The Washington Examiner recently posted an article entitled "White House Demands Debt Ceiling Hike 'Without Drama'." Excerpts follow:
"The White House on Thursday called on congressional Republicans to raise the debt ceiling quickly so the government can borrow more money and maintain its current level of spending, and asked that the GOP deliver this 'without drama.'"
Thus, the Obama Administration wants to:
1) "raise the debt ceiling quickly";
2) "so the government can borrow more money";
3) "and maintain its current level of spending"; and
4) do so "without drama" (publicity or public awareness).
No drama, here. Nothing to see. You folks, just move along.
In fact, I think there's much drama in our national debt and the debt ceiling. In fact, if you care to contemplate the subject, you just might even see something scary.
"White House spokesman Josh Earnest spoke hours after the Treasury Department announced that the U.S. would bump up against the legal debt ceiling by Nov. 3, and said failing to lift the debt ceiling would put the U.S. at risk of 'not being able to pay our bills.'"
That's simply not true. If the government was "able to pay [its] bills," it wouldn't need to borrow any currency.
The fact that government must borrow more currency is irrefutable evidence that government can't pay all of its bills.
"There's no reason for us to engage in that kind of irresponsible brinksmanship; and it's why Republican leaders in Congress need to accept the responsibility that they have to act without drama and not delay raising the debt limit," he said.
Average Americans might disagree. That is, most of us might say, "Wait a minute, there's plenty of reason to resist raising the debt-ceiling-the government is broke and therefore shouldn't be borrowing more money and leaving a growing debt for the next generation. The government should live within its means and not spend more than it collects in taxes."
* However, most Americans assume that debt is bad. They don't understand that, thanks to our fearless leaders and economists, we live in a new-and-improved, debt-based monetary system. Within the context of that system, debt (a mere promise to pay) is deemed to be an asset and our principle form of wealth.
Ergo, the more debt government creates, the wealthier we become-see?
Therefore, in our debt-based monetary system, Obama is doing a good thing by trying to create more debt.
Unfortunately, the public doesn't understand the debt-based monetary concept. Therefore, the Republicans can threaten to refuse to raise the debt-limit and make Obama look like the bad guy since he intends to borrow and spend more currency and create more debt.
In a real world (where "assets" are something tangible like land, gold or silver) the public would be right. Going deeper into debt is bad. Treating intangible promises to pay (debt instruments) as if they were tangible assets is crazy.
However, once we accepted the premise of a debt-based monetary system, creating more debt is not only good, it's logically essential.
The whole thing is nuts. Government wants to create more "wealth" by creating more debt. Government tries to "stimulate" the economy by creating more debt. The public doesn't understand. The government can't explain because if the public understood, they'd riot.
Plus, once government accepted the premise of debt-based currency, the logic of that premise prevented government from stopping the creation of more debt. If government stops creating more new debt that can be used to roll over and seemingly "pay" the existing debt, government will have to admit that it's insolvent, that it can't pay its existing debt, that some or all of its previously-issued US bonds are now worthless and the government is technically bankrupt. In short, the "emperor" would be seen to be nude.
Once government accepted the premise of a "debt-based monetary system," it could never climb off without collapsing the economy.
The leaders of both parties know that they must authorize a higher debt limit or crash the economy. Therefore, the debt limit will rise-but probably not until after the Republicans have exploited Obama's "obligation" to create more debt.
"An increase in the debt ceiling is a sore point for Republicans, but the last few times the U.S. has been in this situation, the GOP managed to authorize more borrowing "without a lot of drama," the White House spokesman said."
Indeed. Top Republican leaders understand that, given the premise of a debt-based monetary system, the only way to keep kicking the can down the road and postponing the inevitable, is to authorize the issue of more debt. Long-term, all that extra debt will eventually choke the national economy. But, short term, issuing more debt will keep the Ponzi-scheme going and allow incumbent politicians to be reelected rather than lynched.
So, from the perspective of national survival, more debt is bad-but, from the perspectives of the two major political parties and their politician's survival, more debt is great.
"Without raising the debt ceiling, the government would be forced to spend only the money it takes in, and thus would likely have to cut back a range of federal programs. Many Republicans have wanted to use the debt ceiling as a point of leverage to negotiate more spending cuts."
Yep. Just like I said. Government needs to borrow more because it's too broke to pay all of its existing bills. If government couldn't borrow more, then it would have to "cut back a range of federal programs."
Imagine government having to spend only as much as it takes in in taxes! As the character Kurtz said in Heart of Darkness: "The horror! The horror!"
The reality is that government's need to borrow to pay existing bills is evidence that the government is broke.
Government's persistent need to borrow for the past several decades is evidence that government has been persistently broke during those several decades. The debt-ceiling problem is not due to a temporary lack of funds. The government's persistent debt problem is evidence that government has been technically insolvent and even bankrupt for at least two generations.
* More, the debt ceiling issue isn't simply about spending.
It's more about borrowing. It's primarily about the creation of more debt instruments (US bonds; mere promises to pay)that can be legally used as collateral by banks.
In a world of fractional reserve banking, whether government borrows and spends another $1 trillion is, in itself, almost irrelevant to stimulating the economy.
However, thanks to fractional reserve banking, once government creates another $1 trillion in debt and memorializes that debt with another $1 trillion in US bonds, some or all of those bonds can be sold to private banks where they can be used as collateral for more loans to American or even to foreign borrowers.
Under fractional reserve banking, American banks can lend $9 for every $1 they have in collateral in their bank vaults.
So, it's not the $1 trillion in new government debt that primarily stimulates the economy. It's the resulting $9 trillion that private banks can create under fractional reserve banking to lend to US and foreign borrowers that stimulates the US and foreign economies. Fractional reserve banking thus magnifies the economic stimulus of $1 trillion into $9 trillion-and maybe, a lot more.
* In theory, if government's debt ceiling isn't raised and government is prevented from borrowing another $1 trillion, there'll be $9 trillion less created by private banks for the purpose of stimulating the US and world economies. Could those economies survive without the $9 trillion in stimulation? Probably not.
Thus, it's not just the US economy that depends on the Ponzi scheme we call the "debt-based monetary system"-even the global economy is, to large degree, dependent on the US continuing to embrace and implement the debt-based monetary system.
If we quit that system, the whole Ponzi scheme that we call the "global economy" could collapse.
The combination of:
1) a debt-/promise-based monetary system; and,
2) fractional reserve banking-
has caused an unprecedented growth in the US and global economies. But that combination is fundamentally irrational because it's all based on 1) intangible promises (government debts) rather than tangible assets; and 2) the loan of imaginary, fractional-reserve dollars that have no tangible reality or tangible support.
More, the combination is debt-based currency and fractional-reserve dollars is worse than irrational. It's also fundamentally immoral because it's based on the fraud of lending currency that has no tangible reality or intrinsic value.
When our irrational, immoral, debt-based monetary system finally fails, the US and global economies will shatter. The world will suddenly see that our entire financial system is built of nothing but intangible, irredeemable, promises that ultimately can't be kept. The collapse will vaporize those intangible promises and teach the world, once again, that the only real "assets" that should be used for collateral are tangible assets like gold or silver.
"But [Obama spokesman] Earnest argued that raising the debt ceiling
wouldn't authorize any new spending, an argument Democrats have made in favor of another increase beyond the current ceiling of $18.1 trillion. 'It simply allows the Treasury to pay for expenditures that Congress themselves already have approved and we want to make sure that those expenditures are paid in full and on time,' he said."
Congress may have "already approved" of the government's expenditures. Special interests and entitlement groups must've cheered those approvals. However, Congress did not also perform its correlative obligation to fully fund all of those expenditures. Without fully funding those expenditure, there are only three options:
1) Repeal some government expenditures and incur the wrath of special interests and entitlement groups who were counting on some more "free money" from Uncle Sam;
2) Raise taxes and incur the wrath of taxpayers and perhaps also precipitate an economic collapse; and
3) Borrow more currency to seemingly "fund" the unfunded expenditures, hopefully stimulate the economy, and leave the debt problem to future generations of taxpayers and politicians.
Do you think Congress will risk angering special interests (by cutting spending) or taxpayers (by raising taxes)? Or will they take the easy way out and raised the debt-ceiling limit so they can borrow more funds? The answer's obvious.
"'I think people on both sides of the aislehave acknowledged the
significant economic risk of failing to do so, that it would throw the U.S. economy and the U.S. financial system and potentially the global economy into chaos for Congress not to handle this basic fundamental responsibility,' Earnest said."
Q: And what, exactly, is the Congress' "basic fundamental responsibility"?
A: To keep the debt-based, Ponzi scheme going as long as possible before it inevitably implodes and "throws the US economy and the US financial system and potentially the global economy into chaos."
Q: What, exactly, did Mr. Ernest mean by the word "chaos"?
A: He meant massive unemployment, global poverty, starvation, pandemics, domestic violence, the deaths of millions of people around the globe, a 20% decline in life expectancy, regional wars and perhaps even WWIII.
No joke.
Will it happen? Almost certainly not to that extreme.
Could it happen? Yes.
In this threat of "chaos," you can see why, once we accepted a debt-based monetary system, we were condemned to support it "forever". To quit riding that tiger is tantamount to signing the death warrants for millions of people and perhaps resetting our standard of living back by decades.
* You can also begin to see why, when Republicans or the American people whine about the immorality of increasing the debt load on future generations, the Obama administration scoffs. I.e., if you had an opportunity to get $1 today for every $1 dollar's worth of debt you created and left for your own children-you'd be a rotten, greedy, irresponsible parent if you did so.
But what if, under fractional reserve banking, you could get $9 today for every $1's worth of debt you left to your kids? What if you could saddle your 5-year old with $20,000 in debt today in order to produce $180,000 for his college education? What if you could saddle your kid with another $20,000 in debt today so he could grow up in a family home worth $180,000 instead of an apartment? Wouldn't the "magical" creation of a new $180,000 family home and a $180,000 college education for the kid be sufficient justification to leave your child with $40,000 in debt?
Wouldn't you be confident that the next generation (your 5-year old son when he became an adult) would do the same by placing his child (your grandchild) into another $40,000 in debt in return for his own new $180,000 family home and another $180,000 for your grandson's college?
If you didn't look at this money-tree miracle too closely, wouldn't you also be convinced that each subsequent generation could get rich just by leaving a modest debt to the next generation?
Just think of it!
For every one-dollar's worth of debt your child unwittingly "promised" to pay, you could have $9 today! Who could resist the deal?
And, if any Debbie-downer tried to explain that all this debt would inevitably grow until it was so great that it couldn't possibly be paid, had to be repudiated, and the result would be "chaos" (millions dead, civilization set back decades, and possible WWIII, etc.)-wouldn't you politely invite her to take her pessimistic crap elsewhere?
Of course you would.
So has Congress, the Senate and the White House. The combination of debt-based (promise-based) currency and fractional reserve banking creates the most pleasurably irresistible, intoxicating, addicting drug the world has ever seen. That combination makes crack look like castor oil.
* Sure, debt-based currency and fractional reserve banking may be addictive and ultimately self-destructive. But who can resist all the fun, wealth and power you can enjoy before the inevitable chaos comes to balance the books?
Most people can't.
Clearly, government couldn't resist. So, we've had at least 40 years of a hot, unearned economy. It was fun while it lasted. We nearly ruled the world. But now, it's just about time for the chaos. Too bad. Too bad for our kids and grandkids. Too bad for us, too.
Once we embraced the premises of debt-based money and fractional reserve banking, the logic of those two premises put us on a path to 1) a great economic high; 2) an enormous, unpayable debt; and, finally, 3) chaos.
If we'd paid attention at the beginning-if we'd behaved responsibly-we could've seen the ultimate result of debt-based currency and fractional-reserve banking would be chaos. But who could say the chaos was sure to happen? Who could say for sure when it might happen? How could we weigh the threat of the chaos that might happen someday against the immediate promise of an economic "high" that we'd get if we accepted debt-based money and fractional banking now?
The temptations of: 1) debt-/promise-based currency; and 2) fractional reserve banking were too great for the Congress or the people to resist.
But, once we accepted those two premises, their logic pushed the whole nation towards a moment of chaos which now seems more imminent than remote.
But that's what happens when you turn control of the world over to political "speculators" who only worry about the next quarterly report, the next election and the next economic "high," rather than to political "investors" who think in terms of what's good for future decades and future generations.
Like I said, it's too bad.
For all of us.
