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The Four Debt Ceiling Possibilities For 2013

Tyler Durden's picture




 

An extended excerpt from Bill Buckler of The Privateer

The Four Major Possibilities For 2013

There are four likely “scenarios” for what will happen when the US Congress - and the president - come up against the limit to the Treasury’s credit card sometime in the first quarter of 2013. The first one is the most obvious. They could simply abolish or “repeal” or draw a line through the legislation which set up the debt limit in 1917. There is no shortage of eminent US historians, economists, captains of industry, politicians, legal scholars, bankers, investors and others from all walks of life advocating this procedure.

If the US Dollar was not the world’s reserve currency and US Treasury IOUs were not the world’s preferred holding of reserves behind their own currencies and financial systems, the Treasury’s debt limit would have been done away with a long time ago. But the US Dollar IS the world’s reserve currency so the debt of the US government IS the underpinnings of the global financial system. That being the case, the system stands or falls on the continuing perception that Treasury debt paper is a viable form of “reserve” and that the debt of the US government will NEVER become “unsustainable”. An announcement by the US government that it was getting rid of any “limits” to its debt-generating capacity would put that perception at risk - quite possibly at grave risk. That is the reason why the debt limit remains - even though it has not been an impediment to ever increasing Treasury indebtedness for well over half a century. It is easy to laugh at the seeming absurdity of a Treasury “debt limit” and many people do. Take it away, however, and the fiction that sovereign debt is “sustainable” - let alone any “confidence” in its eventual repayment - would be MUCH harder to maintain. Absurdities abound in history, and the more abject the absurdity, the more tenacious it tends to be. Today, a US Treasury debt “limit” is a very necessary absurdity.

This does not mean that the debt limit will NOT be abolished. But it does mean that the new Congress convening early next year will be very reluctant to take such a step.

The second possibility is that the US government will follow the lead of one of the few other major nations which maintains a “debt limit” on its Treasury. That nation is Denmark. Denmark last raised its debt limit in December 2010. The Danish government did not mess about - they more than DOUBLED the limit from 950 Billion to 2 TRILLION Kroner. The current debt limit of the Danish government is about three times as much as their official funded debt. If the US government was to increase the Treasury’s “limit” by as big a percentage as the Danish government did in 2010, they would raise the Treasury’s debt limit from its present $US 16.394 TRILLION to almost $US 34.5 TRILLION. If they wanted as big a “buffer” between their current debt and their debt limit, they would raise the Treasury’s limit to almost $US 49 TRILLION.

Like the US, Denmark has its own currency, the Kroner. The Danes did not choose to adopt the Euro in 1999. But unlike the US, the Danish Kroner is NOT the world’s reserve currency.

The third alternative is a very popular one - especially in Democrat political circles. It was suggested by many of them during the mid 2011 crisis and was being advocated right up to a few days before the deal was cut in early August. This “solution” would be for President Obama to do an end run around the whole sorry mess in the Congress and raise the Treasury’s debt limit by executive order. The rationale for the President’s power to do this is said to reside in the Fourteenth Amendment, which begins like this: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Mr Geithner has advocated this method of getting around the Congress. So has Bill Clinton. So has the current majority leader in the Senate, Harry Reid. As these gentlemen see it, any reluctance to raise the Treasury’s debt limit or any “conditions” put on such an action is calling into question - “The validity of the public debt of the United States”. This is clearly UN-constitutional.

Mr Obama was urged to take this step in 2011 and refrained. He has now been elected for a second and last term. With no more elections to win or lose, he may not be nearly so reluctant this time.

This is the last of our four major possibilities. There are variations on all four of them, but these are the major alternatives. The US government could do what they have been doing for many decades now. They could just make another deal and go on pretending they have found a solution to an insoluble problem.

That alternative becomes fraught with danger when one considers the situation in which the Congress will be deliberating for the rest of this year and probably well into next year. The funded debt of the US Treasury has risen by more than $US 1 TRILLION in every fiscal year since 2008. Fiscal 2012 was the fifth year in a row and fiscal 2013 has begun with the debt increasing by $US 220 Billion over the first seven weeks of the year. The Fed has held its controlling rate at 0.00-0.25 percent for more than four years. They have promised to keep that rate until mid 2015. Barring a catastrophe and/or a market rebellion (which would amount to the same thing), 2013 will be the fifth straight year of the ZIRP. The Fed bought more than 60 percent of ALL the new Treasury debt sold in 2011. The final “score” for 2012 is not yet in but it is a safe bet that the total will be even higher. Recent mainstream reporting has put Fed monetisation at over 90 percent of the new longer-term Treasury debt being sold.

But there is one overriding fact which is NOT made it into the mainstream media but which has nonetheless been reported in many places and never denied by the US government or its Treasury. The budget of the US government is divided into “discretionary” and “mandatory” categories.

There is also a third category which is interest payments on existing debt but that is also mandatory. For a while now, the government has not been able to collect enough revenue to meet the demand for its mandatory payments (aka entitlements) and debt servicing (even at historically low interest rates). That means that the government could cut the “discretionary” portion of its budget to zero - AND THEY WOULD STILL BE IN DEFICIT.

Please note here that the “discretionary” portion of the budget INCLUDES military spending. Even if that was cut to ZERO - the deficit would still survive. There is absolutely no prospect of ANY reduction in the debt of the US government (or most any other government) unless and until a meat axe is taken to “entitlements”. This would involve a HUGE dismantling of the welfare state, something that neither side of US politics wants to even discuss. The situation is that simple.

 

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Sun, 11/25/2012 - 18:36 | 3010303 lolmao500
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In another universe : don't raise debt ceiling, cut deficit to 0 overnight.

Sun, 11/25/2012 - 18:58 | 3010335 flacon
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Sometime in the near future, perhaps in 2013, the oceans will turn to lemonade. 

Sun, 11/25/2012 - 19:55 | 3010422 economics9698
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Wouldn’t it be nice if John Boehner said the Republicans are not doing anything and congress was limited to spending what tax receipts they took in from taxpayers?

No more deficit spending, no more crowding out, no more propaganda about how austerity would hurt the economy.

Just a simple spend what you collect fiscal policy.

I was hallucinating for a second there, a flashback.

 

Sun, 11/25/2012 - 22:08 | 3010582 eatthebanksters
eatthebanksters's picture

Bohner doesn't have the sack to do it....

Mon, 11/26/2012 - 04:05 | 3010773 Offthebeach
Offthebeach's picture

You'd have to get him on a non crying day.

Sun, 11/25/2012 - 19:00 | 3010339 EuroInhabitant
EuroInhabitant's picture

Fiscal cliff will be postponed half a year. And again and again and again. This can will be kicked miles and miles on. Never underestimate the amount of rabbits "they" have in their hats.

Sun, 11/25/2012 - 19:01 | 3010343 EuroInhabitant
EuroInhabitant's picture

Let the can kicking of the Fiscal Cliff begin. Start with half a year.

Sun, 11/25/2012 - 19:11 | 3010364 CrashisOptimistic
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You do not understand the depth of hatred of George W Bush on the left.  There is no way possible after winning the White House in the recent election that they are going to allow tax rates for the rich to remain what they are.

Additionally, both sides have said they will end the payroll tax cut rate.

So there is at least one tax increase agreed to by both sides.

Sun, 11/25/2012 - 19:17 | 3010374 Chupacabra-322
Chupacabra-322's picture

The “Poppy Bush Drug Cartel” tax cuts brought in by Dumbya-nuts lowered income taxes only a paltry 3 % for normal people who pay 50-70% of their incomes in taxes of one form or another. Those same tax cuts dropped 20% off the income taxes of the wealthy fat cat pharaohs who only paid 30-40% of their incomes in taxes of one form or other.

Since Owe-bomba Ben Trotsky is a Menchovik he cannot and will not support this, so he has to do something AND break his promises.

Sun, 11/25/2012 - 19:27 | 3010389 smlbizman
smlbizman's picture

yep...can't violate that constitution...

Sun, 11/25/2012 - 19:30 | 3010390 CrashisOptimistic
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My point was that there is not going to be a total can kick because one of the tax items has already been agreed to by both sides.  It's 120 Billion, or about 0.7% off of GDP next year.

That's the GDP drag before negotiations even begin.

Sun, 11/25/2012 - 20:08 | 3010446 formadesika3
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The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

So they propose to use this language in 14th amendment to end-run the debt ceiling. Ultimately, doesn't this lead to a conflict with the 1st amendment as interpretation expands to fit their needs?  Will be considered treasonous to even question the debt in public debate or on internet forums?

Scary.

Sun, 11/25/2012 - 23:21 | 3010660 Lednbrass
Lednbrass's picture

Sadly enough the adherents of both parties consider questioning their agendas treasonous at this point.  Anyone advocating Federal restraint or reduction is a traitor to the statists who like Team Blue, anyone questioning the military and empire is a traitor to the statists who like Team Red.

Sun, 11/25/2012 - 20:21 | 3010465 Everybodys All ...
Everybodys All American's picture

The payroll tax cut is not that big of a deal.

Sun, 11/25/2012 - 19:03 | 3010347 Harbanger
Harbanger's picture

In this universe we raise the debt ceiling until we cut spending to zero overnight.

Sun, 11/25/2012 - 19:05 | 3010352 iDealMeat
iDealMeat's picture

It is not a question of how or when the ceiling will be raised..  It is a question of style..

The path with the most convoluted confusion and maximum polarization will be chosen. + Add a heaping helping of lobbing and loopholing..

 

dogshit food for thinkers in America..

 

Sun, 11/25/2012 - 18:43 | 3010312 fonzannoon
fonzannoon's picture

which one of the four scenario's is bearish for gold?

Sun, 11/25/2012 - 18:51 | 3010328 SmallerGovNow2
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All the above...

Sun, 11/25/2012 - 18:58 | 3010336 fonzannoon
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exsqueeze me? Bacon powder?

Sun, 11/25/2012 - 19:09 | 3010356 Chupacabra-322
Chupacabra-322's picture

Iran Accepts Payment in Gold to Get Around Sanctions

Yet another reason the US government hates gold, unlike dealing with paper money in bank accounts, there is no way they can stop international trade in gold and it is difficult to track gold movements.

WSJ reports:

Turkey on Friday acknowledged that a surge in its gold exports this year is related to payments for imports of Iranian natural gas, shedding light on Ankara’s role in breaching U.S.-led sanctions against Tehran.

The continuing trade deal offers the most striking example of how Iran is using creative ways to sidestep Western sanctions over its disputed nuclear program, which have largely frozen it out of the global banking system.

The disclosure was made by Turkey’s Deputy Prime Minister and top economic policy maker Ali Babacan in answers to questions from the parliamentary budget committee.

http://www.economicpolicyjournal.com/2012/11/iran-accepts-payment-on-gold-to-get.html

 

That’s the same thing Saddam and Gadaffi did, they accumulated enough gold and silver bullion to declare their own “sovereign currency” free and independent of the centralized banking cabal, now going by the name of the Federal Reserve. Before they were called the Federal reserve, our founders referred to them as the “Federalists and others have referred to them as the Rothschilds.

Regardless of who and what anyone calls them, the centralized banks have always and traditionally represented a monetary cabal – a currency monopoly devised by criminal minds, that ends up controlling every nations infrastructure and politics once they entrap and entangle any particular nation.

There is actually a very long history about this cabal going back 100?s of years and this cabal solicits nations to fund their budgets and always bankrupts thise nations that succumb to their sand trap techniques.

During and after the Civil war in the US, these scum bags solicited Lincoln for funding America’s recovery, but Lincoln refused to sign on for such massive debt and used US Treasury bullion to back the US dollar and it was called the Greenback. Garfield made the same mistake earlier, as did JFK a century later, as did Saddam and Gadaffi.

You see folks, any leader or nation that does not sign on for massive debt with the undisclosed banking mafia, now referred to as the Federal Reserve, well, umm, their leaders always get assassinated and their nations distroyed into rubble.

So now that Iran has a means to aquire bullion, well, umm, the cabal will eventually assassinate their leader, as history has proved with Garfield, Lincoln, JKF, Saddam and Gadaffi, because the central banks of the world HATE SOVEREIGN & INDEPENDENT CURRENCY backed by gold because they can’t hijack a nations institutions otherwise.

Because America is in such massive debt to these evel minded bastards, they now write our executive orders for our puppet leader to sign and they now command our Military.

 

Sun, 11/25/2012 - 18:43 | 3010313 xtop23
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2013 = automatic cuts removed , debt ceiling raised , slow motion austerity implemented , and continued death of little brown people to spread democracy ( dont pay any attention to that man behind the curtain it has nothing to do with petrodollar protection )

forward !!! they aren't even going to tap the freakin' brakes.

Sun, 11/25/2012 - 18:45 | 3010316 SIOP
SIOP's picture

They will kick the can.

As it sits right now, there are more fist fights over Black Friday cell phones at Walmart than there is over budget cuts and the future of our very nation.

Sun, 11/25/2012 - 22:10 | 3010586 yogibear
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As they have done before. The treasury secretary proposed elimination the debt ceiling. We all know where this is going. Before Geithner announced it Obama and the other staff members knew.

It's unlimited can kicking until she blows. The Fed has setup for unlimited Treasury buying.

 

Sun, 11/25/2012 - 18:47 | 3010317 eatthebanksters
eatthebanksters's picture

Two longterm outcomes:  1. Raise the debt ceiling, print to infinty and watch inflation destroy the middle and lower class - Greece but worse.  2. Cut entitlements and set off social unrest...Greece and maybe worse.  Tell me who bails us out at this point?

Didn't the wise Kyle Bass say (paraphrased),"If we have an orderly restructuring it will be painful, if we have an involuntary restructuring it will be incredibly painful."   Get ready for the pain... 

Sun, 11/25/2012 - 18:58 | 3010337 xtop23
xtop23's picture

 I believe the word he used was "apocalyptic". please fasten your seat belts and put your trays in the upright and locked position.

 Dilbert @shadowstats is calling for a 2014 inflationary crisis. we'll see how accurate he is.

Mon, 11/26/2012 - 00:49 | 3010706 thecoloredsky
thecoloredsky's picture

Thanks for the tip xtop. Googled and found the article you were referring to if anyone is interested.

http://www.shadowstats.com/article/no-445-special-commentary-review-of-e...

Crises-related actions taken by the Federal Reserve and the federal government in 2007 and after, and the systemic impact from the severe economic downturn, rapidly accelerated dollar selling and official efforts at dollar debasement.  These issues also triggered massive deterioration in the government’s already untenable fiscal circumstances, moving the likely outside timing for a U.S. hyperinflation to 2014 from 2018.  The outside timing for the onset of a U.S. hyperinflationary great depression remains 2014 at this time, but the vulnerability today of the U.S. dollar to a massive sell-off leaves open the real prospect of dollar a panic at any time, a panic that could provide the start-up conditions for a hyperinflation.

Sun, 11/25/2012 - 22:13 | 3010588 yogibear
yogibear's picture

Fixed it.. per Turbo Timmy.

 

Eliminate the debt ceiling, print to infinty 

Sun, 11/25/2012 - 18:46 | 3010319 ZippyBananaPants
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free lunch for all, of course, until it runs out.

Sun, 11/25/2012 - 18:47 | 3010322 MrTouchdown
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Don't worry - Michelle Obama is going to have a bake sale! Except it will be all vegetables and fruit. Totally flawless plan. We're saved!

Sun, 11/25/2012 - 21:07 | 3010509 adr
adr's picture

Michelle starts a drive to confiscate every last Hostess product in the country. In return you are given a serving of vegetables for each box.

Michelle's ass grows two sizes each week for the next year.

Sun, 11/25/2012 - 23:56 | 3010682 Walter_Sobchak
Walter_Sobchak's picture

michelle, like all urban folk, refer to it as a bake-sell, not a bake sale, cracka

Sun, 11/25/2012 - 18:48 | 3010324 Seasmoke
Seasmoke's picture

i guess the plan is, we will all be dead when this finally blows up

Sun, 11/25/2012 - 19:39 | 3010406 OneTinSoldier66
OneTinSoldier66's picture

+1 for the humor. Here's my two cents that has a little different take on it...

 

On a long enough time line, even the survival rate for the debt ceiling is zero.

Sun, 11/25/2012 - 18:50 | 3010327 USS Bernanke
USS Bernanke's picture

A transitory problem if I have ever heard of one.

Sun, 11/25/2012 - 18:53 | 3010329 GCT
GCT's picture

This exercise of raising the debt ceiling is a joke.  Just forget it and let the fools print.  This will come crashing down alot quicker.  Infinity and beyond for the USA.  The rating agencies will then raise our rating back to AAA! 

I do not know what to really type anymore as I watch this country go to hell in a handbasket.  We all know they will not cut anything.  Pretty soon the whole USA will be government employed.  This just sickens me to think at times what is going on.  Maybe it was better to have taken the blue pill and eat my steak.

Sun, 11/25/2012 - 22:21 | 3010597 yogibear
yogibear's picture

... And free

Food Stamps 

Cell Phones

Housing 

Welfare

Education and college for illegals.

Pot allocations for everyone. 

Confiscate 401K, IRAs and Savings to redistribute.

Max wealth allowed, except if your a political party member (just like communism).

The ultimate liberal plan.

Mon, 11/26/2012 - 02:34 | 3010744 Mad Cow
Mad Cow's picture

And 16 hour workdays. Sorry no vodka :(

Sun, 11/25/2012 - 18:54 | 3010330 Rathmullan
Rathmullan's picture

TeTeTeTimmy will threaten to wet his pants and the ceiling will disappear.

Meanwhile: Crap! Tomorrow's cyber monday. In the eyes of the cokehead, pastrami munchin, pinky ring wearin swine... that's gotta be worth 2 or 3 hundred dow points to the upside tomorrow, propelled by some gangnam-style, glasses wearing strategist at one of the primary stealers barking about how tomorrow "broke all previous cyber-monday records" (confusing a secular trend with a cyclical "burst"). Sea of shit where it rains piss and hails pus and jonnie horzine is god.

Sun, 11/25/2012 - 18:55 | 3010331 PaperBear
PaperBear's picture

How about this as a possibility -

'We The People Now Re-Declare in 2012…. The Declaration of Independence!' soldierhugs.com/sign-re-declaration-of-independence-2012/ http://wh.gov/IIKC

Sun, 11/25/2012 - 18:55 | 3010333 asteroids
asteroids's picture

Obama and co have short circuited Congress. When was the last time you Americans actually had a budget?

Sun, 11/25/2012 - 19:00 | 3010341 Rathmullan
Rathmullan's picture

budgets don't matter, deficits don't matter, debt can simply be "cancelled" and gold's a relic in the eyes of the statists,

Sun, 11/25/2012 - 19:06 | 3010354 s2man
s2man's picture

Oh, we always have a budget .  The problem is, since the '80's, the bottom line has been a big, red, negative number.  That used to mean borrowing.  Now, it means printing.  Either way, it sucks.

Sun, 11/25/2012 - 20:02 | 3010435 Everybodys All ...
Everybodys All American's picture

The budget process is a joke. It has turned into the Continuing Resolution bill process. Completely broken. Completely sickening..

Sun, 11/25/2012 - 18:59 | 3010338 Racer
Racer's picture

ZH have you got a chart of  the  number of the debt limit increases and the actual and  % increases for our perusal?

Ta very much in anticipation

Sun, 11/25/2012 - 19:00 | 3010340 lordbyroniv
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Pistachio ice cream for everybody on Tuesdy (s)!!!!!!!!!!!!!!!!!!!

Sun, 11/25/2012 - 19:01 | 3010342 Surrealist
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"There is absolutely no prospect of ANY reduction in the debt of the US government (or most any other government) unless and until a meat axe is taken to “entitlements”. This would involve a HUGE dismantling of the welfare state, something that neither side of US politics wants to even discuss. The situation is that simple."

Imagine the pandemonium if welfare is abolished given the millions of recipients and imagine how many businesses will go bankrupt asap with a huge amount of spending that vanishes. Government benefits are a form of stimulus. Dismantle it now and goodbye America!

P.S. I'm from Australia. We haven't indebted ourself to infinity through funding wars around the world.  

 

Sun, 11/25/2012 - 22:29 | 3010603 yogibear
yogibear's picture

Eventually a confiscation of wealth and distribution. Max wealth allowed rule.

Can't have non-political/non-socialist living better.

The Free Stuff Army demands more and will get it. 

Sun, 11/25/2012 - 19:16 | 3010346 devo
devo's picture

Why not dismantle the corporate welfare state instead? At least citizens pay into "entitlements". It's not their fault government abused that revenue and used it for weapons, war, subsidies, etc. Corporations receive more welfare than citizens. At least be honest and present a balanced picture.

Sun, 11/25/2012 - 19:40 | 3010407 Harbanger
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"At least citizens pay into "entitlements". "  Sure they do....It's all about feel good, it's all about brainwashing until economic reality hits.  They don't teach history or economics  anymore, that's why 1/2 the braindead population thinks the Govt needs to play a more active role in their lives.  Forward!

Sun, 11/25/2012 - 19:57 | 3010429 devo
devo's picture

This started in the 1930s before I was born. I want the govt less involved in my life, but I have paid over $100,000 into these programs and I'm still young. I better get it back when it's my turn, or receive a check for what I paid in if they want to dismantle the programs. What I don't think is right is for ZH to write anti-entitlement articles and not mention corporate welfare/corporate entitlements or the people who have paid into these programs, and how they should be made whole. It comes off as very Ayn Rand/pro-industrialist/anti middle class, which is just a retarded philosophy since not everyone can be a fucking architect or industrialist. It makes me wonder who's funding this site. Again, cut any program, but have a viable plan on how to pay people back in currency that has equal purchasing power to when they paid in. Otherwise, you have to keep the programs going and adjust them for inflation. It's not that people want the govt taking care of them; it's that people don't want to give the govt 100k+ and never see a penny returned. If they cut me a check for 100k + inflation I'd say dismantle all of it, but I'd also say dismantle corporate welfare, too. If the Ayn Rand industrialist is so superior, he shouldn't need to ride the govt coattails.

Sun, 11/25/2012 - 20:11 | 3010448 Harbanger
Harbanger's picture

Since you don't understand economics, you don't understand that you can't be made whole.  You will get screwed, I guarantee it.  It was all a big lie.  Most people collected way more than they ever contibuted, if you didn't, you were late to the party.  The last people in the ponzi are the ones left holding the bag.  Wouldn't you have been better off investing the money they took from you.  of course, but most people believed the big lie.  BTW The crony capitalism you describe is just another example of the welfare State.  it has Nothing to do with Capitalism.

Sun, 11/25/2012 - 20:53 | 3010491 mess nonster
mess nonster's picture

You paid 100,000 dollars to the Fed? ????.....????????....

....why....would...anyone...do... that????

and you think you're going to get it back?

There is a sucker born every minute.

 

Sun, 11/25/2012 - 21:31 | 3010520 devo
devo's picture

Payroll taxes over many years.

I understand economics, yada yada. Enough with the pejoratives from bunker-dwelling tax evaders. We live in a society with payroll taxes, and I pay them. You two have taken the point off topic. The point is the Libertarians/industrialists behind this site will never get decent, honest taxpayers to look down upon entitlements that they've paid into. Not because we're lazy or want a "nanny State" (enough of this hackneyed phrase), but because we had wages taken. We're more likely to frown upon corporate welfare. Beating people over the head with the same biased message isn't going to make them forget how much they've paid into the system and accept the loss.

Yes, the govt sucks, I own gold, don't own treasuries, etc. Yada yada. I also don't think entitlements are the problem. The problem is how that money is used, essentially as a slush fund. Keep the programs, reform the govt. Separating corporations from politicians, holding both accountable, informing the masses, etc. These should be the causes, not destroying poor and middle class "entitlements". That it isn't [the cause] makes me wonder who is funding this site since the writers aren't dummies.

Sun, 11/25/2012 - 23:31 | 3010669 Lednbrass
Lednbrass's picture

You insist on ignoring the fundamental reality that the wealth to return what was taken does not exist."Should be" does not mean a damn thing, deal with what is. You insist that because you got ripped off those behind you should also be ripped off in the name of "fairness"- and if you can't see a problem there I really don't know what to say.

"I got robbed when I was young, so I have the right to do it to someone else" is not a viable basis for a system.

No, the writers at ZH (the Tylers, not necessarily contributors) are not dummies at all- but it is clear that alot of readers are.

Mon, 11/26/2012 - 00:32 | 3010686 devo
devo's picture

You insist on ignoring the fundamental reality that the wealth to return what was taken does not exist.

It does, though. I'd take payment in one of the many vacant homes, or trees, oil, silver, gold, natural gas, etc. That you believe it's okay to not hold the government accountable for the past 80 years and say "no problem, you don't have the money, just end the social programs" is a joke on the middle class and poor. I don't see why you'd support that, but it sounds like you're listening to too much Peter Schiff and reading too much Ayn Rand. There's absolutely no reason to let govt off the hook. If the currency they pay back with can't purchase anything, citizens should demand hard assets. There is plenty of wealth (i.e. commodities/natural resources) in which we can be paid back. Do you think China will forgive our debt? They'll demand land and other assets. Citizens are no different unless they accept being treated differently.

Serious question: why aren't you guys railing against corporate welfare, the military industrial complex, unfunded war, and tax loopholes (the guy above basically admits he's a tax evader) as much as you're railing against middle class "welfare" like entitlements that they paid for? (Besides the fact that ZH and Peter Schiff told you not to). Governments want the masses railling against entitlements because then they don't have to pay back--you're a government/elitists wet dream. The irony.

Mon, 11/26/2012 - 00:48 | 3010705 Lednbrass
Lednbrass's picture

It is your right to be a silly person, but quit abusing the privelege.

Taking things because because a pack of Federal thieves burned you is NOT holding the government accountable in any way, shape, or form- it is only transferring your loss to others which is apparently just fine by you. Quit deluding yourself that you are doing anything else but rationalizing screwing somebody else because you got screwed. Iv'e been burnt worse than you have, but prefer that it end with me instead of passing it along.

The government is not going to give you, China, or anyone else hard assets. You and they will get electronic numbers in a database at best- thats it. Period. China sends us low grade crap, we send them low grade virtual money. As bad as many of their products are, they are still getting the short end of the stick.  The only way they will get real assets will be to convert their Benniebux into them (which I personally think they will begin to do within a few years), the banking cartel and/or their Federal minions are certainly not going to do that.

To address the rest, strawman building and ascribing views you made up to someone else are the marks of an idiot and you would do well to quit branding yourself as its unseemly in public. You will find few fans of empire in this neighborhood but you seem incapable of wrapping your brain around the idea that opposition to one thing does not imply or indicate support of something else. Only the terminally stupid think in terms of "Someone who opposes a welfare society must therefore support an oversized military and outsized influence of the financial sector on public life". Its such a fundamentally dim bulb train of thought as to be annoying to even have to refute but the concepts of the welfare state and military empire are not binary choices. It isn't either/or, support or lack of support of one does not inherently decide a person's view on the other. I would argue that its logically and philosophically conistent for a person to dislike both.

Mon, 11/26/2012 - 00:41 | 3010703 devo
devo's picture

"I got robbed when I was young, so I have the right to do it to someone else" is not a viable basis for a system.

Also, I never said this. I said I paid into a system and want the money back at some point. If the money isn't inflation adjusted and/or can't purchase anything, then I want government assets, just like a country would. Once the paradigm shifts to that, we can begin a discussion about dismantling social programs. But as an honest taxpayer, I am not even open to that discussion until I know how I'm being paid back. And this has nothing to do with laziness, nanny state, or any other Libertarian pejoratives. It's simply a creditor demanding payment from his debtor and not accepting excuses. Find, they're broke in terms of currency, but not in terms of assets, and I'll gladly take those. 

Your response was bizarre, angry, simplified, and it was also something I never even said.

 

Mon, 11/26/2012 - 00:53 | 3010708 Lednbrass
Lednbrass's picture

Saying that you want it back is EXACTLY that.  It is gone. Spent, wasted, blown, poofed, vanished, gone to the great electronic graveyard in the sky. The only way for you to get it back, is to take it from someone else who entered the Ponzi later than you did but for some reason you refuse to acknowledge that reality.

What you, me and everyone else paid in has evaporated. It is not coming back, The only question is whether or not more recent entrants into the scheme should be plundered to make whole the earlier entrants because that is the only means of recovery.

Sun, 11/25/2012 - 19:49 | 3010420 OneTinSoldier66
OneTinSoldier66's picture

I do blame people for trusting someone else to hold onto their money for decades and decades. That's just retarded. I can tell you with a stone cold straight face that I never did.

Sun, 11/25/2012 - 19:05 | 3010353 HurricaneSeason
HurricaneSeason's picture

They should let taxes go back to where they were and gain $600 billion in revenue. Cut federal funding to states by $200 billion and cut the military and foreign aid by $200 billion. That would give us an annual deficit of $300 billion and would make the value of the dollar rise, which none of them want. I look for $50 billion in revenue and $50 from the military. Then, kick the can and watch the stock market go down, while they debate the ceiling. They need that stock market money anyway.

Sun, 11/25/2012 - 19:20 | 3010377 CrashisOptimistic
CrashisOptimistic's picture

You do realize you just specified 1/15th percent drag on GDP?  That's what, 6.5%?  That recession will fire a lot of people, so that 600 billion in revs won't appear.

Sun, 11/25/2012 - 20:58 | 3010495 HurricaneSeason
HurricaneSeason's picture

Adding $1.5 trillion to the national debt, annually, is just cocking the gun at 1% interest and hoping our heros can fly in front of the bullet when the time comes. We survived without Trillion dollar deficits in the past and can again, just not well. There is no well.

Sun, 11/25/2012 - 22:45 | 3010625 NoResort
NoResort's picture

Your $600 bln is a ten year number.  You are advocating giving GDP a 4-7% punch in the nuts to get $60 bln in revenue against a $1.2 trillion defecit. All while ignoring all the revs you just lost by laying off another 10% of the workforce and how much in benefits that will cost. 

Somebody file the divorce papers already.

Mon, 11/26/2012 - 05:02 | 3010784 HurricaneSeason
HurricaneSeason's picture

No, I'm saying $600 billion the first year in expiring Bush tax cuts and expiring social security cuts increased capital gains tax etc. Reducing the deficit by $60 billion would be ridiculous, might as well add another $100 billion as take $60 billion off. The issue is and always has been, the jobs went to China that provide the tax base for all the government spending. Eventually that problem will be solved, but in the meantime, the GDP rolls over with solar panel $300,000/year jobs with it.

Sun, 11/25/2012 - 19:09 | 3010361 Silver Garbage Man
Silver Garbage Man's picture

Let's get this over with already. Hit the reset button.

Sun, 11/25/2012 - 19:31 | 3010394 hawk nation
hawk nation's picture

FUCK reset lets get get a couple states to secede and go there and florish as we watch the destruction as casual observers

Sun, 11/25/2012 - 20:59 | 3010499 mess nonster
mess nonster's picture

Yes! At this point, the pain of kicking the can will equal the pain of the reset. if we axed, with a massive meat-axe, all the social welfare programs, we will only be speeding up the inevitable by... maybe a year or so, that's all. If anything, gutting the socail welfare system with food safeguards in place will be much less painful than what is in store for us.

Here is the big problem of the re-set. A lot of people will die, that's not the problem. The problem is that after the dust settles, and the bodies are buried, we will have freedom again. That is unacceptable. If we continue as we are, we get the bodies, (holodomor)AND the totalitarian police state. That's why it must go on as it is.

 

Sun, 11/25/2012 - 19:09 | 3010362 A Lunatic
A Lunatic's picture

It gets harder every day to even give a shit what they do anymore since the solution is not amongst the choices these assholes offer.........

Sun, 11/25/2012 - 23:58 | 3010685 Incubus
Incubus's picture

That's, like, my life MO, man.

 

 

Sun, 11/25/2012 - 19:20 | 3010369 q99x2
q99x2's picture

Raise that bitch of a debt limit to infinity - $1. In God We Trust. 

Sun, 11/25/2012 - 19:14 | 3010371 woggie
woggie's picture

the beast is on the gobble
and all that matters is we're all headed for it's belly
http://youtu.be/ntmthFyaYzY

Sun, 11/25/2012 - 19:22 | 3010375 SgtSchultz
SgtSchultz's picture

The budget was doomed when baseline budgeting was introduced in the early 1970's. With a continued annual expansion of the baseline, all budget "negotiations" are a fiction for the entertainment of the political classes.

Sun, 11/25/2012 - 19:26 | 3010376 VonManstein
VonManstein's picture

i just read a "retweet" of this sent to ZH with the adage "BUY BUY BUY" suggesting everything is bullish regardless. Also reading from WSJ of ZERO fear amongst investors and then i hear traders talking about "sentiment" being dismal and this being a bullish sign.

In short, everyone is bullish for reasons they feel are contrarian.... the consensus is bullish "because everyones bearish" even though they are clearly not..

Did i miss something or is this one mass exercise in self delusiion, a group think event and ultimately, a big short?

Sun, 11/25/2012 - 23:04 | 3010642 Curt W
Curt W's picture

Herd mentality

Sun, 11/25/2012 - 19:21 | 3010379 Doug
Doug's picture

Nothing will happen if the debt ceiling is removed, just as nothing happened when we lost our AAA credit rating.  That's how ponzi schemes work, Charlie Brown.

Sun, 11/25/2012 - 19:33 | 3010397 AUD
AUD's picture

Yes, until they stop working, then you'll look like a fool.

Sun, 11/25/2012 - 19:23 | 3010381 shovelhead
shovelhead's picture

FEMA Camp fondue made from gubmint cheese.

Sun, 11/25/2012 - 19:26 | 3010387 hawk nation
hawk nation's picture

The major focus of the media this year will be to laugh at the barbarous relic of gold and silver as both doulble in price WITH NOONE IN THE MEDIA ACKNOLEDGING THAT ITS THE RESULT OF INFLATION THAT THE GOV IS MANIPULATING THE NUMBERS ON 

Sun, 11/25/2012 - 19:47 | 3010416 quasimodo
quasimodo's picture

Double? This year? WTF are you smoking? Not even next year will the price double...they won't let it

Sun, 11/25/2012 - 22:27 | 3010600 mvsjcl
mvsjcl's picture

I gave you a -1 not because I think you're wrong or a troll, but because you may very well be right--and that totally sucks!

 

When is this shit gonna end?

Sun, 11/25/2012 - 19:30 | 3010391 DonutBoy
DonutBoy's picture

The introductory assumption is:

"the system stands or falls on the continuing perception that Treasury debt paper is a viable form of “reserve” and that the debt of the US government will NEVER become “unsustainable”. An announcement by the US government that it was getting rid of any “limits” to its debt-generating capacity would put that perception at risk - quite possibly at grave risk. That is the reason why the debt limit remains - ..."

That's a false premise.  No one has a 'perception that Treasury debt paper is a viable form of “reserve"'.  All central banks understand that the nominal debt held outside the Fed will be repaid in devalued dollars.  There are no fiat currencies suitable for reserves today - because a reserve must store wealth. There will be a quiet diversification of reserves to stocks, private bonds, and commodities.  Meanwhile the central banks are and will continue to push ponzi paper on to their own savers.

The dollar is the dominant transaction currency and will remain so until the global fiat currency end-game because there are no suitable alternatives.  The end-game will be a "Black Friday" scramble for hard assets - likely war.

Sun, 11/25/2012 - 20:11 | 3010447 dscott8186
dscott8186's picture

Silly people, the deficit means nothing.  See if you can follow the Keynesian chain of reasoning:  

The Dollar bill is an instrument of faith, i.e. the Dollar is a place holder with no intrinsic value of itself but a means via the decimal system to conveniently make a trade for labor, goods and services.  Hence all economic value resides strictly in the labor, good or service.  The Federal Reserve is tasked with supplying enough Dollars to facilitate those trades.  If there are insufficient dollars to facilitate the trades, the volume of trade my be reduced due to the lack of liquidity, a recession.  

Traditionally, the Fed injects this liquidity by means of cheap near zero interest loans using freshly printed physically money. This means Dollars are created and interest is charged (creating more money, i.e. place holders)  In the same way, when the Treasury sells bonds, notes and bills, they have essentially created more money, meaning a bond is actually just a Dollar bill with interest tied together.  Now that the mechanics are explained, we come to Keynes central premise in which he flippantly described the creation of GDP as paying one person to dig a hole and paying another person to fill it up.  Gross Domestic Product is the sum of all labor, goods and services.  This is why Democrats/liberals insist they can pump prime the economy and prattle "animal spirits".  They literally believe the Federal Government can spend Dollars for labor, goods and services to create GDP out of thin air using printed Dollars, hence the Stimulus Bill.  Worked famously, didn't it?

The perversion of the Fed's responsibility goes deeper however.  Obama is spending a trillion dollars more a year and projecting to do so for another 10 years because in his view of the world, the number of Dollar bills has nothing to do with the intrinsic value of the GDP.  We in the real world know this is counter to reality, e.g. Zimbabwe, Argentina and Germany.  The Dollar is an instrument of faith, however, counter to liberal belief, the value of the Dollar is tied to the idea that it in itself has value like that of Gold.  Gold has value because we believe or decided it has.  The Dollar has value because we believe it does and if the market is flooded with Dollars, the Laws of Supply and Demand dictate it must decrease in value due to its imbalance of Dollars to GDP.  This is the practical reason why counterfeiting is illegal.  

In Obama's world view, the deficit means nothing because the Dollar has no value.  It could be a quadrillion Dollars for all he cares because, zero is still zero.  The Fed will continue to buy bonds with electronic ones and zeros in a vain attempt to create GDP via government spending. For those who are astute, you now understand why liberals see Capitalism as misguided and their endgame is making everyone understand the Dollar is worthless.  Everyone who understands this realizes if liberals are allowed to debase the Dollar you all become slaves.  A slave is someone who works for zero compensation under compulsion from another.  If you will not work for the government you will starve.    

Sun, 11/25/2012 - 20:26 | 3010471 orangegeek
orangegeek's picture

Lots of articles about the US dollar's demise.  When the US dollar falls, the Euro, Yen, Pound and C-Dollar rise - they represent 93.1% weighting against the US dollar.

 

What we saw last week was the Euro and Pound literally take off - as such, the US dollar fell.

 

http://bullandbearmash.com/chart/gold-soars-today-dollar-plungs/

 

If the Euro and Pound continue hard up, the US Dollar will continue hard down.  So that means that there are more buyers of Euros and Pounds - short term?  maybe.  Long term?  not likely.

Sun, 11/25/2012 - 20:37 | 3010477 newworldorder
newworldorder's picture

And the simpletons living in America; those that pay the tax and those that receive from the tax are soundly asleep with sugarplums dancing in their heads.

Mon, 11/26/2012 - 00:00 | 3010687 Incubus
Incubus's picture

I've got my shit together.

I'm just in the metaphorical locker room, on the bench, waiting for the game to begin.

 

Sun, 11/25/2012 - 20:44 | 3010481 Tombstone
Tombstone's picture

Obama will do whatever he wants because that's what a dictator does.  And the Retardican establishment will gladly accept the blame for any consequences that make The Dictator look inept or foolish.

Sun, 11/25/2012 - 20:44 | 3010483 tooriskytoinvest
tooriskytoinvest's picture

WTF? Obama signs new law to kick out all Zionist agents from congress, military and WH

http://investmentwatchblog.com/breaking-obama-signs-new-law-to-kick-out-all-zionist-agents-from-congress-military-and-wh/

Sun, 11/25/2012 - 22:38 | 3010615 mvsjcl
mvsjcl's picture

Hmmm. I don't quite get the AIPAC vibe from reading that. Seems it could apply to all freedom-loving, love-America Ron Paul supporters (Constitutionalists) who might see the government as the problem instead of the solution.

Sun, 11/25/2012 - 23:23 | 3010661 formadesika3
formadesika3's picture

Sounds like a purge.

Sun, 11/25/2012 - 20:46 | 3010484 mkhs
mkhs's picture

 The third alternative is a very popular one -....

Mr Obama was urged to take this step in 2011 and refrained. He has now been elected for a second and last term. With no more elections to win or lose, he may not be nearly so reluctant this time.

This is the last of our four major possibilities.

What happened to the fourth option?

Sun, 11/25/2012 - 21:07 | 3010506 disabledvet
disabledvet's picture

so here it least is some data: http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm looks like debt servicing costs are down dramatically this year. but here is the projected deficit for 2013: http://en.wikipedia.org/wiki/2013_United_States_federal_budget
looks like 900 billion give or take. here's our current debt: http://en.wikipedia.org/wiki/2013_United_States_federal_budget that's 16 TRILLION.
i was looking for some numbers on interest expense on this site but couldn't find it: http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/h...
"default file" indeed. where did all the money go? this site also includes state and local government...which put the g-man at 33% percent of our economic lives...needless to say an all time record. and how do we "pay for all this"? that's the easy one in my view: http://www.google.com/imgres?q=crude+oil+price+history+2012&hl=en&tbo=d&... i find it interesting that our proven oil reserves have increased 1.5 billion barrels in the past year. how can that happen? a discovery of "new reserves"? who cares, right? and something to listen to while viewing these numbers: http://www.youtube.com/watch?v=JkhX5W7JoWI

Sun, 11/25/2012 - 21:26 | 3010539 BullyBearish
BullyBearish's picture

Assuming can kick, ceiling raising...will we get a good (>4%) dip before it's off to the races till April??  Enough to embolden the bears before window dressing begins in earnest (see 2011)?

Sun, 11/25/2012 - 23:01 | 3010641 Herdee
Herdee's picture

Don't worry,the FED is going to keep pouring so much new money into the system without limit until they create the next big mammoth inflationary bubble.One you've never seen before or could imagine.They can handle the inflation,it's the deflation that's the trouble.Just throw another several trillion at her.That'll make it stick.She should be a doozy too.

Mon, 11/26/2012 - 02:12 | 3010736 sbenard
sbenard's picture

Ie., calamity is certainty. Plan and prepare accordingly!

A US Senator told me a few weeks ago that by the end of this decade, we will be paying $1 trillion/year in interest on the debt. That's more than half of income tax receipts.

A cataclysm of biblical proportions is 100% certain!

Mon, 11/26/2012 - 03:50 | 3010766 IridiumRebel
IridiumRebel's picture

His math is off. That happens at 20 trillion or 2015-2016 area. Good luck!

Mon, 11/26/2012 - 05:58 | 3010797 falak pema
falak pema's picture

that's what I said back two years ago; the 20 trillion mark for a country with a GDP of 16T is pushing it beyond the reasonable. 

We are now debating 14th amendment Dogma, the sovereign right to raise debt ceiling, for a money with a dual purpose : world reserve currency AND sovereign nation state money. If the two become incompatbile the Dogma EXPLODES; reality rules the world not the 14th Amendment. 

Mon, 11/26/2012 - 03:34 | 3010763 plata pura
plata pura's picture

you learn'd folk hear to much noise and get paralysis from over analysis. verily the signal be protectionism. the jewish wise man rod carew  once said where all the white womans? no not that one; hit sliders away to the opposite field. so in conclusion void of contestation the highest and best use of a government of, by and for the peoples is to protect it's manufacturing base by anyway possible. i see a vat  on imports to increase to 30-40%.

Mon, 11/26/2012 - 03:55 | 3010769 saulysw
saulysw's picture

They should raise the debt ceiling to Google dollars. That should give them some room to move for a little while. It's $1 with 100 zeros after it, as I'm sure you knew.

Mon, 11/26/2012 - 08:41 | 3010874 kralizec
kralizec's picture

Just remove the damned limit and end this farce already!

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