Don’t Cross This Line…or This One…or This One
December 30th, 2005 at 11:41 pm
December 30th, 2005 at 11:41 pm
In related fiscal news, Reuters reports that the U.S. Secretary of the Treasury, John Snow, is recommending raising the “debt limit”, from the current limit of $8.184 trillion.
Failure to do so potentially risks throwing the country into its first default in history, Snow warned in what has become virtually an annual rite as U.S. borrowing needs spiral.
The debt ceiling was last raised just over a year ago, from $7.384 trillion. Representative Ron Paul (Republican/Libertarian-TX) had a nice article then, and his comments still apply:
Congress has become like the drunk who promises to sober up tomorrow, if only he can keep drinking today. Does anyone really believe this will be the last time, that Congress will tighten its belt if granted one last loan? What a joke! There is only one approach to dealing with an incorrigible spendthrift: cut him off. Congress wastes hundred of billions of dollars every year on countless agencies and programs. Rather than raising the federal government’s credit limit, Congress easily could mandate cuts in the existing bloated budget.
Why even have a limit if it’s pushed in perpetuity?
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December 31st, 2005 at 12:09 pm
So what would it look like for the gov’t to default?
January 1st, 2006 at 1:12 am
I suppose it would look like Argentina, Russia, or even our own U.S., which defaulted on its obligation to pay in gold people who wanted to exchange 1 USD for 1 dollar of gold. Our paper that bought a dollar’s worth of gold before 1933, when we were on the gold standard, can’t buy much gold for $1 now. Gold has nearly doubled over the last five years, from around $280 an ounce at the end of 2000 to above $515 now.
We would probably still have paperbacks because they are plenty in supply and you can’t do much else with them (except burn, I suppose). But if Americans want to buy Canadian beef, Columbian coffee, etc., most of us would have to forget it. Who would want to exchange US dollars for foreign currency and products when we can’t stablize USD value? Maybe then all these people who threaten to move northward every 4 years when an election doesn’t go their way would finally come visit you.
March 7th, 2006 at 10:16 pm
[...] Treasury Secretary John Snow is asking for another elevation of our debt ceiling. If you’re getting déjà vu, it’s because he did it less than three months ago. Prior to that they waited a whole year before asking. [...]