"Time for U.S. to declare bankruptcy"

Scott Beaulier and Pete Boettke:

Of course, our call for debt repudiation is not a new one. Like many good ideas in economics, Adam Smith was there long before us. “When it becomes necessary for a state to declare itself bankrupt ... a fair, open, and avowed bankruptcy ... is both least dishonourable to the debtor, and least hurtful to the creditor,” he argued. In other words, when the financial storm arrives — and it will — the juggling tricks must stop.

Comments

[kyle8]

Probably not necessary now, but might be after another three years of this bunch. Hopefully enough adults will be elected in 2010 to stop any further destruction from the Juvenile Delinquents in charge.

Most likely the proper course, (once we have some leadership that will stop the bleeding) is to take advantage of low interest rates and roll over all of the public debt into some new long term securities.

If that is coupled with a real agenda of cutting spending it will act as a kick in the ass to markets. Markets now will do no big spending or expansion because they are so unsure of the future.

[Brock]

Neither major Party would do this until it was forced upon them by creditors. Democrats don't like admitting that the US Government even has fiscal constraints, and Republicans think of bankruptcy as dishonorable. Neither can bring themselves to cutting spending.