It would probably be even sillier if they could only downgrade AFTER a default. Would make the ratings kind of... pointless...

Good point.


I suspect the problem may be harder than just converting dollars into gold. If US currency becomes worthless and the economy tanks, stuff will not be manufactured anymore, so you wouldn't have anything to buy with that gold.


FWIW, when the Soviet Union collapsed and their currency became worthless, guns weren't the most popular items at all.

The United States has already defaulted.

a government bond gets a triple A rating when it is willing to pay the interest on their debts in a stable currency. The US Dollar is not a stable currency.

Now there are two ways a government can default, it can default by not paying the interest and restructuring its debt as happened in Argentina and in other countries repeatedly, or it can repay the interest and the debt in a depreciated currency. The United States has chosen the latter, and is now paying the price for this in the marketplace.

Like I said before, this is all about the dollar. Forget stocks and ratings and everything else. Focus on the dollar. It is headed towards CharminLand.

The downgrade of the past week is just the first of more to come.

Huh! I know better - for sure. The demand for guns in New Russia since 90s skyrocketed despite the heavily enforced total ban on any rifled firearms sales. People were even prospecting them from WWII battlefields.

There's obviously a lot I don't understand about the national debt and debt default.

The U.S. Debt Clock says our National Debt is $14,587,715,000,000+ and rising by the minute.

It has never been paid and will never be paid. What would this debt do to YOUR credit rating?

You can't eat gold.

Sue

I agree. My story is that I've been removing myself from any influence of western banking little by little for a long time now. That basically means living a simpler life in the country and providing more of my day to day needs myself. If the price of eggs goes through the roof, it doesn't really affect me anymore. If some banks collapse, no big deal for me. So in that sense, it's not really about the convertibility of gold it's separating yourself from a system that is failing miserably.

I guess there is no contradiction between what I said and what you say. The demand for guns may have skyrocketed, but guns still weren't the most popular thing to trade at all, at least between regular people (as opposed to organized crime group firearm suppliers). So if a regular person wanted to go buy some food or clothes and wanted to trade something for it, guns or ammo weren't the most popular trades, nor the safest ones. If you offer ammo in exchange for food, most people would refuse, and those who accept are pretty likely to kill you instead of paying.

Gold has been money for at least 5,000 years. Our constitution says that only gold and silver may be used as money. The fact that the United States government said that gold was no longer money in 1972 doesn't make it so. You can't compare 40 years to 5,000 years.

Gold IS money. The rest of the world understands this. Throw out your public school education and embrace what the rest of the world already knows. Gold has and will continue to reassert itself as money in the United States. You've seen it quite plainly in the last few days, but the demise of the dollar in earnest began more than 10 years ago when gold was a paltry $250 an ounce.

You are correct that I can't eat gold, but I can use it to buy lots of farmland - something that takes more and more dollars every day as the dollar loses value.

Good point. Nothing works the way it is "supposed to" now. Stocks for the long run and capital appreciation? Fixed income for when you retire to live off the interest? Cash is for suckers? Real estate never goes down? Gold is a "barbaric relic"? Each generation has a higher standard of living than the previous one? The "invisible hand" of the market will regulate the markets and rationality will keep things from blowing up?

Ack, it's like I've woken up in some alternate universe!

Basically its a very large Ponzi scheme. Take for example the Accounts for the Royal Bank of Scotland. It has a balance sheet that doesn't balance and through creative accountancy its balance sheet (which is normally a snapshot statement of assets and liability finance) has shrunk by over £1,800,000,000,000 in the last 2 years or an amount considerably more than the GDP of the UK, yet appears not to have produced any substantial operating losses on its profit and loss statement. It's essentially a Zombie Bank.

The only explanation would be that the accounts are fiddled with huge off balance sheet transactions from the secretive shadow world banking system (the Federal reserve at its heart), which is unaccountable to share owners and even Governments, who are meant to regulate through company and tax law. (even its previous Company Directors haven't been struck off)

Unaccountable and the corrupt auditing of the bedrock of capitalism is nothing short of gangsterism, hence the correct term bankster and the term Enrononomics.

Multiple this effect of this one institution again and again, with the Banksters attempt to socialise their losses through Government debt default and austerity measures to plug the gap left by the Bankster bail outs to shore up the even larger derivatives Ponzi scheme bubble, whilst the good time profits remain in their hands will eventually just lead to situations such as the current London Blitz.