'a default leads to just a resetting of the existing system'
? Why doesnt every country default on every debt immediately then?
The main reason seem to me to be most probably because the old cow still has some milk left in her.
Nations do seem to be positioning for their best advantage in a very different economic landscape, however, and at an ever increasing rate. The US got serious decades ahead of most.
.. My question is what are the consequences of defaulting on debt? Because the consequences of printing lots of money is easy to see...
It is a problem of managing liquidity.
If there were no debt there would be no money.I happen to believe this at a fundemental level mostly because it works so well to explain a lot of otherwise mysterious things.
I believe that 'money printing' is a matter of creating debt and handing it off. Governments can buy debt from eachother simultaneously and at will. And governments dictate how accounting works for both themselves and the corp/gov body. This gives them the ability to take the charade to a highly elevated level.
But it is bound to collapse at some point. The big question in my mind is 'then what?' I personally doubt that it would be possible to be using 'pre-collapse' instruments, so I don't hold much hope for sitting on a bunch of much more valuable USD complements of the classical theories of economics and how they explain the effects of a deflationary event. So, saying "Gold has fallen to $400/oz" will be a laughable statement to some and a mystifying statement to others.
I could be wrong...I often am.
