On Sun, 02 Jan 2011 11:57:52 -0600, F. George McDuffee
wrote:
snip
As wrenching and catastrophic as it would be, IMNSHO the
least harmful "solution" now appears to be a refusal of the
"tea party" and other financially conservative legislators
to allow an increase in the national debt limit, projected
to be reached in mid April. This of course will result in
almost immediate governmental default and shutdown, but as
this now appears inevitable, the sooner this occurs the less
damage will be inflicted, and the more of their capital can
be salvaged, by the people, from the wreckage.
snip
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I have received several [OK 2] emails asking what sort of
things the Federal government could inflict on the citizens
while attempting to evade the unavoidable, i.e. default.

While it is difficult to predict what an erratic and
irrational government might do, based on recent historical
examples of governmental actions while attempting to avoid
inevitable default include but are not limited to:

1) Forced investment in/conversion to governmental
"securities" of existing IRA/Roth/401k type retirement
savings accounts, with government controlled interest;
2) Forced investment of increasing fractions of insurance
and bank capital in government "securities" the interest of
which is set by the government.
3) Forced investment of defined benefit pension funds still
under corporate or local/state government control in Federal
government "securities;"
4) Confiscation of privately owned foreign currency, foreign
bank accounts, precious metals, etc. by mandated
sale/conversion at government dictated prices far below the
free market rates, possibly paid in non-liquid government
"securities;"
5) Seizure of other personal assets such as real estate and
vehicles through extortionate tax rates and extravagant fees
for governmental services; and
6) Forced exchange of central bank foreign currency reserves
for governmental "securities."

Without exception, the governments still went bankrupt or
into default, but only after the entire national supply of
legal/licit capital, governmental, corporate and individual
was exhausted, making recovery much more difficult, and
allowing the local criminal elements, who had managed to
conceal/preserve much, if not all, of their assets, to take
economic and political control of the country.


-- Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).