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Friday Tragedy: The US Debt Limit Explained
Ordinarily this space would be reserved for Friday humor, but unfortunately, this is nothing short of a tragedy, especially since as of today the US debt target is $16.394 trillion, a number which will be breached before the end of the year, and possibly before the presidential election in November. As a reminder, in 2011, the US economy grew by 1.7%. It almost, but not quite, offset the growth of US debt held by the public, which grew at a brisk 11.3% pace in the past year...
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Whatever, now is exactly the time to buy with borrowed money, just be sure you have the means to make the payments, and that you lock into the low interest rates offered now. With the rate of inflation what it is now and especially what it will be, you are making money. The people being screwed are the people that have money in the bank.
Wow, interesting. I guess i am screwed then. personally? I dont keep my money in my bank account to earn interest. I keep it in there because I just dont like handling money. Its dirty. The last time i remember getting exicited over bank interest was in the 70s when i was a young buck. Remember the bank books with the account balance that was typed ? Remember getting a woody over $1.27 interest? Yea, those were the good ol' days
And CNBC has more importan shit to cover --- like Maria licking Ackermann's balls on the slopes of Davo--than the very core of our pre-disaster market: sovereign debt increase.
I spend 50% more than I make. I cut 1% from my budget for this year, and I don't feel comfortable asking for a raise. So, we'd better go ahead and raise that debt limit.
What's that, you don't want to raise my limit? Oh well, guess I'm going to have to default then. That's too bad. Guess who isn't going to make their banker bonus this year?
Reminds me of a guy who, whenever a utility or collector would call, he'd say "look, I got a paycheck coming Friday, I'm going to put all my bills into my hat and draw one out and pay it. If you call me again, your bill is NOT going into the hat."
let me think... let me think.....i have a years worth of the following:
canned beans/soups/tuna/sockeye salmon...beef and buffalo jerky...dried beans/lentils/pasta/ jarred tomato sauce/jarred fruit/pickles/olives..flour, salt, agave syrup..
first aids kits...essential oils like tea tree, lavender, eucalyptus..aspirin...toiletries.....
plenty of cash on hand as there will be no physical dollars to be had.....
beretta92fs, plenty of ammo.......
what else.............??? need to finish this soon......things....not....looking....good........
Imodium.
AND Exlax. Things could go either way.
If you're eating MRE's definitely get the ExLax
Lots and lots of toilet paper.
I'm not sure that you are serious...but in case you are:
Whatever you have stored WILL run out, or be stolen from you by force.
Learn to grow a garden (perfect time is right now, it's about time to start seeds).
Find an old man this fall and learn to butcher a hog. If you can do that, you can butcher anything. Learn to preserve it (smokehouse).
Read a few books (I could give you a reading list) about how people lived in the 1840's, and learn those skills.
This is what you will need to survive.
imho.
lay it on me, what are the names of the books? btw, what makes you think my garden would survive if im going to have all of my hidden canned good heisted?
Seed to Seed, Suzanne Ashworth
Root Cellaring, Mike and Nancy Bubel
Basic Butchering of Livestock and Game, John J. Mettler Jr., DVM
Meat Smoking and Meathouse Design, Stanley, Adam and Robert Marianski
Old Time Gardening Wisdon, Jerry Baker
Gunsmithing the AR-15, Patrick Sweeny
These will lead you to others. There are HUNDREDS of free books on Amazon, for the kindle, but you don't even need a kindle there are apps for PC, Mac....
I can also recomment the U.S. Air Force Survival Manual, it is the BEST book for wildernes survival if you have to run.
Grab your seeds and go if you have to.
Also (as you may know) there are sumerous survival blogs out there. One of the "saner" ones is survivalblog.com.
I'll be around......
Also, Where there is no Doctor, and Where there is no Dentist. Very informative.
Foxfire series. 10 or 11 volumes out of print. Ebay or Alibris.
Definitely.
http://www.cd3wd.com/
'AT Files' or 'Appropriate Techonolgy' files off most any torrent site.
Permaculture or Food Forest, etc. Ixquick it. You can grow an amazing amount of food off of plants 99% of people would never recognize or acknowledge. Here in FL there are 'weeds' that can protect you from mosquitoes, provide you sustenance, and lie virtually undetected from the fast food crowd...I can grow fish and edibles from ponds or tanks, the ponds could look like any run of the mill garden pond and be 'useless' to 'grubbers'. You can grow wheat or grain substitutes with 'weeds' and be virtually undetected. Two acres to feed one person, bullshit. You want to mono-crop...feel free to starve while the the food forest feeds the enlightened.
Go to survivalblog.com
There is more information there than you could ask for.
I would definitely acquire a firesteel, and a good combat / survival knife.
@ kito, I would suggest an A-4 and a shotgun.
regarding those tanks on the train cars: bet y'all there will be one tank in front of every bank!
Well played.
This is dumb. A really smart economist told me that debt is cool because it's just money that you owe to yourself or something.
Leverage, bitches!
Yeah, those, "really smart economsts" don't like to listen to pointy headed economists that have anything but eternal optimism for the future.
I don't know whether to laugh or cry.
You'll laugh, you'll cry ,you'll kiss 16 trillion goodbye.
New future qualifier: debt to debt ratio-- Go figure that one out
This one is good too;
http://www.youtube.com/watch?feature=player_embedded&v=NOzR3UAyXao
It's all ok cuz Gingrinch says we're gona colonize the moon, and then Mars, and then...
And tax the moon colonists by forcing them to only buy supplies from America, but don't give them their own congressperson or senator, and then they vandalize a shipment of imported goods, and declare "no taxation without representation", and declare independence, and then America never records the money it invested in building the moonbase in the first place.
It's a brilliant plan, if the goal is to create a new Lunar America. If the goal is to generate revenue to pay off the national debt, its a fail.
Think of all the 'future savings' we could rack up by not going to war against them! That ought to help balance the budget.
"By not going to war against them!" - LOL
You've passed the interview for GAO analyst ! the Job is yours.....
Colon-ize Uranus with debt...
Don't worry Tyler.
Some day(when the US exports more than we import) we will all look back on this, and laugh.
MMTers are going to dismiss this. Can someone tell me how to rebut MMTers on this issue?
http://pragcap.com/the-burden-we-leave-our-grandchildren
TIA
My rebuttal is that in order for the MMTers arguement to work is that there be an extrapolation of the past 150 years of persistent economic growth indefinitely into the future.
The past 150 years of persistent economic growth which is an anomoly in contrast to the rest of human civilization will not be extrapolated into the future for a number of reasons--one of them being energy. Energy, primarily crude oil(the transportation fuel of choice) is like a master commodity. It takes the master commodity to distribute all other commodities. Extrapolating crude oil indefinitely into the future is impossible. In order to extrapolate the past 150 years of persistent economic growth which on a chart would be lower left to upper right with barely a blip for the great depression, we would need to find 10 new elephant sized oil fields. --not gonna happen--
thanks! well said!
Personally, I think "responding" to Keynesians, Monetarists, and MMTers is about as useful as calling one's Senator to oppose TARP, but for what it's worth, here's a good rebuttal to MMT:
http://mercenarytrader.com/2010/12/weekender-the-trouble-with-modern-mon...
I'm not an economist, but this article glosses over some pretty obvious issues. The 100 dollars printed has to be paid back with some interest. Thus there is a limit to how much debt the private sector can incur before it is no longer feasible, much less cost effective to borrow more. Eventually you reach a point where nobody will borrow because the pain of paying back the debt is more than they are willing to accept. If you leave debt to your childern you also leave the obligation to pay back that debt to those from whom you borrowed it.
I don't see any way to avoid this except to completely destroy the concept of individual property rights. Destroying individual property rights is equivalent to economic slavery. No matter how much you work you will never make a better life for yourself. My problem with Krugman is he pretends as if we are a collective rather than individuals exercising our individual freedom to participate in commerce with one another. That fredom creates an obligation to pay back our share of the national debt.
the fallacy in their argument " we owe ourselves" is
that "we" owe, are obliged to pay, "them". the
"we" they refer to includes "them". it is the
largest "we". when you break it down "our" children
will not inherit the debt, inflation, vacant job market,
burdens of communities in decline or collapse.
perhaps it will be just "my" children or "your"
children but not "our" children.
collectively
there is no problem but individually there are nothing
but problems in this zero sum collective and balanced
model of an macro-ideal.
like in a petri dish. the total energy is relatively
constant and resources are consumed, life populations
grow, then peak, then decline (collapse). the total
energy in the system calculation depends on what you define
as energy. the point is the tools we use to define the
state of the system influence our impression of the quality
of the system and also influence the function and quality of
the system when applied to the system.
if 90% of the population died off the current money system
could be reconfigured to show that no significant event
that threatens the system has occurred. you just shift
a few numbers and all is well. if 1% of the population were
to possess all of the assets the flexibility in the system
allows for the view that there is no problem with the
system, we can merely extent further credit in the form of
loans of fiat digits to the population to keep them
consuming what is offered by the producing industries
and paying the minimum interest payments. the actors
in the system become subjects of the monetary experiment!
we may not leave the debt directly to the next generation
but we may leave a culture of death and debt servitude,
a life brutish and short, let's call it freedom, where
they learn to kill before they learn to read, learn to
starve before they learn how to prepare a meal, learn
sickness and disease before they learn to live.
but the money system will be fine as all one must do is
create credit on a computer screen.
.
it is all about distribution. the system we have is
designed to distribute "money" in a particular way,
in a particular direction, and we can see that it has
been creating an inequitable distribution of historic
peculiarity, that is the rich are getting richer and
the middle class, young, retired, labor and salaried,
small businesses etc. are getting wiped out. that is
the proper function of the this money system. it is
its design manifesting its purpose. there is no problem
with it, it is working.
there is no problem with the debt. the problem is
the price the culture must pay to satisfy the debt.
this is something economics does not measure as it is
a question of quality and not quantity.
.
http://pragcap.com/resources/understanding-modern-monetary-system
Understanding The Modern Monetary System
This paper can be downloaded or printed via PDF copy at the following link.
Warning – This subject is very dense, highly complex and counterintuitive to much of neoclassical economics. Because it requires a substantial time investment I would recommend preparing yourself to spend several hours (or even days) on the material before getting overwhelmed by it. The discussion forum also covers many of the common misconceptions when first confronting this subject.
Understanding The Modern Monetary System
In this paper I will explain why Monetary Realism best describes most modern fiat monetary systems. The systems that are applicable to this discussion include nations that are monetarily autonomous, are monopoly suppliers of their own currency and exist within a freely floating exchange rate system. For this discussion, I will focus primarily on the USA although this subject can be applied to many other nations throughout the world.
Overview
Monetary Realism
The core value of Monetary Reality is transparency of the global monetary system. Monetary Realism is a description of the monetary system within a nation operating a fiat currency which involves an autonomous monetary system, monopoly supply of currency and floating exchange rates. Monetary Realism describes how a government creates, destroys and utilizes its monetary unit and also how the private sector utilizes the state’s monetary unit for its own benefit. Monetary Realism is similar to Modern Monetary Theory (MMT) in many ways and utilizes many core aspects of MMT, but focuses primarily on the operational realities of the monetary system and attempts to eliminate the theoretical aspects of MMT that generate substantial political divisiveness and confusion. ***
Monetary Realism is based on the following principles of an autonomous currency issuer:
?The Federal government is the monopoly supplier of currency, but maintains only a loose monopoly as opposed to a coercive monopoly (ie, citizens can always choose to eliminate the currency unit as the monopoly is not without competition and is not based on tyrannical enforcement).
?The modern floating exchange rate system helps to maintain equilibrium and flexibility in the global economy.
?The currency unit created by the state via deficit spending can only be extinguished by payment of taxes. Therefore, a modern monetary system can best be thought of as a system of debits and credits where government deficit spending credits the private sector and payment of taxes debits the private sector.
....
comment: it is a cook book and you ain't the chef !
key misconceptions: autonomy, inflation, "we", federal
government, flexibility, transparency.
Where's that Debt Limit and Total Debt vs. Gold price picture again? Tyler, help me out...how do I post a pic?
Just go back to the post earlier today when the debt ceiling was raised. There is a picture posted there. I think only certain people can post pictures.
Thanks much. I have the pic. I wanted to post.
Our National Debt numbers (just like inflaiton, unemployment, GDP, etc) are a JOKE. The National Debt EXCLUDES the losses fo Fannie, and Freddie. It also EXCLUDES the real cost of the Banker Bailout which is around ~12 TRILLION dollars.
Now can anyone tell me what the real National Debt is?
IMHO, the number doesn't really matter until one of the following happens:
1. Ron Paul become president.
2. US finally blow up on all economic fronts..
The official national debt is in, "real time". The real national debt is extrapolated into the future because bonds bought today are actually predicting the future. Do you think there would be a need for the FED to buy bonds via QE if the bond market was pricing a rosy future? Also, a good bit of buying of bonds regardless of duration is short term based on the giant hoof print of central banks meddling in bond markets.
I was arguing economics about 5 years ago about how bond markets were dictated by governments need to grow spending and no one agreed with me. They all said, "there is no way bond markets could be manipulated--not even by governments because the bond markets are simply too big"
The same shills are still saying the same thing about currency markets...
Check the dark pool? Tack that on to the publicly advertised number and that should get you closer to the actual.
Had to say this is brilliant.
results of gov. largess
http://www.youtube.com/watch?v=o64Fz-KW1Dk
In forming thier opinion of the massive US debt, one must understand who holds the debt. About 40% is owed to the US govt, another $2 trillion + (30%) is owed to pension funds, mutual funds, individuals, trusts, state & local govts, and then about 30% is owed to foreign investors. So roughly 70% of the debt is owed to ourselves. Maybe we just need to not pay back the 70% of the debt owed to ourselves and renegotiate the terms of the 30% owed to foreign countries.
So, what happens when those foreign countries figure out that we "plan" to renegotiate our debt?
According to Gingerich, we will pay off our debts with Gold found on Moon.
Texas Congressman Ron Paul got the Jacksonville debate audience roaring with his comment.
The 76-year-old doctor said: “The people we should send to the moon are politicians.” There’s some merit in that, especially since a vast majority of Americans think Congress has failed the people.
I think what he meant was... "If we wait just a bit longer, we will not need "spaceships" to take us to the Moon" We can just climb our ladder of debt to the Moon? Or did I misunderstand his message?
Signed.. Confused.
Brilliant piece.more people need to see it. It would make a good super bowl commercial.
Thanks could use a good laugh...it's been pretty grim for the last few weeks...........
"As a reminder, in 2011, the US economy grew by 1.7%. It almost, but not quite, offset the growth of US debt held by the public, which grew at a brisk 11.3% pace in the past year..."
Sounds like Keynesian economics is working really well... not!
100% FUBAR.
For a modicum of prosperity and a secure future the US would need jobs, money that does NOT lose purchasing power, a 5% interest rate for savings and of course, savings. How many of these things does the US have? Therefore...........
what if the usa gave an oil embargo and nobody came?....the final death rattle of the dollar ...the embargo that seems to be working is the debt ceiling embargo an issue absent from MSM..its no longer an issue ?a deals been done its election year nobody rock the boat!
I agree with MDB . The gubmint is really making it easy on our kids and grandkids. We should all really be grateful for the amish. they have a lot of them...... average 7 per woman. They will pay it off!!!!!
Those little buggers know how to work!
What a system!!! So those of us past 50....... we are so lucky!
Eat drink and be merry for tomorrow we die!
Here's some humor for ya.....
It's Bush's fault. :-)
NOT!
guns and butter.
http://archive.wbai.org/
Friday January 27 9:00am
.
bonnie faulkner presents george lakeoff.
why?, i'll never know. something about
politics and the brain, buns and gutter.
guns and butter.
....................
The legal basis for this robbery is the CIA Act of 1949, which states, in
blatant violation of the US Constitution:
(a) Notwithstanding any other provisions of law, sums made available
to the Agency by appropriation or otherwise may be expended for
purposes necessary to carry out its functions, including–(1) personal
services, including personal services without regard to limitations on
types of persons to be employed...(2) supplies, equipment, and
personnel and contractual services otherwise authorized by law and
regulations, when approved by the Director.
(b) The sums made available to the Agency may be expended without
regard to the provisions of law and regulations relating to the
expenditure of Government funds; and for objects of a confidential,
extraordinary, or emergency nature, such expenditures to be accounted
for solely on the certificate of the Director... (Par. 403j).
In other words, the CIA can spend its money however it likes and doesn't have
to tell anybody about it, the Constitution be damned.
The "provisions of law" which this law annihilates are the right of the taxpayer to know what the
government is doing with his money, a right which the framers of the
Constitution thought they were establishing when they wrote:
No money shall be drawn from the Treasury, but in Consequence of
Appropriations made by law; and a regular Statement and Account of
the Receipts and Expenditures of all public Money shall be published
from time to time (Article 1, Section 9).
PP
I Appologise for the OT, but, I think I found the "False Flag" bait.
Lt. Cmdr. Mike Kafka, a spokesman for the Navy’s Fleet Forces Command, declined to elaborate on the floating base’s purpose or to say where, exactly, it will be deployed in the Middle East. Other Navy officials acknowledged that they were moving with unusual haste to complete the conversion and send the mothership to the region by early summer.
Navy documents indicate that it could be headed to the Persian Gulf, where Iran has threatened to block the Strait of Hormuz, a crucial shipping route for much of the world’s oil supply. A market survey proposal from the Military Sealift Command, dated Dec. 22 and posted online, states that the floating base needed to be delivered to the Persian Gulf.
Other contract documents do not specify a location but say the mothership would be used to “support mine countermeasure” missions. Defense officials have said that if Iran did attempt to close the Strait of Hormuz, it would rely on mines to obstruct the waterway.
With a large naval base in Bahrain, and one or two aircraft carrier groups usually assigned to the region, the Navy has a substantial presence in the Persian Gulf and surrounding waters. Adding the mothership would do relatively little to bolster U.S. maritime power overall, but it could play an instrumental role in secretive commando missions offshore.
The deployment of the floating base could also mark a return to maritime missions for SEAL teams, which for the past decade have spent most of their time on land in Iraq and Afghanistan.
Other details of the project became public Tuesday when the Military Sealift Command posted a bid request to retrofit the USS Ponce, an amphibious transport docking ship, on a rush-order basis.
Until December, the Navy had planned to retire the Ponce and decommission it in March after 41 years of service. Among other missions, it was deployed to the Mediterranean Sea last year in support of NATO’s air war over Libya.
Instead, the ship will be modified into what the military terms an Afloat Forward Staging Base. Kafka said it would be used to support mine-clearance ships, smaller patrol ships and aircraft.
The documents posted by the Military Sealift Command in December, however, specify that the mothership will be rebuilt so that it can also serve as a docking station for several small high-speed boats and helicopters commonly used by Navy SEAL teams.
Source: http://www.washingtonpost.com/world/national-security/pentagon-wants-commando-mother-ship/2012/01/27/gIQA66rGWQ_story.html
History: http://en.wikipedia.org/wiki/USS_Ponce_(LPD-15)
I was pretty sure it wasn't going to be the Enterprise although there are some stories out to convince otherwise. My bet is on this ship after reading the articles.Why make economics so complicated? It ALL boils down to inflation. Period. And unless you are part of the clique, you will not keep up. No way in hell. You will eventually get hit by the inevitable runaway inflation, or deflation. Sure, you may from time to time catch a wave (stock, RE, bond bubbles). But in the end, you are toast. This is the only economics lesson that anyone needs to know. Unless one is incapable of reading a chart of USD debasement, and looking objectively at one's own lot in life. The FED only cares about wage inflation. Nothing more. Nothing less. It has "hedonics" and other schemes to take care of the rest. Keynes said inflation is so insidious that not 1 man in a million would notice the cause and effects. At least he was right about that.
Great post! Inflation overwhelms all else (Ron Paul is always saying this - to no avail). The welfare/corporate state has obliterated the ability & desire for savings. With the dollar's loss of purchasing power and the inexorable rise of food and goods, savings are last on the list. Why bother if the State will eterally provide? So folks search frantically for the "next big thing" (bubble), risk money they can't afford to lose, play lotteries, etc -all because of no savings and inflation.
I've got two years worth of MRE's and three years worth of toilet paper. That should be enough tp right?