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Government default on pension obligations

That's not what you said, you said foreign debt, Foreign debt is defined as an outstanding loan or set of loans that one country owes to another country or institutions within that country. What you're talking about when Venezuela issued bonds in U.S. dollars is currency substitution. Which has been used by some countries to stop hyperinflation.

What I was talking about was debt owed in something other than one's own currency. You can always meet obligations in your own currency, if you are monetarily sovereign. That debt is not a problem. Venezuela (and a lot of other countries) got into trouble with foreign debt because you have no control over the relative prices of currencies. And that all stemmed from their giant drop in revenues due to the price of oil falling. Venezuela needs foreign currency to buy food and necessities, which their poorly diversified economy does not produce enough of. They did what they believed they had to do to feed their people.

Really Venezuela is a text book example, yes they had a problem with oil prices falling, but that didn't cause their hyperinflation, and yes they had other problems, but had they not just printed more money, there would not have been hyperinflation. There are MANY counties that have and had problem that didn't lead to hyperinflation, as the government contained their spending, thus keeping their money supply under control.

There is always an underlying economic problem. Countries don't just print up tons of money without a reason. It's usually a poor response, but it's still a response, not a cause. Not printing money would not have solved Venezuela's underlying economic problems, which were mainly due to the loss of foreign revenue from oil.

Here's the question I always ask of people who think that money printing is the root cause of hyperinflation: find me some examples of countries that spent their own currency into their domestic economies which resulted in hyperinflation. (Don't bother looking, you won't find any.) This is the question that relates to the U.S., because the U.S. creates money for the government to spend on domestic production. It is the question asked by the OP, at least at the federal level. And the answer is, as long as the economy can meet the increased demand (and they can), not only will there be no increase in normal inflation, the increased aggregate demand will be a boon for the economy.
 
Type in ‘California Cities Defaulting’ and search. The first hit I get on Google is a nationwide map. Captain Adverse is correct about bringing links to the OP table.

You may also want to include Veteran’s Pensions and Benefits with Social Security. I’d put city pensions together with STATE pensions and benefits.

There are a host of reasons why California is defaulting on pensions. They have taxed the citizens up to their eyeballs ( I know, lived there 37 years until 2016) and there is not much ceiling left.

-VySky
 
I am amused by the title of this thread - which is a right wing wet dream that they squeal in delight at the prospect.
 
What I was talking about was debt owed in something other than one's own currency. You can always meet obligations in your own currency, if you are monetarily sovereign. That debt is not a problem. Venezuela (and a lot of other countries) got into trouble with foreign debt because you have no control over the relative prices of currencies. And that all stemmed from their giant drop in revenues due to the price of oil falling. Venezuela needs foreign currency to buy food and necessities, which their poorly diversified economy does not produce enough of. They did what they believed they had to do to feed their people.



There is always an underlying economic problem. Countries don't just print up tons of money without a reason. It's usually a poor response, but it's still a response, not a cause. Not printing money would not have solved Venezuela's underlying economic problems, which were mainly due to the loss of foreign revenue from oil.

Here's the question I always ask of people who think that money printing is the root cause of hyperinflation: find me some examples of countries that spent their own currency into their domestic economies which resulted in hyperinflation. (Don't bother looking, you won't find any.) This is the question that relates to the U.S., because the U.S. creates money for the government to spend on domestic production. It is the question asked by the OP, at least at the federal level. And the answer is, as long as the economy can meet the increased demand (and they can), not only will there be no increase in normal inflation, the increased aggregate demand will be a boon for the economy.

No the problem in Venezuela wasn't the drop in oil price it was the government's response. There have been many countries that have suffer from price drop, economic downturns that haven't suffer hyperinflation.

Look I know you have your mind made up that something caused the government to print money, and while there maybe something in the economy the might be a trigger, the FACT is the government printed more and more money is the cause of hyperinflation. Take Venezuela, had they NOT printed more money, they wouldn't have had hyperinflation. Yes the government would have had to cut back, but they didn't NEED to print more money. If you look at Greece had they just printed more money they would have had hyperinflation, but they didn't due to a number of factor. But they had high debt, a recession, a high public debt to GDP ratio, etc so there were many "triggers" yet no hyperinflation. It's the government decision to print it way out of trouble that causes hyperinflation no matter what the "trigger" is.
 
No the problem in Venezuela wasn't the drop in oil price it was the government's response. There have been many countries that have suffer from price drop, economic downturns that haven't suffer hyperinflation.

Sure, the U.S. didn't suffer hyperinflation, either, even though we produce a lot of oil. The difference is that oil was (is) a too-large part of their economy, to the point where they were dependent on the money they received from oil exports. The Saudi's lived off of their foreign reserves, which were greatly depleted. The U.S. economy barely flinched, because the rest of our economy is strong.

Look I know you have your mind made up that something caused the government to print money, and while there maybe something in the economy the might be a trigger, the FACT is the government printed more and more money is the cause of hyperinflation. Take Venezuela, had they NOT printed more money, they wouldn't have had hyperinflation. Yes the government would have had to cut back, but they didn't NEED to print more money. If you look at Greece had they just printed more money they would have had hyperinflation, but they didn't due to a number of factor. But they had high debt, a recession, a high public debt to GDP ratio, etc so there were many "triggers" yet no hyperinflation. It's the government decision to print it way out of trouble that causes hyperinflation no matter what the "trigger" is.

I have my mind made up? What about you? You just made a declaratory statement in your own defense ("the FACT is the government printed more and more money is the cause of hyperinflation.") But you have come up way short when it comes to backing up your reasoning with examples that would isolate money printing and spending as the root cause of hyperinflation.

Euro-using countries don't have the legal ability to print more euros. Those governments are in a true borrowing situation; they are also limited by certain limits on their debt and spending by the terms of the Maastricht Treaty. And this treaty-imposed "fiscal discipline" hasn't worked out too well for them - their economy shrank over 40% from 2009-2015. If they still had their own currency, and the ability to deficit spend as they saw fit, the Drachma probably would have dropped in value against the Euro, allowing the Greek economy to recover via increased exports.

There is also no evidence that a high debt-to-GDP ratio is at all problematic, let alone a trigger for hyperinflation.

So I'll ask again - give me some examples of countries that suffered hyperinflation simply because they created and spent too much money into their economy. Where they didn't suffer from any large drops in production/income and/or didn't have large amounts of foreign-denominated debt.
 
Is the Social Security fund running out of funds and is there a danger it could go into default on its obligations? Yes. Several American cities have already defaulted on their pension obligations due to bankruptcy. There are those who think the government cannot possibly default on its obligations, but those people don't know what they are talking about.

False Analogy Fallacy.

Municipalities are limited in what they can do to raise money. Part of those limitations involves the charter of the municipality and that is based on that State's constitution.

It is more than likely that the OASI Trust Fund will run out far earlier than 2035. That is due to the fact that the Trustees never factor in recessions when making their projections, and there will be at least one, if not two or three recessions before 2035. The most likely date is 2025-2027.

During the last recession, the Average Wage Index decreased in 2009, so that those turning 62 in 2009 got less in Social Security benefits than those who turned 62 in 2008 or 2010 and later.

Only the faint-hearted actually believe the OASI Trust Fund will be exhausted completely. Congress will step in at the last minute like it always does.

Social Security and Medicare are funded using the same 6th Grade Math:

Revenues = # of Workers * Wages * Tax Rate

You are 11 Million workers short and will never be able to make up the difference. In 1940, there were 159.4 Workers paying the benefits of one single beneficiary. Today there are only 2.6 Workers paying for a single beneficiary.

The logical thing is simply to increase the FICA tax rate from 6.2% for employer and employee to 8.0%-8.4% for employer and employee.

Problem solved. Not only is the problem solved now, but it will remain solvent for the next 200-400 years, because the ratio of Worker-to-Beneficiaries will be fixed at 2:1 from 2040 and on over the next 200-400 years.

The Silent Generation suffered at 520% FICA tax increase to save Social Security for them.

Boomers endured a 72% FICA tax increase to save Social Security for them.

Why are Generation X-Box and Generation Y-Work so pathetic that they cannot handled a 29%-34% FICA tax increase?
 
We will run out of money for welfare and food stamps long before we do for social security.

And run out of welfare and food stamp money for Americans before we run out of money for illegal immigrants. Already, massive sums are diverted from Social Security recipients to illegal immigrants.
 
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