Can a Nation Go Broke?

Zimbawee didn't go broke? The Weimar Republic didn't go broke? The confederacy didn't go broke?

Sure, a government can print money, but eventually that money becomes worthless, and the country is broke.

Zimbabwe is the first country in the 21st century to hyperinflate. In February 2007, Zimbabwe’s inflation rate topped 50% per month, the minimum rate required to qualify as a hyperinflation (50% per month is equal to a 12,875% per year). Since then, inflation has soared.

The last official inflation data were released for July and are hopelessly outdated. The Reserve Bank of Zimbabwe has been even less forthcoming with money supply data: the most recent money supply figures are ancient history—January 2008.

Absent current official money supply and inflation data, it is difficult to quantify the depth and breadth of the still-growing crisis in Zimbabwe. To overcome this problem, Cato Senior Fellow Steve Hanke has developed the Hanke Hyperinflation Index for Zimbabwe (HHIZ). This new metric is derived from market-based price data and is presented in the accompanying table for the January 2007 to present period. As of 14 November 2008, Zimbabwe’s annual inflation rate was 89.7 Sextillion percent.​

R.I.P. Zimbabwe Dollar
Steve H. Hanke*
Professor of Applied Economics
The Johns Hopkins University​

 

Log in or Sign up to hide all adverts.

Value of currency is another discussion. But a country cannot go broke because it makes the rules. It can invalidate the currency or print more of it. But it cannot go broke.

And The United States is no where near hyperinflation. Fact is, we are in a period of depression, the exact opposite of inflation much less hyperinflation.

 

Log in or Sign up to hide all adverts.

Really? The only point Mad was making is that a nation can go broke. No, I don't agree with Mad's assessment. But, it does happen. Zimbabwe is the only nation this side of the turn of the millennium to totally go broke. I just don't get the jump at the race of the leaders. Mad never made that an issue, nor even hinted at it. Not everything is about racism. Stop forcing that on people when they simply disagree.

~String

 

Log in or Sign up to hide all adverts.

A whole lot of words to state the obvious; otherwise, I'm apparently too confusing

Nations go broke as artificially as they prosper. What makes the Zimbabwe comparison so rank is that it is utterly superficial. The fact that both are "nations" really doesn't mean much, despite the phrasing of the original point.

(As a personal note, I find some people's "spontaneous" retreats into literalism something of a discredit to even a tame and civilized assessment of their intellects. If we really are so literalist, George W. Bush should be prosecuted for treason, as he admitted to aiding and abetting Al Qaeda in its quest to harm Americans. But, then again, we all knew what he meant; it would have been futile, even downright stupid to take him literally when he said, "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.")

When the United States of America is a pariah state ruled for decades by a dictator who is incapable of realizing when the jig is up, then a Zimbabwe comparison will be apt. Until then, it's just desperate bullshit.

We might talk about how a war in Afghanistan helped break the Soviets. We might question the expenditures of the Iraqi Bush Adventure. We might draw any number of comparisons, but given the choices, Zimbabwe is nothing more than hyperdramatic bullshit.

Zimbabwe can go straight to Hell, and relatively few people would care. (Of course, given that it wouldn't be that far a fall ....)

The United States? Yeah. The world is really going to abandon us over ... what? We are fifty-seven trillion dollars in debt in this country. Our debt equals eighty one percent of all the money in the world. And take a look around.

What does the world say?

They say, "C'mon, big fella. Get on your feet. You're not done yet."

As long as we can invent some more financial magic to carry the system another quarter century, and then another with a new scheme, and yet another after that, all people want is that we don't bow out.

I would be much more concerned about debt and deficit if money actually meant anything real. But it doesn't. And for once, that's a good thing, because what we need right now is to pull a rabbit out of our ass. I mean ... er ... yeah.

The world wants us on our feet, because if we fall over, we knock everyone else down with us.

I dare anyone to say the same about Zimbabwe.

Oh, hey, here's an easy case to make if the Zimbabwe argument is so apt: Show me, please, that Iceland, in the last year, has collapsed to become a hellhole on par with Zimbabwe. Or show me how it will over however long.

Iceland didn't fall because of Zimbabwe. Rather, the world economic crisis that started with American investment schemes pushed Reykjavik over the edge. So, yeah; anyone is welcome to tell me Zimbabwe is so influential, but I reserve the right to laugh in their faces.

The only real comparison between Mugabe and Obama is that they are both black men who are heads of state and have names that sound funny to white people. After all, Madanthonywayne is the one who noted, "Race is absolutely not the motivation for opposition to Obama, but it is used by some as a tool in the fight against him."

And when questioned about that notion twice—once by Iceaura and once by myself—he simply chose to not answer.

So I'm holding him to it.

Or we could take the simple route and suggest that, despite the hyperinflation, there is still an exchange taking place in Zimbabwe, which suggests it's not "officially" broke. At least, no more "broke" than being fifty-seven trillion dollars in debt suggests Americans are broke. But that doesn't really get us there.

Joe's point, at least taken with the merest grain of colloquy, is accurate. Russia, Japan, China, India, Britain, France, hell, even Singapore: there is no way the world is going to let certain nations fall completely to ruin unless they absolutely have to, and I mean in terms of apocalypse. And as Joe said, "... especially the US government. They can create money."

Anyone can print money. Even Zimbabwe. But Americans? Hell, we're world leaders at inventing the shit out of thin air. I mean, how the fuck else do you run fifty-seven trillion dollars in debt and look at people with a straight face each day? It's because they know ... they know they are in so goddamn deep that there is no way out but forward. And nobody—even to my leftist dismay—has devised a system that can compare.

(For the record, I'm impressed with myself. I had to look up a word for the next point, and managed to find Zimbabwe on a map without words. I know, I know. But, hey, I'm an American. I'm not supposed to be able to do that, you know. At any rate ....)

What did Zimbabwe do yesterday? Or, more specifically, Americans invented the CDO, the CDS, and figured out a way to rate bad mortgages as AAA investments. We're currently trying to figure out how to adapt the system to life insurance to generate the next big bubble°. Zimbabwe, on the other hand, printed more money.

The Zimbabwean dollar was effectively suspended in April of this year (so people shouldn't take "yesterday" so literally, though some will already have noticed; oh, and the currency unit was what I had to look up), after having struck something like thirty-two zeroes from the end of its currency value over the course of three years.

We've got a long, long way to fall before the sad tale of Zimbabwe becomes relevant.

Floater, "Zero Hour" (See Free-Lyrics for the lyrics; it's a nearly prophetic allegory.)​

Thought you might enjoy that.

You're right. Not everything is about racism. But it would be appreciated if we could stuff that straw man in the furnace. It's like Madanthonywayne's argument about race. If it's not a factor, then it needs to be left out. One cannot raise pointless xenophobia and then expect to duck the obvious response.

Or do they need a handicap? You know, like in golf?

Consider what is different about opposition to Obama compared to other presidents. The raw, excessive fury has become very much the mainstream. Left with few options, the GOP and its proxies tapped the racist core and started building around it. And from the outset, Obama has been unable to escape race issues. So he was black before he the election, too. What else was he supposed to say?

It's exactly what the president should say, of course, it's what the president must say. Anyone with eyes can see that there's a racial element to the anger directed at the president .... And just because Obama was black before the election and still managed to get elected doesn't mean that racism isn't a problem and that racists don't exist .... But politically Obama has to avoid the angry-black-man label—which is why he's being baited with racist images and slurs and will go on being baited until sometime after 2012—because it would hurt him with middle-of-the-road white independents who don't want to believe that America has a race problem still.

(Savage)​

But it keeps coming, round after round. From Obama Waffles during the primary to black man in the White House pins at the Texas GOP Convention, health care = white slavery, celebration at the public uprising of a town hall protest by some woman screaming at her Republican representative about the birth certificate (how many more rounds with that birth certificate, anyway; and how many more congressional Republicans will come out of the closet beyond the 11.8% I listed last month?), grotesque exaggerations obscuring the real issues plaguing ACORN (including the extraneous, xenophobic bit about illegal alien child hookers°), the Gates episode (the president can't give a press conference about health care without being asked a race question?), the Kanye West bit (to borrow from, I think, Bill Maher, when did anyone ask President Bush what he thought about Phil Spector?) .... And now, what? Zimbabwe? No. He would have been better off developing the Weimar Republic theory, even though he would have had difficulty establishing sufficient similarity of circumstance. But that's harder, and it doesn't have a black head of state with a funny-sounding name. And, well, compared to what came next, the Weimar Republic wasn't exactly the worst thing in the world, was it?

And the public discourse about ideas and policies is being drowned out by this bullshit hyperbole. And that's the point. Politically, conservatives are fighting a losing battle this time, and even the common-sense talk of debt and deficits isn't working. And why should it? We spent how much in Iraq? At the will of the party of fiscal responsibility? We were about to borrow how much from China to pour Social Security into the pockets of private investment? People are accustomed to mind-boggling numbers. God, when I was a kid, we fretted over numbers that touched on a hundred million. We're up to trillions now. Another trillion dollars for health care? We're going to spend it anyway. If McCain was president, we would find a reason to spend that money, anyway. Futility in Iraq, or holding off green energy, fixing the economy ....

This time people want the money spent on them. On us. All of us. Gonna fix the banks? Leave the bankers to do this all over again? Fine. Just give us health care so we can survive the coming winter of financial discontent.

All of this is a fucking smokescreen. Conservatives are losing. That's just the way the cycle goes. And if we actually get some progress out of it this time, all the better. But in the meantime, conservatives are throwing everything at Obama they can get their pudgy, angry little hands on. And the proverbial kitchen sink ... I think that went out the window with the baby and the bathwater about the time Michael Steel kissed Rush Limbaugh's ass. It's like watching Peter Griffin throwing first confetti, then luggage, and eventually a woman over the side of a cruise ship. Except this isn't funny, and it was never intended to be.

But, just like the scene in "Stewie Kills Lois", it is predictable. Really, just the framing and blocking in that one told you what was about to happen. Kind of like watching the GOP scramble to organize itself around a raw, angry core of people who simply can't cope with a black president while trying to duck charges of racism.
____________________

Notes:

° generate the next big bubble — I have my own hopes removed from that disaster. Schering-Plough employees expect the Merck takeover of their company to close within the next week or so. At $41 billion, this isn't what we would, outside the pharmaceutical sector, consider a high-profile acquisition. However, it is my hope that some of the money wizards will, upon the closing of this deal, reacquire their taste for the game, and come back out of hiding. The theory I would propose to this is that the quickest jumpstart our economy could manage would be a corporate feeding frenzy outside the banking industry. Start the reorganizations. Start the proxy fights. Sure, it's going to cost a lot of jobs, but we're going to lose them anyway before this is over. The quickest way to get the money back into circulation is to spend it. The big hitch, of course, is that they have to invent the money first. But the first round can happen if the sweating palms simply let go of the money they're already hoarding.

° illegal alien child hookers — Really, what did this detail serve? It wasn't going to increase sympathy for the conservative cause among liberals, who view child prostitution as a travesty regardless of an exploited worker's country of origin. It was simply intended to tweak the xenophobic nerve, because apparently the idea of—as one of our members so stupidly put it—ACORN "auction[ing] off a dozen kids as child prostitutes", just wasn't heavy enough.

Works Cited:

Pfanner, Eric. "Iceland is all but officially bankrupt". New York Times. October 9, 2008. NYTimes.com. October 22, 2009. http://www.nytimes.com/2008/10/09/business/worldbusiness/09iht-icebank.4.16827672.html

Thomas, Chad and Omar Valdimarsson. "As world climbs out of recession, Iceland's economy remains in deep freeze". Austin American-Statesman. October 18, 2009. Statesman.com. October 22, 2009. http://www.statesman.com/business/content/business/stories/other/2009/10/18/1018iceland.html

Savage, Dan. "Obama to Letterman: I Was Black Before the Election". Slog. September 22, 2009. Slog.TheStranger.com. October 22, 2009. http://slog.thestranger.com/slog/ar...-to-letterman-i-was-black-before-the-election

 

Hmm. My mistake. Those numbers seem pretty volatile. As recently as August, a plurality was against the public option. Even within the past week, we have some polls showing strong support for the "public option", but at least one showing the public about evenly split (but still in favor).

Well, we certainly are in agreement about the Baucus bill. As to the term "Obamacare", you are correct that he has not endorsed any specific legistlation, just made general statements about what he would like to see and how important it is. Nevertheless, he is the driving force behind this whole thing and it is simply a convenient shorthand.

You may be right. Although, all of the sudden, the "public option" seems to be surging in the polls.

For me, it would be a matter of how it was structured. As I said earlier, Medicare is already going broke. But it seems logical that bringing in younger, healthier clients could actually help balance the books, so long as you charged them enough.

Some of the apparent higher efficiency of Medicare is due to the fact that the patient base served my Medicare is much more expensive per patient. If private insurance company A spends $10,000 in administrative costs for a plan serving 1000 clients, and Medicare spends $12,000 to adminsiter the same number of clients; Medicare will appear more efficient because patients over 65 cost a lot more to cover than those under 65.

I agree with you there.

First of all, your constant accusations of RACISM!!!! are really getting tiresome and childish. As String pointed out above, Zimbawe is the only nation to hyperinflate this century. When I made the comment that my main concern with "Medicare Part E" was that the government was already broke, Joe chimed in that nations can't go broke.

It is ironic that you bring up literalism because I didn't literally mean that we were "broke", just that our financial position was precarious as our official debt approaches 100% of GDP. That point aside, I felt it necessary to correct Joe's statement that nations can't go broke. I cited three instances of nations going into hyperinflation (Zimbawe, the Weimar Republic, and the Confederacy) and then posted some info on the Zimbawe situation specifically because it was the most recent.

Then you jump in spouting obscenities and calling me a racist for daring to mention sometning that happened in Africa at a time when we have a president with some African ancestry. Ridiculous. Maybe we should recruit some members from Stormfrnt so you'd have some real racists to yell about and could stop inventing them like some later day left wing McCarthiest.

There was no direct comparison to the US being made. Get it? It was just an example of a nation (the only one this century, mind you) that had gone broke.

That's all true. But it was also all once true of Rome. Or the British empire. Or any number of empires that have come before. I, too, believe in American exceptionalism, but it has it's limits. We can not continue to spend more than we take in forever. You can only game the system so long before the whole damned thing collapses. Are we Zimbawe? Of course not. AND I NEVER SAID WE WERE. But we've got to get our shit together. Can healthcare reform be a part of that? Yes. Is the "Bauscus Bill even a step in the right direction? I don't think so. This Medicare part E thing could be, but the devil's in the details.

How is this a propaganda thread? I started it to point out an interesting development in the healthcare debate. If done properly, I might even support it. But even if it's just a propaganda tool, it's still a clever idea on the part of the Democrats. How is this propaganda on my part?

 

(Insert Title Here)

Actually, it's your racism—and the pathetic excuses offered after the fact—that are getting tiresome and childish.

Look, we go through this a lot. You post something ridiculous, I drill you for it with less and less patience because, frankly, you never seem to get the point, and then you make some feeble excuse, such as:

Neither is Zimbabwe broke. Dire financial straits? Yes. Broke? No.

Well, let's look at that.

"My main concern would be that Medicare is already broke and so is the government."​

It sounds better than saying "our official debt approaches 100% of GDP", which in no way equals a nation being broke.

Would you call Japan broke? If so, how? Certainly, the Japanese have some troubles to work out, but with a debt:GDP ratio at 172.1% last year, and projected to hit 197.3% before the end of the year, I think it's a hell of a leap—irresponsible, to say the least—to suggest that the U.S. approaching a 100% ratio somehow compares to Zimbabwe, whose estimated 2008 ratio reached around 259.4%.

Using a debt:GDP ratio as a measure of a "broke" nation establishes a conveniently broad range.

Well, you are a racist. And, after all, such stinging criticism does get your attention.

The problem is that you're not trustworthy. For instance, let us consider your accusation:

"Then you jump in spouting obscenities and calling me a racist for daring to mention sometning that happened in Africa at a time when we have a president with some African ancestry."​

Really, sir, how stupid do you think people are? It has long been a theory of mine that conservatism in general relies on ignorance and gambles on memory. That is, it is easier to push a conservative agenda if the people are ill-informed and forgetful.

The mere mention of something going on in Africa at a time when we have a black president is not the issue. What is that thing being mentioned?

For instance, consider one of the points I offered String. What, in the long run, is "racist" about asking the president his opinion of a scandal at the MTV Video Music Awards? Well, when phrased that way, nothing.

However, what is "racist" about asking the president to judge the behavior of a black celebrity who disrupted a useless award show? Still, one might be tempted to say nothing.

Who the hell ever asked George W. Bush his opinion of, say, Phil Spector°, a white celebrity?

You treat politics so superficially that, frankly, it's insulting; that is, you treat people as if they're so fucking stupid that it really is hard to figure out just what the hell your problem is. (And we know that "people are stupid", but there are limits to that statement, and you're way beyond them.

So let's take a deeper look at the issue. Like I said in response to String, you would have been better off developing your Weimar Republic assertion, although even that is suspect because its economic troubles did not develop in a vacuum, and when we compare contributing circumstances, it is impossible to argue that the United States is in a similar position as Germany between the two World Wars. We don't face the same challenges. We are not constricted by the same limitations.

Likewise with the Zimbabwe comparison. Obama is not a corrupt strongman of decades' endurance; the United States won its independence over two centuries ago, while Zimbabwe was granted independence less than thirty years ago; Obama was elected fairly, while Mugabe came to power in a fixed election; Obama is part of a multi-party system while Mugabe has struggled to maintain a one-party arrangement; the United States is a dominant world power, Zimbabwe has never been anything close; and economically, as I noted in the thread, Zimbabwe can print all the money they want, but they have never invented anything closely resembling the CDO, the CDS, the junk bond, the subprime loan, or any other such device intended to grow the national and world economies and reap tremendous individual profit.

If the only numbers we look at are debt:GDP ratios or shockingly huge figures on how much we all owe to dig ourselves out of the hole, well, yes, it's the kind of thing to get one's dander up. But even then you're not making a good comparison to Zimbabwe. Italy is over 100%, and they're not broke. Singapore is at 99.2%, and they're not broke. Greece is at 97.4%, and they're not broke. Debt-GDP ratios are a tricky thing, anyway. Some would say it's approaching 100%; others suggest numbers in the eightieth percentile, and the White House's FY2009 Historical Tables° estimate a range just under 70% through 2013. Even if we accept a higher number, or leap all the way to 100%, we're still a far cry from Zimbabwe.

Bearing that in mind, if we start considering other factors, like trade and production: GDP for the U.S. is estimated at over $15 trillion this year, while Zimbabwe's, being notoriously difficult to pin down, is estimated at under $11 billion. I mean, really. Zimbabwe's GDP is estimated to be shrinking; the 2008 estimated contraction was 14.1%. And while the U.S. faces financial worries, its 2008 estimated GDP growth was just over 1%.

Those are very basic numbers. The United States clearly has the infrastructure and resources to bail the water from our ship of state. Where are Zimbabwe's buckets?

So what is the connection? Your comparison doesn't work. The only real similarity, as I have noted, is that Obama and Mugabe are both heads of state with African ancestry and names that sound weird to white people. But, of course, the comparison of the U.S. to Zimbabwe serves a larger purpose. Mugabe is a villain long known for his corruption. So why not compare Obama to the scary black man?

If this was a stand-alone issue, that would be one thing. But it occurs in a context of hyperinflated xenophobia, a sequence of calculated attacks that target minorities. And with you, it's over and over and over again; and while you're not a child molester, or a crackhead, or a wife-beater, or such, recidivism still counts for something.

If you don't like me pointing out the racism, consider where you've been, and where you're going.

Oh, and by the way: Medicare isn't broke. May be going broke. But it's not there, yet, and it is not an inevitability. Well, unless we choose to make it so. The Los Angeles Times recently ran a brief debate (point-counterpoint) about Medicare and Social Security. Both CEPR's Dean Baker and the New American Foundation's Maya MacGuineas point a finger at Congress. So do I. How about you?

Zimbabwe is not broke. As Joe pointed out, countries don't go broke. Maybe in 1933; maybe in 1861. But we are, to the one, a different world today; to the other, neither did we just lose a civil or world war. And, to yet a third, nor are we an agrarian economy like the Confederacy.

When you and I go broke, someone comes and repossesses our house, maybe our car; hell, people have had to fight to retain their fucking wedding rings before. Let me know who gets the repo contract on Zimbabwe.

Even if Zimbabwe officially goes broke, it's still not the United States. And the U.S. was part of the point you were responding to:

"One more little detail, governements do not go broke....especially the US government. They can create money."​

Your response was Zimbabwe?

I mean, really.

American exceptionalism is a disease that nearly all of us suffer in this country. It's part of our heritage, taught us alongside God, Mom, and apple pie.

As to gaming the system, you are correct. We are, in fact, experiencing one of those collapses right now. And so far the key device financiers hope to use to dig us out is a similar game to what we just played with real estate, only this time using life insurance. The question, when the system collapses, is how you're going to build anew. We could try a new system entirely, but, frankly, it's hard to figure one that produces such dramatic results. So instead we tinker with the busted system we have, and breathe it back to life. And, as I noted recently:

... when devising schemes to perpetuate a massive financial ruse, the analogous application of thermodynamic law does not seem a welcome consideration.

Unlike physics, though, there is a way to escape the law. In the first place, abstract economic schemes are only zero-sum because we presuppose such a limitation. In reality, the only natural barrier is resource-based: availability, accessibility, distribution.

If you ask an economist why we don't just blank the books and start over, giving everyone in the world enough money to survive, the general explanation is that the system would collapse. But the only reason for this is human. People, determined to fight for a greater share of what is available, would pursue their ambitions straight back into the abyss. From the individual to the corporation to entire nations, it is simply greed that transforms our economic devices from instruments of human service to icons of human bondage. That is, given a choice between a chance at real justice and equality, or the opportunity to rub Mr. Jones' nose in your portfolio returns, most people would choose the personal satisfaction of not only keeping up with the Joneses, but surpassing them.​

If things get dire enough around the world, we can just sit down and invent a whole new system altogether. That's the really cool thing about money not being attached to anything tangible.
____________________

Notes:

° white celebrity — Even without killing someone, Spector was something of a strange case, and in all those years, I think we'd be hard-pressed to find someone asking a white president his opinion of this very bizarre white man.

Ironically, one can even reasonably postulate that without Spector, Kanye West simply wouldn't be so famous. Given Spector's influence over the nature and direction of popular music, the pop scene would look much different today, both in terms of record sales and content. Primarily, albums would be more thematic, as opposed to Frankenstein stitch-jobs of disparate; and songs would be composed musically instead of calculated according to hooks. For someone like Kanye West, we obviously cannot overlook titans like Berry Gordy and Quincy Jones, but barring Brian Wilson's nervous breakdown during the Smile sessions, pop music today would sound a lot different, and hook-based anthologies of calculated singles would not be so prominent.

° White House's FY2009 Historical Tables — p. 128; it's a thick .pdf that confounds my browser—I would recommend download and a separate application for viewing. It's easy enough to dump in the trash when you're done.

Works Cited:

Nonomiya, Lily. "Japan’s Debt Ratio to Rise to 197% of GDP Next Year, OECD Says ". Bloomberg. March 31, 2009. Bloomberg.com. October 23, 2009. http://www.bloomberg.com/apps/news?pid=20601101&sid=aDDufj4SrzYo

Central Intelligence Agency. "Public Debt". The World Factbook. 2009. CIA.gov. October 23, 2009. https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

—————. "Zimbabwe". The World Factbook. 2009. CIA.gov. October 23, 2009. https://www.cia.gov/library/publications/the-world-factbook/geos/zi.html

—————. "United States". The World Factbook. 2009. CIA.gov. October 23, 2009. https://www.cia.gov/library/publications/the-world-factbook/geos/zi.html

Office of Management and Budget. "Historical Tables". Budget of the United States Government: Fiscal Year 2009. 2008. WhiteHouse.gov. http://www.whitehouse.gov/omb/budget/fy2009/pdf/hist.pdf

Baker, Dean and Maya MacGuineas. "Preventing Medicare and Social Security from going broke". Los Angeles Times. October 9, 2009. LATimes.com. October 23, 2009. http://www.latimes.com/news/opinion/opinionla/la-oew-baker-macguineas9-2009oct09,0,5449971.story

 

There is veiled racism all over the place. There are racists who are proud of not being racists. Racism is being used against Obama.

Zimbabwe got a lot more coverage from Bush's NPR than Zimbabwe being just another failed African state deserved and I think there was some sort of British lead conspiratorial effort to try to push Zimbabwe over the edge into deeper failure because despite the fact that Mugabe was failing through his own incompetence some Western forces that I don't understand were impatient for Mugabe to fail harder and faster.

But what does any of this have to do with Health Care? Absolutely nothing.

Zimbabwe should get a mention along with the Weimar republic when somebody suggests that governments can't go broke because they can print money. Madanthonywayne may say something influenced by racism in the future and may have said something influenced by racism in the past (like the ACCORN crap) but mentioning Zimbabwe in this context does not qualify as racist.

You were wrong Tiassa.

 

Sorry, Nirakar; as much as I appreciate the input, you are wrong.

Thank you very much, Nirakar. Your opinion is noted and much appreciated.

I would also appreciate your opinion on a few other issues:

• Do you think the Zimbabwe comparison is relevant? That is, just because Zimbabwe can go "broke" (by whatever definition, say, Madanthonywayne wishes to apply), does that mean the United States can follow the same path?

• Do you think the differences between Zimbabwe and the United States might have any effect on whether or not either nation goes "broke"?

• Do you think printing money is the only way to create money?

• If someone responds to a question by reassigning its original context, do you think we should be obliged to honor the new assertion of context? That is, are we obliged to believe that, say, Madanthonywayne knows better than Joepistole what Joe thinks, believes, and says?

• Do you believe events occur in a vacuum, or can one discern trends in repetition?​

You are wrong, Nirakar.

 

Madanthonywayne's response that governments can go broke despite being able to create money for example Zimbabwe was a refutation of what Joepistole literally wrote. Joepistole was free to clarify his original statement any time he wanted.

I don't doubt that the US government will be able to find money for Medicare if that is the US government's priority but that is not what Joepistole wrote.

I do think the Zimbabwe comparison is relevant because it is easier to see what can happen by using extreme examples than by using less clear examples. The difference between what happened in Zimbabwe and what has been happening to the USA over the last 30 years is more a question of degrees than a question of being absolutely unrelated situations.

Due to corruption and bad judgment and perhaps neocolonialst revenge sabotages and drought Zimbabwe has seen their was thriving agricultural base of their economy reduced severely which forced the government to look for new sources of revenue. In the USA due to corruption and bad judgment the USA's once thriving manufacturing base has been reduced severely and the USA may look increasingly at money creation as a source of revenue. Of course the situation is much more complicated in many ways. The Dollar's use as a reserve currency is on way in which the US situation is unusually complicated.

Enough money was created by past presidents and soaked up by the world's demand for a reserve currency that regardless what Obama does the long term outlook for the dollar is for sustained declines in value.

Weimar and Zimbabwe were the extreme cases that demonstrate irrefutably the hazards of relying on money creation as a government revenue source. Zimbabwe turned to money creation as a revenue source because Zimbabwe was already in trouble financially. The USA is also already in trouble financially though for different reasons than Zimbabwe and not to the same extent as Zimbabwe.

I don't expect the USA to become as broke as Zimbabwe or the Weimar republic but I have put my money where my mouth and am betting on a the USA being a significantly poorer nation 15 years from now than it is now and I am betting that over the next 15 years the dollar will experience inflation significantly greater than what it faced in the 1970s but much much less than what Zimbabwe has experienced. Money creation and trade deficits are what causes currencies to lose value in the long term regardless whether the currency is the Dollar or Zimbabwe's currency or any other nation's currency.

NO. Most US dollars only exist electronically and do not exist as physical currency. Then we have to define what we mean by money. http://en.wikipedia.org/wiki/Money_supply

I never saw Madanthonywayne claim to know what Joepistole meant. And i did not notice any reassignment of context by Madanthonywayne in this thread.

You can descend trends in repetition and that is a useful tool in helping to spot a behavior that tends to repeat because you know what to be looking for. But just because a trend tends to repeat does not mean that the current observed behavior is necessarily part of that trend. You know what to look for because of the trends but that does not mean that you can always find what you are looking for everywhere that you think it is likely to be.

Sometimes despite the trend, it is just not there.​

 

Is this thread about governments going broke or nations going broke?

Because those aren't the same thing.

 

Well, I suppose we really meant national governments. The main issue was whether the ability to print money makes one immune to "going broke".

I cited the recent example of Zimbawe (the only nation to hyperinflate this century) as proof that a nation can go broke. Tiassa, of course, immediately branded such an example as racist. But such off topic diversions aside, I'd equate hyperinflation with a government "going broke". What do you think?

 

This and that

Good point. I think you're right about them not being the same thing, but I'm curious as to your take on the difference.

• • •​

Aside from the issue of relevance, I don't disagree. The thing is that I see different processes, different factors, affecting the two nations. The U.S. simply isn't Zimbabwe. Its economy is not challenged by the same factors, and has many more tools at its disposal to effect recovery.

I would look to the latter point about printing money and creating money. When Zimbabwe turns to money creation, they print money. We, too, print more money, but we also have ways of creating money. True, the general method is by making promises against future labors and produce, but unlike Zimbabwe, we have diverse means to help us keep a closer grip on our debts. As I said in a prior post:

Anyone can print money. Even Zimbabwe. But Americans? Hell, we're world leaders at inventing the shit out of thin air ....

.... What did Zimbabwe do yesterday? Or, more specifically, Americans invented the CDO, the CDS, and figured out a way to rate bad mortgages as AAA investments. We're currently trying to figure out how to adapt the system to life insurance to generate the next big bubble. Zimbabwe, on the other hand, printed more money.​

To save a quote tag, I'll simply mention that both your point about US dollars existing electronically and suggestion about the definition of money are apt.

The original point to which Joe's assertion—quoted in the topic post of this splinter thread—responded was, "My main concern would be that Medicare is already broke and so is the government."

It was, in fact, in response to an assertion of literalism—

(As a personal note, I find some people's "spontaneous" retreats into literalism something of a discredit to even a tame and civilized assessment of their intellects. If we really are so literalist, George W. Bush should be prosecuted for treason, as he admitted to aiding and abetting Al Qaeda in its quest to harm Americans. But, then again, we all knew what he meant; it would have been futile, even downright stupid to take him literally when he said, "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we.")​

—that Madanthonywayne redefined his assertion of the government being broke:

It is ironic that you bring up literalism because I didn't literally mean that we were "broke", just that our financial position was precarious as our official debt approaches 100% of GDP.​

It's a curious definition of broke. I presented numbers on certain nations' debt:GDP ratios and inquired if they were "broke"—namely Japan (197.3%), Italy (105.9%), Singapore (99.2%), and Greece (97.4%). We'll find out what he thinks of those nations and governments when he decides to answer that particular point.

Also, it is worth pointing out that in responding to my assertion regarding literalism that he snipped the greater part of the parenthetic note I had written. While this is certainly understandable because some people want shorter blocs of text in the quote box, he failed to account for the missing portion. Unlike my explanation regarding President Bush, or my impression of Joepistole's assertion that "governements do not go broke....especially the US government", it's hard to say the same thing ("we all knew what he meant").

The reassignment of context is that Joe is wrong because of some arcane, unconventional definition of "broke". In other words, Joe is wrong because his statement, which only requires the slightest grain of colloquy to view as a reasonable assertion, respected the conventional definition of "broke", and not some bizarre, new definition only revealed after the fact.

Perhaps that seems a stretch to you. Fair enough. But, like I said, recidivism still counts for something, and Madanthonywayne has, in fact, told me what I think, believe, and say before. And, frankly, he has a long history of absolutely fucking the arguments he purports to consider. He is not, in fact, considering those arguments, but rather, his own argument. He needs to speak for other people in order to respond to what they "say".

Recidivism counts for something. Why not develop the Weimar or Confederacy assertion? Perhaps because, like Zimbabwe, those collapses occurred under different conditions, facing different challenges, and according to different paradigms?

So let us call it, for a moment, an "innocent mistake", as such; he simply grabbed the most conveniently accessible link. As one who sees greater reliability in Freud than most, I am not yet convinced that his racism isn't part of it; he is, after all, one who tries to justify racism by saying the xenophobic attacks are really about ideas and policies. He is also someone who thinks the solution to the injustice of racism in society is that the victims of injustice should simply take it until the unjust oppressors decide of their own good hearts to treat people equally; it is unfair, in his opinion, that people who have profited—directly or indirectly—from racism should be expected to reduce their privilege. And he is one who displays this odd habit of being a couple days behind the news cycle; that is, as something becomes common knowledge, he pops up and asserts the opposite. For instance, he praised Glenn Beck and told me I should watch his show, concluding, "No racism there, but plenty of alarmism verging on the apocalyptic". A very interesting assertion. Does he not see the racism in question? Okay, that part I can understand. But that's a fairly definitive statement: "No racism there". And he made that assertion two days after former Republican Congressman, self-described center-right journalist, and unquestionably dedicated conservative Joe Scarborough used his nationally-broadcast morning television show to denounce Glenn Beck's racism. This is important because while one might otherwise assert that Beck's racism is a liberal attack point, it's not just liberals who see it. Then again, it could be that in his opinion, it could simply be that Scarborough is too liberal for his own tastes; it's possible, given the breadth of ideas, people, and institutions he considers liberal.

Given his history and consistency, it is hard to maintain the adjective "innocent" in front of the noun "mistake".

No other group of phenomena is better qualified to demonstrate the thesis that lack of attention does not in itself suffice to explain faulty acts as the forgetting of intentions. An intention is an impulse for an action which has already found approbation, but whose execution is postponed for a suitable occasion. Now, in the interval thus created sufficient change may take place in the motive to prevent the intention from coming to execution. It is not, however, forgotten, it is simply revised and omitted.

We are naturally not in the habit of explaining [p. 160] the forgetting of intentions which we daily experience in every possible situation as being due to a recent change in the adjustment of motives. We generally leave it unexplained, or we seek a psychologic explanation in the assumption that at the time of execution the required attention for the action, which was an indispensable condition for the occurrence of the intention, and was then at the disposal of the same action, no longer exists. Observation of our normal behaviour towards intentions urges us to reject this tentative explanation as arbitrary ....

This normal behaviour in a formed intention corresponds perfectly with the experimentally produced conduct of persons who are under a so-called "post-hypnotic suggestion" to perform something after a certain time. We are accustomed to describe the phenomenon in the following manner: the suggested intention slumbers in the person concerned until the time for its execution approaches. Then it awakes and excites the action.

In two positions of life even the layman is cognizant of the fact that forgetting referring to intended purposes can in no wise claim consideration as an elementary phenomenon no further reducible, but realizes that it ultimately depends on unadmitted motives ....

.... As in the preceding functional disturbances, I have collected the cases of neglect through forgetting which I have observed in myself, and endeavoured to explain them. I have found that they could invariably be traced to some interference of unknown and unadmitted motives -- or, as may be said, they were due to a counter-will. In a number of these cases I found myself in a position similar to that of being in some distasteful service: I was under a constraint to which I had not entirely resigned myself, so that I showed my protest in the form of forgetting.

(Freud)​

And the good doctor goes on. And on. And on. The above excerpt is taken from Chapter 7 of Psychopathology of Everyday Life, which is the volume which describes one of the most commonly-recognized phenomena of psychology, the Freudian slip.

Or, as I explained to Madanthonywayne:

If this was a stand-alone issue, that would be one thing. But it occurs in a context of hyperinflated xenophobia, a sequence of calculated attacks that target minorities. And with you, it's over and over and over again; and while you're not a child molester, or a crackhead, or a wife-beater, or such, recidivism still counts for something.​

I believe he's a racist. And if he tries to put on a respectable face, he is going to slip up every now and then. Everybody slips up now and then about something. It's a symptom of neurosis, although I should probably take care to specify that in that context, everybody is, to some degree, neurotic. Or, as Norman O. Brown explained in his fundamental examination of Freud, Freudianism, and the crisis of neo-Freudianism, published a mere twenty years after the founder of psychotherapy had passed:

... it is a Freudian theorem that each individual neurosis is not static but dynamic. It is a historical process with its own internal logic. Because of the basically unsatisfactory nature of the neurotic compromise, tension between the repressed and repressing factors persists and produces a constant series of new symptom-formations. And the series of symptom-formations is not a shapeless series of mere changes; it exhibits a regressive pattern, which Freud calls the slow return of the repressed, "It is a law of neurotic diseases that these obsessive acts serve the impulse more and more and come nearer and nearer the original and forbidden act." The doctrine of the universal neurosis of mankind, if we take it seriously, therefore compels us to entertain the hypothesis that the pattern of history exhibits a dialectic not hitherto recognized by historians, the dialectic of neurosis.​

I would thus suggest that sometimes, despite the trend, it is just not there, except when it is. Unlike the Weimar or Confederacy assertions, the Zimbabwe argument has the added advantage—for Madanthonywayne's purposes—of establishing a rhetorical connection between President Obama, against whom Madanthonywayne is not afraid to echo the complaints of the vicious, racist factions among conservatives, and Robert Mugabe, a notorious dictator and scary black man who does much evil. Any of the three examples present circumstantial dissonance compared to the U.S. in the twenty-first century. And, apparently, we are expected to apply a unique definition of "broke" to his argument, although that was only offered up after he was called out on his dubious assertions about Medicare and the U.S. government being broke. Add to that the opportunity to imply similarities between Obama and Mugabe, thus reinforcing Obamanoiac xenophobia, and the fact that all of this matches consistent past behavior, and I simply must disagree with your conclusion.
____________________

Notes:

Freud, Sigmund. Psychopathology of Everyday Life. Trans. A. A. Brill. London: T. Fisher Unwin, 1901. PsychClassics.YorkU.ca. October 23, 2009. http://psychclassics.yorku.ca/Freud/Psycho/

Brown, Norman O. Life Against Death: The Psychoanalytical Meaning of History. London: Routledge & Kegan Paul Ltd., 1959.

 

Please define "going broke" as it applies to a government.

 

Well, for a nation to go broke implies, to me, that (almost) all of the individuals that comprise it have gone broke. So, collectively, they're tapped out. It would be no different from talking about a neigborhood going broke, or a family.

But I'm still not clear on what it means for a government to "go broke."

I can certainly imagine a case wherein a government becomes insolvent due to political unwillingness to tax, which leaves the actual nation in question plenty flush (at least in the short term). In fact I seem to recall various prominent conservatives promoting that as a strategy in the last few decades.

 

I think he means that the nation would run out of cash. But since nations make their own cash they traditionally could not go broke. Nations could reduce the size of their debt by inflating the economy. But with the advent of TIPS (Treasury Inflation Protected Securities) the specter of a nation going broke is a real possibility if they issue enought TIPS.

In the extreme a government could issue so much currency the currency becomes practically worthless, the Zimbabwe or the Weimar Republic senario. In which case the nation can proclaim the inflated currency void and replace it with a new currency based on a statutory exchange rate.

 

Exactly.

 

So the issue, then, is not "going broke" per se, but rampant inflation undertaken intentionally in order to devalue dollar-denominated debts?

 

I think that is Mad's question here or issue here.

I think most conservatives don't understand the Federal Reserve and the US monetary system very well. So visions of Zimbabwe or the Weimar Republic dance in thier heads when they are not in power. When in power, deficits and debt don't matter.

While it is important to control deficits and national debt, one has to do what is needed. The costs of ineptness greatly exceed the costs associated with keeping the economy moving. We are in a deflationary environment at the moment. The danger is deflation not inflation. When inflation becomes an issue, the Fed will need to reign in the money supply through open market actions. And we are no where near rampant inflation.

 

Is my understanding correct that broke, or bankruptcy, or insolvency (in Europe), has different definition from country to country?

 

The Federal Reserve system does not make Zimbabwe or Weimar type hyperinflation impossible. I don't expect the USA to ever be like Zimbabwe but Zimbabwe is not even close to being able to pay for something like Medicare.

"Broke" is relative. For the USA not being able to pay for Medicare equates to being broke. The USA could be rich and rolling in wealth by Zimbabwe standards and still be broke by American standards.

AS for whether we are discussing national governments going broke or national economies going broke the two options are so closely correlated that that I don't see the need to differentiate between the two choices as to which we are discussing.