The US should default – intentionally!

SCENE 1, ACT 1:

All of the key players are pretending to be negotiating an increase to the debt limit, so the US doesn’t go into default. The GOP is digging in by saying they want to see drastic cuts in spending and no new taxes. The Democrats are saying those things can be negotiated later; the important thing is to allow for more borrowing so we don’t default, which could happen in early August.

NOTE: This particular “play” is just starting – hence my designation of “SCENE 1, ACT 1.”

Why did I say “pretend”?

I think it’s entirely possible the Dem/Pubs are on the same page here. Both sides might actually agree with my proposal: The US should intentionally default, for reasons I quote below. However, the best way to do so might be to give the appearance of being unable to come to an agreement. The Dems and the Pubbers could point the finger of blame at each other, knowing they got what they really wanted anyway.

Seems far-fetched? Maybe. But I have a very suspicious mind and, make no mistake about this, these people are bastards. If they can create enough confusion, that will be a pretext to seize even more power. Or maybe even strike out in another diversionary war.

Two postings

This first posting was in response to an article on Yahoo News:

QUOTE:

[President Obama had spoken the following line, trying to say default was opposed by mainstream economists.]

“That's not my opinion, I think that's a consensus opinion.” You “think?” It either is or it isn’t.

We should just go ahead and default. This is a golden opportunity, since we are still in the driver’s seat. If we wait too long and keep on borrowing, we’re going to default anyway and then it will be too late. We won’t have any leverage left due to our weakened condition. Then, China will be in the driver’s seat and I don’t think they’ll be too merciful with our indecisive asses.

Steven Searle for US President in 2012

“No mainstream economist would dare make this proposal, but (really) this is our best chance.”

:UNQUOTE.

This second post was really a reply to a mass e-mail sent by Rabbi Michael Lerner of Tikkun Magazine:

QUOTE:

I strongly disagree...we don't "have to" raise the debt ceiling. I know, I know...the usual suspects like Geithner would have us believe otherwise. But...has anyone truly thought outside the box on this one? Sooner or later, it's going to take some kind of trauma to restabilize the world economic order. Wars often do that. And, just as in the case of war, the outcomes aren't precisely predictable. However, even wars have their upside (I can't believe I just said that!).

Why should we wait for events to spin entirely out of control? We have control now, in terms of proactively refusing to raise the debt-ceiling. Of course, should that happen, the shit will hit the fan. But as I said, sooner or later, that will happen anyway. And I say, better sooner than later. For one thing, people will finally realize the seriousness of the situation: We can't keep borrowing forever.

If the ceiling isn't raised, there will be a national emergency. But it won't be the end of the world. We should recognize default for the blessing it could well turn out to be. Since defaulting will be our doing, we can have a great deal to say about how the dust settles. Again, better now than later when it will be others (the Chinese?) who will call the shots, much to our powerless chagrin.

I am stunned at how many well-intended people follow Geithner's dire warnings without even trying to think outside the box. I am proud to say, I'm not one of them.

Steven Searle for US President in 2012

"Declare your independence by voting for Independents. Throw all the Dem/Pub bums out of Congress now."

:UNQUOTE.

Coup d’état, USA style

It’s well known that Pentagon planners play mock war games. They simulate, using computer programs, a wide variety of potential (though mostly far-fetched) war scenarios. All in the name of trying to determine our best response. Of course, all the major powers do this.

I wonder if we’ve taken the trouble to project what might happen (and how we could influence events) from Day 1 of Default. We have a lot of incompetence and plain mean-spiritedness in our governing class. But could it really be possible that no one has thought this thing through? Not even among our academics? Not even as a classroom exercise for future economists?

Are we that lame? I say “no,” though I’m tempted to say “yes, because we’re that stupid.”

If we do default (intentionally or otherwise), be prepared for lots of talking heads’ noise on the media. And a whole variety of smoke-and-mirrors routines to kick in, ranging from press conferences to movements by our military forces. The House (or at least Bachmann and her ilk) will call for Obama’s impeachment. However, Obama might invoke Directive 51 which basically suspends normal government operations and puts him in charge. To quote from Wikipedia:

QUOTE:

… sometimes called simply "Executive Directive 51" for short…claims power to execute procedures for continuity of the federal government in the event of a "catastrophic emergency". Such an emergency is construed as "any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy [my emphasis], or government functions."

…when [one man!] the president considers an emergency to have occurred, an "Enduring Constitutional Government" comprising "a cooperative effort among the executive, legislative, and judicial branches of the Federal Government, [again, my emphasis] coordinated by the President," will take the place of the nation's regular government.

:UNQUOTE.

If the President could seize power, why would the GOP support an intentional, though apparently “accidental,” default? With the President in charge, wouldn’t the GOP lose at least some leverage? A question like that, though, assumes that the GOP and the Democrats are really in opposition or really in control. I happen to believe they aren’t, but act as they do to fool the public. There is an Elite; there is really a Shadow Government (though not necessarily one single Mr. Big); and that is the entity that is really in charge.

Nothing major happens without the Elite’s approval. The only real questions at this point: Has that approval been given? If so, has the Elite really thought through how this will play out?

Immediate practical benefits

When individuals go bankrupt, their debt can be either entirely written off entirely or it can be restructured. Just because the US could default on its loan obligations, doesn’t mean it’s entirely without resources. And those biggest resources are our military and the sheer scope of our economy itself. I can see the possibility of US leaders, after we default, whispering in the EU’s ear, “Go along with us to write off a huge chunk of our debt or we’ll pull all US forces out of Europe with no guarantee we’ll continue to provide the nuclear umbrella or, for that matter, any help whatsoever.”

Such a threat could inspire the EU to “magically” conjure up some loans or (and I love this word) “forgiveness.”

As for our economic gravitas: As traumatic as default would be for the US, it would be even more traumatic for everybody else – even the Chinese. We could use that as leverage to renegotiate for trade advantage, insist on currency reevaluation (the Yuan), and muscle our way into the internal affairs of developing (especially African) nations.

Steven Searle for US President in 2012

Founder of The Independent Contractors’ Party

“I don’t have any kind of economics training – I’m about as ordinary a bloke as you’re going to find – and yet why is it I’m the only one talking this talk?...Or am I?...I certainly hope I’m not alone in this.”

Contact me at bpa_cinc@yahoo.com