How long before the USA defaults or they get hyperinflation?

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italiandragon

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An extract from:

https://www.theaustralian.com.au/bus...tch-above-greece/story-e6frg90o-1226043633361

– Capitol Hill has been consumed with political wrangling over whether to increase a $US14.3 trillion ($13.3 trillion) debt ceiling that is due to be breached next month.

If the US national debt hits that level, it would trigger a default.

Deutsche Bank's analysis acknowledged that the risk attached by financial markets to US debt remained very low, as demonstrated by the country's modest borrowing rates. That was in part due to the US dollar remaining the premier reserve currency for world governments.

However, the report noted: "Reputation and reserve currency status can be lost, and failure to move US fiscal policy off its currently unsustainable path would certainly increase the risk."


McDonalds Hires 62,000, Turns Away Over 938,000 Applicants For Minimum Wage, Part-Time Jobs

https://www.zerohedge.com/article/mc...938000-applicants-minimum-wage-part-time-jobs

https://www.google.com/hostednews/ap...3TZL0w?docId=4d28a118fd5146c190bbef2e2c4b9ab3


The government now borrows about 42 cents of every dollar it spends. Imagine that one day soon, the borrowing slams up against the current debt limit ceiling of $14.3 trillion and Congress fails to raise it. The damage would ripple across the entire economy, eventually affecting nearly every American, and rocking global markets in the process.

China and other countries that now hold about 50 percent of all U.S. Treasury securities could start dumping them, further pushing up interest rates and swelling the national debt. It would be a vicious cycle of higher and higher interest rates and more and more debt.
 
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hugegrowth

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They will vote to raise the ceiling rather than default IMO
 

dn-101

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Schmuck,
u don't understand the US monetary policy.
We can always print more money to pay the debt.
That's the gist of the entire Chicago School of Economics in the last 60 years and 5 Nobels.
And by the way, as a special deal, the $2 Trillion we owe Chinese we'll print on the toilet paper made in China :smilewinkgrin:
 

Donald Aquilano

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Congress should not raise the debt ceiling. All this default talk is nonsense....all Washington would have to do is make the debt payments priority number one.
 

inernetster

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H1B abuse and outsourcing abuse is the biggest mistake. It was always done not in the need for the supply in the USA
but who would profit most straightway.. to the demise of so many professional and other tiers of labor. we are a global economy but the US government should NEVER have sold out its own people( Am referring to congressmen/lobbyists that did that acting on their own interests and never looking at the big picture).

Also, the personal cost of education is blocking the advancement and economy in the US. Tax dollars go to the war machine and many entitlements that people really do not need(mostly that are abused). Feed the truly poor and feed the minds of the youth.

We are becoming a burger flipper country.. soon we won't be able to buy the burgers. That puts the burger flippers out of a job. There go the tax dollars. US government please do something that is a rare commodity in DC.. Think.

And we know (except FOX News) a greener self-sustaining energy supply is the future of the US and the planet. And it means
security, safety, reliability, more NET jobs (even in the case of coal and all hydrocarbons.. carbon sequestration is part of the green transition if it will happen at the pace it should), and commerce.
Take the red pill bastards in Congress that sell out the people of America and the truth
 
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italiandragon

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What happens if Congress blows the debt ceiling?


https://money.cnn.com/2011/04/29/news/economy/debt_ceiling/index.htm?iid=HLM

Either way, he would be put in the completely ridiculous position of having to prioritize who besides bondholders should get paid first and which federal contractors and programs would be effectively issued I.O.U.s payable when Congress comes to its senses and raises the debt ceiling.

That could mean deferring payments to Social Security beneficiaries, Medicare doctors, weapons vendors or taxpayers expecting refunds.

.

:rolleyes:
 

inernetster

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A BIG point that is missed starting from the founding fathers and the vision of America:
We have the right to prosperity and happiness (won't go there now).. main thrust was we can do business without
being stymied by a government and let the free market work (reasonable stuff) to those that are US citizens.
What has changed is you pay into the taxation for (REPRESENTATION?) to be apart of this commerce and they pull the plug on their own professionals and laborers.
If you want to talk about debt.. talk about why it is there and what should have been done NOT to be at this point that made it.
And..how to go forward.
and if we do bold and size..

E PLURIBUS UNUM as a Country

We are not a people getting represented for our needs. "In many one" is the motto that a non corrupt congress is supposed to follow.
Maybe even after getting the education, paying the taxes, fighting for the country and getting betrayed is fine to some.
I know it is wrong.

Stop the debt that should have never been there and fix the country so the debt can be wiped out. And to do that start with number one.. The American Worker

hyper-inflation cannot happen to the USA right not UNLESS there is an enormous global reaching catastrophe. The world's economies depend on us now.. if we go down the world goes down.. net effect is nil overall.
 
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italiandragon

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Let me explain this with some pictures.


This IS inflation:


https://1.bp.blogspot.com/-kYuQ6eeqNVI/TbI2_H0MHCI/AAAAAAAABtM/oCMTj4bDzZI/s1600/Dollar-from-1913.gif


while this WAS hyperinflation, after WW2 in Berlin:


inBoKw.jpg


and here some additional recent information:


WTIC-USD2.png


"The key dynamic is the linkage of the renminbi (yuan) and the U.S. dollar. When the dollar tanks, oil rises when priced in dollars--and thus it also rises when priced in yuan. Thus the decline of the dollar and the consequent rise in commodities has directly fueled inflation in China, which is more dependent on a per capita basis on materials than the U.S.

Yes, the yuan peg has declined from the 8.5 range down to 6.5 to the USD, but it is still firmly pegged. As the cost of materials priced in dollars soars, it feeds higher input costs in China.

China's policy-makers have exacerbated inflation by excessive money creation and lending by their own banks, but that alone is not sufficient cause for gasoline/petrol to cost as much in China as it does in the U.S. Oil is the foundation for petrochemicals, fertilizers, transport, plastics, etc., so the rise of oil driven by dollar depreciation is a driver of inflation throughout the Chinese economy.

No wonder the Chinese leadership is unhappy with the Fed's crush-the-dollar strategy.

Though the cost of soy beans imported from the U.S. remains fixed in terms of currency, the relentless rise in oil is also raising the cost of China's imports which are heavily dependent on oil, such as soy beans from the U.S."

The problems in my humble opinion, started in 1971 when the US changed the way things worked till then, backing the country wealth with gold. Since 1971, it does not happen anymore:

https://money.howstuffworks.com/currency7.htm

A recipe for a disaster.

And as we deal a lot with US domainers and US currency, this is a big problem.

In other financial and travel forums I read more and more Americans have started buying silver, gold, platinum, Euros, Australian dollars and foreign property in a strategy to hedge the USD collapse. You can just google for more info. It's not a surprise to see the AU$ at a new record nearly each day since it was floated many years ago. Same for gold and silver....but some experts warn that this is just the tip of the iceberg if things keep going this way.....meanwhile Wall Street is living on its own world with already new IPOs that look like we are well in the middle of the bubble cycle. The Chinese version of Facebook Renren is about to hit the market with a ridiculous (that's my opinion as an expert financial adviser) price-to-revenue ratio of 52 and a price-to-operating profit ratio of 519. (For comparison, Google's price-to-revenue ratio has been hovering around 5.5-6.5 for most of the last year and its market-cap-to-operating-profit-ratio using data for 2010 is 15.6.)

https://tech.fortune.cnn.com/2011/04/20/how-renrens-ipo-is-setting-the-table-for-facebook/

In my opinion, the whole toy is broken and they are just delaying a solution. The more they wait, the worse it will be for everyone.

Silver went from $10 to $49.90/ounce.

Inflation is alright high...I'm sure Americans see it at the pump when they need to get gas.

But what I expect if they do not fix this A.S.A.P. is not really a nice scenario. The past GFC will look like a walk in the park.
 
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inernetster

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Why I posted we have to get our own energy sustainability, spend money for those who really need/deserve it,keep jobs HERE,and get better educated. If you look at the recipes for disaster and keep those principles in mind all you are looking at is disaster news that should never have happened.
 

italiandragon

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edited....I don't want to create an off-topic debate.
 
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inernetster

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I looked at the video on the link.. reminds me of PA stuff.
There are pros and cons with everything in life.. and with that particular energy harvesting looks like the cons win out with the video.
The big picture includes ocean( I love the possibilities there), nuclear fusion (yes NUCLEAR but NEGLIGIBLE radioactive by-products),solar (not cost effective yet but NICE), wind, geothermal(look you drill 7 miles down on average and have almost endless steam in conversion), and current hydrocarbon combustion to sustain us BUT with carbon sequestration.
I don't want to play Russian roulette with life.
 
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Donald Aquilano

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Ron Paul had two great proposals that somehow got overlooked.....:rolleyes:

1) Refuse to raise the debt limit! Find a way, month by month, for Congress to spend only what the Treasury raises in revenue.

2) Start over from scratch with the 13 appropriations bills that fund the federal government. Reject any talk of baseline budgets or discretionary spending. It is all discretionary!
 

Bill F.

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Schmuck,
u don't understand the US monetary policy.
We can always print more money to pay the debt.
That's the gist of the entire Chicago School of Economics in the last 60 years and 5 Nobels.
And by the way, as a special deal, the $2 Trillion we owe Chinese we'll print on the toilet paper made in China :smilewinkgrin:

Yes, that seems to sum up the current government's economic policy nicely.
The US will never default, politicians throughout history have used the "print your way to hyperinflation" tactic when it's available. China and others know this. Their trick is to quietly extract themselves from the dollar without causing a panic and currency collapse. A very tight rope to walk for everyone. The only bright side will be the complete collapse of Washington DC government as we know it.
 

south

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Actually, the most likely scenario would probably be a global currency.
 

inernetster

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Going with the "arguments", maybe the answer is like in the song 2525.
I really think different and the answer is like "physician, heal thyself".
No conspiracies .. no need need for God to squash the bad,..just make your voice known and do what you can (constructively)
 

italiandragon

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Deadline extended:

Geithner Extends Debt-Ceiling Deadline by Three Weeks to August

https://noir.bloomberg.com/apps/news?pid=20601108&sid=auDvszpXldq4

Some quotes from the article:

If Congress doesn’t raise the limit by May 16, the Treasury will declare a “debt-issuance suspension period” under the statute governing the Civil Service Retirement and Disability Fund, Geithner said. That will allow the U.S. “to redeem existing Treasury securities held by that fund as investments.”

‘Next Steps’

Geithner’s letter shows that “the mechanics are now in motion” for the government to take the “next steps” if the debt limit isn’t raised, said Drew Matus, a senior economist at UBS Securities LLC in Stamford, Connecticut.

Though the extended August deadline “in theory gives Congress additional time to complete work on increasing the debt limit, I caution strongly against delaying action,” Geithner said in the letter. “The economy is still in the early stages of recovery, and financial markets here and around the world are watching the United States closely.”

Matthew Zames, chairman of a Treasury advisory panel and a managing director at JPMorgan Chase & Co., said last week that failure to raise the limit could be “catastrophic.”

“Any delay in making an interest or principal payment by Treasury even for a very short period of time would put the U.S. Treasury and overall financial markets in uncharted territory, and could trigger another catastrophic financial crisis,” Zames, chairman of the Treasury Borrowing Advisory Committee, wrote in a letter to Geithner.
 

whitebark

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Congress should not raise the debt ceiling. All this default talk is nonsense....all Washington would have to do is make the debt payments priority number one.

Very true - but much harder to do than it appears.
 

italiandragon

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So after yesterday the commodities market went into panic mode with OIL losing nearly 10 % in one go and SILVER continuing a sharp decline (-30% in 4 days), today we hear about the rising inflation from Bloomberg as well.

These are the early signs of what in few years could ruin the savings of each American family.

How long before you raise your domain prices when dealing with American buyers?


https://noir.bloomberg.com/apps/news?pid=20601109&sid=ahEOfkKdNVvY&pos=11

Restaurants Lift Prices as Inflation Hawks See Fed Lag Curve (1)
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Anna-Louise Jackson and Anthony Feld


May 6 (Bloomberg) -- Dining out will cost more this year as U.S. restaurants take advantage of the nearly two-year long expansion to boost prices on food and drinks.

Higher-priced menus reflect growing confidence by eateries that consumers can afford to pay more to eat out. Restaurants are emboldened in part by the success of U.S. airlines, which have raised fares almost 10 percent since a year ago, according to Dean Maki, chief U.S. economist at Barclays Capital in New York.

“The fact that the airline industry was able to pass along cost increases signals that the pricing environment has become somewhat more favorable than it was during the heart of the recession,” Maki said. “It’s more likely restaurants will be able to pass along price increases now relative to the last few years.”

Higher food and fuel costs are spurring menu changes, which are reflected in the food-services category of the personal- consumption-expenditures price index. Purchased meals and beverages, which make up about 6 percent of core PCE, rose nearly 2 percent in March from a year ago, the biggest increase since November 2009, according to data from the Bureau of Economic Analysis in Washington.

Several apparel companies -- including San Francisco-based Levi Strauss & Co., which supplies jeans to retailers in more than 110 countries -- also have announced increases to offset higher costs for cotton, foreign wages and freight. With imported-clothing prices rising at the fastest rate in at least a decade, retailers stand a better chance of exerting pricing power, Maki said.

Pressure on the Fed

All this puts pressure on the Federal Reserve to prevent inflation from getting out of hand, said Samer Nsouli, chief investment officer in New York for the Lyford Global Macro Fund.

“Inflation hawks see restaurants and airlines passing through higher prices and say the Fed’s behind the curve,” Nsouli said. “The Fed’s not paying enough attention to such trends when it comes to its continued accommodative monetary policy.”

The central bank’s Federal Open Market Committee said it “will pay close attention to the evolution of inflation” in the statement for its April 27 meeting, when it kept the target for the federal funds rate, or overnight inter-bank lending rate, at zero to 0.25 percent. It first set the rate at the record low in December 2008. The Fed also reaffirmed at the April meeting its plan to complete a $600 billion Treasury purchase program by June.

‘Transitory’ Threat

Fed Chairman Ben S. Bernanke and his chief deputies on the FOMC -- Fed Vice Chairman Janet Yellen and New York Fed President William C. Dudley -- have said in recent speeches that the committee’s leadership believes the threat from accelerating prices will prove “transitory.” Even so, policy makers have been bumping up their forecast for 2011 core inflation, which excludes food and fuel. The April projection is about 1.5 percent, compared with about 1.2 percent in January.

Restaurants have projected menu increases of 1.8 percent during the next six months, the most in a year, according to research by RBC Capital Markets. The amount depends on the type of food they serve, said Larry Miller, an RBC analyst in Atlanta. In the same period, the companies are forecasting a rise of at least 3.2 percent in their commodity costs, the research showed.

Rising Unemployment

The industry’s ability to pass along higher input costs depends on diners’ ability to pay more. The unemployment rate rose to 9 percent in April after dropping to 8.8 percent in March, still below a post-recession peak of 10.1 percent in October 2009. The Bloomberg Consumer Comfort Index fell to minus 46.2 in the week ended May 1, the second consecutive weekly decline.

Customer traffic still has improved from last year and “trends have been decent in terms of demand, so restaurants have a little more confidence to raise prices,” Miller said.

The Standard & Poor’s Supercomposite Restaurants Index, which includes McDonald’s Corp., The Cheesecake Factory Inc. and 25 other companies, has risen by 43 percent since December 31, 2007, while the S&P 500 Index has declined by 8 percent.

McDonald’s boosted menu prices in the U.S. by 1 percent in March, Chief Financial Officer Peter Bensen said on an April 21 conference call. The Oak Brook, Illinois-based fast-food chain had resisted such a move since 2009, said Miller, who upgraded McDonald’s stock in January to “outperform” from “sector perform.”

‘Inflationary Environment’

“Our upgrade was driven by the belief that fast-food models, like McDonald’s, thrive in a modest inflationary environment and that they would be able to successfully implement price increases in 2011,” Miller said.

BJ’s Restaurants Inc. expects to boost menu prices for the full year by about 3 percent to offset rising food and energy costs, Chief Executive Officer Gerald Deitchle said on an April 20 conference call. Like McDonald’s, the Huntington Beach, Calfornia-based company didn’t raise prices the past few years at its namesake brewery, pizza and grill chains, Deitchle said.

Cheesecake Factory, based in Calabasas Hills, California, is monitoring input costs after rolling out a 0.7 percent rise at its 150 casual-dining restaurants earlier this year, Chief Financial Officer Douglas Benn said on an April 20 conference call. The company currently projects a further boost of at least 1.4 percent later this year, he said.

“We will implement a higher level of menu-price increases in our upcoming summer menu change if commodity-cost pressures continue at the current level,” Benn said.

Food Quality

Cheesecake Factory, BJ’s and McDonald’s are among a group of “haves,” according to Steve West, an analyst at Stifel Nicolaus & Co. in St. Louis. These are restaurants that can push through moderate price changes, though they likely won’t be menu-wide, West said. He includes Chipotle Mexican Grill Inc. in this group because it has focused on improving food quality and the customer experience during the recession.

“If anyone has pricing power, it’s Chipotle,” said West, who maintains a “buy” rating on the stock.

The Denver-based burrito chain, which McDonald’s spun off in 2006, will wait to raise prices until the third quarter, allowing it time to “see the magnitude and timing of inflation and assess the customer reaction to price increases at other restaurants,” Chief Financial Officer John Hartung said on an April 20 conference call.

The restaurant industry will serve as a test of the retail sector’s pricing power, Maki said.

‘Stronger Position’

“Consumers are in a stronger position now because their labor income has been improving, but the surge in gasoline prices has moderated the recent growth in their purchasing power,” Maki said.

For Yum! Brands Inc. -- the Louisville, Kentucky-based owner of KFC, Pizza Hut and Taco Bell fast-food chains -- potential price changes in this environment are a balancing act, Chief Financial Officer Richard Carucci said on an April 21 conference call.

“When you have inflation and our sales are soft, you have to play it pretty smartly,” Carucci said.

To contact the reporters on this story: Anna-Louise Jackson in New York at ajackson36@bloomberg.net; Anthony Feld in New York at afeld2@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

Last Updated: May 6, 2011 11:06 EDT
 
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Nathan King

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Inflation devalues the national debt. I think many in Washington had this in mind when they started going crazy with the spending. 15 years ago we had a balanced budget.

Inflation can be (and currently is) an indirect tax on the American people. It's time for people to start getting mad about it. Unfortunately, people are so brainwashed that they can't do anything but blame the opposite political party. Meanwhile: CEO Compensation Now Exceeds Pre-Recession Levels.
CEO pay increased by 27 percent in 2010, which compares to an increase of just 2.1 percent for ordinary workers in the private sector.
 
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