Wednesday, April 20, 2011

Liveblogging the Future: July 1, 2037

On July 1, 2037, Standard & Poors issued its 16th consecutive downgrade of U.S. sovereign debt, from AAA in 2012 to CCC+.  Interest rates on U.S. Treasury bills, notes, and bonds surged well past 100%, making it impossible for the federal government to meet its obligations.  The U.S. dollar had lost its reserve currency status a decade earlier.  The government could no longer print money to borrow in its own currency without catastrophic inflationary consequences.  China’s renminbi had become the world’s reserve currency, along with Swiss Francs, Brazilian Reals, Canadian and Australian Dollars, and several others of fiscally-sound countries.

U.S. currency was no longer accepted abroad.  Foreign currency had to be bought in U.S. black markets if anyone wanted to travel overseas.  U.S. merchants preferred cash payments in foreign currencies or precious metals.  The once-upon-a-time, good-as-gold greenback had become like the Revolutionary currency, which depreciated so badly during the war giving rise to the phrase “not worth a continental.”

The U.S. had run out of financial assets to sell to foreigners to sustain federal spending on retirement benefits, health care, unemployment benefits, public education, and infrastructure.  It had already privatized its property holdings.  All that was left was land, pure and simple.

In a last ditch effort to stay afloat, the federal government put American land up for sale.  The sovereign states could not object because they were no longer sovereign, surviving entirely on federal transfers.

The federal government initiated a series of one-on-one negotiations to sell chunks of U.S. land to the original foreign colonial powers, who had heeded Standard & Poors warnings.  These sales became known as “Land for Survival.”  As in the Northwest Ordinance of 1787, U.S. settlers residing in the new foreign domains would enjoy their customary rights for one generation, after which they and their successors would become citizens of the new foreign realms.

United Kingdom - New Jersey, Maryland, the Carolinas
Canada - Northern New England
Spain - Florida
France - Louisiana and other portions of the Louisiana Territories as required
Mexico - Southern Arizona and New Mexico (reverse Gadsden Purchase)
Netherlands - Manhattan and New York
Delaware - Sweden
Denmark - Virgin Islands
Russia - Alaska
China - California as a Special Administrative Region of China
Japan - Pacific territories

Historical Note: Each successive downgrade of U.S. sovereign debt was met by presidents and Members of Congress as a call to action, but invariably they resorted to politics as usual a short while later.

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