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The Obvious Facts About the Debt Ceiling Showdown

Written by Robert Murphy on October 25, 2013

Big “showdowns” in Washington are always hype, with both sides distorting the facts so that the hapless citizen–whether he watches Fox or CNN–focuses on irrelevant details and misses the big picture. When it comes to the recurring conflict over raising the debt ceiling, here are two obvious facts that explode just about everything that the Republicans and Democrats are saying:

OBVIOUS FACT #1: Refusing to raise the debt ceiling is equivalent to insisting on a balanced budget. Any Republican politician who has (a) championed a balanced budget amendment but lamented the difficult road ahead while (b) voted to raise the debt ceiling, is obviously insincere (or doesn’t understand accounting). Either way, genuine fiscal conservatives cannot take such a person seriously anymore.

OBVIOUS FACT #2: If the debt ceiling is not raised, the government by no means needs to default on its outstanding bonds. There is an enormous amount of revenue flowing in, with which the government could pay existing creditors, as well as people owed money through Social Security, pensions to retired government workers, etc. Thus when President Obama and other Democrats say that if they don’t get their credit limit raised, they will crash the Treasury market, they are (using their rhetoric) holding the global credit markets hostage to their spending goals.

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One thought on “The Obvious Facts About the Debt Ceiling Showdown

  1. Some people never learn. History repeats itself. How long do you suppose the government can continue to spend recklessly, borrow money, print fiat currency, buy its own debt, etc. Many governments did musch as we are doing today – big "free" giveaways, etc. The German Weimar Republic in 1929 is an example. The Germans had all these pie-in-the-sky programs, but no hard currency. The exchange rate became so terrible tha ONE U.S. dollar equaled 4 trillion Deutschmarks. Peron's Argentina did similar things. The Argentine peso eventually tanked and Argentina experienced a depresssion greater than our own Great Depression. Napoleon had a similar inflationary problem due to his military exploits into Prussia, Austria, Russia, etc. He had no hard currency; his government began to print assignats, francs backed by land in what later became the Louisiana Purchase. Modern France, Greece, Portugal, Spain et al are in the same fix. Sooner or later the rubberband will break, and our currency will collapse. God help us when that happens, because Obama and his minions won't be able to help anyone.