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I'm not saying that the U.S. defaulting on it's debt would resemble post-World War I Germany.

I'm just saying that I've started refreshing myself on that era of history.

It's the closest modern-day parallel I could think of.

Oh, and we're buying a deep freezer and some rain barrels this week, just in case the zombie hordes do happen to show up.

Even with all of Germany's economic shortcomings, it could have still been possible to make reparation payments if foreign countries had not placed protective tariffs on Germany's goods. With the income Germany could have gained by selling goods in foreign countries, for relatively low prices, reparation payments could have become feasible. The protective tariffs made this idea impossible and further depressed the German economy. Faced with reparation payments they could not afford, Germany began printing exaggerated amounts of money. This threw Germany into a state of super inflation. Inflation reached the point where millions of marks were worthless. Cartoons of the time depicted people with wheelbarrows full of money who could not buy a loaf of bread. "With the approach of world crisis foreign lenders withdrew capital and markets further closed against German imports" (Sweezy 8). The United States was an extremely significant example of this. When the U.S. was hit by the great depression they immediately sought to get the loans, which they had made to German, paid back. This, in addition to all of Germany's other problems, practically caused the German economy to collapse.

I'm sure economic experts will point out a thousand ways in which a post-Default United States would be completely different from post-Versailles Germany, and I welcome all of those explanations.

I'm just hoping that by "different" they mean "not nearly as bad as" instead of "far, far worse".

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Comment Preferences

  •  The Blessed Karl of Austria tried to make a (2+ / 0-)
    Recommended by:
    Horace Boothroyd III, Lepanto

    separate peace. Instead, Central Europe is carved into several dozen little states, some of which are as autocratic as Austria-Hungary, including Austria and Hungary.

    Be careful about what you wish for.

    The "Shot heard 'round the world" is now known as the "Pinochet Ricochet". --commonmass

    by commonmass on Tue Oct 08, 2013 at 07:05:04 PM PDT

  •  My great grandfather, by the way, fought in (3+ / 0-)
    Recommended by:
    Brainwrap, Lepanto, kaliope

    that war on a side you might not suspect:

    The "Shot heard 'round the world" is now known as the "Pinochet Ricochet". --commonmass

    by commonmass on Tue Oct 08, 2013 at 07:12:27 PM PDT

  •  Is the debt ceiling really the GOP's (6+ / 0-)

    final volley? No way they'd do sequestration, but they did it, and we now live under it. No way they'd do a government shut down. But they did it, and seem to actually be taking a liking to it. Now they are looking at defaulting us, and some are doubting they'll that.

    What's really going to happen is that they're going to send us into default, then prevent us from getting out of it, and then move on to their next even huger threat, as their pattern has been. But what will that be?

  •  Destablization of the world economy and rescue (1+ / 0-)
    Recommended by:
    commonmass

    by these confederate bigots.  All to protect the wealth of the 1% and render Obama helpless by world wide unrest due to the debt ceiling default.

  •  Germany had a hyperinflation problem (0+ / 0-)

    Which is something mostly seen in the 20th century, and seems to always have a large amount of debt owned by somebody else that must be paid in foreign currency (their own currency can't pay the debt).

    So the govt prints money to cover their internal obligations and all the foreign money goes to pay the debts.   This doesn't have to cause hyperinflation (the life and times of the Soviet Ruble through the 60s-80s shows a more normal trend of soft currency), but it will if the govt misjudges the economy that does treat their currency as money.

    Most hyperinflation periods end when the govt does the math and issues a new currency that is more in line with the actual economy.

    Hyperinflation has never happened for a country in the USA's situation.  Yes, we have debt, but it's all in dollars and nobody can make us pay in anything else.

    We are far more likely to have a credit crunch and deflationary death spiral (more like early 30s) in this situation than hyperinflation.

    •  The period of Weimar Republic that we are in (1+ / 0-)
      Recommended by:
      kaliope

      is early 30s, when the Nazi party used obstructive parliamentary tactics to prevent any government business from being done.  In a Prime Minister type government, the government falls when it can't manage a majority, and new elections are held.

      There were LOTS of elections, with some gains for Nazis, but it peaked out.  They remained so annoying that finally the powers that be offered Hitler the Chancellor position, and figured they could control him.   They were wrong.  He used his new powers to gin up a state of emergency and change election rules so the Nazi power couldn't be removed without armed force.

      It's harder to gridlock the US system, but the stupid Debt Ceiling and the way that continuing resolutions aren't automatic does make control of either house of Congress or the presidency a vehicle for significant damage.   Obama and the Ds are in a much stronger position than the Weimar majority in the early 30s, as a constitutional crisis at this point isn't going to sweep the Rs into power any time soon, and one way or another this particular gridlock will have played out by the end of this year, giving us a sense of what the new rules are going to be going forward.

      Yeah, we might have a horrible economic collapse.  But there are no elections for over a year, and the American system leaves you stuck with what you have, for better or worse, even after a really awful crisis and dysfunction.   That's the advantage of a presidential system over a Prime Minister system (the disadvantage is you can have divided government for extended periods, the true consequences of which we're just seeing now after about 250ish years because only the Civil War period had a minority party unwilling to try again at the next election)

       

      •  No *national* elections, you mean (1+ / 0-)
        Recommended by:
        kaliope

        Some states are electing governors and state reps and such THIS year - and they need paying attention to.

        If it's
        Not your body,
        Then it's
        Not your choice
        And it's
        None of your damn business!

        by TheOtherMaven on Tue Oct 08, 2013 at 10:25:47 PM PDT

        [ Parent ]

        •  True enough. (0+ / 0-)

          But I was talking about a party getting a national leader in that changed the rules.  There isn't any appeal when the guys at the top do it (see Bush vs Gore).  

          If a state tries to nullify the feds, there is recourse.  Yes, they talk about it a lot but DoJ does actually push back and so far has succeeded.

          Some states dumb enough to elect Rs in 2010 have paid a pretty steep price and look to keep paying for a while yet.  I am thankful that CA remained sane in 2010.

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