Why Bitcoin Boomed During the Government Shutdown 282
Daniel_Stuckey writes "Just two weeks after the Feds shuttered the Silk Road, the notorious online drug bazaar, Bitcoin prices have touched a five-month high — with a single Bitcoin fetching nearly $156 on Tokyo-based exchange Mt. Gox. Bitcoin's resiliency can no longer be denied, especially as the digital currency continued its ascendancy even against the backdrop of a U.S. government in utter disarray. At the 11th hour of the crisis, President Obama signed a bill that ended the partial government shutdown and, more importantly, raised the debt ceiling, an arbitrary limit on the amount of money the country can borrow that would have been surpassed today. If Congress had failed to reach a deal and the U.S. was unable to pay its bills, the results might have been catastrophic, eclipsing the bankruptcy of Lehman Brothers five years ago, the domino that could trigger the worst financial crisis since the Great Depression."
Re:Crisis not solved, made worse (Score:5, Informative)
Correction. Threatening not to raise the debt ceiling lead to a credit rating downgrade. Explicitly saying in public that you're thinking about not honoring your financial obligations does that.
Re:Crisis not solved, made worse (Score:5, Informative)
You liar. The credit rating downgrade wasn't because we raised the ceiling, it was because the Republicans threatened not to.
The ratings agency EXPLICITLY SAID SO:
The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
Re:Derp (Score:4, Informative)
1) That the Treasury has the power to pick and choose who gets paid.
2) That the payments are made all at the same time so we don't have cashflow issues for different payment dates.
3) That telling people other than bondholders, "Yes, we agreed to pay you, but we're not going to," is something other than a default and that the credit markets would see this as A-OK.
I don't think that any of these things are true, and even if some are, it seems pretty unlikely that all of them are true.
Default Only If We Chose To (Score:3, Informative)
The U.S. Government gets somewhere between $200 billion and $225 billion a month in tax payments. I forget the exact figure, but let's say debt payments are around $50 billion a month.
We would only default if we chose to pay our debt with the lowest priority.
Re: Nobody cares about bitcoin (Score:2, Informative)
If people stop mining, each miner gets more per time interval. Which makes it very attractive to mine again. Its a self-regulating system.