Posted on 03/31/2011 9:50:39 AM PDT by DTogo
Many recent articles have been published and posted here on FR warning of a US default on its debt obligations. Other articles have hypothesized on post-default scenarios such as a second world-wide depression, the rise of a global currency (= Global Government), hyper inflation, social unrest and/or a general collapse of America society, and perhaps another world war.
What has not been asked yet is what America’s creditors, holding hundreds of billions in treasuries that may be severely devalued, if not deemed worthless, might be willing to do to prevent any sort of default scenario.
Geopolitically China and others may quietly want America knocked down a couple notches from its super power status. But do realities of the world’s largest consumer going broke, and their own currencies/economies/societies collapsing trump such musings? If so, again, what might China, Japan, England, the EU or other major creditors be willing to do to prevent an American default and force us to get our fiscal house in order?
Possible scenarios:
1) Ratchet up public lectures to American leaders to get their fiscal affairs in order? Washington DC is doing its best to demonize its own citizens who call for fiscal discipline, i.e. the 'extreme' Tea Party, so it’s doubtful they’d listen let alone act.
2) Threaten to, and to a limited degree follow through, by reducing their purchase of US debt? The Fed, despite previous testimony saying they would not, has already shown a willingness to buy American debt, and that would continue the current downward spiral towards hyper inflation and the devaluation of the Dollar.
3) Quietly support 2012 candidates most likely to balance the Federal Budget? While directly influencing American elections may be illegal, the positive fiscal results could offset negative default risk.
4) Should social unrest and/or looming hyper-inflation in America become a seriously destabilizing factor, covertly sponsor “regime change?” Imagine Hu Jintao, Angela Merkel, or David Cameron forming a “Coalition of Creditors” and appearing on TV to say that the current government in America is threatening the economic stability of the global “community,” the livelihoods and possibly the lives of hundreds of millions of citizens of the world. Turn Obama’s Libya speech back at him, “Obama and the American Congress must go. There will be times when our safety is not directly threatened but our interests and values are. We have a responsibility to our fellow human beings in America that their government lives within its means and provides a stable economy and currency for us all... etc, etc, etc”
Has Washington considered what might happen if America's creditors started meddling in our domestic affairs under similar pretenses?
The entire world wants the U.S. ratcheted down. The mission of the U.N. is to keep America in check (and admonish Israel).
However, the west does want America to keep a robust military so that they don’t have to. America’s military allows Europe to forgo a military budget and run a welfare state.
And keeping a robust military costs money we no longer have.
Let’s make it personal. Suppose YOU are a Republican candidate for Congress, on a campaign of limited government and a balanced budget. The Chinese offer you a secret donation, since they have an economic interest in a healthy US economy. Do you take it?
No and would start prosecution.
In 1933, bankruptcy was declared by President Roosevelt. The governors of the then 48 States pledged the “full faith and credit” of their states, including the citizenry, as collateral for loans of credit from the Federal Reserve system. To wit:”Full faith and credit” clause of Const. U.S. article 4. sec. 1, requires that foreign judgement be given such faith and credit as it had by law or usage of state of it’s origin. That foreign statutes are to have force and effect to which they are entitled in home state. And that a judgement or record shall have the same faith, credit, conclusive effect, and obligatory force in other states as it has by law or usage in the state from whence taken.
Black’s Law Dictionary, 4th Ed. cites omitted.
Sorry for the double posting..
Would I then consider myself beholden to China over America? Never.
In some instances the ends justify the means.
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