to think through, and I am pondering on the go, as a thought experiment, let us suppose tomorrow trump, instead of going for a wall, and pushes button on foreign-owned debt jubilee. what happens next?
- 1/3 of fed debt (6 trillion out of a lot more trillions enumerated earlier) explodes in foreigners hand, and everything else blows up in the domestics wallet due to sharp rise in market interest rate to refinance the remaining load of 2/3 of fed debt, and along with that kaboom, goes the state, local, corporate, and individual debts
- 25 trillion of domestically held debt would have to be rolled over (1.x X GDP), and 100-200 trillion of unfunded obligations then exposed to sun shine given the then topical news
- market interest rate would go up sharply, or fed rate go seriously negative via fiat money suppression
- not good
what happens next?
- no more foreign buyers of new debt, and would take domestic printing, taxing, and borrowing no time to rack up 7 trillion of new debt crammed down domestic throats, that which used to be financed by overseas savings pool, and
the same domestics population would be relieved of 7 trillion of overseas equity holdings ala compensatory confiscation and concurrent exchange control by newly-stiffed creditor nations, corporations and individuals - not good
consolation prize, gold goes to ... any number |
