As we move closer to the debt ceiling “deadline,” there are 2 points I would like to make.\u00a0First, the U.S. WILL NOT NOT DEFAULT if the debt ceiling is not raised UNLESS President Obama chooses to do so. Monthly tax and other revenues are sufficient to cover interest on the debt, as well as Social Security and other obligations. The President has a good bit of authority to decide what gets paid and what doesn’t. The idea of a default is only propagated by those who have a personal interest in leading you to believe that the world will come to an end this weekend if we don’t continue spending more than we take in. It won’t.<\/p>\n
The second point is a bit more complicated. President Obama and other Democrats have been talking DOWN the stock market for the past few weeks. I believe this is also being done to scare average Americans and old-guard Republicans into thinking that the debt flow must continue or their personal portfolios and retirement accounts will be at risk. Wall Street is responding to this rhetoric to a point, and some minute-by-minute analysis suggests that traders tend to sell off each time the President warns of financial catastrophe. But we must\u00a0look at the bigger picture.<\/p>\n
Wall Street has been and continues to be the beneficiary of Fed-financed government debt, much of which primes demand for securities and pushes prices upward. Like Washington, Wall Street is addicted to debt and the Fed’s artificially low interest rates. Expect stock prices to drop in the short run if and when one or both of these drugs is withheld. I don’t think this can be avoided. When this will occur, the extent of the decline, and our ability to recover are open to speculation.<\/p>\n
The debt ceiling debate is only a symptom of the real problem, the debt that got us to this point in the first place.\u00a0Raising the debt limit to keep the drug flowing is not a solution. In fact, doing so will simply increase the debt and create more pressure to raise the ceiling next year, the year after, and so on.<\/p>\n
The Federal Reserve is a huge player as well. The Fed is financing much of our new debt because other nations, namely China, have become less willing to do so. Interest rates are being kept near zero–well below the natural market rate–to prime consumer spending and keep government debt payments low. As price inflation becomes more of a problem, it will be difficult for the Fed NOT to raise rates. This scenario is largely predictable and has the potential to wreak real havoc on our economy. It is brewing while many Republicans seem preoccupied with negotiating a “deal” to save the country from alleged default.<\/p>\n","protected":false},"excerpt":{"rendered":"
As we move closer to the debt ceiling “deadline,” there are 2 points I would like to make.\u00a0First, the U.S. WILL NOT NOT DEFAULT if the debt ceiling is not raised UNLESS President Obama chooses to do so. Monthly tax and other revenues are sufficient to cover interest on the debt, as well as Social […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/698"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=698"}],"version-history":[{"count":0,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/698\/revisions"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=698"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=698"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=698"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}