While Barack Obama is chugging Guinness and Congress is doing… well not much of anything, we’ve breached the US debt ceiling.
That’s correct, the US now has more debt than is legally permitted. We’d crossed the “more debt than is healthy” as well as the “more debt than is sane” levels long ago. However, it wasn’t until the last few weeks that we cleared the legal debt limit.
You’d think that the world’s largest economy (and home of the world’s reserve currency) exceeding its debt limits would be big time news. But we’ve yet to hear a peep about it from the mainstream financial media.
It’s even stranger that we haven’t heard mention of the fact that the US is in fact RAIDING pension funds to continue to fund its debt.
That’s correct, Tim Geithner, who aside from being a tax dodger has managed to make US Treasuries (formerly the ONLY risk-free investment in the world) so unattractive to foreign investors that he is now using money that was promised to retirees to fund his debt orgy.
Let’s think about this for a moment… US Treasuries are so unattractive that investors no longer want to buy them… so we’re using money promised to those who worked… to buy them.
Aside from being morally wrong, Geithner’s moves are the usual “I’ve got no solutions so I’m just going to come up with something on the fly” nonsense we get from the DC crowd. Even Geithner himself has admitted that his latest scheme will only buy the US about three months’ time before we start defaulting on our debt.
That’s not a typo… Geithner has publicly stated that barring any sudden changes in the demand for US Treasuries, the US will DEFAULT in August 2011.
In some ways this doesn’t matter. The US was going to default soon anyway. The US Federal Reserve is the primary buyer of Treasuries now. And it’s simply buying 50+% of all new debt issuance back from Wall Street (usually within a week or two of the debt being issued).
In other words, the entire US debt structure is now a giant Ponzi scheme.
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