[quote=briansd1][quote=Nor-LA-SD-GUY2]
But while I am sure china deserves to be paid back the full value of every penny we borrowed (NOT!!) I think the gold standard would be a disaster at this point.[/quote]
I fail to see how the Tea Party is populist when they advocate guaranteeing that bondholders get paid while they cut pensions and benefits for ordinary citizens.
China and other holders of treasuries will be paid back for sure. But pensioners can take a haircut.
During the Debt Ceiling debate there was something weird about listening to Tea Party adherents say that Congress should pass legislation to allocate funds to bondholders first.[/quote]
This is a bit of a strawman argument. Simply put, if we don’t pay off the bondholders, they will not lend to us or will charge us prorated based upon what the expected chance of default is. Want to see interest rates spike? Don’t pay off the bondholders. The Feds purchasing can’t counter market behavior, just dampen it out a bit. The Thai government tried to counter the devaluation of the Baht.. and lost badly.
The real thing is that we need to live within our means. Blaming the bondholders for letting us borrow the money to buy the rope to hang ourselves with is stupid and childish.
To say that no borrowing should be done is wrong. During times of financial stress, the gov. should spend more (borrowing to do that). That also means that during times of good, the government should cut spending including on social services (paying back the loan). Problem here is that our government currently acts as a child who seeing a dollar, has got to spend it.
