Economists? What would happen if . . .

[abumbyanyothername]

What if we just let the Fed twist in the wind here. And if it failed, it failed. I mean if the Federal Reserve Bank went under, so what?

If neither citizens, nor government could borrow (at least temporarily), what would happen?

I have some ideas, but I want to hear yours.

[napi21]

1. It's a rare business that can survive without credit! Think about the reprocussions.

Banks fail by the thousands because of bad loans.

The few left won't lend any $$.

Businesses fail because they have no credit access.

The housing industry fails completely because noone can get a mortgage.

Unemployment skyrockets because no homes are being built, realtors can't seel anything, car mfg. all go belly up because noome can buy a car, almost every retailer croaks except those selling mandatory goods like food and bare essential clothing, infividual bankruptcys go nuclear because there's no jobs and noone can pay for their homes, medical expenses, credit card payments.

Dare I go on?

Thom Hartmann has it right. When we had the "Great Depression" we had a manufacturing base to halp stabalize the country. NOW we have NOTHING!

[abumbyanyothername]

3. Well when we had the Great Depression

we also had a food production issue.

I'm not sure, I am just not sold that the current credit and debt based society is the best answer.

At least put the federal government itself, not a private bank, in charge of the money supply. It seems unlikely that we will ever again be the world's reserve currency after this screw up.

[napi21]

5. I'm not sure it's the answer either, but I can't even imagine what

it would take to change the current mindset of the American People. See, I grew up when there were only Dept. store crediit cards, and the limit on those was quite low. My first one had a limit of $300. They had to be paid off every month! Businesses did get loans, but it wasn't necessarily for operating capital as it is today. It was for expansion. When MC & Visa first came into being, it wasn't easy to get one! Even in the 70's when I was working for a $50 million company, the auditors we hired to travel auditing the stores had to get company backed charge cards because they didn't have any credit history so nobody would grant them a CC on their own.

The younger population now doesn't know how to live without a CC. When I tell them I always bought a monthly bus pass to make sure I could at least always get to work if I only had 10¢ left in my wallet and it was two days until payday, they think I'm hallucinating and making up stories! I'm NOT! I remember saving for several months to be able to buy 6 rose bushes for my yard and they cost $5.00 each!

How in the world would you ever turn everyone's lifestyle completely upside down?

[spag68]

8. Young people

Try telling them that anything over 10% on a loan was a crime and was called usury. Tell them that in the time after ww 2 you could get a mortgage for 3.75%. Tell them that everyone had to take a class called civics and learn what govt. was really supposed to do. Then when they stop laughing at you slink of to your rocking chair and be glad you didn't tell them that phones had dials instead of buttons, could not take pictures and had operators on the other end.

[napi21]

11. I don't see a problem with modern technology. I would croak without

my internet access! My problem is with the "I want & have to have it now" philosophy. I really believe that's what got us into this mess, and I have no idea how to change it.

[mckara]

2. You Will Go to Your ATM And It Will Say: You Have No Money!

Possibly

[cottonseed]

4. One thing that would happen is that the ag sector would seize up.

You borrow money BEFORE the growing season and pay it back after harvest. Some of these local ag banks probably aren't involved in this mess, but I'm sure they'd be hit and it would basically kill the ag sector.

Also, before anyone goes off and says, "fine f' them". Remember that those that do survive will be the same corporate ag interests people rail against. Small independent farmers (of which my parents are one of) would most likely wither on the vine.

[whistle]

6. Could that eliminate the $10.8 trillion in National debt?

[abumbyanyothername]

7. As far as I can imagine,

the only consequence of USGOV defaulting on it's debt would be that it would not be allowed to issue any more. I don't think anyone is coming in to invade and collect.

[1corona4u]

9. Here's an interesting read...

http://www.nytimes.com/2008/09/24/business/24leonhardt.html

[tritsofme]

10. They could print their way out of debt.

That's what banana republics do.

[doc03]

12. Hyperinflation like Germany in the 30s. n/t