Liquidation of Debt? - I'm not clear on what Ron means..

[Butchie]

Ron has repeatedly said the solution to our debt is to liquidate it as we did after WWII, well I started to research this but the answer I found was strange. I have posted the full article below but the part that really baffled me is this:


"includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks."

This all sounds like exactly what the Fed and our govt is doing now, and what Ron speaks out AGAINST, so why is he advocating this as a solution???

http://blog.empiricalfinancellc.com/2011/05/stealth-government-debt-liquidation/

 

[Chester Copperpot]

liquidating bad debt = writing off the bad loans

 

[Feeding the Abscess]

Ron is speaking of default.

If he said default, more people would get it, and call him a miser, hater of the poor, etc.

 

[jmag]

This looks like the defaulting that Ron Paul is against. They are defaulting when they inflate by cheapening the dollar, and most don't think they are defaulting. Honest liquidation is a repudiation like in bankruptcy. Assets are turned into cash and creditors get what they can and it is finished. /disclaimer - I am no expert.

 

[nobody's_hero]

Yeah, it's basically just writing loans off; there's not supposed to be a partnership between banks and governments, which probably did happen after WWII. For example, in a bankruptcy court, the government is supposed to be a mediator—not taking sides, exactly.

Bankruptcy is a thing of the past, unfortunately, and it shouldn't be that way. We've become conditioned to believe that bankruptcy is a disastrous thing, but it's not. It's a way to get a fresh start when you have no other alternative. Well, who thinks getting a fresh start is a bad thing? (It's sort of how Americans now think that freedom is a bad thing, you can see how brainwashed the masses are).

Bankruptcy isn't painless for the person filing. Credit ratings take a hit and it is much harder to be trusted with loans in the future.

But the banks! oh! the banks really, really don't like bankruptcy, so they are colluding with the government to make it almost impossible to file, these days. See, no loans, no repayment. Nevermind the fact that the banks were the ones who authorized the loans to people who couldn't repay in the first place. Banks don't like that. And of course, our corporatist government doesn't like it when banks are unhappy. Especially the big ones that fund political campaigns.

 

[sailingaway]

This looks like the defaulting that Ron Paul is against. They are defaulting when they inflate by cheapening the dollar, and most don't think they are defaulting. Honest liquidation is a repudiation like in bankruptcy. Assets are turned into cash and creditors get what they can and it is finished. /disclaimer - I am no expert.

and creditors get it 'fairly' as much to each, not cronies taking theirs and running. It is a negotiated and calculated process, not in the shadows. Look at what Iceland did, for one way to do it.

 

[No Free Beer]

paying off debt (without asking for more), setting proper interest rates, and forgiving certain loans (writing them off).

 

[sailingaway]

paying off debt (without asking for more), setting proper interest rates, and forgiving certain loans (writing them off).

Yeah, Ron has never said default, just deal with it and get it over with.

 

[Feeding the Abscess]

Yeah, Ron has never said default, just deal with it and get it over with.

http://www.bloomberg.com/news/2011-...r-a-more-expensive-crisis-later-ron-paul.html

Default will be painful, but it is all but inevitable for a country as heavily indebted as the U.S. Just as pumping money into the system to combat a recession only ensures an unsustainable economic boom and a future recession worse than the first, so too does continuously raising the debt ceiling only forestall the day of reckoning and ensure that, when it comes, it will be cataclysmic.

We have a choice: default now and take our medicine, or put it off as long as possible, when the effects will be much worse.

 

[sailingaway]

http://www.bloomberg.com/news/2011-...r-a-more-expensive-crisis-later-ron-paul.html

OK so I was wrong....

And that is what he meant then!

Thanks for the link.

 

[dbill27]

liquidation of debt and let the market liquidate bad assets. When government bails out failing banks and companies, they're taking money that would go towards savings and growth and re-directing it towards areas that have already proven un-proffitable or unsustainable. As long as we try to prop up and delay the inevitable, the more damage is done and the longer we will feel economic pain.

 

[Carson]

Butchie,


I glanced at the article you posted and I wasn't able to find the part where Ron Paul explained Liquidation of Debt. I'll look at again later but I feel compelled to tell you what it means to me in today's economy.

For several decades, the banks that had no money, printed it up out of thin air and made risky home loans. That encouraged people to, not buy housing based on what it was worth, but based on what they were willing to gamble borrowing. For decades the gambles paid off because there was always someone willing to print up money they didn't have, and loan it to people willing to gamble home prices would rise.

See even though the prices rose, the real property was still just an asset or a quantity of a commodity.

When the bubble on the housing prices burst the honest way was to liquidate the debt. In other words the world still has the real property or the real quantity of a commodity but the loans have to be written off. The people that made the bad loans would have to take a loss.

That would allow the housing prices to fall to there real value and allow people waiting for a house to live in to move on the market and get true value for their money.

In our criminal society what is being done is the central banks are printing up more fake money to buy up the bad loans to keep the bubble afloat a little longer. That in turn put the bad loans on everyone like the way socialist do.

It only increases the pain on society as a whole to drag it out this way.


~To try clarify. Whenever someone counterfeits the money supply they don't really create anything that adds to the worlds wealth. The worlds wealth remains the same, they just illegally shift the ownership lines.

Maybe read the Super Dollar below.

The Band - The Weight (Woodstock 1969)

 

[Philosophy_of_Politics]

How much debt would be abolished if we were to liquidate it?

 

[Lovecraftian4Paul]

To me, he's saying let the lenders who get into trouble from making too many bad loans go bankrupt. The debt disappears because it's inherently toxic. They won't be able to sell it off and it just goes away.

The borrowers get punished regardless by blackening their credit records or having to declare bankruptcy. I'm okay with that. What I'm not okay with are lenders making bad business decisions and getting bailouts because they're "too bit to fail." Meanwhile, debt like student loans will persist no matter what on top of bailouts and consumer bankruptcy. The government has gone one step further there and made it impossible to discharge this type of toxic debt under bankruptcy hardship.

You're looking at the next financial crisis.

 

[Carson]

How much debt would be abolished if we were to liquidate it?

That is kind of a tough question to answer.

On the one hand you may be able to get an idea of what real commodities are worth by comparing them amongst themselves. A pound of sugar, or a pound of silver, or a gallon of gas are all real commodities. I'm thinking since they are what they are, their value has a stability built in. If you look at the commodity silver in monetary form, and gas; prices are still about the same as they were back in the 60's.

Commodities have a price or value stability built in.

It is only when we start to compare prices in the counterfeited fiat that prices go way out of whack.

See how the devaluation of the dollar in this chart based on the Consumer Price Index rise and stock prices seem to rise in tandem? If you knock off a couple of zeros on the DOW chart it is easy to explain the growth.

If you overlook a lot of variables and just look at the decrease in the value of the dollar one way it could be achieved is by counterfeiting the money supply about twenty six times over. If you multiply a 20,000.00 dollar fifty year old house by 26 maybe it really should run about $520,000.00. If that is the case I'm thinking there wouldn't be much debt would be abolished. Then again maybe that fifty year old house was $14,000 back then. That would make it $364,000.00 instead of $600,000.00. Multiply as an average by all of the houses and it could be lot of debt would be abolished.

Maybe the problem is our wages haven't been increased by 26 times. I can remember a minimum wage of $1.85. That would give a person starting out in an occupation a starting pay of $48.10 an hour.

P.S. Actually looking at just the debt of the housing market is pretty myopic. Maybe so is looking at ones share of the $17,000,000,000,000.00? or so in national debt. With the way we've allowed others outside of our country to fire up the fake money presses just where does it all end?

 

[The Free Hornet]

http://www.bloomberg.com/news/2011-...r-a-more-expensive-crisis-later-ron-paul.html

Thanks for making me read something.

Ron Paul's 3 historical examples of US default are ... interesting:

-- In 1934, the government banned ownership of gold and eliminated the right to exchange gold certificates for gold coins. It then immediately revalued gold from $20.67 per troy ounce to $35, thus devaluing the dollar holdings of all Americans by 40 percent.

-- From 1934 to 1968, the federal government continued to issue and redeem silver certificates, notes that circulated as legal tender that could be redeemed for silver coins or silver bars. In 1968, Congress unilaterally reneged on this obligation, too.

-- From 1934 to 1971, foreign governments were permitted by the U.S. government to exchange their dollars for gold through the gold window. In 1971, President Richard Nixon severed this final link between the dollar and gold by closing the gold window, thus in effect defaulting once again on a debt obligation of the U.S. government.

Questions:

• Would Ron Paul have advocated the action taken in each of those cases?
• Did these defaults lead to less future debt or restrained spending?
• Why didn't the world end?
• In each case above, the holdings were still worth something because of the fiat currency system, what would treasury bonds be worth?

Silver certificates are still legal tender and exchangable for Federal Reserve Notes (blah!). Anyway, there was a clear devaluation in each instance but the notes didn't become worthless.

Here are more questions:

• Will only the treasury bonds be devalued or will they whack our precious fiat dollars (more so)?
• Does a default matter if we continue to accumulate debt at the same rate?
• Should the prudent investor just assume we are defaulting already?
• How is Bernanke's Fed any different from the above devaluations?

 

[sailingaway]

Thanks for making me read something.

Ron Paul's 3 historical examples of US default are ... interesting:



Questions:

• Would Ron Paul have advocated the action taken in each of those cases?
• Did these defaults lead to less future debt or restrained spending?
• Why didn't the world end?
• In each case above, the holdings were still worth something because of the fiat currency system, what would treasury bonds be worth?

Silver certificates are still legal tender and exchangable for Federal Reserve Notes (blah!). Anyway, there was a clear devaluation in each instance but the notes didn't become worthless.

Here are more questions:

• Will only the treasury bonds be devalued or will they whack our precious fiat dollars (more so)?
• Does a default matter if we continue to accumulate debt at the same rate?
• Should the prudent investor just assume we are defaulting already?
• How is Bernanke's Fed any different from the above devaluations?

well, he did say he thought the #1.7 trillion we 'owe' the federal reserve as interest isn't real debt since it is our money they devaluate when they print more, anyhow....

 

[ClydeCoulter]

Even though I don't believe in redistribution of wealth, something has to give with all of this theft. We can't just go on a sound money system with a straigtht cross over of the current dollar. Prosecutions or something has to happen. I'm tired of "fines" that don't reimburse the one that was stolen from, no matter how obscure the crime.

 

[Crystallas]

We can always put all of our fiat money in one crucible and all of our gold in another. See which one liquefies better?

 

[sailingaway]

Even though I don't believe in redistribution of wealth, something has to give with all of this theft. We can't just go on a sound money system with a straigtht cross over of the current dollar. Prosecutions or something has to happen. I'm tired of "fines" that don't reimburse the one that was stolen from, no matter how obscure the crime.

there is a difference between 'redistribution' and 'restitution' but I'm not sure how you'd calculate it.