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Rand Paul Threatens To Filibuster Debt Ceiling Talks Until Balanced Budget Constitutional Amendment Passes
When it was reported last week that Eric Cantor, who had just walked out of Biden's debt ceiling talks leaving Democrats to talk amongst themselves, was pushing for a "balance budget" amendment to the constitution, many took it as merely more posturing in the relentless debt ceiling drama that is rapidly approaching its inevitable conclusion (under one month left until August 3). It now appears that this may have been more than a bluff, at least to members of the Tea Party. According to the Huffington Post, "Sen. Rand Paul (R-Ky.) is planning a Senate filibuster next week in an attempt to force debt ceiling negotiations into the open." More: '"We've had not one minute of debate about the debt ceiling in any committee," he said in an interview with C-SPAN's "Newsmakers" that aired on Sunday. "We haven't had a budget in two years. We haven't had an appropriations bill in two years. So I'm part of the freshmen group in the Senate that's saying, 'no more.'" Paul's plan: "Next week, we will filibuster until we talk about the debt ceiling, until we talk about proposals."" He added that a group of senators in the "conservative wing" of the Republican Party will also be presenting a proposal to tie raising the debt limit to passage of a balanced budget amendment." So, just more posturing, which may now be indicative of the first splinters within the republican party, especially after John Cornyn said the GOP may accept a "mini deal" on raising the debt ceiling, or actual concerns about the debt hike that have to be appreciated? For now, at least judging by the market, the debt ceiling rise is a foregone deal.
"[W]e will actually vote in favor of raising the debt ceiling next week if we can, but it will be contingent on passing a balanced budget amendment to the Constitution," he said, adding, "I'm not completely without the sense that we may need to raise the debt ceiling. But I will only do it if we have significant budgetary reform, and to me that means you have to balance your budget every year."
Paul's announcement picks up where Sen. Ron Johnson's (R-Wis.) one-man filibuster attempt last Tuesday left off. Johnson declared that as long as the debt ceiling negotiations are held behind closed doors, he would block all unanimous consent calls, effectively putting a stop on Senate business.
"Unless we receive some assurance from the Democrat leadership that we will actually start addressing our budget out in the open, in the bright light of day -- I will begin to object," Johnson said on the Senate floor.
Further indicating that Paul's noble attempts at curbing spending may be short-lived is a report from The Hill that Mitch McConnell, who has resisted a balanced budget amendment: "He argues that a balanced budget amendment, which requires a two-thirds vote in both chambers, simply doesn’t have enough votes to pass the upper chamber. But this has put him out of step with some of the hard-charging conservative freshmen in the upper chamber."
At this point it is probably not even worth the time to look at who funds whom out of the abovementioneds, although for those curious, here is the complete list of McConnell's lifetime contributors. Hopefully it is a not a surprise to anyone.
Contributor  |
Total |
Indivs |
PACs |
|---|---|---|---|
| Kindred Healthcare | $180,200 | $150,200 | $30,000 |
| UST Inc | $128,100 | $93,100 | $35,000 |
| Brown-Forman Corp | $121,150 | $82,650 | $38,500 |
| Elliott Management | $114,000 | $114,000 | $0 |
| UBS AG | $107,950 | $97,950 | $10,000 |
| Humana Inc | $98,652 | $74,777 | $23,875 |
| Citigroup Inc | $93,750 | $70,750 | $23,000 |
| Peabody Energy | $93,700 | $66,600 | $27,100 |
| Altria Group | $91,950 | $46,950 | $45,000 |
| Ashland Inc | $90,358 | $67,000 | $23,358 |
| AT&T Inc | $77,050 | $27,800 | $49,250 |
| United Parcel Service | $74,600 | $27,600 | $47,000 |
| General Electric | $71,750 | $40,450 | $31,300 |
| Greenebaum, Doll & McDonald | $71,000 | $75,000 | $-4,000 |
| Blue Cross/Blue Shield | $69,750 | $37,250 | $32,500 |
| Guardsmark Inc | $67,100 | $67,100 | $0 |
| Griffin Industries | $66,750 | $66,750 | $0 |
| FMR Corp | $65,000 | $54,000 | $11,000 |
| WPP Group | $65,000 | $61,000 | $4,000 |
| FedEx Corp | $63,400 | $29,400 | $34,000 |
Below is Paul's warning clip:
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Awesome
+100
No. Not so awesome. Just more hypocritical tea-party rhetoric, as usual.
According to the Tax Foundation, Kentucky receives $1.59 in Federal spending for every $1.00 in taxes they send to Washington. Perhaps Rand should focus on his own backyard before he attempts to force austerity on everyone else.
You've got to wonder about a state that has as its 2 letter abbreviation a celebration of anal lubricants...
Protect her from your girth with the best lube on earth!
pods
By appealing to tons of bullshit about the Constitution and other patriotic crap, Senator Paul is able to seduce his brute and ignorant constituency, and most important to perpetuate himself in that position for years to come (a clever way to make easy money). Besides that, Americans are a bunch of stupid animals easy to manipulate and subdue. The sooner the US economy collapses the better, so these brutes will finally learn NOT to live beyond their means.
Yes, forgive us for not being the great beacon's of truth justice and equality such as yourself, oh wait...
+2 Bernancke Bucks for that astute observation.
There is no question about it Kentucky is in bad shape and has been completely piss poorly managed. Its one of biggest federal teet suckling state of them all.
What would you rather him do? Ask for MORE federal dollars? Any critique of Kentucky's fiscal issues should fall squarely on the Governor and the state senate/reps.
+1
Yeah, you are correct, but that is not the topic of the immediate battle. One domino at a time grasshopper.
We should get a reading list put together for Rand to read aloud during the filibuster. I will donate my copies of Ludwig von Mises "Human Action" and F.A. Hayek's "The Road to Serfdom". Any other recomendations??
Zen and the Art of Motorcycle Maintenance
"Uncommon Cents - Benjamin Franklin's Secrets to Achieving Personal Financial Success", ISBN: 0-939817-06-3, by Lynn G. Robbins
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"Economics in One Lesson", ISBN: 978-0-517-54823-3, by Henry Hazlitt
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"Everything You Know Is Wrong: The Disinformation Guide to Secrets and Lies", ISBN 978-0-971-39420-9
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The Dirty Dozen, How Twelve Supreme Court Cases Radically Expanded Government and Eroded Freedom ISBN: 978-1-935308-27-0
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"Dreams Come Due, Government and Economics as if Freedom Mattered", ISBN: 0-671-61159-3, by John Galt
The book is dated, but many of the things it talks about are still valid today.
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"The Big Short" by Michael Lewis, ISBN: 978-0-393-07223-5
Illusions by Richard Bach
It's unfortunate that it takes a state like Kentucky to set an example for the more fiscally responsible ones
Hopefully other states will join in the filibuster...
Not gonna happen.
Keep spouting off pre-manufactured talking points without doing any underlying research as to why the numbers look the way they do.
Yes, KY does get back 1.59 for every 1.00 sent in, but lets looks below the surface.
KY is home to Fort Knox and Fort Campbell. Both of these outfits which are FEDERAL MIC skew the data.
Subtract those funds and the picture is a little clearer. As a KY resident, I would love to see the MIC reduced in size, and so does Rand Paul. So, no hypocrisy in his stance on this issue.
He actually already addressed this exact question / issue in an interview with a local radio personality. Do a little research and you'd know where he stands.
Oh wait, you're just another tool who recites shit you hear from the establishment Republicrat owned media whores trying to discredit someone who actually understands LIBERTY AND RESPONSIBILITY GO HAND IN HAND.
Fuck off and slither back into whatever hole you came from.
Hit a little too close to home for you there, eh?
Care to name a single US state WITHOUT a major MIC presence? Go on, I'm waiting....
Fort Knox is downsizing, the armored school and division have already left. As for Campbell, it's mostly empty land/reservation.
"Hit a little too close to home for you there, eh?"
Perhaps.......hehehe.
Fort Knox is not exactly downsizing, however. They did eliminate the entire tank division....I've saw miles of train cars loaded with tanks heading off to their new home. I haven't paid much attention to what they are bringing in to keep all those boys entertained next, but I do know that they are adding a couple of thousand more uniforms. The constant expansion of Fort Knox has kept residential real estate demand high enough since the bottom fell out that prices in Radcliff/Elizabethtown haven't taken a beating.
My real point was, Rand Paul has been asked point blank about the imbalances in KY pay in vs receivables from the FedGov. It's not an issue he is clueless about as the original comment was slanted to imply. So don't run around lobbing character assassinations at an individual who just arrived on the scene and actually appears to be trying to to the right things so far.
I'm as cynical and untrusting as anyone else, but if he is just another crooked SOB, it will be evident quickly enough that we don't have to lay extra land mines and set agendas against him.
And for the record, the MIC footprint appears fairly small in Wyoming.
http://www.nps.gov/history/nagpra/DOCUMENTS/BASES.PDF
There was not a Armored Division at Fort Knox for a long time. There were training units, {the Armor School}, they used tanks of course to train the tankers, and they also trained cav scouts. In addition, the NCO Academy trained PLDC, Armor BNCOC and ANCOC. These types of schools have little financial impact in the area. Also there were some Officer courses here. I got to Knox in 1994 and any deployable Armor Unit was gone before I arrived, and the Infantry at Knox was leaving as I was inprocessing. I was a Infantryman and there were no slots for me a short time after I arrived on post, except at the NCO Academy.
What the guy above said.
I live 8 miles from Fort Knox, my wife works at IACH. It did not downsize. You don't have a clue, and your comments show it. The Armor School is leaving - almost gone. There was no "Division" here for many years. They just built a new huge building for Human Resources, which they have moved here to replace the Armor School, basically a one for one trade in personnel, and they have brought an actual deployable combat unit here from Fort Hood [3rd BDE, 1st IN DIV, adding 3400 troops, plus family members. Almost a billion dollars has been spend on Fort Knox for this changeover. The highways are clogged in the area at start and quiting time, unlike before the change up. Fort Campbell is home to the 101st IN DIV, Air-mobile, four full brigades and two aviation brigades, plus an "ass and trash" brigade.
You are clueless. These are two of the larger installations in CONUS. As for empty land, that is called "training areas" and "impact areas". You can't train troops without "empty land/reservation".
I guess facts are things that hit too close to home for you.
Was Rand Paul responsible for the Kentucky budget? What does that have to do with his efforts to change the Federal budget?
Take your sideshow to tent #6 down the pike and behind the outhouse.
During times of universal deceit, telling the truth becomes a revolutionary act.
George Orwell
so what if kentucky takes in more federal tax dollars than it sends in? Is it Rand's fault that the previous decades of congress have been shelling out money they don't have?
ISNT THAT EXACTLY WHAT HE'S TALKING ABOUT RIGHT HERE?
I JUNK your ignorant statement.
Rand Paul is the only person I've seen in government that is truly rattling cages. What happened to the wanker, tea-party express and all of their faux outrage? I guess they're only concerned about keeping government out of their Medicare.
In politics cage rattling = name in headlines, nothing more.
Agreed, but I really don't see what more one man can do. Quite honestly, it seems like it is Rand Paul vs the United States government at this point.
Well, someone needs to start this. So what if he tilts at windmills, A journey of a thousand miles starts with the first step. So get that guy some freaking' shoes, not this defeatist BS. If not him, Who? If not now, When?
Rand Paul is instigating a discussion besides attempting to restore the contitutional legislative process. TPTB obviously do not want the people to engage in an honest discussion. They don't want the electorate to examine the issues and vote our displeasure. They'd rather have you hanging onto trials that have nothing to do with money, banks, central banking, overwhelming debt, enslavement, or politics.
Thank God for Rand Paul. Surely he must understand that he may end up taking a bullet for you and me and our children.
Amazing how the MSM has so many trained to snicker reflexively while circling the toilet drain.
If he is honest and persists, I wouldn't be surprised if he did have an accident before he catches on anymore. As of now, they'll just use the MSM and trolls to discredit him with a bunch of BS.
Welcome back my friends to the show that never ends
We're so glad could attend - come inside, come inside
The tea party is such a nutless fraud. Everyones biggest fear is any truth entering the Ponzi....lets focus on Greece a TINY $100 billion problem, nevermind our own $600 trillion debt because to actually address it and admit we're completely screwed and bankrupt in a 0% production economic model would have 'disastrous consequences'...
LMAO
I think you're exactly right. A lot more people know and understand (at all levels) what's going on. As bright as the ZH crowd is, I promise you it doesn't take that many combined brain cells to understand something is seriously wrong. I think a lot of them see the analogy of the marriage that stays together for the kids even though the adults hate each other and know everything is complete fake.
Could you be anymore clueless? Or are you another OFA drone out to try the propaganda schtick?
How is he wrong? The tea party seems to take is lead from Obama... all campaign, no substance. They're the fake liberty movement. The sooner people realize this the sooner we can all evolve.
"They're the fake liberty movement"
I think this assessment is spot on. They were co-opted early. If there was any substance behind the Tea Party, they would simply put out the word for all producers in this economy to stop sending in any tax receipts.
Nothing would get the attention of the Politicians faster than if every small business owner in America didn't send in their monthly payment one month.
Agreed, just look at how Bachman voted two times on the extension of the Patriot Act yet she campaigned on smaller federal government.
How do you know a politician is lying?
I am a big Paul supporter though for POTUS.
The original "Tea Party" movement was in support of Ron Paul's 2008 bid for the republican nomination back in 2006. The most recent incarnation of the "Tea Party" is a phoney Dick Armey hijacked anti-Obamacare/anti-Obama, Glenn Beck like creation.
Their lips are moving.
I guess 8 sheep junked you because the want to be part of the herd...
Indeed the "look over there and see how bad they are" game hasn't stopped for years. It's like a game! Now Europe, than the US, Euro, US....
And never we see how it ends because just in to before anybody sees any details or results we get another show.
And nobody ever talks about it anymore... Most don't even remember the events after 3 months!
And every time we sink deeper and deeper in the quicksand, and always there will be somebody "worse off" in the comming month...
Weird that ZH still has a lot of 2008 Hope and Change ***k **ck*rs.
I cannot understand that last part, as it seems your parents have a filter on your web browser.
fd,
Freddie doesn't understand that our postings here simply convey thoughts. He meant to write dick suckers. The tragic part is when these same sad saps talk about a "revolution" yet have trouble typing out the word 'fuck'.
I don't. Fuck you!
Ah yes, another useless comment from the nutless wonder. You came to a battle of wits unarmed.
FUCK THAT!!
I'm betting it was "cock suckers".
Given the fact that three quarters of the states have to ratify an amendment and there's usually a seven year time limit for it to be ratified, good old Rand will either have moved on to other endeavors or he will be one boring fuck for 7 years.
Before the cheers begin, pause to realize how utterly crazy this threat is and how devastating this would be.
Yea, 'if we dont go into far more trillions in unrepayable debt, why, that would be devastating!'
We're already devastated, just that no one has the balls enough to actually admit it. Thats whats utterly crazy.
My point is that the best solution is not all or nothing, but that is how impulsive these politicians are. You have a country that can borrow for 3% for 10 years. Why screw this up when so many people depend on food stamps and unemployment just to scape by?
This kind of thinking leads to ruin.
Borrow at 3% from whom? Ourselves??
China, Japan, increasingly the Fed. This isn't good and not saying it is. But extreme solutions lead to chaos.
Almost exclusively the FED. Which means you and me, because the only thing the FED knows is fractional reserve fiat usury.
So your solution is to cut spending by about 60%?
That's is crazy.
Manage the situation, don't destroy it.
How is it crazy? Some of the limbs have gone cancerous. Why not amputate?
BTW, I didn't junk you.
I get so many junks I don't even count anymore. Speak the truth and gagglers will come running.
It is crazy because an unknown but HUGE number of people dpeend directly or indirectly on government largesse. You pull the plug, the center will not hold and you will have chaos.
Whatever floats your boat. It must be because you "speak the truth."
Fifty eight percent of all Americans, by 2009 numbers, rely on some form of government largesse for their contracts, business, income, salary, or similar. Source-
http://money.usnews.com/money/blogs/flowchart/2009/11/09/how-the-government-is-swallowing-the-economy
That's over 175 million US citizens.
How does one get junked for posting a link to a news article? Especially one referencedin one of Tyler's previous articles here on ZH?
You said it right there..if we are spending 60% more than we have....I would say we have a problem..a big problem....unfortunatly..the Politicians won´t do anything...so plan on the crash..this could be fixed...but it won´t happen..that is the sad part....we have built a house on air....and soon that air will blow away...and the house will crash...
No... this can't be "fixed".
the problem will fix itself one way or another in time. I propose that we use our minds and resolve to manage a better fix than mother nature will bring on our heads.
I dunno jm, while you have a point increasingly the only other option is just to keep on doing what they've been doing, i.e. bankrupting the nation, inflating away the $, etc. Rome 3rd century AD.
We elect the "they". For god's sake--preety please-- if people would stop with the blame game and going into inner exile and instead just try to act responsibly and demand repsonsibility from those they elect we would never have been in this mess.
Now that we are in it, there is no point in making the inevitable pain more extreme than necessary.
We elect the "they". For god's sake-
That too is a scam. The Dem/Rep is one party with two heads. Who chose McCain anyway? Nobody I know. How can we "demand responsibility" from those who are elected? They only respond to money or promises to deliver bloc votes. Kudos to Paul. Too bad it would take several election cycles to get him enough help. I'm afraid we don't have time.
The scam is all the "wake up from your illusion" nonsense I keep seeing. Everyone is responsible for their own experience. if enough people demanded good leaders, you would get them.
As it is, people can't even accept the truth, much less accept being led.
Lots of people demand good politicians and attempt to vote for them. Then they realize they got shit. Or they just can't take the truth and pretend like the mound of fly ridden rotten stinky shit tastes great.
There comes a time when no peaceful resolution is feasible. The maniac has broken your window and is forcing his way in. You point the shotgun at him and he just looks at you crazed and keeps coming. You call the police but they won't be there for another 20 minutes. You can sit there and watch him so long before finally deciding whether you want to give up everything or blow away this crazed fuck. I say, pull the fucking trigger.
Correct. Gut the Federal Government down to bare bones. Let all of the self entitled fucktards learn to fend for themselves or starve. Sounds like a good way to thin the heard to me.
You are a very sad example of a person you know that? I hope Paul is successful in getting a balanced budget requirement made law so that YOUR taxes will double, and your kids will sell meth for a living, and you will live in exactly the sewer you think everyone else should. Nazi motherfucker, if ever there was an example of narcissistic small penis syndrome on this site it is you, though there are several just like you.
Yes, increase the credit limit on our maxed out credit card or the kid gets it.
No. I'm even coll with a balanced budget law. But phase it in so the adjustment doens't lead to chaos.
Chaos is inevitable due to exponential math function concerning money/interest/debt/credit. Exponential phase in is impossible.
Exactly this. Debt can't be reduced... it is not possible. Money, at its inception is debt with interest beginning to accumulate. BUT... there is no money in the system to actually pay for the interest on the debt. The only way to get more money into the system to pay the interest... issue more debt. This can work, up to a point, but inevitably, the interest payments on the debt will overwhelm the productive capability of the underlying economy. We're there now. Game Over.
Sure it can. A guy threatened with foreclosed will look at his kids and get a second job. He'll cut cable. He'll prioritize.
He doesn't just give up, does he?
you're not getting what the guy told you. Read it again.
Everyone thinks only in exponential extremes and that kind of thinking leads to doomsaying.
There is plenty of confounding exponential growth like inflation to mitigate the issue.
If you sudden stop the ability to roll treasuries, but are guaranteeing what this guy says comes to pass. Disaster.
I'm not talking about an individual "Joe Six Pack"... I'm talking about what money is, how it is created, and what is needed in our system to allow debt to be rolled over. I'm talking about the aggregate... and the reality that that only way to pay interest on debt it to create more debt. There is no "growing our way out of debt". Who owns what percentage of debt can shift, but not the direction. Debt must increase until it overwhelms the system... then the system will collapse. Rinse and repeat. I do share your belief that austerity isn't the "solution" that many want to pretend it to be... austerity is just another form of debt servitude. The real solution happens after the collapse with whatever is left to put back together.
Congress can simply tell the Fed to tear up the government bonds on their balance sheet ... and hey presto, debt is reduced by 3 trillion and debt free M0 is increased by 3 trillion.
Now there are lots of reasons not to do this, but it's still perfectly possible.
You are forgetting who tells who to do what.
In America Congress, chartered central bank controls you!
So we wait til we have 100 million people on food stamps?
The unwind of the ponzi will be painful, the longer we wait, the more govt institutions implemented, further trillions borrowed will not make it easier. The pipe dream of growing fast enough to outrun our debt will not happen.
We need to make the changes now so there is something left for our children.
How about this. Every dept, every entitlement takes a 20% cut in funding. Let the departments themselves work out the details. done.
This is better than eliminating the ability to refinance and ensure we become the world greatest deadbeat nation in history.
Cutting 20% across the board fixes nothing if we're spending 60% more than we bring in. This is not a solution, just a way to extend and pretend some more.
Bullshit. Just keep doing it every fiscal year until you balance. Managing pain.
Misunderstood.
I agree, you can cut 20% year after year. I read it as a one time cut.
I am all for cutting 20% three years in a row. That gets us down to spending 51% of current levels. However, I am not sure that we would go through less pain.
Historically, entities that can print their own currencies do not decrease spending until they collapse. So lets not hold our breath.
"...extreme solutions lead to chaos."
A woman came in to my wife's hospital, with an infected finger after being bitten by her daughter's hamster. My wife explained that she needed to cut out the area around the bite as it was infected, and she couldn't just give antibiotics. The woman freaked out and left. A week later she came back, the infection was far worse and my wife had to amputate the finger at the first joint, or she would probably lose the whole hand.
My point is, sometimes what we perceive as an extreme solution may be far less than the alternative if we wait.
This may well be the case, but cutting the baility for the US govt to roll their debt would be like cutting your arm off to fix an infested toe.
I may be wrong, but I can concieve how bad this will be for every one on this planet.
We are already at the point of "ruin." Thank Hope & Change voters still wiping that hope off their faces.
Printing money, borrowing trillions, creating dependents of government, not facing mathematical truths, compromise. These are a few of the things that lead to ruin. I hope you realize that the final outcome for these welfare recipients is the same whether we balance the budget or borrow trillions more, right? You simply want to add more debt and a little more time to the ponzi.
You are describing where we are now. The best way out is to carefully limit the damage that retrenchment will cause.
What I described are the things that got us here. You apparently want more of the same. You speak in vaguedies and generalizations. What would you cut? My guess, nothing.
See above. A 20% cut in every dept and entitlement for the next three fiscal years, on unrilt we balance the budget, wherever comes first.
An additional 20% every year?
You have a country that can borrow for 3% for 10 years.
And just who gets to pay that back?
Why screw this up when so many people depend on food stamps and unemployment just to scape by?
Maybe we need to wean a few off the debt parade and put them back to living within thier means. You're not "owed" steak and beer, a big screen TV, air conditioning, smart phones, high speed internet or multiple cars. You are also not "owed" a 4 bedroom, 2 bath house with inground pool and a vacation. 800 sq ft used to be a great starter home, we got too cozy with our possessions and too greedy with "things".
This kind of thinking leads to ruin.
Why? I see plenty of hard working, multiple job holding folks trying to muddle by and raise their kids and in some cases grandkids because family comes first. If more people would swallow thier attitude, live within their means and be thankful for what they have while they try to better themselves, we might learn something. My folks grew up in the first depression, learned self-reliance, saving up for things and living within their means. When things got good, they didn't go hog wild, but continued to live within the means, save for a rainy day and enjoy life.
Too bad too many think living the good life is eating out every day, running up credit card bills for things that don't last and living the high life while it lasts.
who get to pay that back? The people bonded to pay it back. If your word is your bond, then those you elect have put you in this pickle.
Then as one of those "people" I say, no more borrowing!
Then all I can say is do your best to push this through, man.
I haven't felt "represented" by elected politicians in 25+ years (yes, I'm a slow learner). I'm not one of their "constituents", i.e. fat cat lobbyists, industry paid for shills, or astroturf groups. I suspect most here feel likewise in this regard, i.e. representative democracy has failed in its promise, and many have lost faith in the "system". Your mileage may vary, of course.
To quote from Charles Hugh Smith, "We get all the democracy we can afford."
We get all the democracy we DESERVE.
If you invest it right ... no one.
China and the oil producing countries are giving you product for paper, it's that simple ... if fighting wars and conspicious consumption is the only ways you can come up with to use those products, then sure you're better off stopping sooner rather than later. You could also use them to fill the deserts with solar thermal plants and develop and build synthetic petrol plants using the glut of electricity which would become available though. Solar power might be expensive, but paper is very cheap ... trillions of paper dollars can build an awful lot of solar plants.
Once a country is self sufficient it really has no reason to fear debts denominated in it's own currency ... without oil dependence soft default suddenly becomes a really interesting option.
The problem with default is that it is a nuclear option, in that immediately afterwards (and for years to come) no external funding will be available, or will only be at uneconomical rates. This implies an immediate crash austerity program, since without external income (i.e. investors), a balanced budget becomes a must, revenue-driven. Business 101.
Well, as I said ... make sure you don't need foreign oil first.
Apart from oil the US is probably the country most capable of self sufficiency in the world.
Second this. Let the productive be productive, and the weak be eaten (the spineless, both credit-wealthy and welfare-dependent). We've got food, education, infrastructure . . . we're 10 years away from having manufacturing again. Ratchet down the "quality of life" (ha) a few notches and get everyone productive. Jubilee. Agrarian Utopia!
Whether we stop paying our bills or we inflate, it is all DEFAULT. Inflation is better for the powers that be. Default is better for the rest us in any time frame except for the very short term.
There is a difference between inflation caused by QE and by true money printing ... QE just delays execution and gives middle men in the financial world a chance to make money for nothing.
Money printing hurts all creditors, helps all debtors ... not really fair to the frugal, but this isn't about fairness it's about what's good for the economy ... and hell, just like government they're going to default eventually any way. The private debt is no more sustainable than the public one.
The advantage of inflation is that it soft defaults for everyone, after a hard sovereign default the private sector will still have to unwind it's debt the old fashioned way ... with a deflationary spiral, which could take decades.
It would not take decades. The only times it takes decades is when the government gets involved and tries to soften the landing/prop up asset prices. Mal investment must be liquidated. The sooner the better. Period.
QE is money printing. Governement borrows money from bank - Bank borrows money form Fed - Fed prints money on its computer(create money out of nothing). Government spends said money.
Much of the money that has been printed, simply has not been put to use.
It is is true that if the banks starting taking their reserves from the fed and lent them out inflation would be much worse, but thankfully they have not done that much as of yet.
QE is only money printing as long as the balance sheet isn't shrunk ... the money is created as the bonds are added to the balance sheet, and they destroy it again up to the principal as payments are made. Effectively QE is more like a near 0% loan than true money printing (the government gets most of the interest back, minus the cut the primary buyers took and the dividend the central banks take).
When China or Japan print money to buy dollars ... that's real money printing.
are you one of the "keep the ponzi going" crowd?
A balanced budget amendment won't happen overnight and any consideration would have to plan for a period of time to bring things into balance. It's more like taking the car keys away from the reckless spending Congress. It's change you can believe in which is why it's so heavily resisted.
Being lectured by the president on fiscal responsibility is a little bit like Tony Soprano talking to me about law and order in this country.
John F. Kerry
Exactly!!! Stopping or trying to stop the CRAZY TRAIN is insane! However, putting more coal in the already roaring fire in the boiler of the CRAZY TRAIN so the boiler explodes is sensible.
Don't try to fix it! Keep charging up the credit card!
JM...you think having an amendment to the Constitution requiring a balanced budget would be damaging?
I think you must work for the government then...
I don't. But if some politician torpedoes are ability to roll debt, it is like pulling the plug on a guy on life support.
A balanced budget deal wouldn't be bad at all. Keep us out of all many wars by other name.
That's the problem...the patient is on life support with no way of ever living a viable life again! Let's pull the plug and quit wasting resources!
That isn't necessarily true.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Ludwig von Mises
So why again should we expand the gubmint's ability to "borrow" our way to prosperity? There is no amount of growth that will let this end in a good way we either cut our losses here or others will make that decision for us
I never said don't limit their ability to borrow. Just don't destroy the ability entirely, which is what this jackass Rand proposes.
Edit: double post bitchez!
A balanced budget amendment would've kept the USA out of WWII. It would've prevented the Reagan-Revolution.
I suppose those are both good things...in a way.
But I suspect most folks have no good idea what the implications are.
I think it's all a red-herring, anyway. People want to pretend the Constitution controls the government when they're pushing for their own pet amendment, but somehow they know it doesn't mean a damn thing when they're screaming about their own pet peeve.
There's nothing I can think of that's crazier (in the technical sense) than holding two completely contradictory views about the same subject.
Devastating is a term relative to your position in this current mess.
A scenario which you perceive as devastating, I may just celebrate as liberating.
Exactly. Devastation depends on where youre standing.
Everyone depends on the ability to roll debt, whether you admit it or not.
People on food stamps, people in homes that don't make mortgage payments on (because banks have no incentive to exercize collateral when they get a bailout), senior getting free healthcare, families that don't have to worry about the parents' bills, corporations that hire you to do research and development, drug companies, medical equipment companies, energy companies, oil exploration companies, fat cats that get massive tax breaks,....
on and on and on.
I assure you, I do not.
People and institutions that live within their means do not rely on debt being rolled over. Most of those examples are incorrect.
People that can't afford their homes dont need debt rolled over. They need more income.
There is no such animal as free health care. It is either payed for by theft through taxation or theft through inflation.
I wager you don't own a business or know anything about running one. Most every business is levered and has to roll their debt to stay in business because they can't settle out of cash overnight.
This is exactly what is going on here on the governmental level.
Very true, hence the concept of net 45 days, accounts receivable, billing, and payroll.
Mom and pop pizzaria orders flour, tomatoes, and cheese on rolling debt (credit), makes and sells pies, makes payments, repeats process, profit.
I began to question the financial acumen of some of the commenters here on this, purportedly a financial commentary site, when even the most rudimentary small business concepts seem foreign.
Rolling credit and exponentianally increasing credit are two differnent animals. Your error is that you confuse the two. Mom and Pop stores pay their bills or their credit is taken away. Our government wants to play by different rules. It may work a bit longer, but it WILL end badly. Mom and pop stores and the federal government are not operationally comparative.
"People and institutions that live within their means do not rely on debt being rolled over." - That's your exact quote Effington, one I just demolished with everyday fact. Sounds like you are the one "in error".
There sure are a lot of clueless meatpuppets on ZH nowadays.
When I was a youngin, I used to work for a pizzeria. They had a cash balance for all expenditures. So I wouldn't say that in the context of all places. But then again, the owner also owned outright the building his shop was in as well. It was a multi-generational family business. Plenty of businesses (properly run) don't rely on revolving credit. But maybe this is only true of "old" businesses.
You equate the ability of uncle sugar to roll debt with all credit markets. If uncle sam couldn't come to the party then maybe more credit would be available to the private market (crowd-out effect and all that).
Fact of the matter is that we don't know what will happen if a place with the size and position of the US can't roll its debt. Maybe it will freeze all credit markets and the world will end. Maybe uncle sugar will shut down and life will go on.
Here's a thought: when the US interest gets so large nobody will lend to any individual or entity in the US because they are affraid those private parties will default when the federal gov't needs to take everything just to pay that interest either through outright taxation or inflation.
Perhaps small and large companies should not be reliant on accounts recievable to operate. The whole idea of short-term leverage and JIT inventories strikes me as more effecient but less robust. We're all one or two days from grocery store shelves going bare if there is a hiccup in transportation or credit markets. Doesn't make me sleep any easier...
Why is that difficult to understand? They do not want to just roll debt. They want to INCREASE debt. Also, the government does not produce anything, therefore the analogy that they should borrow like a business in order to produce is innacurate.
the "rolling" of debt is because of the fundamental mechanics of the abusive monetary system we have.
Why the hell should there BE any debt? It seems the bigger production gets, the bigger the debt is to go with it. When you figure out why that is, come back and talk to us.
Why the hell should there BE any debt?
I think the historical concept is: the guys who own the country should have a chance to profit from its operations. This was Hamilton's conception--a strong central government which borrowed money from the wealthy citizens and paid them for the noble charity they displayed by running it.
If you go back to the core philosophic debates between the Founding Fathers, the premises were set up pretty well.
jm , its simple. Take the pain now or take WW3 x Greatest Depression on steroids later. We cant outrun the debt monster by creating more debt.
The collapse will be truly meteoric at this rate. So far we have just had a love tap. Wait for the full 18 inches without vaseline.
I'm not syaing take no pain. There's plenty of pain without killing the patient.
Government spending is about 50% of GDP, right?
What happens when this almost overnight has to align to budget revenues?
Nothing good.
Govn is the problem. Govn spending is the problem. People relying on the govn are the problem.
Im really sorry , its a horrible topic to discuss , but this idea that govn can take care of everyone is a fallacy. Unless we , as a collective society , completely give up - which does look like where we are heading.
People are going to suffer tremendiously whatever happens. The choices are do you make everyone suffer or allow those with half a chance to survive? Im going to get junked for this but so what. People just dont like hearing bad news.
Too much govt is the problem. Making the governemnt a shoadow of its former self overnight is not good solution.
jm i dont know a case in history of govn being able to shrink slowly. Govns are organic. They just grow until they cant grow anymore then collapse. Lets take control of the collapse phase before we are all working in camps.
There ARE historical examples of government effectively managing self-contraction in the face of decline, but they are rare. You guys should read frequent ZH guest post writer Charles Hugh Smith's latest blog, covers the issue:
http://www.oftwominds.com/blogjuly11/dependency-self-reliance6-11.html
This is why I love the muni space. The headlines go to Cali and IL, but the real story is one of belt-tightening and tough choices being made.
I have seen this from the family farm to Taiwan in 1998 to novation settlement.
the world is not all about extremistan. They're plenty of mediocristan to save the day.
What happens is we live within our means.
nothing good now beats utter devastation later.
The patient is already dead We don't need no stinkin' zombies!
Already have the zombies. Who else ate the brains in DC?
There were brains in DC? News to me! Maybe there were when you were Prez Ole Hickory...by the way too bad the Fed put you on the 20, it is the ultimate disrespect to you and your legacy!
double post bitchez!
It is around 25%. What you don't realize is that you are only delaying the inevitable. In fact, the longer you delay, the worst the inevitable gets. What amount of cutting would you support? Who would you cut it from?
"What happens when this almost overnight has to align to budget revenues?" Perhaps those politicians would finally have to make to hard decisions - i.e. we could cut off support for the eldery needing social security and medicare or we could cut corporate welfare. They know if they choose the former it would lead to a Greece times 200 situation while the latter threaten to finally cut off the corporate welfare to Wall Street and the MIC. Decisions, decisions. At least they would be forced to fucking make those decisions. Right now they pass the buck down the line and the debt displays this quite nicely. You can't roll it over forever.
You neglect to realize the reason we have so many dependent on government to take care of them is because of the vast amount of resources being shifted to those creating the wealth disparity in the first place (Wall Street and the Fav Five Primary Dealers). The debt trap that allows for this system to continue to the detriment of the 99.999% of the population is the debt itself, as direct taxation to pay for this corporate extravagance would get the rulers hanged. Instead of taxing, they borrow and print and the public doesn't yet grasp that the public is paying for this debt through higher food and energy prices.
Cutting off perpetual public sector debt in order to bring about the chaos and destruction of the elite (suckling the tit of Uncle Sam) is something I would be willing to risk.
This progressive line of reasoning you are parroting that we can incrementally increase the debt in order to fix the debt is what got us into this mess in the first place. Demopublicans are both to blame. Time for a real solution of constrained spending, as government spending does NOT induce prosperity – it only rents it for a period of time and the rental agreement is now on a month-to-month basis. Benny’s your landlord bitchez. Better recognize!
Wrong. Goverment spending is 24% of GDP, at least get the numbers right if you are going to argue a point
It was off the top of my head, but I don't think your number counts off-budget entitlements. Even so, you make the case of managing instead of full-on stupid even stronger.
Bring on the devastation. I am well positioned for it.