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Comment by fryry | Hacker News Reader

I'm fairly young and I remember this debt ceiling brinkmanship happening several times in the past , turning out to be a nothingburger. Is this time any different? (Genuine question I'm not American)

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Here is the history of debt ceiling changes:

https://en.wikipedia.org/wiki/History_of_the_United_States_d...

I usually see similar sin in both parties. But it's notable that not one Democrat Senator is standing up and demanding e.g. the Green New Deal or disbanding ICE in exchange for their vote on the debt ceiling.

Market says the odds of default are similar to 2013, and lower than 2011. https://www.msci.com/www/blog-posts/the-cds-market-s-view-on...

Brinkmanship only works if there's a real risk of going over the edge. Is this the roll of the dice that's going to come up snake-eyes? Probably not, but no-one really knows.

Previously, it was a threat, "Give me what I want or I'll shoot the economy"

Right now it's not clear if McCarthy and the MAGA wing understand what that means.

They know exactly what it means, and they are betting on the electorate having zero long term memory, which, unfortunately, rings quite true in election years.

There is no brinkmanship, people need to realize that. A crashed economy with high gas prices, rampant inflation, etc... in an election year is exactly what the GOP wants when a Democrat is in the White House. Why do you think right-wing media has been screeching about "Biden's crappy economy" for months now while the GOP's only play is to push Biden to enact a 315 page budget that features 271 pages of handouts to the Oil&Gas lobby? They put in what they want, and have the upper hand, because they get to blame it on Biden when it inevitably goes to shit, and look like they tried something and all Biden said was "no" and a crash happens. That play has worked time and time again and it wins elections.

The GOP playbook for as long as I've been alive is "break things when we're in power, but make sure they aren't visibly broken until a Democrat is in power, and then raise hell about how Democrats always break things, so people will vote us back in".

NINJA EDIT: I wish people were educated enough to understand why Washington and his greatest political rival, John Adams, both were in unison when it came to suggesting that a two party system would destroy our country.

Washington: “The alternate domination of one faction over another, sharpened by the spirit of revenge, natural to party dissension, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism.”

Adams: “There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.”

Yet, here we are.

...and if that doesn't work, move around the dates and repeat it until your followers believe.

An economic crash under Bush in 2008? No, an economic crash under Obama in 2009.

Pandemic money printing under Trump in 2020? No, pandemic money printing under Biden in 2021.

"The debt is something we should care about!"

Didn't you slap 3 trillion dollars onto the debt in your last admin just to give tax breaks to the rich?

No. Both republicans and democrats are heavily invested in the US stock market which would collapse if US defaults.

It's all a show.

Unless they sold already and plan to buy back in after the dip and just before announcing a compromise? It's hardly rocket science...

That's only true if you think they value money more than power. If power is what they care about more, then they could absolutely believe that creating chaos could be more to their advantage. Given the global rise in authoritarianism, and given that in times of trouble people shift toward favoring authoritarians, it's entirely plausible to me that there are political actors who will create the problems that they then claim they will solve.

Isn't that a "king of the ashes" scenario?

Yes? And?

Not necessarily. Take the "heighten the contradictions" types, who believe in either not remediating or even increasing the pain of current societal dysfunctions. They believe that after a blowup and revolution, things will be better.

You see a fair bit of that sort of logic on the right lately. Saletan's "The Corruption of Lindsey Graham" [1] documents the shift nicely, with Graham going from a senator who believed in democracy and inter-party comity to one who says Democrats "hate us" and "want to destroy us", claiming "there’s nothing they won’t do". Or look at Trump calling for the "termination of all rules, regulations, and articles, even those found in the Constitution".

In that context, political actors can claim and might even believe that saving America from the boogeymen might require making things worse before they step in to put things right.

[1] https://specialto.thebulwark.com/p/the-corruption-of-lindsey...

Do you ever wonder why it is that politicians that are, at least nominally, ultimately responsible for signing $6.3 trillion in checks every year only manage to enrich themselves to the tune of a few dozen millions at best? The fry cook at McDonalds gets a larger share of the overall take.

I have two possible explanations. 1) Our politicians are remarkably morally virtuous, and there is virtually no graft and corruption whatsoever. 2) Our politicians are front-men for the actual powers that be and are compensated on a model similar to WWE superstars. In the latter case it's the financial interests of the PTB that will control, not those of the politicians.

Thought experiment: If you were running things would you A) Put your face and name on the power structure or B) Hire goons to do that?

Care to elaborate? What would the effect on the stock market be and why?

Bonds are basically like high-denomination dollar bills with a small "coupon" interest payment stapled to them. The interest can be ignored and then we just treat them like money. As all big financial institutions do. They're the "risk free" place to store money. Which is why Circle (via Blackrock) are holding so many in the first place.

Now, what happens if the US defaults, even technically-defaults (missing just one payment) and all this "money" held by financial institutions is suddenly "not money"? Or "maybe not money"?

I would expect a majority of US banks to be in FDIC resolution the next day. As bank stocks fall off a cliff, they start taking the rest of the economy with them. Things would rapidly outstrip the existing ability of the system to absorb small crises. It would look like Cyprus in 2008.

good explanation

We ARE headed toward a pretty tight election. And the MAGA crowd seem to want conflict for it's own sake (and apparently run the whole republican party).

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