After consulting with my evil twin brother......boglerdude wrote: ↑Fri Jun 01, 2018 12:07 am https://johnhcochrane.blogspot.com/2018 ... -oped.html
From the comments:
"Yes, we can easily default on our obligations like we did in 1932 and 1973, And we can do it smoothly as you suggest, with opportunistic and deliberate default via the Fed. Possibly keep inflation under 5% for a ten year period, dump some debt. It worked in 1973, except it took us ten year to rebuild finance. But the rebuilding was because it was sudden, Nixon defaulted unexpectedly over night. Instead, do it deliberately, dump about 4T of debt, all of finance is aware, all of finance can bet along the way and avoid coordination failure."
ELI5? How exactly do you pull off an inflationary default
To carry out an inflationary default I would issue a External US trade dollar, possibly partially backed by some commodity (gold/silver/oil).
The value of which would allow the foreign creditors to be payed back in full. We could call it the Nixon Note
Then I would have the Federal Reserve Dollar pegged to it at say 90% of the Nixon Notes value.
While stroking a fluffy white cat, I would announce due to an emergency caused by (insert your choice) Russians/Chinese/Iranians/Tongans, this was the only option.
Over time I would drop the peg percentage to what ever was necessary to default on the debt (while allocating the cause to someone else.)
The US citizens still get their promised pensions, but you would have hardly any purchasing power. Overseas creditors would be happy and still carry out business with American corporations
Quickly get into my private jet and go to Zurich.
Any other suggestions?