Debtordammerung, Part IV: But why?

[solarbird]

In Part I of this series, we discussed, briefly, salient elements of the politics of the current debt and budget conflict. Part II discussed the politics of economic statistics, and why the way GDP is calculated means that the total amount of government spending never gets reduced. Part III discussed possible economic ramifications of the current

Comments

[wrog]

Barring that, if the premise is that the debt ceiling is Real and they simply will not accept any deal, then either the government is forced into default which increases borrowing costs, or forced into massive spending cuts which further trash the economy and further reduce revenue
It will be the latter, of course. They're aware of this; again, as per above, "The pain you take now is to avoid worse pain in the future."
That's the part I'm not seeing. If they're smart enough to understand currency death spirals, they should be smart enough to see that they're shooting themselves in the head along with the rest of us.

Looks to me more like, "We just want to burn everything down and start over."
I'm talking about effective tariffs on (or outright bans on) capital transfers across borders.
Trade, in which one is exchanging goods & services for presumably-equal-valued currency or other goods & services does not (ideally) involve net transfers of capital. There are already pretty significant restrictions on straight capital transfers and GATT is just fine with it (...I'm pretty sure if I were to withdraw the entire balance of my SSB account and wire it to a Canadian bank, all kinds of hell would break loose...)

[solarbird]

Looks to me more like, "We just want to burn everything down and start over."
I'm sure it does. What's relevant is what it looks like to them.

If it makes you feel better, I'll absolutely decline to rule out "burn everything down and start over" as an underlying motivation, whether they know it or not.

There are already pretty significant restrictions on straight capital transfers and GATT is just fine with it (...I'm pretty sure if I were to withdraw the entire balance of my SSB account and wire it to a Canadian bank, all kinds of hell would break loose...)
But they're manageable. I mean, we still see this going on - there's a neat trick going on right now where a lot of corporations started shifting profits back out of the US after that big reward during the amnesty in ....2006? to bring them back in. So now they're of course lobbying for another tax amnesty - wash, rinse, repeat. It's been in a couple of versions of these various debt limit bills.

Like I said, I'm not as concerned about capital flight in the face of higher taxes as both the Hayakians and the Marixists I know are, but I don't think it's silly either.

[agrumer]

If it makes you feel better, I'll absolutely decline to rule out "burn everything down and start over" as an underlying motivation, whether they know it or not.

According to this survey, more than a third of Tea Partiers are Evangelicals, and nearly half identify with the religious right. I wonder how many of them (consciously or not) identify economic catastrophe with Armageddon.