The U.S. May Finally Breach the Debt Ceiling. Here’s Why That Would Be Bad(nytimes.com)
nytimes.com
The U.S. May Finally Breach the Debt Ceiling. Here’s Why That Would Be Bad
https://www.nytimes.com/2023/01/11/us/politics/debt-ceiling-economy-congress.html
18 comments
My primitive understanding is that every dollar in circulation is borrowed from the fed and needs to be paid back with interest and that the only source of new dollars is borrowing them from the fed by way of the treasury selling bonds to the fed. If I am not missing anything (I’m guessing I must be) then wouldn’t the only possible outcome be that the nation goes into perpetually greater debt to the fed?
That's a very common misconception.
No, most money is created by commercial banks [1].
[1] https://en.wikipedia.org/wiki/Money_creation
No, most money is created by commercial banks [1].
[1] https://en.wikipedia.org/wiki/Money_creation
Treasury issues electronic debt, to fund Congressional spending beyond income, which loans dollars into existence.
Treasury prints paper dollars which are sold to 'federal reserve' for pennies per sheet.
Treasury mints coins which are sold to 'federal reserve' at face value.
Banks create debt money via fractional reserve lending for cars and houses and whatever. When those loans are repaid that debt money is extinguished.
Treasury prints paper dollars which are sold to 'federal reserve' for pennies per sheet.
Treasury mints coins which are sold to 'federal reserve' at face value.
Banks create debt money via fractional reserve lending for cars and houses and whatever. When those loans are repaid that debt money is extinguished.
That is a decent analysis.
This is also why the government tries to persuade people away from auditing the Fed, as it would be the nail in the coffin to the ongoing crime that has been perpetrated for the past 110 years: unchecked government spending would be impossible without the money printer at the Fed, and would collapse the military industrial complex.
This is also why the government tries to persuade people away from auditing the Fed, as it would be the nail in the coffin to the ongoing crime that has been perpetrated for the past 110 years: unchecked government spending would be impossible without the money printer at the Fed, and would collapse the military industrial complex.
So if this is the case why is raising the debt ceiling newsworthy event? Shouldn’t it be happening regularly by design?
Because Republicans like bringing the government to its knees every year. It’s insane and no other country does it.
It would collapse all of the society…if that were true.
But it’s not. The fed is regularly audited in the usual sense by independent third parties.
https://oig.federalreserve.gov/reports/board-financial-state....
Additionally, every security owned by the Fed, up to the detail of the identifying CUSIP number, is also available online.
https://www.newyorkfed.org/markets/soma-holdings
But it’s not. The fed is regularly audited in the usual sense by independent third parties.
https://oig.federalreserve.gov/reports/board-financial-state....
Additionally, every security owned by the Fed, up to the detail of the identifying CUSIP number, is also available online.
https://www.newyorkfed.org/markets/soma-holdings
They keep USA's gold. When was the last full gold audit?
Not since 1995…suspicious…
"hey we identified every single bond we bought with the funny money we printed out of thin air, so no worries comrade."
> raising fears that the fragile U.S. economy could be rattled by a calamitous self-inflicted wound
If the article starts this way talking about having a _balanced budget_ it's hard to trust anything else they say. Borrowing ever larger sums of money from foreign creditors will be the fall of the republic, not fiscal responsibility.
If the article starts this way talking about having a _balanced budget_ it's hard to trust anything else they say. Borrowing ever larger sums of money from foreign creditors will be the fall of the republic, not fiscal responsibility.
How is blocking funding for the government going to balance the budget? It’s like you saying you’re going to get your spending under control by stopping to pay your credit cards.
It’s just performative. Republicans had full control of all 3 branches of government in trump’s first term and all they did was increase the debt with unfunded tax cuts.
The republic is teetering because of this disfunction and hypocrisy, legislators who have no interest in actually legislating and finding compromises to solve our problems.
It’s just performative. Republicans had full control of all 3 branches of government in trump’s first term and all they did was increase the debt with unfunded tax cuts.
The republic is teetering because of this disfunction and hypocrisy, legislators who have no interest in actually legislating and finding compromises to solve our problems.
> It’s like you saying you’re going to get your spending under control by stopping to pay your credit cards
I mean it's a pretty obvious analogy: raising the debt limit is like opening a new credit card. If you keep doing that you get more and more in the red. If you keep your current credit limit and instead stop buying so much junk you can reduce your debt.
> It’s just performative. Republicans had full control of all 3 branches of government in trump’s first term and all they did was increase the debt with unfunded tax cuts.
I 100% agree with you. It's performative by the majority of Republicans. There are some who I feel truly believe a balanced budget is the #1 issue, though, and I'm rooting for them. Unfunded tax cuts (TCJA) are _worse_ than the status quo of just bumping the limit; that made my blood boil.
I mean it's a pretty obvious analogy: raising the debt limit is like opening a new credit card. If you keep doing that you get more and more in the red. If you keep your current credit limit and instead stop buying so much junk you can reduce your debt.
> It’s just performative. Republicans had full control of all 3 branches of government in trump’s first term and all they did was increase the debt with unfunded tax cuts.
I 100% agree with you. It's performative by the majority of Republicans. There are some who I feel truly believe a balanced budget is the #1 issue, though, and I'm rooting for them. Unfunded tax cuts (TCJA) are _worse_ than the status quo of just bumping the limit; that made my blood boil.
None of them will do anything about balancing the budget when they can, how will this circus act achieve it?
The majority of them are performative and the rest of them are just chaos monkeys in it for the power this gives them, no matter the cost to the country.
Debt in any case is not our biggest most urgent problem, it may not be a problem at all in fact.
The majority of them are performative and the rest of them are just chaos monkeys in it for the power this gives them, no matter the cost to the country.
Debt in any case is not our biggest most urgent problem, it may not be a problem at all in fact.
It might interest you to know the FDIC is funded by mandatory payments from commercial banks, not by the government. Your savings account will still be safe in the event of debt failure and prolonged government shutdown.
If you post a paywalled article please have the courtesy to post an archive link or workaround. I wish this was built into HN like it used to be.
https://archive.is/B9zT6
https://archive.is/B9zT6
By IMF definition the US is in an economic death spiral that will become irreversible by 2028, meaning all of our loan payments will go to only the interest and not the principal, putting the US on track to insolvency by 2042.
We can't do any more quantitative easing because we can't print more money. That road we've been kicking the can down since Bush was in office, hell since Nixon took us off the gold standard making overspending for political points and cronyism and criminal profiteering possible -- we're at the end of it. Hence the Fed raising interest rates, forcing the people who took all that money to move it out of the stock market and into bonds so the government can keep it's head above water and make loan payments.
Yes, it's all fake virtual money that can be written down. But not without completely disrupting civilization by requiring The People to follow one set of rules and laws, and it's Elitist rulers to follow another.
A balanced budget amendment is required, as is strict control and regulation of social security and medicare so they cannot be used as slush funds. On top of that, MASSIVE spending and entitlement cuts -- MASSIVE austerity for everyone is required to give us even a chance of solving the problems. That's almost what we are doing now. It'll get worse because there's no path to it getting better. This is the point where historically there's a war. Hence all the ramp ups in military spending and growth by the US, Japan and China at the very least.