Should Americans Be Worried About Default?

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Oct. 15 (Bloomberg) –- Calvin Coolidge Momorial Foundation Chair Amity Shlaes and Glenmede Director of Investment Strategy Jason Pride discuss the lessons from some of history’s biggest defaults. They speak with Adam Johnson and Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

This close to a technical default will stop is there a warning here in all of it, though?

There are decisions to be made, or else?

Right, the roman empire is an example of what you do not want to do, just lie to your self year in and year out and then eventually collapse.

Yes, any value in the current temperature and -- in the current tension is that it makes us more aware of our entitlement problems.

Whether we technically default or not, in five years we will be ok.

We can get this extension on the debt ceiling so we can perhaps deal with some of these issues.

If we wait until february, maybe there is enough time for congress to deal with some of these issues, like entitlement reform.

The fed is right in one of them to most telling data points.

People are saving a lot.

Personally, we are worried about default.

You can see that in our personal habits.

Also, people wanted to vote out congress.

That is because they want congress to make a deal with entitlements rather than fighting more.

Isn't very big difference between this scenario and the other scenarios you just mentioned, in terms of the defaults of the past?

Today, we have a u.s. treasury and a u.s. government fully capable of paying its debts.

It is more of a political gridlock that is causing this.

The treasury is capable of inflating its balance sheets, at least the fed is, as big as it needs to.

I'm not sure if that is the same as capable of paying debts.

It does not take too much of a rebalancing of the government payments and the government spending in order to get us to a more sustainable scenario.

Would it be difficult?

Sure, and there would be many routes that we could find that would he difficult.

But we are not in quite the same place.

Our rates are 10% and we are worrying about carrying a 10% interest rate scenario.

The real worry is washington and its lack of context.

Washington has benefited from the dollar being the reserve.

People want a dollar even when washington skewers up.

But it will not happen that much longer.

It is so easy to fix.

Four guys in an afternoon could sit down and do social security.

You and i could do it really well without hurting a lot of people.

Maybe another whole day some guys and gals could do medicare.

Social expectations are not that far off from what the government can do.

The drama and the tragedy of it is that we are going toward tragedy when we do not have to.

It is very much self- inflicted.

And farcical.

Self-inflicted drama playing

This text has been automatically generated. It may not be 100% accurate.


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