Debt Ceiling Limit-Bringing Down the USD House of Cards via Controlled Demolition or Fake Wrestling to Screw the Poor?
Congress controls the pocketbook. They voted for a budget for Fiscal Year 2023, fully aware of the current debt and revenue forecasts, so they have defacto approved a debt ceiling limit equal to the spending they authorized.
Well obviously, they don’t think so.
In 1979,, Dick Gephardt imposed the "Gephardt Rule," a rule that deemed the debt ceiling raised when a budget was passed. This resolved the contradiction in voting for appropriations but not voting to fund them. The rule has been suspended from time to time over the years, mostly when Republicans control the House with a Democrat President
If the current Congress wants to cut spending and reduce the debt, as we are entering into a recession (pretty stupid), they may try to do so in the Fiscal Year 2024 Budget heading into an election year. Go ahead, cut spending for the military and intelligence agencies which accounts for most of the budgets discretionary spending and raise taxes. Then wonder why the Democrats win the election in 2024.
Isn’t it funny how the only times Republicans care about the debt is when they don’t control the White House?. But when Reagan, Bush Jr and Trump were in office the sky is the limit. Tax cuts galore and plenty of spending.
Sure, Obama and Biden followed suit, both inheriting the disasters left behind by their predecessors (GWOT, 2008 Financial Collapse and 2019-2020 Repo Mkt/Covid Operation), but the only time we are threatened with a default for political purposes is by Republicans when a Democrat is in office.
Have any of these IDIOTS considered the ramifications of doing so? Lets look at the situation on the ground
Countries moving away from the dollar.
Push for CBDC’s with the Federal Reserves FedNOW coming on line in July
Interest rates sky high thanks to the Feds War on Inflation despite knowing these price increases are due to Collusion and not low interest rates. Seems designed to crash the economy
Bank closures due to the drop in value of assets like Treasuries due to high interest rates
What do you think the threat of default, let alone an actual default does to Borrowing Costs and the price of Treasuries held by Banks?. Borrowing costs go up due to lower credit rating and Treasury Securities held by Banks as Assets go down.
Furthermore, banks hike interest rates on credit cards, car loans, mortgages which increase inflation, and a devalued dollar means higher cost of imports (most of much we wear and use is imported) and retail prices.
“2011 was a very different situation — we were in recovery mode from the global financial crisis,” said Randall S. Kroszner, a University of Chicago economist and former Federal Reserve official. “In the current situation, where there’s a lot of fragility in the banking system, you’re taking more of a risk. You’re piling up fragility on fragility.”
The mounting tension could cause problems through a number of channels.
Rising interest rates on federal bonds will filter into borrowing rates for auto loans, mortgages and credit cards. That inflicts pain on consumers, who have started to rack up more debt — and are taking longer to pay it back — as inflation has increased the cost of living.
Increasingly urgent headlines might prompt consumers to pull back on their purchases, which power about 70 percent of the economy.
https://www.nytimes.com/2023/05/20/business/economy/debt-limit-default-economy.html
So this is NUTS, or is it?
Its struck me both sides of the political spectrum may be engaging in a Classic Fake Wrestling Match
The Republicans claim to want to reign in spending while the Democrats pretend to be victims. Where they seem to agree is that not raising the Debt Ceiling Limit will guarantee default on the Governments Debt obligations with catastrophic effect.
Here is what the Republicans say they are holding out for.
House Republicans passed the Limit, Save and Grow Act last month outlining the areas they want to pare back. The bill would impose sweeping cuts to federal discretionary spending, impose new work requirements for welfare recipients and expand mining and fossil fuels production, all in exchange for raising the debt limit for about a year.
https://www.cnbc.com/amp/2023/05/09/debt-ceiling-explained.html
The Limit, Save, Grow Act would return total discretionary spending to the Fiscal Year (FY) 2022 level in FY 2024 and cap annual growth at 1 percent for a decade thereafter; rescind unspent COVID relief funds; repeal most of the Inflation Reduction Act's (IRA)energy and climate tax credit expansions; rescind the IRA's increased Internal Revenue Service (IRS) funding; make changes to energy, regulatory, and permitting policies; impose or expand work requirements in several federal safety net programs; and prevent implementation of President Biden's student debt cancellation and Income-Driven Repayment (IDR) expansion.
https://www.crfb.org/blogs/cbo-scores-limit-save-grow-act
Whatever your thoughts on the merits of the bill, discretionary spending is only 1/3 of the budget and most of that is allocated to the Military and Intelligence Agencies (Social Security and Medicare have Trust Funds and spending is Not discretionary) , and the savings is a paltry $400 Billion a year. We paid $213 billion in interest payments on the national debt in the last quarter of 2022 alone.
Furthermore, Republicans pretend to not understand that reducing spending as the country enters a recession will result in a much worse recession, especially as the Fed keeps interest rates high. Maybe they think a more severe recession helps their chances in 2024. Pretty despicable if thats so, but then this is the party that gave us a October Surprise in 1980
One of two things will happen, Biden caves and agrees to curb spending by throwing his base under the bus and eliminating more services to the poor, claiming he had no choice.
The other is we actually default which will collapse the House of Cards and end the dollar as we know it a month before the Feds CBDC , known as FedNOW comes online.
House of Cards Poised to Collapse
I don’t know for sure which one they opt for, but I guess this was discussed during the Bilderbergers latest meeting in Lisbon and the G7 meeting in Hiroshima. Meeting in Hiroshima might be symbolic of the USD fate.
Twitters new Globalist CEO suggested in a Tweet the dollar will be no more as of September 2024.
A couple of points must be raised to bring clarity as to what should happen if the Debt Ceiling Limit is not lifted.
Under the 14th Amendment, the Treasury Department is required to pay off the debt.There is not an option not to do so. There is sufficient revenue to meet these debt obligations
The debt ceiling is also a law. It orders the Treasury not to stop making payments, but to stop issuing securities past the $31.4 trillion limit
Legislation enacted in 2001 allows the treasury to mint platinum coins of any value without congressional approval. Under that law, the coin's value could be anything, but it would have to be platinum, not gold or silver, nickel, bronze or copper, which are under Congress' control. So, in theory, President Joe Biden could order Treasury Secretary Janet Yellen to have a coin with the value of $1 trillion be minted and deposited into the Treasury, giving the government an extra trillion dollars to cover debts and prevent default.
Secretary of the Treasury is still authorized to monetize 8,000 tons of gold, valued under the old law at approximately $42 per ounce, but with a market value worth over $1,900 per ounce ($500 billion)
In the event they chose not to do so, there are inadequate funds to pay all expenses without taking on new debt, so the Treasury could chose to prioritize mandatory vs discretionary spending. 1/3 of the Budget is Discretionary Spending including most of the Military’s budget. BTW Social Security and Medicare are both Mandatory Spending with their own Trust Fund
So technically default is not in the cards, or at least it should not be in the cards, yet Biden and Yellen chose not to reassure those who hold Treasuries that they are as good as Gold. This will adversely affect the USG credit rating and increase borrowing costs.
Even Trump weighed in to advocate Default during his CNN interview saying it was inevitable so best to get it over with. Mr Trump has a history of default in business and while bankruptcy protects the Personal Wealth of the Rich, it does not Make America Great Again.
Again, what do you think happens to the price of Treasuries held by Banks as assets? Any better way of precipitating a more severe Banking Crisis than this?
If Default happens its because Traitors allowed it to happen. Biden and Yellen should be marched straight to Gitmo.
[This does not mean Biden should cave to Republican Demands, he can resist while not permitting Default using the tools he has available]
Janet Yellen says 'it's not a given that the Fed would' accept a $1 trillion platinum coin to save the US from economic catastrophe. No sh*t Bat-lady, you and the Fed are doing your best to conduct a controlled demolition of the financial system.
https://www.businessinsider.com/will-the-us-mint-platinum-coin-yellen-dismisses-debt-ceiling-2023-1]
If Powell refused to accept Treasuries $1 trillion Platinum Coin as Yellen suggested he should earn himself a trip to GITMO himself. Sadly, this Controlled Demolition appears to be sanctioned if not engineered by the Military Industrial Everything Complex that is guided by the hidden hand of the Atlantic Council-CFR-Bilderbergers-Trilateral Commission-WEF-Club of Rome
In truth this Treason to embark on a Controlled Demolition of the US Economy began on 9/11 with another big step being the engineered Financial Collapse and Bail Outs in 2008, 2019 Repo-Market Crash, Operation COVID, etc
Stepping Back From The Ledge
More likely than not, Default is not in the Cards at this time as we still need money to feed the Military Industrial Everything Complex. Unless of course a Global IMF controlled CBDC is further along than I thought. Then the Military may become the IMF’s Private Army and empowered to collect from the US what we owe [less the book value of the Military] .Then we get a taste of 3rd World Austerity Measures
Assuming we aren’t at that stage, whats the end game being played if not Default?. Its called the “Nixon goes to China” card. There are certain things only Republicans can do and certain things only Democrats can do.
Only a Republican could get away with opening up relations with Communist China at the height of the Cold War and Anti-Communism hysteria, or get the country to accept COVID Lockdowns, and only a Democrat can Cut Social Welfare Spending to any significant extent as was done by Clinton , Obama and soon Joe Biden
Joe Biden is anything but a true Democrat.
In the 1990s and early 2000s Biden supported bankruptcy reform that made it more difficult, especially for the poor, to get rid of debt
Biden had pushed for two earlier bankruptcy reform bills in 2000 and 2001, both of which failed. But in 2005, BAPCPA made it through, successfully erecting all kinds of roadblocks for Americans struggling with debt, and doing so just before the financial crisis of 2008. Since BAPCPA passed, Chapter 13 filings went from representing just 24 percent of all bankruptcy filings per year to 39 percent in 2017.
In 1984 he proposed freezing Social Security benefits — that is, ending cost-of-living adjustments that boost benefits to keep up with inflation.
In January 1995 he gave a speech endorsing a balanced budget amendment (an utterly lunatic policy) and boasted about his previous record of proposing "that we freeze every single solitary program in the government, anything the government had to do with, every single solitary one, that we not spend a penny more, not even accounting for inflation, than we spent the year before."
In November 1995 he did so again, boasting that "I tried with Senator Grassley back in the '80s to freeze all government spending, including Social Security, including everything."
He may well be using the debt ceiling fight to push for politics he secretly favors but which a majority of Democrats would otherwise oppose. This gives him the opportunity to make 'concessions' that are favored by his rich donors but opposed by a majority of people who voted for him.
He will then sell those by presenting them as the only possible step to take. Maggie Thatcher's "There is no alternative!" will again succeed.
Most Democratic liberals have been fooled by Biden and refuse to acknowledge he is the servant of Delaware's banks, which want the cuts to social services. The Republicans may be using the debt ceiling to provide Biden cover to make 'concessions' to the banksters, which the Democratic liberals will easily swallow.
Remember, both Parties are controlled by the Globalists. This does not mean there isn’t competition between the 2 parties so long as it does not interfere with the Globalists Agenda to reduce living standards and consumption and enrich the ELite
If the agreement involves retracting his decision to give Student Loan Relief, it can be used as an issue by Democrats to motivate voters in need of relief to Vote and give the Democrats control of all 3 Branches in 2024 . Like in 2011 many Voters will blame Republicans
It might be useful to look back at the history of the Debt Ceiling Limit.
Since 1960, Congress has raised the ceiling 78 times — 49 times under Republican presidents and 29 times under Democratic presidents. In recent years, however, the debate has turned particularly rancorous amid the growing partisan divide in Congress. The debt ceiling was last raised in 2021, to $31.4 trillion, where it currently stands.
During the Trump administration, the national debt rose by $7.8 trillion—the third biggest increase, relative to the size of the economy, of any presidential administration and the most during any 4 year period
Under Trump the Debt ceiling was raised twice and it was suspended twice. From August 2nd 2019 there was no debt ceiling until Biden took office . In July 2022 a debt ceiling of $31.4 Trillion was imposed while the Debt was already at $30.6 Trillion
The US after Biden took office added $ 3.5 Trillion in debt hitting the the 31.4 trillion debt ceiling on January 19
Looking Back
After the Gephardt Rule was suspended by Republicans this led to the need to request a debt ceiling increase in 1995, this led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995–96. The ceiling was eventually increased and the government shutdown resolved.
Many people blamed Republicans for the disruption and Clinton won easily in the 1996 Election although Republicans maintained control of the House and Senate
Flash forward to 2011
Here are a couple of interviews with Michael Hudson back on 2011 when the Republicans last pulled the Default Card
1/
2/
In 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Averagefalling 2,000 points in late July and August. Following the downgrade itself, the DJIA had one of its worst days in history and fell 635 points on August 8. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion in 2011 and noted that the delay would also raise costs in later years.
The Bipartisan Policy Center extended the GAO's estimates and found that the delay raised borrowing costs by $18.9 billion over ten years.
January 2013, when the United States reached the debt ceiling of $16.394 trillion that had been enacted following the crisis in 2011.
Members of the Republican Party in Congress opposed raising the debt ceiling, which had been routinely raised previously on a bipartisan basis without conditions, without additional spending cuts. They refused to raise the debt ceiling unless President Obama would have defunded the Affordable Care Act (Obamacare), his signature legislative achievement.
The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.
On August 26, 2013, Treasury informed Congress that if the debt ceiling was not raised in time, the United States would be forced to default on its debt sometime in mid-October.
On September 25, Treasury announced that extraordinary measures would be exhausted no later than October 17, leaving Treasury with about $30 billion in cash, plus incoming revenue, but no ability to borrow money. The CBO estimated that the exact date on which Treasury would have had to begin prioritizing/delaying bills and/or actually defaulting on some obligations would fall between October 22 and November 1.
The crisis ended on October 17, 2013 with the passing of the Continuing Appropriations Act, 2014, although debate continues about the appropriate level of government spending, and the use of the debt ceiling in such negotiations.
On February 7, 2014, the debt limit suspension expired and treasury began applying extraordinary measures once again, warning that such measures would not last beyond February 27 due to large tax refunds that would need to be paid during February. On February 11, after finding insufficient support for various conditions for increasing the debt ceiling, the House passed a bill suspending the debt ceiling without conditions through March 15, 2015. The Senate passed the bill unamended on February 12, 2014, and it was signed into law as Public Law 113-83 by the President on February 15.
Just as during the 2011 debt ceiling crisis, the 2013 crisis caused rating agencies to re-evaluate the rating of US government debt. On October 15, Fitch Ratings placed the United States under a "Rating watch negative" in response to the crisis.On October 17, Dagong Global Credit Rating downgraded the United States from A to A−, and maintained a negative outlook on the country's credit
Polls showed that Americans blamed the Republicans more for the shutdown than President Barack Obama by a margin of 22 points (53 percent to 31 percent).Another poll showed a 74% disapproval rating of the way Republicans handled the crisis while 61% disapproved of the way Democrats handled the budget talks. According to a Gallup Poll, "60 percent of respondents said that a third major party is needed to represent the American people", an all-time high
https://en.m.wikipedia.org/wiki/History_of_the_United_States_debt_ceiling
I’ll end here.