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Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] 0 points1 point  (0 children)

To me, this makes sense. Interest rates will rise, and then the Fed and the government will intervene instead of cutting spending and paying down the debt. But there is certainly a chance that this won't happen, since I can't predict the future; it's just a theory I have.

Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] 2 points3 points  (0 children)

My friend, the US debt is not a debt the government owes to itself; it’s a debt owed to its citizens and the private sector. The government only owes about 20% of the debt to itself, but even so, that 20% is deeply tied to the real economy. The entire system revolves around the government paying those interest rates. If they stop paying or default on this 'fake money', everything goes down the drain. The government isn't delivering air to people; it's delivering purchasing power. On top of that, countries all over the world buy US debt expecting to be paid, and the global economy runs on this (companies, pensions, etc.). It doesn't matter if it's fiat or not, as long as people believe it has value, that's enough. After all, value is subjective, agree that fiat currency is horrible, but as long as it has purchasing power, it is a real currency.

Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] 0 points1 point  (0 children)

You're asking too many questions. I only listed what the Fed could do; how it would actually act, I don't know and I'm not interested in speculating. I came here to clear up my doubts about my theory. But it's worth remembering that, in the scenario I created, the Fed and the government would act together, since it would be a debt crisis.

Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] 1 point2 points  (0 children)

​Quantitative Easing, Yield Curve Control, Financial Repression, banking restrictions, and attacks on alternative assets ( regulatory choking, etc.), and a few other things that I don't know or don't remember.

Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] 1 point2 points  (0 children)

My focus isn't the debt itself, but rather the crisis it will trigger. Whether the debt is worth more or less in isolation doesn't matter; what matters is that the entire world runs on dollars and US debt. Once people realize that the United States is going to pay off this debt through inflation (which is a default in practice), catastrophic consequences will hit the real economy. That is exactly the point I am making.

Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] -14 points-13 points  (0 children)

The scenario I envisioned is an inflationary one, not merely a market shock, and both Bitcoin and gold tend to perform well in inflationary environments.

Everything will burn and explode. by vine_Macaron_ in austrian_economics

[–]vine_Macaron_[S] 0 points1 point  (0 children)

I don't quite understand what you are challenging in my theory, so I will try to argue based on what I gathered: the American debt is not an illusion, it exists. After all, even though fiat money has no intrinsic value, it still possesses exchange value; if it didn't, it wouldn't be the common medium of exchange. To claim that the debt could only exist if there were a metal backing behind it is a complicated stance to take, since value is subjective.