Every day we hear about how awful it will be if the debt ceiling isn’t raised because the United States will then default on its treasury obligations.
When it is pointed out that we don’t need to miss any debt payments—that if making the payments is so dire we should prioritize them over arming Syrians or using drones to kill people in Nowherethatmatterstoanyamericanstan. But we are told that, despite the fact that defaulting will cause the planet to explode, for some vague reason prioritizing spending won’t be possible. Then we are told that it doesn’t matter if we actually fail to pay. Just by approaching the debt ceiling we risk shaking confidence in the Treasuries, which will have earth-shattering consequences for the economy. The only way to prevent a loss of confidence in Treasuries is to raise the debt ceiling.
That makes perfect sense. Whenever I hear that someone is using a credit card to pay the minimum balance on another credit card, I immediately think, “That man is completely trustworthy financially; if I loan money to him I can rest assured he will always be able to pay me back.” We should raise that debt ceiling and keep inspiring that confidence. Oh, wait. That makes no sense at all!
But what is really infuriating is the explanation of how any downgrade of the value of US debt will spread problems throughout the economy. Here is one version of the explanation:
“A failure to repay investors who’d purchased Treasury securities would be a default. It would have ripple effects on financial markets since some financing deals rely on Treasurys as collateral for loans and defaulted securities can’t be used as collateral.”
So in order to supply collateral for current debt and for more debt, to keep Wall Street going, it is essential that we raise the debt ceiling in order to go further into debt in order to pay interest on debt. You really think that makes any sense?
Other than debt, what is fundamentally behind the trustworthiness of US Treasuries? Ultimately, faith in the United States government to bleed American taxpayers to whatever level necessary to keep this ponzi scheme in operation. After all, only a tiny fraction of the borrowed money is being put into anything that could be called an investment. The majority goes to middle-class-entitlements and a smaller chunk to our global military presence. 99 percent of the money from people buying our Treasuries is thus converted into immediate consumption. When it is time to pay the loans off, the government has nothing of value to use to pay it back. The money is gone. The taxpayer is the slave of the Treasuries.
Essentially, the future blood, sweat, and tears of Americans is being used as collateral for debts.
So we have to raise the debt ceiling so we can enjoy our party (even though it already shows signs of waning) just a bit longer. We must try to win by dying before the bill comes due. Let our children deal with it. We don’t care about them, do we?
The people explaining why we must raise the debt ceiling are basically telling us we live in a banker-invented death trap. An animal would chew its foot off to escape such a snare. We should be willing to deal with a recession, if that is what it will take. Waiting only makes it worse.