Homestead mailing list

["Marie McHarry" <mmcharry AT dtnspeed.net>]

<<No [every debt is not an IOU].>>

<<Your 
mortgage is not just an IOU.  If you default on it, the creditor can 
foreclose and take the property.  That is, it is secured by a REAL asset.>>

Right.

<<  Likewise most loans and by far most loans of any consequence.  Even
loans, such as most credit card debt, which are not secured by real assets
are done with the understanding that there will be a definate repayment
schedule. >>

Yes, they are. The debts of the US government are taken on with -- as of
today, and certainly in the past, -- the full belief that they will be paid
in full. 

If you're loaning your money today, would you loan your friend Alfred a
thousand dollars or would you buy a thousand-dollar T-note? Which is more
secure?


<< Contrast this to giving a friend or relative a sum of money in exchange
for an IOU that will be paid back some unspecified time in some unspecified
manner.  You carry the IOU around in your pocket hoping someday when you
need the money, the friend will be able AND willing to cough up the money. 

<<THAT's what the treasury notes that back up the SS system resemble.  No
plan, no schedule, no understanding as to what is to happen when (in 2017 or
sooner or much sooner) SS is no longer taking in as much is it is obligated
to disburse, only those notes that say in some vague way the US is
responsible for coughing up that much extra money.>>

We haven't come to the Apocalypse yet but in our world of today's society,
as my Comp 101 students used to write, if you hold a US T-bill or bond, you
more or less are holding money. To say that they aren't good is to say that
US money isn't good. After all, a dollar bill, or a thousand-dollar bill, is
just an IOU.

Perhaps, we should still be using gold and silver coins but if we don't
trust government bonds and T-bills, we've already entered a world so chaotic
that the price of oil may just be a footnote.


<<What happens when you really need the money back and you track down your 
erstwhile friend and demand payment, yet you find him going through hard
times himself and unable to pay?   All the grabbing him by the ankles and
trying to shake the money out of him would be to no avail.  Likewise when
the SS needs to cash in some of those treasury notes to pay its obligations,
the US government must go one of the only two sources it has for revenue:
shake it out of the taxpayer or borrow more money. >>

If the US is in that bad a shape when SS clients are trying to get their
payments, it's certain that the stock market will be well and truly out of
action. Either the US economy is solid and can pay it's debts or it isn't.
If it isn't, I wouldn't be counting on lesser entities to be solvent.


<< What happens if at that time the taxpayers are 
having their own hard time and nobody wants to buy any more US debt (since 
they already have a closet full of it)??   That's why it's just and IOU and
not like a regular debt of any kind - it is not secured (not backed by any
assets) and there is no agreement, plan, or schedule as to how the money is
to be paid back.>>

Then we have a world meltdown, and Social Security recipients will have a
hell of a lot more to worry about than their SS checks. That's why you have
a homestead and so do I, among other reasons. If things get that bad other
rules will take effect.

Me, for the first time in my life (I said this on the list I run but I don't
think I said it here) I'm glad I'm an older person and have lived a large
part of my life. My only dependent has gone to glory. 

The coming years are not going to be pretty, I don't think (though I hope
I'll be surprised). I have no strong bonds to this world, so it won't be
hard to say goodbye. All this is quite liberating -- as a wise ass said
once, there's no one more dangerous than a guy who doesn't give a shit. 

If it turns out that the US government does an Argentina, that will be very
interesting. Not having a dog in *that* fight is a relief (not that all of
society won't have a dog right in there but the old-middl- aged and the
old-old can at least go off and die). 

And that's another reason for Tvo to have been so cheerful. Where is he
lately?

Marie