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community building | economic justice

why I'm not afraid of a government default

when people in this country hear that the government might default on its loans in august, they panic. obama tells us that they'll have to freeze social security checks, which brings in the AARP to sob to congress and get them to agree to another trillion or so dollars of debt...after all, what's another trillion on top of the thirteen trillion we already owe? but I think obama is being disingenuous, and using the AARP and the like for a political end, that the debate over whether to raise the debt ceiling so we can keep paying for our wars is like demanding ransom from a nation held hostage to the irresponsible corrupt actions of the corporate elite and their government puppets.
I am not afraid of a government default! In 2001 argentina defaulted on hundreds of billions of dollars in IMF loans. it was painful, yes, but it was also beautiful. ever heard of cacerelos? those community assemblies that formed on street corners in buenos aires and all over the country, while the middle class smashed in the banks to try and get at their savings, while the poor rose up and collectivized factories as the bosses fled for europe and the US with their tails between their legs.

it could happen here! am i just a wishful idealist thinking back on the heady days of seattle? i don't think so. here's how it went down in argentina: massive privatization throughout the 90s forced by the IMF and its energy-sapping SAPs, pretty much the whole government privatized when the debt started coming due, and the economy crashed - the reformist president told citibank and the other banks that argentina would pay them back five cents on the dollar for their loans - a full-on default.... and the IMF was hesitant to pursue its usual enforcement technique of credit boycotts, because the argentinean economy was already in ruins, and people were out on the street in droves shouting that all the politicians must go! que les vayan todos! in the years since, argentina got a hand from chavez-led brazil, paid off 95% of the loans at heavily discounted payback rates, and started a boycott of the IMF that most of the world joined in, leading the IMF to its current state of near-bankruptcy. (thx david graeber for this synopsis)

how would it happen here? well, instead of citibank and the IMF, the US owes most of its debt to china. china's economy is heavily dependent on the US consumer system to sell the goods manufactured there. so it's not exactly in china's interest to see the US economy fail, and all those consumers stop their overspending on chinese-produced goods.

but what if it did happen, and the US had to default on its loans? I think its worth looking at the 1929 stock market crash - who lost their fortunes, their savings, their stocks? certainly not the poor - they didn't have them to begin with. the very rich were the ones who lost the most, and those parasites deserved it - finally found themselves having to live like the rest of us. my grandparents, who lived on farms, say they did not notice a huge difference in their lives during the great depression - they kept on farming and living like they had, maybe with a few more people to feed - refugees from the cities. the massive drought brought about by 50 years of massive deforestation changed the picture a bit, with tons of farmers unable to farm their land which had turned to dust. now, given the current state of climate destabilization, it's definitely possible another drought could be on the way. but let's start with a scenario of no such drought, and see where it leads us.

so....usa defaults on its loans, offering to pay china five cents on the dollar. the government becomes insolvent, the stock market crashes, people run on the banks and the banks close their doors.

now, if you are a banker or extremely rich, then yeah, you should probably be afraid. but i am not afraid. and you, who are not bankers, should not be afraid either. i have seen how people react when their government abandons them, and i have been amazed at how quickly communities form and people begin to return to their true nature of mutual aid and support, rather than the self-preservation that we all assume would be our natural response -- because we have been culturally conditioned to believe this. but. it. is. not. true.

i think it would be a lot more like argentina when their economy failed - mutual aid and local organizing to take back the means of production.

seriously, we have been propping up this fucked up system with our hard labor for way too long. it's time for capitalism to fail! i look forward to meeting many of my neighbors for the first time, gathering on street corners in evening assemblies to figure out how our local infrastructure works, and how to take care of the seniors who, yes, will lose their social security checks (although states may jump in to provide the payments, if they have any money left), and to create a local economy based on trust and mutual aid instead of fear of scarcity. now i'm not naive enough to think this will be some sort of anarchist utopia right away, but i think it could be a real possibility for once in our lives.

even Time's worst-case scenario for a government default doesn't really sound that bad:
 link to moneyland.time.com

personally, i hope it would be a whole lot worse - causing the so-called 'world economy' to crash and burn. modern capitalism is a sham to extract the resources of this planet and hoard it in the bank accounts of a few. and it's time to expose this sham for what it is, and turn this whole thing around to make sure that we, and future generations, can survive. enough is enough! let the damn government default! and the banksters too! and wall street! enough of these parasites and their theft of our labor. let's get back to working the land.

Amazing Revelations By Economists Concerning The "Debt Ceiling Crisis"!!! 14.Jul.2011 15:27

blues

Angry Bear Blog
 http://www.angrybearblog.com/2011/04/social-security-debt-limit.html

If I get this right (details may be a bit off, since it's a complex article, and I'm too angry to read it carefully), the Angry Bear says that the Social Security payments must be made. Basically, the money the government pays monthly to the Social Security Trust Fund reduces what the government owes to the Fund. And the money owed to this Fund turns out to be a major portion of the national public debt. So... if the treasury does not pay the Fund, this instantly increases the national public debt!!! However, Food Stamps, Medicare, Medicaid, etc. may still be at risk. Not sure about Veteran's Benefits.

Corrente Blog
 link to www.correntewire.com

Scott Fullwiler says that established law empowers the U.S. Treasury to mint coins. And that they are able to simply mint a one trillion dollar coin, and the Federal Reserve is legally required to receive this coin, and to credit the Treasury with the one trillion dollars!!!