Raising the US debt ceiling

[bush_cheney2004]

However, you cloak it, it is still a payment due the citizens of the US to be paid monthly out of the US Treasury.

Correct, but it is easily covered by curtailment of payments to other obligations. Obama and Geithner have already set up their triage plan if necessary, and the Fed is standing by to help as well. This Kabuki theatre does not reflect all of the nuts and bolts in the background.

I specifically recall having my military pay deferred back in the 80's due to a fiscal year budget crisis caused by identical politics....no big deal.

[bush_cheney2004]

Any failure of the US government to honor its financial obligations will have a similar effect though. A government that cant fund its own programs or pay its own employees is not going to have an easy time selling bonds. Its a matter of credibility.

But wait....you are the one who claims that America has been in default for over 35 years...how did it keep such credibility since then?

Theres also a question of whether or not the treasury has a constitutional mandate to priortize payments. Depending on what legal advice they get they might have to pay bills in the order they become due as opposed to which bills they think are more important to pay.

Irrelevant academic posturing by talking heads.....Treasury will do as it has always done.

This whole line of argument is really just for fun though because the government will pay ALL of its bills SS, Medicare, Interest on the debt, etc no matter what the idiots in congress do.

Not until the fun is over....

[dre]

But wait....you are the one who claims that America has been in default for over 35 years...how did it keep such credibility since then?

Irrelevant academic posturing by talking heads.....Treasury will do as it has always done.

Not until the fun is over....

But wait....you are the one who claims that America has been in default for over 35 years...how did it keep such credibility since then?

Iv explained this to you before. The US dollar was the reserve currency under bretton woods. The world had no choice but to accept dollars that were now backed by the US governmment and economy instead of gold because they were already sitting on gigantic mountains of greenbacks. And the US economy was huge and growing fast and that kept the bond market strong.

A default isnt the end of the world... life goes on. Within a decade or so people will be buying Greek bonds again too.

[Bitsy]

Correct, but it is easily covered by curtailment of payments to other obligations. Obama and Geithner have already set up their triage plan if necessary, and the Fed is standing by to help as well. This Kabuki theatre does not reflect all of the nuts and bolts in the background.

I specifically recall having my military pay deferred back in the 80's due to a fiscal year budget crisis caused by identical politics....no big deal.

With August bills almost twice August revenue, I think it will be difficult to defer all the paychecks coming due.

Edited to add:

But have fun with it.

http://about.bgov.com/2011/07/12/august-invoices-show-u-s-treasury%E2%80%99s-limited-choices/

Edited July 30, 2011 by Bitsy

[bush_cheney2004]

Iv explained this to you before....

Uh huh...and it still doesn't add up to a "default".

A default isnt the end of the world... life goes on. Within a decade or so people will be buying Greek bonds again too.

I know...Canada is proof of that. Presto....no more Canadian peso!

[bush_cheney2004]

With August bills almost twice August revenue, I think it will be difficult to defer all the paychecks coming due.

They don't have to defer all of them...just some of them. SS and military will get priority over others, just as before. This is not a new execrcise for the federal government.

Accordingly, there will be no default on debt service.

[dre]

Uh huh...and it still doesn't add up to a "default".

I know...Canada is proof of that. Presto....no more Canadian peso!

Uh huh...and it still doesn't add up to a "default".

Thats exactly what it adds up to. In fact its the dictionary definition. The US was obligated as a bretton woods signatory to redeem US dollars with gold, and it defaulted on that obligation. If you sell someone a bunch of tickets with the promise that they can bring those tickets to you later and trade them in for some kind of product or service or commodity, and you then refuse to keep that promise when they show up wanting to redeem those tickets then YOU ARE IN DEFAULT. If you deny this you simply dont know what the word means.

Edited July 30, 2011 by dre

[dre]

They don't have to defer all of them...just some of them. SS and military will get priority over others, just as before. This is not a new execrcise for the federal government.

Accordingly, there will be no default on debt service.

They dont have to defer ANY of them if they dont want to. The government can just create the money to make all these payments and in doing so extract the wealth required to satisfy these obligations from all holders of US dollars and bonds world wide.

[bush_cheney2004]

....and you then refuse to keep that promise when they show up wanting to redeem those tickets then YOU ARE IN DEFAULT. If you deny this you simply dont know what the word means.

Right....so the US has actually been in "DEFAULT" since the early 1970's. If that's true, then why all this fuss over DEFAULT now? Was the earlier DEFAULT settled in some way that only you know about?

[Bitsy]

I specifically recall having my military pay deferred back in the 80's due to a fiscal year budget crisis caused by identical politics....no big deal.

Forgot to ask you if this is when the Republicans showed their a$$ and shut down the federal government?

[bush_cheney2004]

Forgot to ask you if this is when the Republicans showed their a$$ and shut down the federal government?

Nope...it was in the 80's....typical beginning of fiscal year budget wrangling. At least they were able to pass a budget, something that the Democrats were unwilling to do recently. I wonder why?

[Scotty]

Correct, but it is easily covered by curtailment of payments to other obligations. Obama and Geithner have already set up their triage plan if necessary, and the Fed is standing by to help as well. This Kabuki theatre does not reflect all of the nuts and bolts in the background.

I specifically recall having my military pay deferred back in the 80's due to a fiscal year budget crisis caused by identical politics....no big deal.

Depends on how long it's deferred, and what state your finances are in.

And anyway, deferring pay checks isn't going to cut it given nearly half your spending comes from borrowing.

[Scotty]

They dont have to defer ANY of them if they dont want to. The government can just create the money to make all these payments and in doing so extract the wealth required to satisfy these obligations from all holders of US dollars and bonds world wide.

Printing more money results in inflation. The more you print the more inflation. I don't think the US economy needs that on top of all its other problems.

I don't think Americans want to have to roll a wheelbarrow full of cash down to the corner store to buy their milk.

[bush_cheney2004]

Depends on how long it's deferred, and what state your finances are in.

And anyway, deferring pay checks isn't going to cut it given nearly half your spending comes from borrowing.

That remains to be seen...there are many mix and match options. California has survived in just this manner, giving official IOUs to vendors and employees.

[dre]

Right....so the US has actually been in "DEFAULT" since the early 1970's. If that's true, then why all this fuss over DEFAULT now? Was the earlier DEFAULT settled in some way that only you know about?

If that's true, then why all this fuss over DEFAULT now?

Kind of a silly question. Just because the US was able to survive defaulting on its obligation to redeem its dollars for gold does not mean that a default now wouldnt be a pretty big problem. But like I said... life goes on. If the US defaulted on its obligation now it would face some consequences but it would recover. Life would go on.

Agentina is another good example. Theyve managed to stabilise the situation and their currency is slowly re-valuating. Only about 3 pesos to the dollar now.

[Bitsy]

Nope...it was in the 80's....typical beginning of fiscal year budget wrangling. At least they were able to pass a budget, something that the Democrats were unwilling to do recently. I wonder why?

That's a question many of us have asked, along with others questions. Democrats time management was dismal and they are paying for it now, or I should say, we are paying for it now. But even without a budget, I don't recall any military pay or any other pay for that matter being deferred..did I miss something?

[bush_cheney2004]

.... But even without a budget, I don't recall any military pay or any other pay for that matter being deferred..did I miss something?

...only about seven consecutive continuing resolutions in lieu of a real approved budget. After losing the 2010 mid-terms, the Democrats kicked the can down the road for political purposes. But it was too late, the new Congress was seated and it now includes Tea Party members who vowed to honor their elected mandate...stop business as usual when it comes to the federal debt.

I guess they have made their point.

[dre]

Printing more money results in inflation. The more you print the more inflation. I don't think the US economy needs that on top of all its other problems.

I don't think Americans want to have to roll a wheelbarrow full of cash down to the corner store to buy their milk.

Maybe but the money would only need to exist temporarily until the treasury can sell bonds again. They can simply mint a 2 trillion dollar platinum coin, deposit it in its account at the federal reserve and start writing checks.

[Bitsy]

...only about seven consecutive continuing resolutions in lieu of a real approved budget. After losing the 2010 mid-terms, the Democrats kicked the can down the road for political purposes. But it was too late, the new Congress was seated and it now includes Tea Party members who vowed to honor their elected mandate...stop business as usual when it comes to the federal debt.

I guess they have made their point.

Here is a moderate Republican journalist who thinks it is time for them to go.............

If the nation defaults on its financial obligations, the blame belongs to the Tea Party Republicans who fragged their own leader, John Boehner. They had victory in their hands and couldn’t bring themselves to support his debt-ceiling plan, which, if not perfect, was more than anyone could have imagined just a few months ago. No new taxes, significant spending cuts, a temporary debt-ceiling solution with the possibility of more spending cuts down the line as well as action on their beloved balanced-budget amendment to the Constitution.

These people wouldn’t recognize a hot fudge sundae if the cherry started talking to them.

snip

Unfortunately for the country, which is poised to lose its place as the world’s most-trusted treasury and suffer economic repercussions we can ill afford, the stakes in this political game are too high to be in the hands of Tea Partyers who mistakenly think they have a mandate. Their sweep in the 2010 election was the exclusive result of anti-Obama sentiment and the sense that the president, in creating a health-care plan instead of focusing on jobs, had overplayed his hand. Invariably, as political pendulums swing, the victors become the very thing they sought to defeat.

Who’s overplaying their hand now?

It must be said that the Tea Party has not been monolithic — and the true grass-roots shouldn’t be conflated with leaders who disastrously signed on to the so-called “Cut, Cap and Balance” pledge. What is it with Republicans and their silly pledges? Didn’t they get enough Scouting? This pledge now has them hog-tied to a promise they can’t keep — the balanced-budget amendment. As many as a third desperately want a pardon from that commitment, according to sources close to the action.

Hubris is no one’s friend, and irony is a nag. The Tea Partyers who wanted to oust Barack Obama have greatly enhanced his chances for reelection by undermining their own leader and damaging the country in the process. The debt ceiling may have been raised and the crisis averted by the time this column appears, but that event should not erase the memory of what transpired. The Tea Party was a movement that changed the conversation in Washington, but it has steeped too long and has become toxic.

It’s time to toss it out.

http://www.washingtonpost.com/opinions/the-tea-fragger-party/2011/07/29/gIQA23pAiI_story.html?hpid=z6

[bush_cheney2004]

Here is a moderate Republican journalist who thinks it is time for them to go.............

Not quite go...maybe keep them in the back yard next time a slap upside the head is needed in Congress. If this is a positive turning point in America's fiscal fiasco, then the Tea Party has done a great service to the nation.

[Oleg Bach]

The whole monitary system world wide is beyond my comprehension. If I can't firmly grasp what is going on then the average person who IS the economy and who pays TAXES probably does not have a clue how or why money behaves in such a strange manner - This is the greatest of irony...that we don't really know what's going on - and I suspect that our brave and noble leaders can not grasp what is going on also - Mission control we have a serious problem - no one knows how to pilot the ship.

[bush_cheney2004]

Agentina is another good example. Theyve managed to stabilise the situation and their currency is slowly re-valuating. Only about 3 pesos to the dollar now.

...or Canada in the 1990's....no more Canadian peso now.

[Guest American Woman]

As we are getting closer to the eleventh hour, it appears the news is suddenly more positive. What a shcok!

"We're a long way from any kind of a negotiated agreement, but there is certainly a more positive feeling about reaching an agreement this evening than I've felt in a long time," Senator Richard Durbin, the No.2 Democrat in the Senate, told reporters.

If a credible bipartisan deal is tantalizingly close, the White House has said it would accept a very short-term extension of the debt limit to allow lawmakers time to nail down the compromise.

link

[pinko]

As we are getting closer to the eleventh hour, it appears the news is suddenly more positive. What a shcok!

"We're a long way from any kind of a negotiated agreement, but there is certainly a more positive feeling about reaching an agreement this evening than I've felt in a long time," Senator Richard Durbin, the No.2 Democrat in the Senate, told reporters.

If a credible bipartisan deal is tantalizingly close, the White House has said it would accept a very short-term extension of the debt limit to allow lawmakers time to nail down the compromise.

link

I read your link and there really is nothing new there other than a wish and a hope.

[Guest American Woman]

I read your link and there really is nothing new there other than a wish and a hope.

Gosh. And here I thought all the negativity coming out of the government and the media was the reason for everyone's 'doom and gloom' attitude. Least that's what I was told. Not surprising if the story changes now that the news is more positive.