Wikinvest Wire

Raise the debt ceiling! But, just a little...

Tuesday, December 15, 2009

Well, it looks like Congress will raise the "debt ceiling" by just $200 billion instead of the much larger $1.9 trillion, as previously believed, due to some moderate Democrats who are insisting on the development of some sort of a plan to eventually pay down some of the debt.

That's a start. Like an alcoholic, the first step toward recovery is to admit you have a problem. Unfortunately, far too few elected officials think there's a problem.

A report at CNN/Money earlier today came with the graphic below that really doesn't look all that bad on the scale provided with the new, smaller increase sounding almost benign.

Last week, there was talk on Capitol Hill of raising the legal limit on how much debt the U.S. Treasury could have on the books by as much as $1.9 trillion. This week, the tune has changed considerably.
IMAGE The new plan under consideration: increase the debt ceiling just enough to satisfy Treasury's borrowing needs for two months -- likely by "a couple hundred billion dollars," House Majority Leader Steny Hoyer, D-Md., told reporters Tuesday.
This could be a dangerous precedent. Lawmaker may realize that raising the debt ceiling by just one or two hundred billion dollars ten times a year is a lot easier than raising it one or two trillion dollars just once a year.

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Anonymous said...

The central bank printed until domestic spendthrifts borrowed all of the extra goods produced overseas. One of the unintended side effects was to create a dependence upon continued borrowing. To keep people employed, the US must borrow goods produced overseas, and use the borrowed goods to pay for domestically produced services.

40% of S&P profits were from the financial sector at the peak. A substantial fraction of those profits were based upon completely useless financial innovation "services". When you add up the other useless services being paid for with borrowed overseas goods, the magnitude of the problem starts to become apparent.

Because of too much printing, the economy became seriously distorted, and is no longer viable without ever increasing foreign loans of their manufactured goods. The federal debt is just one symptom of this dependence upon borrowing.

Printing is not medicine, as the central bank claims. It is heroin that dulls the pain of recession, but makes the patient dependent upon it. Over time, it gradually destroys the patient. Now the strung out drug addicted economy is in bad shape, and the central bank prescribes even more heroin.

Kick the habit. Stop printing. It is the only way to restore eventual health.

Anonymous said...

Can't wait to see what you post about Time's person of the year being Bernanke.

Anonymous said...

Congress will never, never, never, never, never, never, never act responsibly until this whole mess collapses.

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