Category Archives: Debt

Debt-Addled America

Debt, Democrats, Economy, Government, Republicans

“Like father, like son” goes a saying about the similarities between the behavior of a child and his parents. In the case of the nation, infantile America mirrors its squandering government with respect to debt carried.

Is there any wonder the American people, happliy gulled by the moron media, disapprove of Republicans for entertaining the idea of not raising the debt ceiling?

“American companies and consumers are embracing [debt], running up record amounts in 2013,” reports CNBC.

Total household debt, according to the Fed’s flow of funds report, is at $13 trillion, nearly back to its pre-crisis level in 2007 and a shade below government debt of $15 trillion. … The debt deluge doesn’t end there, either, with lots of loans being taken out as well by companies. U.S. loan volume alone totaled $1.53 trillion through the first three quarters, a gaudy 25 percent higher than the same period in 2012. …
…Consumer credit, for instance, surged past the $3 trillion mark in the second quarter of 2013 and continues on an upward trajectory, according to the most recent numbers from the Federal Reserve.
At $3.04 trillion, the total is up 22 percent over the past three years. Student loans are up a whopping 61 percent.

Warns financier Peter Schiff:

The belief that deficits add to the economy, and that debt can be dealt with in an imaginary future (that never seems to arrive) is the foundation upon which the President can chastise the Republicans as irresponsible suicide bombers. Using this logic, he can argue (with a straight face) that borrowing is the equivalent of paying. That the President can make this delusional argument is not so surprising (no lie too great for the typical politician to attempt). What is alarming is that the media and the public have swallowed it so willingly. As they call for limitless increases in borrowing, Democrats have offered no plan to reduce the current debt and they are unwilling to negotiate with Republicans on that topic. Yet somehow they have been perceived as the party of fiscal responsibility. …
… According to modern economists, an elimination of deficit spending will immediately cause a dollar for dollar decrease in GDP. For example, if the government stopped sending food stamp payments to poor people, then grocery stores would lose business, employees would be laid off, and the economy would contract. But this one dimensional view fails to appreciate that the purchasing power of the food stamps had to come from somewhere. The government can’t create something from nothing. Taxation transfers purchasing power from people living in the present to other people living in the present. In contrast, borrowing transfers purchasing power from people living in the future to people living in the present. The good news for politicians is that future people don’t vote in current elections (and current voters don’t seem to appreciate the cost to their future selves of current policy).

It’s Do Or Die: How Important Is NOT Raising The Debt Ceiling?

Debt, Economy, Government, Republicans

One of the most important stands the near-irrelevant Republicans can take is to NOT raise the debt ceiling. As was pointed out in “Debt-Ceiling Hike Denier And Proud,” on EPJ (the preeminent libertarian site on the World Wide Web), if the Republicans stand firm just this once and “refuse to raise the debt ceiling,” they would force the government to balance its budget. Also explained in the column: The government’s receipts are more than sufficient to cover its debt payments by a factor of approximately ten.

More via Professor Jeffrey Dorfman, at Forbes:

Reaching the debt ceiling does not mean that the government will default on the outstanding government debt. In fact, the U.S. Constitution forbids defaulting on the debt (14th Amendment, Section 4), so the government is not allowed to default even if it wanted to.

In reality, if the debt ceiling is not raised in the next two weeks, the government will actually have to prioritize its expenses and keep its monthly, weekly, and daily spending under the revenue the government collects. In simple terms, the government would have to spend an amount less than or equal to what it earns. Just like ordinary Americans have to do in their everyday lives. …

… An increase in the debt ceiling allows the government to continue to run a budget deficit, which by simple accounting means that the national debt will increase. Not raising the debt ceiling does not mean defaulting on the current debt, but rather that no new debt can be incurred.

As a libertarian, it hurts me to “plot” all the state’s immoral and wastrel appropriations. As an economics professor, Dorfman has done the necessary work. He has worked out a balanced budget for the plundering class.

Read it.

It really is do or die.

Debt-Ceiling Hike Denier And Proud

Debt, Government, Propaganda

“Debt-Ceiling Hike Denier And Proud” is the current column, now on WND. An excerpt:

The government “not paying for all sorts of things” is how Tom Foreman messily defined a default on the debt-ceiling for the Chicken Littles of his news network. In one of many doom and gloom debt-ceiling segments for state broadcaster CNN, Foreman forewarned that a default on the country’s debt “would not be just about D.C., but it could be about YOU.”

In the same phillipic, Foreman carelessly conflated a debt default with a failure to raise the debt ceiling before its Oct. 17th deadline. But then President Pain has been setting the tone for the media, having accused Republicans, in his “Oct. 8 news conference on the shutdown and debt limit,” “of refusing to “meet our country’s commitments, pay our bills,” and of generally precipitating an “economic shutdown.”

The notion, however, that not raising the government’s credit limit must necessarily result in a default on the debt is untrue.

The government takes in approximately $250 billion a month in revenue. Servicing the national debt costs about $30 billion a month. Three trillion dollars is what the federal government expects to loot in the fiscal year that began on Oct. 1, 2013 and will end on Sept. 30, 2014.

On reflection, the U.S. Treasury collects enough to pay down the interest on the debt as well as a portion of the principal.

Claiming that the president is powerless to prioritize won’t wash either. “There is no constitutional feature that says the president cannot allocate revenues,” David Stockman told Lou Dobbs. Paraphrased, the director of the Office of Management and Budget under President Ronald Reagan said this: Unless President Obama orders it, there will be no default on the government debt, because Obama has the power to prioritize and allocate the revenue coming in. Oct. 17 is a phony date, designed to intimidate Republicans—and anyone trying to stand against a massive increase in the “public debt.” The Beltway is silent about the ability of the president to honor the country’s debt, because of an opposition to entitlement reform. …

Read the complete column. “Debt-Ceiling Hike Denier And Proud” is now on WND.

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MORE Debt Dross

Debt, Government

Before Republicans caved on the debt-ceiling, Tom Foreman of the state broadcaster CNN warned that interest rates may climb, if what he billed incorrectly as a default on the debt came to pass.

That would be a much-needed correction. Interest rates should more realistically reflect the risk of lending to the U.S. government—and borrowing in general. That has to happen eventually.

Foreman also worried that the 148 million Americans (!!!) who are currently partaking in government programs will suffer. Not if they bite the bullet and decide, instead, to partake in the economy, if only for minimum wages.

The profligate president fretted too that not enough people will risk buying Treasury bills from the U.S. government. That’s a good thing too.

Like white on rice, the U.S. is on any country with significant foreign currency reserves. We’re even borrowing from … Brazil, which is now the United States’s fourth-largest creditor. The countries who buy U.S. government bonds to finance our debt are enablers. Anything that discourages this dubious investment will encourage the U.S. government to live within its means.