Op-ed: Debt ceiling debate?

July 5, 2011 by · Leave a Comment
Filed under: Opinion 

Editor’s Note: August 1st is rapidly approaching.  The fact that we are this close and we still are debating it, will start creating a grave crisis of confidence very soon.   The first thing that we should see is interest rates on our Treasury bonds rise as we get closer to actually defaulting all the way up to the 1st of August.   There really should not be a debate and actually we should just get rid of the debt ceiling all together.  We seem to forget we are in a debt-based monetary system in which we use the code-word “growth” to mask this plain fact.  As long as we have a system where we create liabilities on the United States in a manner where we create only the principal not interest, two things happen.

First, because the bonds (debt) needs to be paid off, there is a constant sucking in the economy, bring money back to the holders of debt.  In our system this creates artificial scarcity of money so that we have to “grow” or go into debt or we will have deflation.  When you don’t have enough money to pay off your debt, either you default it or restructure which in effect is a default.  Second, as you create more debt, more growth and profits need to be found to keep servicing the ever increasing debt-load.

This will not end well, incomes are not keeping up so that means our taxable income is not growing anywhere near the speed at which we are creating more debt.   At this point, I am very sure we will have some very adverse consequences when the fallacy of our economic & monetary math shows the true nature of money in our system.  If we don’t get a deal done by August 1st, god help us.


Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!