCFusor
DCFusor's picture

Sadly, all that means is that the republicans can now slip another of their utter losers on us -- why waste a good candidate on a gimme?  And if the big O is sufficiently discredited, we might have to face Hillary again.  Yuck.

We lose whoever wins, haven't you learned that yet?

Fri, 07/29/2011 - 15:33 | 1506097 deeznutz
deeznutz's picture

Right. That was his *mandate* when he got into office: finish Bush/Clinton/Bush/Reagan/Carter/etc.../etc...'s work: Roll back the middle class. Voting is a complete waste of time.

Fri, 07/29/2011 - 11:37 | 1505023 Pladizow
Pladizow's picture

Artice is a graet summary!

Fri, 07/29/2011 - 12:14 | 1505207 wisfool
wisfool's picture

Its surprising that so many here trash banksters and politicians and uber weathly elite individuals.

But the article completely overlooked the 'hidden' door: raise taxes on the 1% ???

It won't solve the problem but shouldn't it be considered one of the 'doors' or open to debate?

Fri, 07/29/2011 - 13:03 | 1505431 Greenhead
Greenhead's picture

The 1% is not a homogeneous class.  You have wage earners and business owners who create jobs and invest in their businesses and then you have the "unearned" income class.  The latter probably have significantly higher levels of wealth yet are taxed at lower capital gains rates.  Mostly the President talks about raising taxes on the wage earners and business owners and doesn't much address the disparity of rates the "unearned" class enjoy because of the amount of contributions he receives from that group.

Fri, 07/29/2011 - 14:18 | 1505793 sun tzu
sun tzu's picture

I support raising rates on high income W-2 and investment income over a certain level ($500K), but not business owners who could use the money to create new jobs instead of giving it to the feds to blow on wars, foreign aid, and stupid projects. There should be no increase in taxes unless the government can get the budget back under $3 trillion. It would be like filling up the gas tank on a wrecked car.

Fri, 07/29/2011 - 15:33 | 1506092 RockyRacoon
RockyRacoon's picture

So, you admit to being a tax whore, and we're just quibbling over the price?

Having winners and losers be chosen by Washington hasn't worked out so well for us.  Why would it be any different under your guidance?

Fri, 07/29/2011 - 12:43 | 1505353 escargot
escargot's picture

What does "official" have to do with anything?

Fri, 07/29/2011 - 21:21 | 1506977 Jalaluddin
Jalaluddin's picture

1. I thought he 16th Amendment to the Constitution was never ratified.

2. At least one other comment has covered this but I will add mine: writing a 1 followed by 12 zeros is not difficult, so the problem does not lie here.

3. A Russian demographer calculates that socialist FDR wiped out about as many U.S. citizens in the 30's depression as the Cheka wiped out in the Ukraine.

4. Fannie Mae and Freddie Mac: boondoggles.

5. Have a look at the Line of Control and you will realise what an aggressive, provocative pack of gentlemen the US has become - you don't just fight wars, you manufacture them (and contantly bellyaching "Waaah! He hit me first!) but the wars are no longer profitable as the easy pickings are finished and now basically only the Muslims are left to rape and pillage and we are a tough nut to crack.

6. The Great Society blows another mind - Mad Magazine's take.

7. Default on gold backing of the Amerazoo, and "social" "security" are just part of the fiat scam where virtually entire populations have been so indoctrinated that it is almost impossible to find anyone who can think straight and figure out that there should be no trade in promissory notes (and no "gold backed" currency, just gold).

* And for any mentally impaired person who suggests that "gold is heavy" i prescribe a regimen of press-ups and chin-ups (I have a PhD in Economics and am eminently qualified in the area of medical economics).

* Also the pic of Liberty is wrong - she is up to her eye-balls in debt.

Fri, 07/29/2011 - 11:24 | 1504948 RobotTrader
RobotTrader's picture

 

 

5-yr. yield has now crashed to 1.40% and we have a complete U-Turn on ES.

Gimme a full blown default, and we'll see the 5-yr. yield at 1.25% within hours.

Never fight Uncle Gorilla.

Fri, 07/29/2011 - 11:33 | 1504980 DoChenRollingBearing
DoChenRollingBearing's picture

Uncle Gorilla is now rated less than AAA as per Obama.

He is not lying about that.

THIS General Jim (Quinn) has been predicting correctly all along.

---

 

I guess I am going to have to say the below all day.  My duty as I see it.

To: Tea Party members of the House:

Do.Not.Give.In.  Remember why we elected you.  Stop the spending, stop the cozy deals.  Stop the robbery of the American people.  The ONLY way to right the ship (and it WILL be very painful) is to STOP the spending.  You know it, and we know it.

---

To: Valued Zero Hedge readers and commentators:

Buy.Gold.Now.  Tell your members of Congress: NO!  To a BAD deal.

 

Fri, 07/29/2011 - 12:29 | 1505282 Vendetta
Vendetta's picture

they will do the same back room deals as all the previous assclowns in office have done ... you'll see

Fri, 07/29/2011 - 14:31 | 1505850 DCFusor
DCFusor's picture

Rolling, you might be right.  On the other hand, the meme of the day is that we get a deal (which will stink), and so many people want to see it as good, that the market will zoom, and PM's correct -- for about a day or two.  Then they'll read it and the reverse will happen.  I'm sitting on dry powder myself to buy that dip.  If I don't get it, or I don't catch it, I'll not have lost much in opportunity cost, and I can still increase over my core, non traded holdings -- I just won't make *as much* if my hypothesis is wrong.

Fri, 07/29/2011 - 11:37 | 1505028 dasein211
dasein211's picture

You're right. It makes me want to throw up in my mouth and shit on congresses face but you're right. Trade like bernanke's gonna win.. For a while. We will not default. We will QE and obfuscate to the very end. There will be no spx crash... Ever. The dollar will devalue before all else. Its their only way to keep power. Fuck.

Fri, 07/29/2011 - 13:19 | 1505526 tsx500
tsx500's picture

+++1625.4

Fri, 07/29/2011 - 12:08 | 1505173 malek
malek's picture

Look Robotroll! Another decade low for EUR/CHF may be in.

Fri, 07/29/2011 - 12:23 | 1505251 Richard Head
Richard Head's picture

Please just stop posting and/or kill yourself.  As if the message in your ridiculous posts wasn't bad enough, you insist on using some kind of faux-trader juvenile language such as "world-record highs" and "Uncle Gorilla."

Fri, 07/29/2011 - 11:24 | 1504952 casaananda
casaananda's picture

Should I sell my gold now?

Fri, 07/29/2011 - 11:46 | 1505063 Ghordius
Ghordius's picture

Yes. I'll buy it from you.

GREAT ARTICLE, most of my favourite rants all together. 60'000 pages tax code? No way, it's much more. The last law was 20'000 pages. Either you have a huge team of lawyers or you are a second class citizen.

Fri, 07/29/2011 - 12:42 | 1505350 Debt-Penitent
Debt-Penitent's picture

Yes, SELL-SELL!

To me...now.

Might as well dump it quick for $1400 an oz too, just to be sure it all sells fast.

Fri, 07/29/2011 - 13:23 | 1505549 tsx500
tsx500's picture

' ...  honey,  that raging wildfire is getting very very close to our house ... looks like it has a very good chance of hitting us very soon... what do you think, should we cancel our homeowner's insurance now ? '

Fri, 07/29/2011 - 11:24 | 1504954 baby_BLYTHE
baby_BLYTHE's picture

The final collapse of our credit expansion boom approaches

All parabolic moves end in an epic bust.

http://1.bp.blogspot.com/-KfmgOaqyfII/TimeGKsq3GI/AAAAAAAAAEw/kQO41lqrew8/s1600/US+debt-GDP.jpg

"Full Faith and Credit" will appear on the tombstones of Greenspan, Paulson, Bernanke and Geithner.

Fri, 07/29/2011 - 11:30 | 1504973 Cognitive Dissonance
Cognitive Dissonance's picture

Famous last words.

 

Watch this.

It's different this time.

I am not addicted to fiat crack.

Fri, 07/29/2011 - 11:31 | 1504992 V in PA
V in PA's picture

Don't forget...

Fuck it, thats good enough.
I can fly!!
Obama seems like a good candidate

Fri, 07/29/2011 - 12:03 | 1505155 r101958
r101958's picture

....and 'Check's in the mail'.....' all locked on'........'got ya covered'......

Fri, 07/29/2011 - 12:03 | 1505156 A Lunatic
A Lunatic's picture

also............

Yeah, I'm pretty sure it will work like that.

Fri, 07/29/2011 - 11:29 | 1504982 Ahmeexnal
Ahmeexnal's picture

Debt shall set you free.

Fri, 07/29/2011 - 11:31 | 1504990 Silver Dreamer
Silver Dreamer's picture

Who's going to honor them with a burial?

Fri, 07/29/2011 - 11:25 | 1504958 Hedgetard55
Hedgetard55's picture

Money printing is default by another name. Results are the same.

Fri, 07/29/2011 - 12:06 | 1505169 A Lunatic
A Lunatic's picture

Who cares as long as we don't have to eat our peas, right?

Fri, 07/29/2011 - 11:37 | 1504961 DoChenRollingBearing
DoChenRollingBearing's picture

Again:

 

I guess I am going to have to say the below all day.  My duty as I see it.

---

To: Tea Party members of the House:

Do.Not.Give.In.  Remember why we elected you.  Stop the spending, stop the cozy deals.  Stop the robbery of the American people.  The ONLY way to right the ship (and it WILL be very painful) is to STOP the spending.  You know it, and we know it.

---

To: Valued Zero Hedge readers and commentators:

Buy.Gold.Now.  Tell your members of Congress: NO!  To a BAD deal.

 

Fri, 07/29/2011 - 16:47 | 1506393 Mr Kurtz
Mr Kurtz's picture

While sympathetic to the need to reign in spending, I am extremely leery of their corporate backers, Koch Industries, Rupert Murdoch, Dick Armey's Freedom works, etc whom I am convinced do not have my financial interests in mind nor that of their tragically duped placard waving followers. 

Fri, 07/29/2011 - 11:26 | 1504963 Cognitive Dissonance
Cognitive Dissonance's picture

Shameless plug for my coming article later today regarding the Washington DC and Wall Street addict and how it relates to our own enabling.

 

The vested interests in Washington DC and Wall Street only care about power and wealth. They will never abandon credit expansion. It’s their drug. They must have it. They are addicted to it. They will keep injecting it into our system until they overdose America.

Fri, 07/29/2011 - 11:32 | 1504994 DoChenRollingBearing
DoChenRollingBearing's picture

I look forward to your piece CigDis.

Am I allowed to read it first and throw up when I finish?  What if projectile vomiting happens first?  Would that be OK?  It would be MY keyboard after all.

:(

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