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Buffett - Us Debt Is Still Aaa----Merged threads

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http://www.guardian.co.uk/business/2011/aug/08/stock-market-turmoil-us-downgrade-eurozone-crisis

11.40am: As America wakes up, talk in the financial markets continues to centre on S&P's downgrading of the prized triple-A credit rating.

Legendary investor Warren Buffett has issued another rallying cry this morning, insisting that America deserves the best credit rating around. He just appeared on CNBC to announce that his firm, Berkshire Hathaway, is still buying US Treasuries, and that his view of America's government debt has not changed.

If anything, it may change my opinion on S&P.

Our currency is not AAA, and in recent months the performance of our government has not been AAA, but our debt is AAA.

It's worth remembering that Berkshire Hathaway already holds about $40bn in US government bonds - Buffett isn't a man who going around talking his book down.

Buffett trying to buy time to offload his bonds?

Not sure how if the currency is not AAA then the debt can be AAA. Currency and debt are interlinked with one another.

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http://www.guardian....eurozone-crisis

Buffett trying to buy time to offload his bonds?

Not sure how if the currency is not AAA then the debt can be AAA. Currency and debt are interlinked with one another.

He's saying you'll get your money back. But it might not buy you as many BMWs.

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I think he just means you are certain to get repaid - after all, they have the printing plates.

Yep, they may as well just stamp any number they like on leaves and pay in those, would cost them less to produce too :)

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He's saying you'll get your money back. But it might not buy you as many BMWs.

Surely that depends on your view if you think purchasing power is important in your investments.

If your purchasing power declines with your investment is it really AAA?

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http://www.guardian....eurozone-crisis

Buffett trying to buy time to offload his bonds?

Not sure how if the currency is not AAA then the debt can be AAA. Currency and debt are interlinked with one another.

That's the same kind of hubristic nonsense some chap posted here yesterday: "We won't repay what we borrowed but you should still say we're perfectly credit worthy. It's because we devalued our currency you see, not the bonds."

If this this kind of thinking still rules, we're still in the same mess as we were in 2008. And typing this I realise, I already knew that. :(

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He's saying you'll get your money back. But it might not buy you as many BMWs.

Agreed, but it's a technicality - all government fiat money is essentially debt, whether cash or bonds. Even notes can essentially be seen as tokens to pay taxes with, which is a debt we're all carrying as soon as any trade is done in the fiat currency (or arguably anything not done on the black market).

That said, it's interesting that investors were abandoning US treasuries, in favour of storing cash in custodial bank (i.e. essentially safety deposit boxes) accounts. Therefore, you could argue that there is a perceived difference between government bonds and cash. However, if they defaulted on one, I see no reason why they couldn't default on the other, in the form of the 'New Dollar' replacing old 1:10 or some such, with the old notes expiring.

In short, claiming that one form of debt is fine, because it's only the underlying form of debt provided by the same issuer which is being debased, is rather odd. Ofc, it does bring into the question of the legitimacy of both US treasuries and their dollar notes/cash, when either can be defaulted on so easily.

Edited by Traktion

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That said, it's interesting that investors were abandoning US treasuries, in favour of storing cash in custodial bank (i.e. essentially safety deposit boxes) accounts. Therefore, you could argue that there is a perceived difference between government bonds and cash. However, if they defaulted on one, I see no reason why they couldn't default on the other, in the form of the 'New Dollar' replacing old 1:10 or some such, with the old notes expiring.

Technically isn't the dollar illegal currency under the constitution? Doesn't the constitution say the only legal tender US tender is gold/silver???

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http://www.cnbc.com/id/44051683

Former Federal Reserve Chairman Alan Greenspan on Sunday ruled out the chance of a US default following S&P's decision to downgrade America's credit rating.

"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press

"What I think the S&P thing did was to hit a nerve that there's something basically bad going on, and it's hit the self-esteem of the United States, the psyche" said Greenspan

Austan Goolsbee, the chairman of the White House's council of economic advisors, hit out at S&P on the same show, insisting the credit ratings agency had got its math wrong.

"Well, the basic case is they made a $2 trillion math error and forgot to check their work," he said. "So rating agencies that didn't make a $2 trillion math error reaffirmed the AAA status. You saw Warren Buffet say that, if they had a AAAA, he would put U.S. Treasurys in AAAA status."

Following the decision to downgrade America's credit rating, the head of sovereign ratings at S&P, David Beers, said the Obama administrations analysis of the move was a complete "misrepresentation."

Greenspan said the current sense of crisis that has unnerved investors is about the euro zone, not the US.

'The United States was actually doing relatively well, sluggish but going forward until Italy ran into trouble," he said. "That destabilized the European system, and the crisis re-emerged. Europe is very critical to the United States in the sense not only do we have a fourth of our experts there, but more importantly, significant proportion of the foreign affiliate profits, in fact half of U.S. corporations, are in Europe."

"When Italy showed signs of significant weakness in selling its bonds—the yield is now over 6 percent, which is an unsustainable level—it created a massive problem within Europe because Italy is a very large country, cannot be easily bailed out and, indeed, cannot be bailed out," Greenspan added.

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"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press

ie DEFAULT.

They really are desperate now, aren't they?

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"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default" said Greenspan on NBC's Meet the Press

Excellent we'll never default we'll just give you worthless bits of paper back.

The Weimar never ran out of money they just printed more, until tax revenues reached 4% of expenditure however they never ran out of money.

It's amazing they think saying this will calm the markets, unless they are hoping if you do X we'll print our way to oblivion now behave.

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Technically isn't the dollar illegal currency under the constitution? Doesn't the constitution say the only legal tender US tender is gold/silver???

:blink::unsure:

Wot....?

LIAR DOLLARS....?

.

:huh::unsure::unsure:

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The head of S&P explained the error and why it didnt matter.

The $2tr figure comes out the end of some compounded forecast over 10 plus years and has a confidence interval itself of -/+10trillion!

Therefore Alan Dickhead either doesnt understand or doesn't want to. Clearly he'd rather throw his lot in with the extend and pretenders than face the issue head on.

The print the money thing is old hat too. Inflating away debts with printing is effectively a default - so its really a question of semantics. You think people will treat the dollar as reserve and/or lend the US govt anything if this is the route they choose to repay their creditors. Good luck buying that oil when no one wants your still wet dollah!

Finally, US default wont happen because funnily enough repayments of borrowing are tiny in comparison to all the other fed spending that goes on, and l pretty much expect a few bureacrats losing a weeks wage here and there is far more likely than the govt outright defaulting instead.

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Excellent we'll never default we'll just give you worthless bits of paper back.

The Weimar never ran out of money they just printed more, until tax revenues reached 4% of expenditure however they never ran out of money.

It's amazing they think saying this will calm the markets, unless they are hoping if you do X we'll print our way to oblivion now behave.

Greenspan is trying to insinuate that the US is printing this money when in fact it is the private cartel that sells the USA the paper and then asks interest.

The money isn't the USAs to print , that is the private cartels job.

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ie DEFAULT.

Greenspan is a clever man... I've never caught him in a lie, but he seems very happy to make ambiguous statements that can be interpreted in different ways by different people.

To me "US will never default because it can just print money" is deserving of several interpretations:

  • Whatever happens, it won't involve the government refusing to credit accounts with nominal sums.

  • Greenspan knows you will assume he's pulling the wool over your eyes - and that's good, because he wants you to stand opposed to the Democrats' wishes to spend on account of his political convictions.

  • Extraordinary events should now be assumed more probable - why else would Greenspan issue a denial of the risk of "default"?

I find most of what Greenspan says to be relevant and accurate... but that it needs a narrow interpretation.

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http://www.usconstitution.net/xconst_A1Sec10.html

Article 1 - The Legislative Branch

Section 10 - Powers Prohibited of States

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

No State shall, without the Consent of Congress, lay any duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

However it might be down to interpration as this is about "states" rather than the national govt. Ron Paul has been a clear advocate that gold/silver is the only legal tender.

http://fauxcapitalist.com/2011/04/30/the-u-s-constitution-doesnt-say-money-should-be-gold-or-silver-coin/

The documentary, Fiat Empire, makes the claim:

“When you suggest to people that their money should be gold or silver coin, as it says in the Constitution, they sometimes stare at you with a blank expression, or make the most extraordinary comments.“

In some cases, those responses are justified, since the Constitution doesn’t say money should be gold or silver coin.

Article I, Section 8 of the Constitution grants Congress the power “To coin Money,” but nowhere is the word “money” defined in the Constitution.

The Coinage Act of 1792 provided for the coining of copper, in addition to gold and silver, and made those coins lawful tender, showing that something other than gold and silver were coined as money by Congress during the era of the Founding Fathers.

Some cite Article I, Section 10 to claim the Constitution says money should be gold or silver coin.

“[No State shall] make any Thing but gold and silver Coin a Tender in Payment of Debts;“

But that is a restriction on the individual States of what they can make legal tender, and not a requirement that they make gold and silver coin legal tender. In the same section is the restriction which prohibits the States from coining money, so the only money that can be coined by government is by Congress, and includes more than just gold and silver.

However reading this if they have the power to "coin" money that could be taken to imply the only legal tender could be coins rather than bits of paper with dollars written on them.

From a legal aspect this could get very interesting.

http://en.wikipedia.org/wiki/Legal_Tender_Cases

So far the courts have upheld the idea fiat is legal tender.

Legal Tender Act of 1862

The Legal Tender Act of 1862 was enacted to issue paper money to finance the Civil War without raising taxes.[5] The paper money depreciated in terms of gold and became the subject of controversy, particularly because debts contracted earlier could be paid in this cheaper currency.[6]

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That said, it's interesting that investors were abandoning US treasuries, in favour of storing cash in custodial bank (i.e. essentially safety deposit boxes) accounts. Therefore, you could argue that there is a perceived difference between government bonds and cash. However, if they defaulted on one, I see no reason why they couldn't default on the other, in the form of the 'New Dollar' replacing old 1:10 or some such, with the old notes expiring.

In short, claiming that one form of debt is fine, because it's only the underlying form of debt provided by the same issuer which is being debased, is rather odd. Ofc, it does bring into the question of the legitimacy of both US treasuries and their dollar notes/cash, when either can be defaulted on so easily.

Agreed - if a sovereign currency issuer defaults then the currency itself is finished.

Of course, if they openly print to pay government debts then the currency is also not long for this world either. But it gives anyone with a whit of financial nous the chance to get out whilst the economically clueless public end up taking the ultimate pain.

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Greenspan is a clever man... I've never caught him in a lie, but he seems very happy to make ambiguous statements that can be interpreted in different ways by different people.

To me "US will never default because it can just print money" is deserving of several interpretations:

  • Whatever happens, it won't involve the government refusing to credit accounts with nominal sums.

  • Greenspan knows you will assume he's pulling the wool over your eyes - and that's good, because he wants you to stand opposed to the Democrats' wishes to spend on account of his political convictions.

  • Extraordinary events should now be assumed more probable - why else would Greenspan issue a denial of the risk of "default"?

I find most of what Greenspan says to be relevant and accurate... but that it needs a narrow interpretation.

Yep you'll never get to pin anything on him.

He's turned ambiguity into a surreal art form.

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:blink::unsure:

Wot....?

LIAR DOLLARS....?

.

:huh::unsure::unsure:

DENIAL DOLLARS more like.

Just watching Doomberg, and its all goodness and light...in spite of Futures falls.

course, the G7 has pledged to take whatever measures to protect currencies and economies....arent WE part of the G7.....looks like The last PMs plan is about to be enacted on our behalf.

Me?..I say...let em burn.

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DENIAL DOLLARS more like.

Just watching Doomberg, and its all goodness and light...in spite of Futures falls.

course, the G7 has pledged to take whatever measures to protect currencies and economies....arent WE part of the G7.....looks like The last PMs plan is about to be enacted on our behalf.

Me?..I say...let em burn.

Them's fighting words :)

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Technically isn't the dollar illegal currency under the constitution? Doesn't the constitution say the only legal tender US tender is gold/silver???

ha! There are many things that the US government does which aren't in the constitution. Many of their politicians would say it's just a guide or some such. Sad, but true.

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ha! There are many things that the US government does which aren't in the constitution. Many of their politicians would say it's just a guide or some such. Sad, but true.

A bit like the bible then something to pay lip service too?

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A bit like the bible then something to pay lip service too?

I think so. A bit like 'thou shalt not kill' (unless you are the government and then you can kill thousands for little reason).

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  • 334 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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