Dominos to fall if U.S. debt ceiling not raised

Discussion in 'West Mall' started by A. BETTIK, Jan 15, 2011.

  1. A. BETTIK

    A. BETTIK 1,000+ Posts


     
  2. johnny chimpo

    johnny chimpo 500+ Posts

    Let the ******* dominoes fall already.
     
  3. general35

    general35 5,000+ Posts

    "an event that has no precedent in American history."
    _________________________________________________

    like a 14.3 trillion debt?
     
  4. gobears92

    gobears92 Guest

    Well the dominoes were set up....
     
  5. majorwhiteapples

    majorwhiteapples 5,000+ Posts


     
  6. johnny chimpo

    johnny chimpo 500+ Posts

    Rex, I have an idea of what may happen, and my family and I are very prepared for what comes when this ponzi scheme/jenga game of an financial system comes crumbling down.
     
  7. THEU

    THEU 2,500+ Posts

    tie the raising of the debt ceiling to the repeal of Obamacare, and not spending anymore stimulus dollars (if they remain). That would be a good start.
     
  8. Musburger

    Musburger 500+ Posts

    The debt ceiling must be raised. However, in the long run (probably within the decade) the current system is doomed.

    Here's an interesting video.
     
  9. MaduroUTMB

    MaduroUTMB 2,500+ Posts


     
  10. HornsInTheHouse

    HornsInTheHouse 500+ Posts

    To answer the OP's question, we would not necessarily default. The debt ceiling refers to how much debt the Treasury is allowed to borrow. If the Treasury can't borrow money, it's like a family that has maxed out its credit cards--they have to cut expenditures to avoid running a deficit. In effect that means Social Security checks, Medicare payments, foreign aid, and Federal employee paychecks stop flowing. The government would have to rely entirely on its revenue to pay both the interest on existing debt and the Federal budget.

    A choice between defaulting and funding the government is a choice many countries have faced before: Mexico in 1994, Argentina in 1999, Greece in 2009, other countries throughout history. The line from the international community has always been that is it best to defund government than default, and most governments have accepted that advice. I don't know what the effects of defaulting would be on the U.S.

    We should raise the debt ceiling. Grappling with a potential default is a distraction we do not need as we try to boost the economy and raise employment. Foreign lenders would demand a higher interest rate on our debt to compensate for the additional risk of loaning us money. Our financial leadership worldwide would take a big hit and it would be embarrassing to say the least. If the debt ceiling isn't raised, and all revenue is diverted to paying interest on the debt to avoid default, that means large swathes of the Federal government go unfunded. I know the Tea Partiers fantasize about that, but who decides what goes unfunded? Probably President Obama and his cabinet, and he might just decide to end the Afghan War and a lot of favorite military projects Republicans like. Blocking a raise of the debt ceiling is bad economics and bad politics.
     
  11. majorwhiteapples

    majorwhiteapples 5,000+ Posts

    So here is a suggestion:

    We rasie it $1T, then that is it............No More, the max the government is allowed to spend outside it's limits is 15.9T?

    What Democrat or Republican can disagree with that?

    Regardless of the past 10 years or the past 20 or the past 60?

    Liberals please tell me my idea is wrong........?
     
  12. THEU

    THEU 2,500+ Posts

    I wouldn't mind seeing a law passed dealing with meeting our debt & deficit, rather than raising the debt ceiling. We can fail to raise the debt ceiling & still not default. Why would that be bad?
     
  13. general35

    general35 5,000+ Posts

    If Dominoes fall, what would be the worst case scenario?
     
  14. dheiman

    dheiman 1,000+ Posts


     
  15. Texas007

    Texas007 1,000+ Posts

    this is really simple. Eliminate obamacare, and every other entitlement tomorrow. Problem is solved overnight. Fact is we cannot service our obligations anymore because we are borrowing money to pay everything from interest, to entitlements. You gotta eliminate them. Follow the constitution, and everything will be fine.
     
  16. Ag with kids

    Ag with kids 2,500+ Posts

    Any bill that raise the ceiling should be coupled with cuts in spending.
     
  17. dheiman

    dheiman 1,000+ Posts


     
  18. 2003TexasGrad

    2003TexasGrad Son of a Motherless Goat

    Raising the debt ceiling but cutting spending is an oxymoron.

    Why would we need to raise the ceiling if we are going to cut spending? If we cut spending then we can address the debt and dont need to raise the ceiling....

    Raising the debt ceiling means justifying going deeper into debt. Who in their right mind thinks we can keep doing that? At SOME point, the ceiling must be capped. If it isnt, we will continue going deeper into debt.

    At some point...... thats the thing. Every politician doesnt want that point to be when they are in office. Lets face it. Our monetary system is out of control, and we are going to have to face it sooner or later. The problem is, later means worse. And we cant stave it off forever. It IS going to crash and crumble on its own whether we like it or not.

    Its funny, in a morbid way, that when the last presidential debates were going on in the spring of 2007, Ron Paul spoke about the impending economic crisis, and everyone just laughed at him. Fools.
     
  19. 2003TexasGrad

    2003TexasGrad Son of a Motherless Goat


     
  20. HornsInTheHouse

    HornsInTheHouse 500+ Posts


     
  21. bronco

    bronco Guest


     
  22. 2003TexasGrad

    2003TexasGrad Son of a Motherless Goat

    Please correct me if I am wrong on this,

    but the health care bill requires everyone to buy a policy, but it doesnt ensure you will be covered, and it doesnt lower the cost of premiums. Is this true or am I misinformed?
     
  23. dheiman

    dheiman 1,000+ Posts


     
  24. 2003TexasGrad

    2003TexasGrad Son of a Motherless Goat

    So every insurance company will be forced to cover EVERY medical condition? I find that hard to believe. I also dont believe that premiums are going to be any less expensive, which is why alot of people DONT have health insurance. They CANT AFFORD IT!
     
  25. Musburger

    Musburger 500+ Posts

    Link
    America: Where we are and where we are going

    By musburger

    There are many, many reasons why the national debt will continue to grow exponentially faster than GDP. The most important reason is the monetary system, where money/debt is synonymous with government spending. The idea most of us have is that money first exists within the population, the government then taxes the citizens, and then spends the money which it collects. It doesn’t really work quite that way.

    In general, money is created through borrowing. In the private sector, people and businesses borrow money from banks. Since banks loan out something like 9 x the amount they have on reserve, most of the money in existence is not actually currency, but in fact credit(debt) which is simply digital entries on accounts. At the level of the federal government, the Federal Reserve creates the digital entry for the government. The money is backed by bonds auctioned off by the Treasury to investors of all sorts. Bonds are merely the promise of paying back the investors plus interest. The government then collects money to pay back the bond holders through taxation. Because interest is the cost of borrowing, the money supply accelerates faster than growth. Over time, because of exponential growth, the gap between debt (money creation) and the ability to pay it back becomes greater and greater. The only way to reverse the process is through default. Outside of government, bankruptcy and default are mechanisms which restore equilibrium. For the government bankruptcy and default is unthinkable.

    Within the framework of our monetary system, we have a mixture of socialism and capitalism. First, let’s look at the socialistic aspects of our government.

    Since the days of FDR, our country has benefited from a wide range of social programs including social security, Medicare/Medicaid, food stamps, and various other programs. Since about 1983, social security taxes collected have exceeded social security payouts. The largest surpluses in social security occurred during the Clinton administration which more than offset the deficit spending which was actually occurring (without social security, the surplus years would have in fact been deficits). The cumulative surplus of social security taxes since 1983 have already been spent by Congress in the amount approximating $2.6 trillion. This is part of what is called inter-agency debt (debt not held by the public). Beginning in 2010, possibly in 2011-2013, and certainly after 2013, social security will run deficits every year. In order to payout benefits, the government must begin to borrow money. Because the over 62 population is demographically becoming very large (and vote in large numbers), it is politically all but impossible to reduce benefits. Ditto Medicaid/Medicare and food stamps.

    Speaking of food stamps, the numbers of Americans enrolled continue to increase month by month at an annual percentage rate that is double-digits – even as the press announces that we are no longer in recession. And medicare is even more problematic than social security.

    Social programs are not compatible with growth creation. When a business takes a loan and then uses the proceeds of that loan to create a product or service, value is added. This must be the case or the loan, which requires repayment of both principal and interest, cannot be repaid. However, when the government is forced to borrow money and issue bonds, which require the repayment of principal and interest, in order to payout entitlements there is no value added. In other words, the newly created debt (the treasury bond) cannot possibly be repaid.

    Over time, our capitalist system has undergone changes. At the turn of the 19th century large monopolies dominated the steel, oil, and railroad industries. The government under Teddy Roosevelt realized the danger of concentrated wealth and broke up these monopolies. One hundred years later, America is in a similar predicament as a few powerful corporations dominate nearly every major industry. Monsanto, ADM, and Cargill control almost all of our agricultural production. Of thousands of financial institutions, six control assets which total trillions of dollars. The oil industry is dominated by Exxon, Chevron, and BP. Our defense industry is headed by titans like Lockheed and Boeing.

    The difference between now and the turn of the century, is that these powerful interests have made such large inroads into the government there is little chance they can be broken up. The executive branch now consists of dozens of agencies where the decision makers are staffed with forme CEOs of the very agencies they are entrusted to oversee and regulate. These bureaucracies, instead of representing the public and serving the nation, now work to see that the interests of the corporations are served. Lawyers representing these corporations comprise Congressional staffs and lobby Congress. Millions of dollars are spent to influence legislation or be granted exemptions from laws smaller companies/individuals are forced to comply with. If we haven’t yet reached the point of Plutocracy, we are certainly headed in that direction. Instead of capitalism, the new American model is crony capitalism.

    With crony capitalism, the interests of the few outweigh the interests of the many. Let’s take the financial industry for an example. For the JPMorgans and Goldmans, the greater the debt of the individual (and the nation as well), the greater the short term profit. As the individual takes on more debt (as with the housing finance boom earlier in the decade) the financial industry finance the debt which creates a steam of income. This nearly backfired as the debt overhang became too great, and balance would have to be restored by default. Because of the concentrated power of the financial system, the US government took on trillions of dollars of debt to ensure the banks continued to receive their flow of income (and payout multimillion dollar bonuses). The national debt is financed by the sale of bonds, much of which is purchased by financial institutions. Since the bonds are paid back with interest, the more debt the government takes on, the more the banks profit. And how does the government pay the bonds? By extracting taxes from the citizens. When the amount collected is insufficient, the government simply borrows even more. Of course, this process is unsustainable, but once the system blows up, the power brokers will have already absconded with billions.

    The defense industry employs hundreds of thousands of Americans. Lockheed has facilities in 49 states. Homeland defense expenditures are rapidly growing. Downline industries (both domestic and overseas) make cameras, silicon chips, engine parts, and all kinds of other materials. If the defense budget were cut, say $200 billion/year, the deficit might shrink perhaps only $20 or $40 billion. Why? The wasteful projects such as building unneeded jets, etc. employ real people who pay taxes. These people would find lower paying jobs or worse yet be sustained by unemployment or other social programs. Also, through massive lobbying, most Americans believe any cut in spending threatens our defense (even though with the hundreds of billions spent now, there is no concerted effort to close the border). There is no political will to shrink defense spending.

    Green energy, at least on paper, is not economically feasible. The hidden costs of environmental damage from oil spills, dead zones in the ocean from fertilizer runoff, and so on, probably make the costs more comparable. In the long run, cheap oil will no longer be available and we will need some kind of alternative energy sources. However, the oil lobby (Halliburton, Exxon, BP), stands to gain little from algae fuels or solar power. And as the oil industry expands to places like Iraq, the defense industry goes with them. The government must fund these operations and the banks profit as a result of that funding.

    In summary, our monetary system is flawed because it based on debt. The population has become dependent on unsustainable social programs that are politically impossible to kill or scale back. The corporate sector has usurped power from the citizenry and controls much of the decision-making positions within the government apparatus. The end result is systemic failure, either through default and massive deflation or hyperinflation resulting from the refusal of default.
     
  26. YoLaDu

    YoLaDu Guest


     
  27. general35

    general35 5,000+ Posts

    The national debt is the accumulation of years of deficit spending going back to the days of George Washington.
    __________________________________________________

    This might be true, not all debt is bad, but pelosi spent more during her time as speaker than all the previous administrations combined.
     
  28. YoLaDu

    YoLaDu Guest

    In reply to:


     
  29. YoLaDu

    YoLaDu Guest

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  30. Uninformed

    Uninformed 5,000+ Posts


     

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