Should Congress vote to raise the US debt limit?

[Hemodoc]

I don't think so Bill. This is just the usual posturing that Washington goes through publicly before the back room deal materializes.

[Willis]

Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness.

How so? You make a strong statement--what analysis is behind these predictions?

 

[Hemodoc]

Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness.

How so? You make a strong statement--what analysis is behind these predictions?

 

Seen it before over and over again.

[Bill Peckham]

Not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness.

How so? You make a strong statement--what analysis is behind these predictions?

Here is a good analysis of what would happen
http://www.npr.org/2011/07/05/137627991/what-a-debt-default-would-really-mean-for-the-u-s

The article gives numbers to illustrate the problem that our inflows and out flows come in spurts. The inflow spurts are heavily correlated to when income taxes are due. There is April 15th  but there are also quarterly deadlines for estimated tax payments for those with income not subject to withholding (people who also typically have the highest incomes and thus represent a disproportionate part of our incoming revenue) the quarterly deadlines are Jan 17, Apr 15, June 15 and Sept 15 in 2011 so for 6 weeks after default bills due will be running far below money coming in.

The article also does a good job laying out the timing issue of when bills come due too. Right away there are the SS security checks people depend on - there are a lot of people who need that check for basic survival. To prepare for the treasure interest and roll over due later in the month you would have to assume payment to contractors - everything from office supplies to road construction to military hardware - would stop. So all those workers making all the stuff the government buys would be out of work.

Then comes the interest payments due on treasuries. And the Treasuries due to expire will have to be dealt with and here no one knows what will happen. The 27 billion in expiring treasuries means that we'll be below the debt limit by ~27 billion dollars, so the Treasury could issue new bonds but who is going to buy them and at what price? You have to assume that the price the Treasury will have to pay will be higher than what it is today.

Right? This is a key point to understand if you are to understand why it is indisputable that not raising the debt limit will destroy jobs, create economic uncertainty for generations and greatly diminish America's economic competitiveness. Once the interest rate Treasury has to offer to sell t-bills increases, that fact increases interest rates throughout the economy.

What do you think that interest rate will be? What do you think will be the interest rate on the t-bills Treasury will need to sell on August 15th ? Intrest rate changes alone put hundreds of thousands of jobs at risk.

Then what do you think will happen to the value of stocks post default. The reduction in government spending is big enough to describe in terms of GDP. A 40% decrease in monthly government spending would cause a 1 to 2% decrease in GDP. Right now stocks are priced based on a GDP expectation of about 2.5% - the immediate effect of a default would be a collapse of assets prices which would effect anyone with a 401K or who relies on a stock portfolio. As we saw in 2008, as people's asset wealth evaporates there current spending contracts and optional purchases - like automobiles or the kitchen remodel - are put off. This is how interest rates, GDP and the stock market all feed into employment. That's the downward spiral that requires massive Fed action to reverse but the FED will not be able to act so the spiral will play out.

The fact of the default will effect the competitiveness of the United States for our life times. The possibility of a default will need to be factored into the price of every bond, every stock and every contract.  Even if this lasts a day, this will be true. It may be true already.

[Bill Peckham]

One other thing should be noted too - the revenue that routinely comes in is in large part from people's pay check withholding.


Should we go into default I think I would be inclined to change my withholding from 1 to a higher number of deductions which would probably mean that almost no money would be withheld from my next few paychecks.


I think the Republican's plan relies on my (and people like me) cooperation and I am not inclined to cooperate with this madness.

[Willis]

That's the downward spiral that requires massive Fed action to reverse but the FED will not be able to act so the spiral will play out.

Not to say that I disagree with everything above, but I do agree that we are like an aircraft spiraling to earth in a flat spin. Our financial house of cards has been one big ponzi scheme since Bretton Woods was rescinded in 1971. It has been fed by both parties. So sure, we can push on the throttle a few more times but it doesn't do anything but make the plane spin faster and make it even harder to pull up--and make a bigger mess when it finally hits the ground.

The fact of the default will effect the competitiveness of the United States for our life times. The possibility of a default will need to be factored into the price of every bond, every stock and every contract.

Well, given especially the loophole that President Obama has suddenly "found" in the 14th Amendment that gives precedence to our debts above all else, and the fact that servicing the debt and principle of our outstanding bonds is about 18% of the (phantom) budget, there shouldn't be any reasons other than political reasons to threaten default. Service the existing debt and there is still more than 80% of the budget for everything else. That 80% by the way was more than enough to cover everything less than 5 years ago. The President and his supporters seem to want nothing but to kick the can down the road--at least until January 2013.

 

[Bill Peckham]

That's the downward spiral that requires massive Fed action to reverse but the FED will not be able to act so the spiral will play out.

Not to say that I disagree with everything above, but I do agree that we are like an aircraft spiraling to earth in a flat spin. Our financial house of cards has been one big ponzi scheme since Bretton Woods was rescinded in 1971. It has been fed by both parties. So sure, we can push on the throttle a few more times but it doesn't do anything but make the plane spin faster and make it even harder to pull up--and make a bigger mess when it finally hits the ground.

The fact of the default will effect the competitiveness of the United States for our life times. The possibility of a default will need to be factored into the price of every bond, every stock and every contract.

Well, given especially the loophole that President Obama has suddenly "found" in the 14th Amendment that gives precedence to our debts above all else, and the fact that servicing the debt and principle of our outstanding bonds is about 18% of the (phantom) budget, there shouldn't be any reasons other than political reasons to threaten default. Service the existing debt and there is still more than 80% of the budget for everything else. That 80% by the way was more than enough to cover everything less than 5 years ago. The President and his supporters seem to want nothing but to kick the can down the road--at least until January 2013.

The full faith and credit of the United States means more than meeting bond obligations. But Geitner has said that he does not believe that Treasury has the ability to go beyond what Congress has authorized so really the Administration's hands are tied. There doesn't seem to be a 14 AMendment option in the view of the administration. But I just don't think the math supports your expectation of what can happen.

The math is the math. 29 billion interest payment comes due on Monday, Aug. 15. That's also the day that $27 billion worth of Treasury bonds mature. So just to meet that obligation Treasury needs 56 billion dollars. We have about 12 Billion dollars coming in taxes and then what? How's this suppose to work?

I think you are dividing total US revenue by 365 and comparing it to the total budget divided by 365. That's not a good approximation to the real world. In the real world we won't have the money to meet our T-bill obligations on August 15th. And as a practical matter we can't just not pay our soldiers and essential government personnel and operations so there is one alternative - taxes. In this circumstance I would support a tax on oil at the refinery equal to $1 a gallon. That revenue could be generated quickly, the industry is use to handling a price shock, this would be as if the price of oil increased ~$20 barrel.

Other areas that could generate immediate revenue would be surcharges - so you would have to look for surcharges on businesses that were operating so I think financial surcharges would be one area that would be exploited.

I don't see the House Republican's incentive to accept any sort of deal that could pass the Senate and I believe the bill would have to originate in the House (although there is a routinely used work around so a Bill could start in the Senate). Politically the path of least resistance might require unanimous House Democrat support with the bare minimum of Republicans joining but that seems unlikely so I really don't see how your expectation will be met Peter.

I think your plane analogy is off Willis. We are not in a spiral], we are flying along below trend after a terrifying loss of altitude. There is persistent unemployment and below trend demand, everything else is going to be self inflicted. This entire crisis is due entirely to the political impasse in the US House of Representative. None of this is being compelled by our current level of debt or our anticipated borrowing. None of it. Zero. Zilch. This crisis is the result of political calculus.

[Bill Peckham]

I'd like to hear from those in the don't raise the debt limit school of thought: Does it matter that Representative Cantor is invested in a fund that aggressively shorts US Treasuries?

"Cantor owns up to $15,000 in the fund, which is called the ProShares Trust Ultrashort 20+ Year Treasury ETF. Cantor, who leads the House GOP’s debt ceiling negotiations, would see his ETF rise dramatically in value if Republicans allow the country to default on its debt."

A $10,000 investment might not sound like much but if you read The Big Short (and you really should) you know how this works. The fund buys, what is in effect, insurance on an unlikely event - US Treasuries suddenly becoming less valuable. This insurance cost is a percentage of the assets being insured, usually around half a percent/year for treasuries. So a $10,000 short would insure $2 million dollars in assets.

I think this sort of investment - betting against the United States - is inappropriate for a member of Congress. Having a Congressman who has made this investment pursue policies that would cause this investment strategy to pay off, should disqualify that person from the privilege of serving.

[Willis]

Bill, again we are in (at least partial) agreement. This is clearly a conflict of interest. But it would be hard to imagine how any portfolio held by anyone holding Federal elective office wouldn't be rife with conflicts of interest. I'm neither excusing Cantor nor any of the other politicians. This case may be perfectly legal, but it definitely smells bad. I think what we have though is a serious systemic problem. Perhaps like the President, all such affairs should be in a blind trust until leaving office?

BTW... I still don't think there is a chance in hell of any defaults, debt limit or no debt limit. That is unless a default is what the big guys like Buffett or Soros are really aiming for. 

 

[Bill Peckham]

BTW... I still don't think there is a chance in hell of any defaults, debt limit or no debt limit. That is unless a default is what the big guys like Buffett or Soros are really aiming for. 

Here's something I didn't know happened:

"America’s only known instance of outright default (other than refusing to repay debts in gold in 1933) occurred in 1979 when the Treasury failed to redeem $122m of Treasury bills on time. It blamed unprecedentedly high interest from small investors, a delay in raising the debt ceiling and a word-processing-equipment failure. Although it repaid the money and a penalty to boot, a later study by Terry Zivney, now of Ball State University, and Richard Marcus of the University of Wisconsin-Milwaukee found it caused a 60-basis-point interest-rate premium on some federal debt. Today that would cost $86 billion a year or 0.6% of GDP, a hefty penalty for something so avoidable."

So we have one data point on the cost of even a temporary - and relatively minor - default.


EDITED TO ADD: Absent a debt limit deal with Congress, the Administration would be forced to break the law (AKA create a Constitutional challenge) one way or the other.

it would be hard to imagine how any portfolio held by anyone holding Federal elective office wouldn't be rife with conflicts of interest. 

I think there is a big incentive difference between holding US treasuries or GM stock (or investing in a mutual fund that holds Treasuries/GM stock) v. shorting Treasuries/GM stock. I don't have a problem with elected officials or government employees, betting on the US to win - we don't have a Pete Rose situation here where the absence of an investment would be signalling a lack of confidence.


EDITED AGAIN TO ADD: One other data point is that since about the middle of June Brazilian Credit Default Swaps have been priced lower than US Credit Default Swaps. This means it is cheaper to buy insurance against a Brazilian default than it is to insurer against a US default. So the market believes that a US default is more likely than a Brazilian default. I will note that the market thinks either is very unlikely - Brazil's chance is reckoned at 1 in 300 (1 yr CDS=33 basis points) while the US's is being reckoned at 1 in 200 (1 yr CDS=50 basis points) but still, ultimately the US will now be paying more for our borrowing than Brazil for the foreseeable future. And that's if a deal passes tomorrow.

[Willis]

Calls/puts...long or short...to those in the financial and futures markets these have no emotional connotations. Buying puts and shorting stocks is a risky business that can cause an investor to lose EVERYTHING, but these transactions provide the liquidity that allow the equity and commodity markets to function efficiently.

 

[Bill Peckham]

Look at this
http://modeledbehavior.com/2011/07/10/cheaper-than-cash/
right now it is as if bond investors are willing to buy 5 year US Treasuries with 0.00% interest AND pay a couple percent for the privilege.

Because there is no where else to go the United States could, if nothing else, offer states and municipalities a 2% interest rate on any five year bond levy and we'd make money while spurring local projects from schools to sewers.

This is the tragic situation. Not only are we threatening to assassinate our own economy we're doing it at a time of unparalleled opportunity. Mad about all the foreigners manufacturing stuff and taking all our jobs? Now is our chance to get some of the money back by borrowing from them for -5% interest. It's actually very sad.

[Hemodoc]

Bill,

How can Obama claim to be sincere on cost reduction when he won't even put the unspent stimulus and TARP funds on the table of discussion in the debt debate.  Sorry, that just makes no economic sense whatsoever to not return those funds now to the treasury in dealing with our current crises. I don't believe he has any intention of reigning in spending what so ever.

[Bill Peckham]

Bill,

How can Obama claim to be sincere on cost reduction when he won't even put the unspent stimulus and TARP funds on the table of discussion in the debt debate.  Sorry, that just makes no economic sense whatsoever to not return those funds now to the treasury in dealing with our current crises. I don't believe he has any intention of reigning in spending what so ever.

The Congress controls the purse. Congress was going to get to have a budget debate in the next few months because the '11 - '12 budget starts 10/1. There was no need to conflate the budget negotiation with raising debt ceiling. In fact no matter what happens, we are going to go through another round of it in a month or two ... because they will still have to get to a federal budget, A budget that will certainly spend more than it takes in (because we don't take in enough). The Republican debt limit strategy is hostage taking and extortion.

So my answer to your question is Congress can do whatever it wants. A lot of that stimulus money is already committed - five year projects in their second year, five year research commitments just getting started (like the John Hopkins study I'm volunteering with that is just entering its second year) - but without a link I can't give you a more detailed answer other than Congress controls the purse. If Congress wants to change something there is a well worn path to do it but it would be unprecedented to do it with the support of just 20 to 30% of the American people.

The projected deficit is based on spending bills that have already passed the House and the Senate, and then were signed by the President. Not increasing the debt limit is more like not paying for your meal already eaten then it is saving money by cutting back.

I think this is bad policy. I think what the Republicans are asking for would be bad for the country. But what is truely hard for me to understand, are the politics - this is bad politics. I can't understand the Republicans' actions in terms of political strategy. What I see is a continuation of the narrative of not having a Plan B. Whether it was the McCain campaign or decision on top of decision during the Bush administration, there is never any thought given to what will happen if events don't proceed according to their initial (questionable) plans. Right now the Republicans in the House don't have 218 votes need to pass any debt limit increase. They don't have them.

So, for this to go forward there needs to be a deal that gets some combination of Republican and Democrat votes and such a deal has not crossed the lips of a single republican Congressman, at least not in public (unless you count Senator McConnell's idea) and the Democrats are not in a position to do it alone. How is this suppose to work out from your point of view Peter? What's an acceptable outcome?

How could your predicted backroom deal materialize given the current nose count? ~ 200 Republican (follow party line, would probably take a deal endorsed by their House leaders), ~40 Republican (Tea Party, no increase in the dept), ~150 Democrat (party line, would probably take a deal endorsed by their House leaders), ~40 Democrat (liberal, wont accept cuts to Medicare/SS). Where are there 218 votes for a bill that can get through the Senate? Never mind Obama.

[Bruno]

I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.

[Hemodoc]

I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.

Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice.  Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend.  That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance.  Another teaching from the Bible is that we will reap what we have sown.

Not sure if you meant a literal response from your statement, but there it is.

[Hemodoc]

It is interesting how the media is trying to create a rift in the GOP by going after Cantor. Sorry, hasn't anyone heard of playing good cop, bad cop as a negotiation strategy.  All of these antics won't work and the American people are in favor of controlling spending as well. The Dems are the ones playing a dangerous game. The GOP put there budget proposal on record several months ago and to date, we still have no hard offers with any meat from the DEMS. They are simply playing the game of criticizing the GOP and offering no concrete plan of their own.

http://www.foxnews.com/politics/2011/07/14/dems-slam-cantor-as-patience-runs-thin-in-tense-deficit-talks/

[Hemodoc]

Obama Owns the Debt-Ceiling Fiasco
It doesn't help that he's declared high-speed rail and even unspent stimulus funds as untouchable.

The president has made a bipartisan agreement even more difficult by declaring certain spending off-limits to cuts. Mr. Obama's "untouchable" list includes his $1 trillion health-care reform, $128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal, spending on "green" jobs and student loans, and virtually any structural changes to entitlements except further squeezing payments to doctors, hospitals and health-care professionals.

Mr. Obama has offered no evidence since becoming president that he wants to restrain the upward trajectory of government spending. He does want higher taxes to pay for significantly higher federal spending. But he wants Republicans to deliver the tax increases, since Democrats couldn't pass them last year despite controlling both chambers of Congress.

Republicans have wisely declined. Demanding the GOP vote for immediate tax increases that would be offset by vague, future tax cuts conjures up images of Charlie Brown, Lucy and the football. The tax increases would be real—tthe future tax rate cuts would be imaginary. And Mr. Obama has opposed any serious spending enforcement mechanisms, such as a balanced budget amendment or hard caps on spending.

His tone also hasn't helped achieve a comprehensive agreement. The president's two most recent press conferences, in which he accused the GOP of foot-dragging, convinced Republicans that he was interested in scoring political points and attracting independents, not facilitating a deal. Convening high-profile White House meetings without offering substantive concrete proposals and then having his aides leak madly (and inaccurately) to the press afterward further squandered trust.


http://online.wsj.com/article/SB10001424052702304911104576443863077227784.html?mod=WSJ_Opinion_LEADTop

[Bill Peckham]

I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.

Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice.  Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend.  That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance.  Another teaching from the Bible is that we will reap what we have sown.

Not sure if you meant a literal response from your statement, but there it is.

I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ... Reagan's deficit spending strategy, however, is an issue I have a view on.

The fundamental error that the Reagan administration made was thinking that a deficit would force future Congresses/Administrations to shrink the size of the federal government in order to accommodate debt payments. That was still the thinking during the Bush administration. But it doesn't work. It works against the Republican's stated aim by making federal programs more popular. It discounts the cost of federal services. Right now the people are getting $1 of federal spending for $.60 of taxes and people like it. People like a bargain.

That I think is why the Republican proposals to cut spending are so unpopular.  Every bit of that spending is popular with someone,  and a lot of it is necessary or a good value. Paying for dialysis? I like that. Paying for some new gizmo for the military? It's very popular with the people who make it (I am sure they feel like they are working to benefit the country, and they might be) and it's popular in the community(s) where they're located. NIH research? I think we need all we can get, and many other people feel the same way. Foreign aide to Israel? That has a lot of support. Foreign aid to other countries - this is just about the most popular place in the budget to cut if you poll people but experts say it does a lot of good and is a good value.

But a lot of our very popular spending, in my opinion, may not be a good value. For instance, I'd say the tax deduction for charitable contributions is questionable. Most people have an effective federal tax rate below 17% (PDF) but even using 20% it means that for every dollar not paid in income taxes because of the charitable donation the charity gets $5. That seems pretty good but would it really mean that money wouldn't be donated if it wasn't tax deductible? I don't think so, I'd still donate to the charities I support.

Another one I benefit from that is very popular is the mortgage interest deduction. Housing drives our economy and when people move into a new house they spend money e.g. furniture, appliances, paint, but again how much of a factor is it? It makes a 6% mortgage have an effective tax rate of ~5%, which must have some effect but if you eliminated these popular deductions (and the less popular ones) it would allow us to massively cut rates while increasing revenue. And the revenue increase could be at a low net cost to tax payers because of the efficiency gained.

Not only could the marginal tax rates be halved but it would also allow a massive simplification ... to the point where 95% of the population could receive a tax bill and they could just pay what the IRS says is due and avoid all the time and expense that is now spent on complying with the tax code.

Our financial problems are entirely within our ability to manage. One thing that would be very helpful would be if the Republicans decided that surpluses are in their political interests. I think that surpluses would make federal services seem more expensive then under a balanced budget (let alone a deficit budget). The more expensive the services the less popular they will be. The Republicans need to reverse course and embrace surpluses. And surpluses will result if we collect a 1990s level of revenue.


If Republicans want to shrink the federal government they should raise taxes to the point that we are paying down our debt.

[Bill Peckham]

It is interesting how the media is trying to create a rift in the GOP by going after Cantor. Sorry, hasn't anyone heard of playing good cop, bad cop as a negotiation strategy.  All of these antics won't work and the American people are in favor of controlling spending as well. The Dems are the ones playing a dangerous game. The GOP put there budget proposal on record several months ago and to date, we still have no hard offers with any meat from the DEMS. They are simply playing the game of criticizing the GOP and offering no concrete plan of their own.

http://www.foxnews.com/politics/2011/07/14/dems-slam-cantor-as-patience-runs-thin-in-tense-deficit-talks/

Obama Owns the Debt-Ceiling Fiasco
It doesn't help that he's declared high-speed rail and even unspent stimulus funds as untouchable.

The president has made a bipartisan agreement even more difficult by declaring certain spending off-limits to cuts. Mr. Obama's "untouchable" list includes his $1 trillion health-care reform, $128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal, spending on "green" jobs and student loans, and virtually any structural changes to entitlements except further squeezing payments to doctors, hospitals and health-care professionals.

Mr. Obama has offered no evidence since becoming president that he wants to restrain the upward trajectory of government spending. He does want higher taxes to pay for significantly higher federal spending. But he wants Republicans to deliver the tax increases, since Democrats couldn't pass them last year despite controlling both chambers of Congress.

Republicans have wisely declined. Demanding the GOP vote for immediate tax increases that would be offset by vague, future tax cuts conjures up images of Charlie Brown, Lucy and the football. The tax increases would be real—tthe future tax rate cuts would be imaginary. And Mr. Obama has opposed any serious spending enforcement mechanisms, such as a balanced budget amendment or hard caps on spending.

His tone also hasn't helped achieve a comprehensive agreement. The president's two most recent press conferences, in which he accused the GOP of foot-dragging, convinced Republicans that he was interested in scoring political points and attracting independents, not facilitating a deal. Convening high-profile White House meetings without offering substantive concrete proposals and then having his aides leak madly (and inaccurately) to the press afterward further squandered trust.

http://online.wsj.com/article/SB10001424052702304911104576443863077227784.html?mod=WSJ_Opinion_LEADTop

I think most people already know that both Rupert Murdock's Wall Street Journal and Rupert Murdock's FOX news support the maximal Republican position. The only previous votes that are relevant to the debt limit discussion are the votes that authorized the spending authority that in sum is the federal budget. The spending authority this group of Representatives authorized.

As I have said, the only deal that can get the support of 216 House Republicans (I now think that is the number - down due to vacancies) is one that cuts spending by the same amount the debt is raised and does not increase revenue by any amount. There is no way the President can accept that but that doesn't even matter because there is no way that would pass the Senate - even excluding the use of the filibuster! The Hose Republican proposal couldn't even get 50 Senate votes. I don't think it would get 40 votes. And there is a reason why. The House proposal is deeply unpopular with the American people.

So given that. Given that the only proposal that the Republican House can deliver, cannot pass the Senate and is supported by only 20% of the American people what is the President suppose to do? What would be a reasonable demeanor in the face of those facts?

[Hemodoc]

I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.

Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice.  Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend.  That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance.  Another teaching from the Bible is that we will reap what we have sown.

Not sure if you meant a literal response from your statement, but there it is.

I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ...

Bill, America became a great nation based on biblical financial principles. That all began to change with the Fed in 1913 which is a privately owned bank truly outside of any control by our government. Yup, the president gets to nominate and the Senate approves the Fed Chairmen, but I suspect that they get to choose the people the Fed wants them to choose. In reality, a central bank can control the economy and politics of a nation and that is why Andrew Jackson got rid of the national bank during his term of office.

A nation that goes into debt becomes a slave to the lender(s).

Deuteronomy 15:6     For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.

Borrowing money strikes at the root of our sovereignty and is a danger to us in a much greater manner than many understand.

[Bill Peckham]

I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.

Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice.  Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend.  That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance.  Another teaching from the Bible is that we will reap what we have sown.

Not sure if you meant a literal response from your statement, but there it is.

I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ...

Bill, America became a great nation based on biblical financial principles. That all began to change with the Fed in 1913 which is a privately owned bank truly outside of any control by our government. Yup, the president gets to nominate and the Senate approves the Fed Chairmen, but I suspect that they get to choose the people the Fed wants them to choose. In reality, a central bank can control the economy and politics of a nation and that is why Andrew Jackson got rid of the national bank during his term of office.

A nation that goes into debt becomes a slave to the lender(s).

Deuteronomy 15:6     For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.

Borrowing money strikes at the root of our sovereignty and is a danger to us in a much greater manner than many understand.

This is a common misconception. US Treasuries are not equities. US Treasuries do not give the holder an ownership interest in the United States. Their value derives entirely from the value of our word. They are uncollateralized loans.


EDITED TO ADD: Wasn't this country founded by incurring a very large debt most notably from the Dutch, securing which loan is said to be Adam's contribution to defeating the British?

[Hemodoc]

I liked the religion debate, but I like this one better...one thing though, there's no need to read a newspaper, or watch TV when you can get such an accurate idea of the situation from IHD.
I have Peter HD in front, but that's purely on number of posts.
Peter, for you to win, you need to find a way to combine religion and budget deficits.

Dear Bruno, if we followed biblical financial principles, we would never have gone into debt in the first place. Finances are a large part of the Bible and America has long since become a slave to the lender. That is plain and simply an ungodly practice.  Paradoxically, Ronald Reagan took us from the biggest lender to the biggest debtor nation during his terms in office, a little know fact. So look at what that practices has wrought in only 30 short years with the US now on the verge of going broke. I don't know of any corporation that could stay in business by borrowing 42 cents for every dollar we spend.  That is at the heart of the Republican response and yes, it is also biblically correct while the Democratic position goes against all teachings from the Bible on finance.  Another teaching from the Bible is that we will reap what we have sown.

Not sure if you meant a literal response from your statement, but there it is.

I would be surprised if a modern economy could operate on Biblical terms but I'm not familiar with what exactly that would entail ...

Bill, America became a great nation based on biblical financial principles. That all began to change with the Fed in 1913 which is a privately owned bank truly outside of any control by our government. Yup, the president gets to nominate and the Senate approves the Fed Chairmen, but I suspect that they get to choose the people the Fed wants them to choose. In reality, a central bank can control the economy and politics of a nation and that is why Andrew Jackson got rid of the national bank during his term of office.

A nation that goes into debt becomes a slave to the lender(s).

Deuteronomy 15:6     For the LORD thy God blesseth thee, as he promised thee: and thou shalt lend unto many nations, but thou shalt not borrow; and thou shalt reign over many nations, but they shall not reign over thee.

Borrowing money strikes at the root of our sovereignty and is a danger to us in a much greater manner than many understand.

This is a common misconception. US Treasuries are not equities. US Treasuries do not give the holder an ownership interest in the United States. Their value derives entirely from the value of our word. They are uncollateralized loans.


EDITED TO ADD: Wasn't this country founded by incurring a very large debt most notably from the Dutch, securing which loan is said to be Adam's contribution to defeating the British?

Bill,

Not sure what you are speaking about with the Treasuries and ownership interest in response to my post. I was speaking of the Fed not the US treasury.  A little further explanation would help.

God bless,

Peter

[Bill Peckham]

um it is a thread about our debt limit and your quote says don't borrow money from other nations. The Fed doesn't borrow money.

You're Fed history might be a dog whistle in some circles but I can't hear it ... the Fed hasn't put us in debt.


And I don't think you can actually be a slave if your bondage is based on entirely your word.

[Hemodoc]

um it is a thread about our debt limit and your quote says don't borrow money from other nations. The Fed doesn't borrow money.

You're Fed history might be a dog whistle in some circles but I can't hear it ... the Fed hasn't put us in debt.


And I don't think you can actually be a slave if your bondage is based on entirely your word.

Fair enough, first of all,  I never implied that the Federal Reserve borrows money. In fact, the Fed is the single largest owner of our national debt.

http://www.brillig.com/debt_clock/faq.html

In comparison, the amount we owe to China is only a small fraction of the debt that we owe the the Fed. Most folks do not understand the power that the Fed has over our economy and over our politics. The simple fact that the Fed is the largest single owner of our debt should lead us to ask some questions as Americans. Who OWNS the Fed? Gaining actual lists of the owners is probably impossible for a regular grunt like me or others, but the reports are foreign bankers own the Fed. This is a private bank, it is NOT owned by the Federal government and there is nothing federal about the Fed. They do as they please and tell congress and the president what they are going to do, not the other way around.

So, the Fed is not what many believe it to be. Instead they are the banker that holds us debts. People should be afraid of the Fed more than they are of China.