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July 13, 2011 / 74

Raise the Debt Ceiling? I say, NO!

There is a LOT of Bullspit flying around Washington DC these days. Major sources include Tax cheat Timmy Geithner (TcT), Bungling Ben Bernanke (BBB), and everybody’s favorite clown, Barack H Obama. Why do I say these things? Well… I REALLY don’t like being lied to, and I hate it when an addict tries to con me into supporting his habit.

In an article in CNN today I found this:

Administration officials have warned that a failure to raise the current $14.3 trillion debt ceiling by August 2 could trigger a partial default. If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.

http://www.cnn.com/2011/POLITICS/07/13/debt.talks/index.html?hpt=hp_t1

Okay… maybe in their incompetent and ignorant dreams, these things could happen if the debt ceiling isn’t raised… but in the REAL world? Not.

Let’s take the things one at a time.

1. That failure to raise the debt ceiling could trigger a partial default. First – you cannot default “partially”. You either default, or you don’t. Second, the only way a default could be triggered would be if the USA can’t pay it’s bills, now or ever. ie the USA is BANKRUPT and borrowing more just makes the financial hole deeper, but we still will never get out of it! So stopping the USA from borrowing MORE does not cause a default – the default has already been caused by too much spending for too long. Actually, a refusal to raise the debt limit would be a signal that the US is FINALLY going to stop digging the debt hole deeper – and there could be hope that maybe it will someday pay back the money it has already borrowed.

2. If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline If Washington can’t pay its bills without borrowing, then we are already broke, and for purposes of discussion, what “interest rates” do is completely irrelevant. what difference does it make that the banks charges you 5% or 50% if you can’t or won’t pay it?  As to the value of the dollar – that’s your Keynesians talking there. the value of the dollar is determined by the FED via how much money they’re printing up. If the FED floods the world with US Dollars, the value of the dollar goes DOWN. If the Fed fails to print up enough dollars to meet the needs of the economy, then the value goes up. Period.

And remember what a dollar is. (See my post “Debt” posted on 5/6/2011, and “Some Monetary Basics, Part IV” posted on 5/18/2011.

So if the US can’t pay its debts, or more exactly the payments on its debt, the money does not “decline” – the US dollar becomes WORTHLESS because no one in their right mind would accept it in exchange for goods and services because the redemption of the debt would come into question. And what would happen then? The US government would just create a NEW currency, and take a “do-over” – and anyone who owned US debt would be a loser. (And you’d have to get out of the way to avoid being trampled by the people rushing to buy US debt denominated in the NEW currency.)

So… the next question we have to answer is WHY is Obama the Organizer trying to pressure us, via our elected representatives, into doing something that is obviously not required, and would be stupid besides? I’d be willing to raise the debt ceiling without conditions in exchange for ONE act – that would be if EVERY Congressman and Senator and the President and Vice-president would take an oath to NOT run for re-election or for any other political office – EVER. Violation of the oath would net an automatic 20 year sentence, no appeal, no parole, no time off for good behavior.

The US government is addicted to spending. What is the best way to break an addiction? It’s to stop doing whatever it is that you’re addicted to – cold turkey.

It’s time the US government went to rehab and cured it’s addiction to debt.

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