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The Economist: America may default on its debt

Posted July 20th, 2008 by flavio

End of illusions

THERE is a story about a science professor giving a public lecture on the solar system. An elderly lady interrupts to claim that, contrary to his assertions about gravity, the world travels through the universe on the back of a giant turtle. “But what supports the turtle?” retorts the professor. “You can’t trick me,” says the woman. “It’s turtles all the way down.”

The American financial system has started to look as logical as “turtles all the way down” this week. Only six months ago, politicians were counting on Fannie Mae and Freddie Mac, the country’s mortgage giants, to bolster the housing market by buying more mortgages. Now the rescuers themselves have needed rescuing.

You can continue reading at http://www.economist.com/...

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If you enjoyed that article

On July 20th, 2008 Memphis says:

then you'll probably enjoy this one (from this week's issue as well)...
http://www.economist.com/...

good post! great info! i'm

On July 20th, 2008 SIERRAHPBT says:

good post! great info! i'm sure this is just "maddening " to jzneff lol!

as for me and my home, we shall worship the LORD

jzneff lol

On July 20th, 2008 djskiefer says:

jzneff lol

"may default" ?

On July 20th, 2008 austrianschool says:

There is little choice ("choice" from the stand point of those in control of the system) remaining other than to, as in the past, continue the issue of more baseless notes to cover obligations and thereby further debauch the value of existing notes. That is to say, to "pay off" obligations via inflation.

"Lenin was right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." (Keynes)

The expression "full faith and credit", used in the Constitution, is taking on a meaning far from that which was intended by its framers.

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"An economy built on fiat money is a society on its way to ashes."

great post

On July 20th, 2008 legalizeliberty says:

http://www.flickr.com/pho...