To default or not to default?

Poll

With whom do you most agree on the "default" issue -- Webster Tarpley or the Austrian School?

The Austrian School.
Webster Tarpley.
Other (please explain).

Author Topic: To default or not to default?  (Read 56604 times)

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Offline Geolibertarian

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Raising the roof on America’s debt
« Reply #80 on: May 09, 2011, 10:53:20 AM »
http://www.ft.com/cms/s/0/c67b683e-79a7-11e0-86bd-00144feabdc0.html?ftcamp=rss#axzz1LrcaDyvl

Raising the roof on America’s debt

The Financial Times
May 8, 2011

As US federal debt approaches its statutory ceiling, confidence on Capitol Hill is growing that a deal to raise the limit will soon be struck, avoiding the theoretical possibility of default. Arriving at such a deal, with or without strings, ought to be the first order of business. Sane governments do not cast doubt on the pledge to honour their debts – which is why, if reason prevailed, the debt ceiling would simply be scrapped.

That will not happen. Republicans in Congress have their own way of framing the issue. They refuse to support the “clean” bill requested by the Treasury: a measure to raise the ceiling and nothing else. As part of the deal, they want further short-term spending cuts; caps on future spending, deficits, and/or debt; and a trigger to cut spending if those caps are breached. The danger is that talks about this could drag on all the way to the Treasury’s newest estimate of when the debt limit will bind (early August) or beyond.

This would be the worst possible outcome.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Paranoid Puppet Master

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Re: To default or not to default?
« Reply #81 on: May 09, 2011, 11:06:59 AM »
Quote
which is why, if reason prevailed, the debt ceiling would simply be scrapped.

Did Paul Krugman help write this?

Offline Geolibertarian

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Third Way: Default would harm 'tens of millions of Americans'
« Reply #82 on: May 14, 2011, 10:30:38 AM »
http://thehill.com/blogs/on-the-money/budget/161191-third-way-default-would-harm-tens-of-millions-of-americans

Third Way: Default would harm 'tens of millions of Americans'

By Bernie Becker
The Hill
05/13/11

Third Way, the centrist Democratic think tank, is getting set to release a new report on the consequences if the U.S. defaults on its debts — and their findings are far from pretty.

A draft of the new report finds that, among other things, default would lead to $756 billion lost among the S&P 500 in just three months and a full percent off of gross domestic product — which would perhaps cause the economy to shed 640,000 jobs. It also says default would add thousands of dollars to the lifetime cost of mortgages.

“Defaulting on our debt is not an abstract idea that might affect a few institutions on Wall Street; it would harm tens of millions of Americans in profound and lasting ways,” the draft report says. “Should the U.S. government default, the short and medium-term effect would be that the economic recovery would be halted.”

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline freedom_commonsense

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Re: To default or not to default?
« Reply #83 on: May 14, 2011, 12:43:16 PM »
Too bad nobody's seeing sense on the "debt" (read: fractional reserve scam) in the UK government.

Offline Geolibertarian

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http://www.prisonplanet.com/treasury-confirms-debt-ceiling-to-be-breached-today-will-tap-pension-funds.html

Treasury Confirms Debt Ceiling To Be Breached Today; Will Tap Pension Funds

Tyler Durden
Zero Hedge
Monday, May 16, 2011

It’s official: the US credit card has officially been maxed out, just as we predicted on Wednesday, and througout Q1 and Q2. The United States is expected to reach the legal limit on its debt later on Monday and will start dipping into federal retirement funds to give the country more room to borrow, a Treasury official said. As Reuters reports further, The U.S. Treasury will settle $72 billion in maturing bonds on Monday, which will push the country right up against its $14.294 trillion borrowing cap, the official said. To all those who thought only the insolvent government of Ireland will plunder pension funds, our condolences.

Full release (no pun intended):

As US Reaches Debt Limit, Geithner Implements Additional Extraordinary Measures to Allow Continued Funding of Government Obligations

Today, the United States has reached the statutory debt limit. Secretary Geithner sent the following letter [.pdf] to Congress this morning alerting them to actions that have be taken to create additional headroom under the debt limit so that Treasury can continue funding obligations made by Congresses past and present. The Secretary declared a “debt issuance suspension period” for the Civil Service Retirement and Disability Fund, permitting Treasury to redeem a portion of existing Treasury securities held by that fund as investments and suspend issuance of new Treasury securities to that fund as investments. He also suspended the daily reinvestment of Treasury securities held as investments by the Government Securities Investment Fund of the Federal Employees’ Retirement System Thrift Savings Plan. For more information on these measures, please read this FAQ [.pdf].

Last Friday, Secretary Geithner also responded to an inquiry from Senator Bennet regarding the fiscal and economic consequences of failing to increase the debt limit. That letter can be found here [.pdf].

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

worcesteradam

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Re: To default or not to default?
« Reply #85 on: May 16, 2011, 01:42:51 PM »
Federal retirement funds are invested in the stock market, arnt they.
So they are plundering the nasdaq now

Offline Geolibertarian

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Barney Frank: U.S. government default likely
« Reply #86 on: May 21, 2011, 11:45:03 AM »
Barney Frank: U.S. government default likely

By Jerry Kronenberg
BostonHerald.com
May 20, 2011

U.S. Rep. Barney Frank (D-Newton) says America might have to default on its bills for the first time ever because Democrats and Republicans can’t agree to raise the government’s $14.3 trillion debt ceiling.

“I’m pessimistic about anything reasonable (winning congressional approval) in the near term,” Frank, the ranking Democrat on the House Financial Services Committee, told the New England Council in a Boston speech today. “It may be that we’re going to have to see some failure to raise the debt limit and some temporary hiatus in our ability to pay our bills (for lawmakers to act).”

The U.S. government officially hit its congressionally mandated debt ceiling on Monday when the nation’s red ink reached $14.3 trillion.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline tritonman

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Re: To default or not to default?
« Reply #87 on: May 21, 2011, 12:00:02 PM »
Wow , most of the comments were refreshing over at the Boston Hearald of all places. ;D

Offline Geolibertarian

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http://www.prisonplanet.com/david-stockman-both-parties-and-the-white-house-are-advocating-a-us-default.html

David Stockman: “Both Parties And The White House Are Advocating A US Default”

Tyler Durden
Zero Hedge
May 24, 2011

Last week David Stockman was on Tom Keene, making the usual media rounds (sometimes we marvel at his patience and endurance), as one of the few voices of fiscal prudence available to TV producers who seek to hold a balanced debate on the topic of US insolvency. Today, Reagan’s budget director was again on Bloomberg TV explaining the reality of the situation to Matt Miller for the nth time (by now even a 2 year old will understand the cul-de-sac facing the US), although presenting a new spin on the situation, namely that we have gotten to a point where both parties are implicitly pushing for a US default, while though their inability to reach a political compromise, blaming each other for this inevitable outcome. “The real problem is the de facto policy of both parties is default. When the Republicans say no tax increases, they’re saying we want the U.S. government to default. Because there isn’t enough political will in this country to solve the problem even halfway on spending cuts. When the Democrats say you can’t touch Social Security, when you have Obama sponsoring a war budget for defense that is even bigger than Bush, then I say the policy of the White House is default as well…That is the question that really needs to be understood better and appraised by the bond market. Both parties are advocating default even as they point the finger at each other.”

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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US default ‘more likely than in Indonesia’
« Reply #89 on: May 25, 2011, 04:24:31 PM »
http://www.ft.com/cms/s/0/4ebddca2-86f2-11e0-92df-00144feabdc0.html#axzz1NOeachXo

US default ‘more likely than in Indonesia’

By James Mackintosh
The Financial Times
May 25, 2011

It sounds dotty to suggest the US is at imminent risk of default. A country which has rarely been able to borrow so cheaply, which issues debt in its own currency and has just demonstrated that it can print as much money as it likes need never miss a coupon payment.

Yet in the past fortnight traders have come to the conclusion that America might breach its own constitutional clause that its debt “shall not be questioned”. According to Markit, the cost of one-year US credit default swaps, which insure against default, almost tripled in six trading days.

According to this – far from perfect – measure, the US is now more likely to default than Indonesia or Slovenia in the next 12 months.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline larsonstdoc

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Tarpley---'US riding second wave of depression'
« Reply #90 on: July 16, 2011, 09:27:58 AM »
http://www.presstv.ir/detail/189190.html


  Video and transcript


         Tea Party Lunatics Demand US Default; Wall Street Orders GOP to Raise Debt Ceiling – or Else; Obama Schemes to Wreck           Entitlements
I'M A DEPLORABLE KNUCKLEHEAD THAT SUPPORTS PRESIDENT TRUMP.  MAY GOD BLESS HIM AND KEEP HIM SAFE.

Offline Geolibertarian

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http://www.prisonplanet.com/debt-political-theater-diverts-attention-while-americans%e2%80%99-wealth-is-stolen-kucinich.html

Debt Political Theater Diverts Attention While Americans’ Wealth is Stolen — Kucinich

Dennis Kucinich
July 15, 2011

Congressman Dennis Kucinich (D-OH) today spoke on the House floor about the massive transfer of wealth from the American people to the hands of the few by virtue of wars, energy policies and monetary policies. He called upon Americans to witness Wall Street’s theft of Main Street, which has left millions of everyday Americans out of work and seniors facing cuts to Social Security to pay for tax cuts for the rich.

See video here. The full text of Congressman Kucinich’s remarks follow.

The rancorous debate over the debt belies a fundamental truth of our economy — that it is run for the few at the expense of the many, that our entire government has been turned into a machine which takes the wealth of a mass of Americans and accelerates it into the hands of the few. Let me give you some examples.

Take war. War takes the money from the American people and puts it into the hands of arms manufacturers, war profiteers, and private armies. The war in Iraq, based on lies: $3 trillion will be the cost of that war. The war in Afghanistan; based on a misreading of history; half a trillion of dollars in expenses already. The war against Libya will be $1 billion by September.

Fifty percent of our discretionary spending goes for the Pentagon. A massive transfer of wealth into the hands of a few while the American people lack sufficient jobs, health care, housing, retirement security.

Our energy policies take the wealth from the American people and put it into the hands of the oil companies. We could be looking at $150 a barrel for oil in the near future.

Our environmental policy takes the wealth of the people — clean air, clean water — and puts it in the hands of the polluters. It’s a transfer of wealth, not only from the present but from future generations as our environment is ruined.

Insurance companies, what do they do? They take the wealth from the American people in terms of what they charge people for health insurance and they put it into the hands of the few.

We have to realize what this country’s economy has become. Our monetary policy, through the Federal Reserve Act of 1913, privatized the money supply, gathers the wealth, puts it in the hands of the few while the Federal Reserve can create money out of nothing, give it to banks to park at the Fed while our small businesses are starving for capital.

Mark my words — Wall Street cashes in whether we have a default or not. And the same type of thinking that created billions in bailouts for Wall Street and more than $1 trillion in giveaways by the Federal Reserve today leaves 26 million Americans either underemployed or unemployed.  And nine out of ten Americans over the age of 65 are facing cuts in their Social Security in order to pay for a debt which grew from tax cuts for the rich and for endless wars.

There is a massive transfer of wealth from the American people to the hands of a few and it’s going on right now as America’s eyes are misdirected to the political theater of these histrionic debt negotiations, threats to shut down the government, and willingness to make the most Americans pay dearly for debts they did not create.

These are symptoms of a government which has lost its way, and they are a challenge to the legitimacy of the two-party system.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline plankeye912

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Re: To default or not to default?
« Reply #92 on: July 16, 2011, 10:25:52 PM »
   I have to admit that I do not know as much about the working of our economy as I thought I did, but thanks to the people in this forum I have learned a great deal.  I appreciate the time and research all of you put in to make this a treasure trove of ideas.

   That being said... I don't think there will be a default or shutdown.  It seems to me that the biggest issue they are talking about behind closed doors is not weather or not to raise the debt ceiling but how much and when the money will run out.  The republicans want the money to run out before the next election so they have that issue to talk about, and the dems want it to run past the election so they don't have to talk about it.  There will be name calling, walk-outs, interviews and its all done to make you think they really care. 
   
   I just haven't seen anything that makes me think they will do anything different that the norm, more QE, more bailouts, more welfare.  they have blown a hole in their boat and will ride the ship down rather than admit they were wrong .

   
The best way to protest a corrupt system is to not participate

Offline Femacamper

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Re: To default or not to default?
« Reply #93 on: July 28, 2011, 09:52:34 PM »
TRUNEWS - Thursday July 28, 2011

Guest: Adam Rabie

Topic: Adam Rabie joins Rick to discuss what could happen if the U.S. were to default on it's debt August 2nd

www.goldnews.com


STREAMING 
     DOWNLOAD 

Offline Geolibertarian

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Disastrous Outcomes From An Orchestrated Economic Crisis
« Reply #94 on: July 29, 2011, 02:22:37 PM »
http://www.globalresearch.ca/disastrous-outcomes-from-an-orchestrated-economic-crisis/25824

Disastrous Outcomes From An Orchestrated Economic Crisis

by Dr. Paul Craig Roberts



Global Research
July 29, 2011

With the world concerned about US financial credibility and the poor outlook for the US economy, now is not the time for the Republicans to grandstand on the public debt. The debt ceiling needed to be quietly raised.  Instead, the Republicans started a fire and then threw gasoline on it, creating an inferno that could burn up the US social safety net or the US Treasury’s credit rating and the US dollar’s role as reserve currency or what remains of the separation of powers.

Consequently, world financial markets, currency markets, commodity markets, central banks, and mutual fund money market and bond funds are on pins and needles.

This level of irresponsibility is seldom seen even from American politicians.

Republicans have created a totally unnecessary crisis and turned it into compelling political theater.  Will the US default?  Will entitlements be slashed?  Will Obama seize the power of the purse from Congress in order to save the dollar and the US credit rating?  None of these questions needed to arise.

While the world media fixates on the orchestrated debt ceiling crisis, the US government continues to bomb civilians in Afghanistan, Libya, Iraq, Pakistan, Yemen, and Somalia and continues with preparations to do the same thing to Syria and Iran.

The violations of other countries’ sovereignties, the naked aggressions that constitute war crimes, the murder of noncombatants, and the horrible moral and economic expense inflicted by the maximization of the military/security complex’s profits are somehow not a crisis.  These are just routine, normal, everyday necessary events. Nothing to notice or to become upset about.

The offshoring of US jobs, GDP, tax base, and consumer demand that has eroded away the US economy and the government’s tax base, thus elevating the deficit, is somehow not a crisis. These are just the imperatives of globalism and the routine maximization of shareholders’ profits and management’s performance bonuses.

The US has become such a ridiculous collection of fools that no real crisis can be recognized.  Instead, the country is mesmerized by a fake crisis.

The fake orchestrated crisis can easily turn into a real one.  If income support programs are slashed, so will be consumer demand, and the US economy will decline further, widening the budget deficit and national debt.

If the Republicans force the country into default, the dollar will suffer. At the least, import prices will rise and the trade deficit with them. At the worse, the dollar will lose its reserve currency role, and the US will no longer be able to pay its oil bill in its own currency.  With its balance of payments deep in the red, it has no foreign currency with which to purchase oil.

If Obama has to seize the power of the purse in order to prevent a new financial crisis from landing on top of the ongoing financial crisis, democracy will take another big hit.

Americans need desperately to ask themselves why they put into political office such utterly irresponsible and incompetent people capable of creating such a totally unnecessary crisis loaded with such disastrous potential outcomes. It would appear that the American population is too insouciant to use the vote with any care.

Little wonder that the president is becoming a Caesar.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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It’s not a “Debt Crisis”. It’s "Economic Genocide"
« Reply #95 on: July 29, 2011, 02:31:16 PM »
http://www.globalresearch.ca/it-s-not-a-debt-crisis-it-s-economic-genocide/25822

It’s not a “Debt Crisis”. It’s "Economic Genocide"

by Larry Chin



Global Research
July 29, 2011

The grotesque political carnival gripping Washington is being referred to as a “debt crisis”. But the debt and the looming default of the United States are merely symptoms of the wider calamity that remains deliberately unaddressed.

This is a global collapse: the death and controlled demolition of a global capital system built on petroleum, political corruption, institutionalized fraud, the manufactured “war on terrorism”, the wholesale looting of taxpayer funds, and the imminent destruction of state social programs and civil society.

This collapse is thoroughly detailed by the prescient Mike Ruppert in his book Crossing the Rubicon, the book Collapse: The Crisis of Energy and Money in a Post Peak Oil World, and the film Collapse. His web site Collapsenet continues to report on events as they happen.

World collapse is also fully explained, from a different perspective, in the book The Global Economic Crisis, edited by Michel Chossudovsky and Andrew Gavin Marshall.

Chossudovksy writes:

    “We are not dealing with a narrow defined economic crisis or recession. The global financial architecture sustains strategic and national security objectives. In turn, the US-NATO military agenda serves to endorse powerful business elite which relentlessly overshadows and undermines the functions of civilian government….The meltdown of financial markets in 2008-2009 was the result of institutionalized fraud and financial manipulation. The “bank bailouts” were implemented on the instructions of Wall Street, leading to the largest transfer of money wealth in recorded history, while simultaneously creating an insurmountable public debt.”

Today’s elite global criminal enterprise finds Washington’s political players---led by the devious corporate appeaser Barack Obama, and the neofascist right-wing Republicans and Tea Party---enthusiastically sharing a common vision of destruction. It is delusional to think these criminals are “racing” to save anything (besides their own rear ends). They are merely scrambling over the best method of securing even more power and wealth for their corporate puppet masters; arguing over the fastest, most effective way to eliminate social programs. And how to exploit the propaganda to their advantage, ahead of elections.

As pointed out by Patrick Martin, the “debate” over default ceilings and government spending cuts is a fraud. He notes that “the Democratic administration and the congressional Republicans are using an orchestrated crisis over the raising of the federal debt ceiling to create the conditions for an unprecedented attack on the living standards and social rights of working people”.

In the view of Paul Craig Roberts, the Washington political theater is “perfectly orchestrated scenario for getting rid of the New Deal and the Great Society [programs] that could be spent on wars and bailouts and tax cuts for the rich.”

This is the definition of genocide. The elimination of remaining social safety nets will result in a systematic long-term extermination of people in a variety of ways. It’s all “on the table”, from what little remains of health care, Social Security, etc. followed by poverty, homelessness, sickness, and death. While the elites remain safe and comfortable, awash in looted cash for generations.

The United States and other governments all over the world have run out of money. Where is the money? That is the question that has been asked for years, by the likes of Catherine Austin Fitts:

Where is the Money?

The missing money (article archive)

Trillions have been looted, and these trillions remain unaccounted for. And trillions more will “disappear”.

What is clear is that there is endless money for endless wars, endless CIA budgets, and endless tax cuts for the wealthy and for corporations. But nothing for anything else.

Criminal aristocracies have increased their plunder, with Washington spearheading the operations. Governments of the capitalist world---each regime a criminal enterprise---are impoverishing their populaces, subjecting citizens to unprecedented suffering under the Orwellian rubric of “sacrifice”. Systematic destruction is taking place from the international down to the local level.

Adding to the insult, the elimination of the social safety net---literally life or death for millions of American citizens---is being callously bandied about like a political volleyball ahead of another idiotic and meaningless election. Obama spews lies and deception, pandering at every step to conservatives and Wall Street. The neofascist right-wing, led by John Boehner, Eric Cantor, Mitch McConnell, Bachman, Palin, the Tea Party, etc., are focused exclusively on the removal of Obama, oblivious to the fact that the “black man in the White House” has been the seamless extension of Bush/Cheney, and the perfect corporate/Wall Street lap dog. In true right-wing fashion worthy of the Third Reich, today’s Republicans and Tea Party “patriots” are genuinely evil and genuinely insane.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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The Debt Ceiling Set For Progressive Repealing
« Reply #96 on: July 30, 2011, 10:01:37 AM »
http://www.globalresearch.ca/the-debt-ceiling-set-for-progressive-repealing/25825

The Debt Ceiling Set For Progressive Repealing

by Prof. Michael Hudson



Global Research
July 29, 2011

Mr. Obama’s scare tactics to get Democrats to vote for his Republican Wall Street plan

The Wall Street bailout melodrama should be viewed as a dress rehearsal for today’s debt-ceiling non-crisis.

You know that the debt kerfuffle is as melodramatically staged as a World Wrestling Federation exhibition when Mr. Obama makes the blatantly empty threat that if Congress does not “tackle the tough challenges of entitlement and tax reform,” there won’t be money to pay Social Security checks next month. In his debt speech last night (July 25), he threatened that if “we default, we would not have enough money to pay all of our bills – bills that include monthly Social Security checks, veterans’ benefits, and the government contracts we’ve signed with thousands of businesses.”

This is not remotely true. But it has become the scare theme for over a week now, ever since the President used almost the same words in his interview with CBS Evening News anchor Scott Pelley.

Of course the government will have enough money to pay the monthly Social Security checks. The Social Security administration has its own savings – in Treasury bills. I realize that lawyers (such as Mr. Obama and indeed most American presidents) rarely understand economics. But this is a legal issue. Mr. Obama certainly must know that Social Security is solvent, with liquid securities to pay for many decades to come. Yet Mr. Obama has put Social Security at the very top of his hit list!

The most reasonable explanation for his empty threat is that he is trying to panic the elderly into hoping that somehow the budget deal he seems to have up his sleeve can save them. The reality, of course, is that they are being led to economic slaughter. (And not a word of correction reminding the President of financial reality from Rubinomics Treasury Secretary Geithner, neoliberal Fed Chairman Bernanke or anyone else in the Wall Street Democrat administration, formerly known as the Democratic Leadership Council.)

It is a con.

Mr. Obama has come to bury Social Security, Medicare and Medicaid, not to save but them. This was clear from the outset of his administration when he appointed his Deficit Reduction Commission, headed by avowed enemies of Social Security Republican Senator Alan Simpson of Wyoming, and President Clinton’s Rubinomics chief of staff Erskine Bowles. Mr. Obama’s more recent choice of Republicans and Blue Dog Democrats be delegated by Congress to rewrite the tax code on a bipartisan manner – so that it cannot be challenged – is a ploy to pass a tax “reform” that democratically elected representatives never could be expected to do.

The devil is always in the details. And Wall Street lobbyists always have such details tucked away in their briefcases to put in the hands of their favored congressmen and dedicated senators. And in this case they have the President, who has taken their advice as to whom to appoint as his cabinet to act as factotums to capture the government on their behalf and create “socialism for the rich.”

There is no such thing, of course. When governments are run by the rich, it is called oligarchy. Plato’s dialogues made clear that rather than viewing societies as democracies or oligarchies, it was best to view them in motion. Democracies tended to polarize economically (mainly between creditors and debtors) into oligarchies. These in turn tended to make themselves into hereditary aristocracies. In time, leading families would fight among themselves, and one group (such as Kleisthenes in Athens in 507 BC) would “take the people into his party” and create a democracy. And so the eternal political triangle would go on.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Bipartisan "Russian Roulette" and America's Federal Debt
« Reply #97 on: August 01, 2011, 12:11:34 PM »
http://www.globalresearch.ca/bipartisan-russian-roulette-and-america-s-federal-debt-the-debt-ceiling-is-unconstitutional/25842

Bipartisan "Russian Roulette" and America's Federal Debt: The Debt Ceiling Is Unconstitutional

by Ellen Brown



Global Research
July 31, 2011

The debt ceiling crisis can be averted by enforcing the Fourteenth Amendment, which mandates the government to pay its debts already incurred, including pensions. That means Social Security, which IS an “entitlement,” in the original sense of the word. We’re entitled to it because we’ve paid for it with taxes.

The game of Russian roulette being played with the U.S. federal debt has been called a “grotesque political carnival” and political blackmail. The uproar stems from a statute that is unique to the United States and never did make much sense. First passed in 1917 and revised multiple times since, it imposes a dollar limit on the federal debt. What doesn’t make sense is that the same Congress that voted on the statute votes on the budget, which periodically exceeds the limit, requiring the statute to be revised. The debt ceiling has been raised 74 times since 1962, 10 of them since 2001. The most recent increase, to $14.294 trillion by H.J.Res. 45, was signed into law on February 12, 2010.

Taxes aren’t collected until after the annual budget is passed, so Congress can’t know in advance whether or how much additional borrowing will be required. Inevitably, there will be some years that the budget pushes the debt over the limit, requiring new legislation. And inevitably, now that this tactic has been discovered, there will be a costly battle over the increase, wasting congressional time, destabilizing markets, and rattling faith in the American financial and political systems. There will be continual blackmail, arm-twisting and concessions. The situation is untenable and cries out for a definitive resolution.

Fortunately, there is one. A bevy of legal scholars are recommending that the issue be eliminated altogether by playing the Constitutional trump card. The Fourteenth Amendment provides at Section 4:

    The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Where statute and the Constitution collide, the Constitution prevails. Whether the government should pay the bills it has already incurred is not a matter of negotiation. It is a Constitutional mandate. And those are the bills we are talking about here, as President Obama stressed in his remarks on the issue last Friday. He said:

    Raising the debt ceiling simply gives our country the ability to pay the bills that Congress has already racked up. I want to emphasize that. The debt ceiling does not determine how much more money we can spend, it simply authorizes us to pay the bills we already have racked up. It gives the United States of America the ability to keep its word.

Ignoring the debt ceiling on Constitutional grounds would not, as Michelle Bachmann declares, make President Obama a “dictator.” It would simply mean he is complying with his Constitutional mandate to pay the government’s bills on time and in full.

Social Security Is Not Welfare. It Is a Debt Due and Owing.

The President could have a clean resolution of the issue, but he is not jumping at the opportunity. Rather, he appears to be ready to throw Granny under the bus by slashing Social Security, Medicare and Medicaid, all in the name of “compromise.”

The Fourteenth Amendment says debts already incurred shall not be questioned, “including debts incurred for payment of pensions.” That includes Social Security, which is an “entitlement” in the true sense of the word: we’re entitled to it because we’ve already paid for it. In fact, the Social Security Act was originally sold to Congress and the nation in 1935 not as a government benefit, but as a retirement savings program. Earlier this year, the Urban Institute published a study [.pdf] evaluating the program in this way, concluding that the average worker who retires today will withdraw from Social Security just about the same amount he put in over the years, with a modest 2% real interest rate (after inflation).

A deal is a deal. We paid for it, we are owed it, and the U.S. government is good for it. To change the terms of the deal ex post facto is both a breach of contract and a violation of the Constitution.

Where to Get the Money: Ron Paul’s Creative Plan

A sovereign nation can always find the money to pay debts owed in its own currency. The U.S. could, if it wished, pay its bills using debt-free U.S. Notes or Greenbacks, just as President Lincoln did to avoid a crippling debt during the Civil War. Alternatively, it could eliminate the deficit with Ron Paul’s plan, which amounts to the same thing. As Stephen Gandel explains Paul’s solution in Time Magazine:

    In the last year or two the Fed has been buying up U.S. Treasury bonds in an effort to lower interest rates and boost the economy. The most recent round of that buying has been dubbed QE2, and has come under a good deal of criticism, though most economists agree that it was a generally helpful policy. The result is that the Fed now holds nearly $1.7 trillion in U.S. debt. But that is really phony debt. The Treasury pays the interest on the debt on behalf of the U.S. government to the Fed, which in turn returns 90 percent of the payments it gets back to the Treasury. Nonetheless, that $1.7 trillion in U.S. bonds that the Fed owns, despite the shell game of payments, is still counted in the debt ceiling number, which caps that amount of total federal debt at $14.3 trillion.

    Paul's plan: Get the Fed and the Treasury to rip up that debt. It's fake debt anyway. And the Fed is legally allowed to return the debt to the Treasury to be destroyed. A trillion and a half dollars is currently about what spending is expected to exceed tax revenue in 2011.

The biggest drawback to the plan, says Gandel, is just that it “looks bad.” It looks as if the government is paying off its debts by printing money. But that is what government-issued money is: a note acknowledging a debt due and owed from the public, good for an equivalent value from the public, traded in the marketplace. A U.S. Note or Greenback and a Federal Reserve Note or dollar bill are both forms of promissory notes. The government can as easily issue a dollar bill as a dollar note or a dollar bond, as Thomas Edison pointed out in the 1920s.

The objection to that solution is that it would be inflationary, but as economist Richard Koo graphically demonstrates, the Fed’s quantitative easing has had virtually no inflationary effect on the money supply to date:



Misdirected Fed policy has instead caused $1.6 trillion in “excess reserves” to sit on bank balance sheets, as explained in an earlier article. Conveniently, excess reserves can be used as collateral for futures and derivatives contracts, and that is what some banks appear to be doing with the money: backing trades in the financial markets. This sort of speculation, involving money making money without increasing productivity, can and does drive up prices.

If the money had been delivered directly to the government to be spent on the national budget, it might have gotten into the real economy where it could do some good. The government’s budget is spent not on speculation but on goods and services. Increased government “demand” stimulates an increase in “supply,” causing supply and demand to increase together, avoiding price inflation while stimulating economic activity.

Time to Close the Debt Ceiling Loophole

The debt crisis was created, not by a social safety net bought and paid for by the taxpayers, but by a banking system taken over by Wall Street gamblers. The gamblers lost their bets and were bailed out at the expense of the taxpayers; and if anyone should be held to account, it is these gamblers.

The debt ceiling crisis is a manufactured one, engineered to extort concessions that will lock the middle class in debt peonage for decades to come. Congress is empowered by the Constitution to issue the money it needs to pay its debts. Abraham Lincoln did it; Barack Obama could do it. He probably won’t, but he does need to follow his Constitutional mandate to pay the government’s bills as and when due. The statute imposing a ceiling on the national debt is trumped by the Fourteenth Amendment, making it redundant and unnecessary. The statute should be repealed.
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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The Debt Ceiling Debate that Didn’t Happen
« Reply #98 on: August 04, 2011, 01:47:11 PM »
http://www.globalresearch.ca/the-debt-ceiling-debate-that-didn-t-happen/25890

The Debt Ceiling Debate that Didn’t Happen

by Prof. Michael Hudson



Global Research
August 4, 2011

To begin with the most obvious question: If governments run up their debt in the process of carrying out programs that Congress already approved, why would Congress have yet another option to stop the government from following through on these authorized expenditures, by refusing to raise the debt ceiling?

The answer is obvious when one looks at why this fail-safe check was introduced in almost every country of the world. Throughout modern history, war has been the major cause of a rising national debt. Most governments operate in fiscal balance during peacetime, financing their spending and investment by levying taxes and charging user fees. War emergencies push this balance into deficit – sometimes for defensive wars, sometimes for aggression.

In Europe, parliamentary checks on government spending were designed to prevent ambitious rulers from waging war. This was Adam Smith’s great argument against public debts, and his urging that wars be financed on a pay-as-you-go basis. He wrote that if people felt the economic impact of war immediately – rather than postponing it by borrowing – they would be less likely to support military adventurism.

This obviously was not the Tea Party position, or that of the Republicans. What is so remarkable about the August 2 debt ceiling crisis in the United States is its seeming dissociation with war spending. To be sure, over a third ($350 billion) of the $917 billion cutback in current spending is assigned to the Pentagon. But that simply slows the remarkable escalation rate that has taken place from Iraq to Afghanistan to Libya.

What is even more remarkable is that last month, Democrat Dennis Kucinich and Republican Ron Paul sought to make President Obama obey the conditions of the War Powers Act and get Congressional approval for his war in Libya, as required when warfare goes on for more than three months. This attempt to apply the rule of law to the Imperial Presidency was unsuccessful. Mr. Obama clamed that bombing a country was not war. It was only war if a country’s soldiers were being killed. Bombing of Libya was done from the air, at long distance, and perhaps also by drones. So is a bloodless war really a war – bloodless on the aggressor’s side, that is?

Here was precisely the situation for which the debt ceiling rule was introduced in 1917. President Wilson had taken the United States into the Great War, breaking his election campaign promise not to do so. Isolationists in the United States sought to limit America’s commitment, by imposing Congressional oversight and approval of raising the debt ceiling. This safeguard obviously was intended to be used against unscheduled spending that occurred without Congressional approval.

The present rise in U.S. Treasury debt results from two forms of warfare. First is the overtly military Oil War in the Near East, from Iraq to Afghanistan (Pipelinistan) to oil-rich Libya. These adventures will end up costing between $3 and $5 trillion. Second and even more expensive is the more covert yet more costly economic war of Wall Street against the rest of the economy, demanding that losses by banks and financial institutions be passed onto the government balance sheet (“taxpayers”). The bailouts and “free lunch” for Wall Street – by no coincidence, Congress’s number one political campaign contributor – cost $13 trillion.

It seems remarkable that Mr. Obama’s major focus on the debt ceiling is to warn that Social Security funding must be cut back, along with that of Medicare and other social programs. He went to far as to say that despite the fact that FICA wage set-asides have been invested in Treasury securities for over half a century, the government might not send out checks this week.

A radical double standard is at work for democracies. Wall Street investors certainly had no such worry. In fact, interest rates on long-term Treasury bonds actually have gone down over the past month, and especially over the last week. So institutional debt holders obviously expected to get paid. Only the Social Security savers were to be stiffed – or was Mr. Obama simply trying to threaten them, so as to depict himself as a hero coming in to save their Social Security by negotiating a Grand Bargain?

Wall Street had it right. There was no real crisis. Authorization to raise the public debt ceiling is not a proper occasion to discuss long-term tax policy. Since 1962 – just as the Vietnam War was starting to escalate – it has been raised 74 times. This averages out to about once every eight months. It is like going to a Notary Public – just to make sure that the President is not doing something wrong. Mr. Obama could have asked for a limited vote just on this, without riders. Never before have riders such as this been attached. And even more remarkably, there was no attempt to impose a rider restricting the Obama Administration from spending any more funds on Libya, without getting an official Congressional declaration of war.

Mr. Obama could have invoked the 14th Amendment to pay. He could have taken the proposal made by Scott Fullwiler and other UMKC economists for the Treasury to issue a few $1 trillion coins and pay the Fed for Treasury securities, to retire. But Mr. Obama steered right into the debate, turning it into a discussion of how to cut back Social Security and Medicare in the emerging U.S. class war, rather than over extending the Oil War to North Africa.

The first great victory for the financial sector in America’s domestic class war was the Bush “temporary” tax cuts on the wealthy. This aggression was not undone in order to restore budget balance. No temporary tax cuts were revoked, no loopholes closed. The burden of balancing the budget was pushed even further onto the Democratic Party’s own base: urban labor, racial and ethnic minorities, the Eastern and Western seaboards. Yet the Democrats split 95/95 on the vote to raise the debt ceiling by slashing social spending on their major voting constituency.

Voting constituency, but not campaign contributors. That looks like the key to how the debt crisis has unfolded. Although leading Democrats such as Maxine Walters Waters, Dennis Kucinich, Henry Waxman, Barney Frank, Edolphus Towns, Charles Rangel and Jerrold Nadler opposed it (and on the Republican side, Ron Paul, Michele Bachmann and Ben Quayle), much of the principled opposition has come from traditional Republicans. Reagan Assistant Treasury Secretary Paul Craig Roberts accused the deal as being too right-wing and favoring the wealthy to a degree threatening to bring on depression.

The essence of classical free market economics was to restrict Executive power – in an epoch when war-making power was the major abuse of national interests. Just as the lower house of bicameral legislatures had taken over the power to commit nations to permanent national debt – rather than royal debts that died with the kings, as were the norm before the 16th century – so parliaments asserted their rights to block warfare.

But now that finance is the new form of warfare – domestically, not externally – where is the power to constrain Treasury and Federal Reserve power to commit taxpayers to bail out financial interests at the top of the economic pyramid? The Fed and other central banks claim that their political “independence” is a “hallmark of democracy.” It seems to be rather a transition to financial oligarchy. And now that finance has joined with the oil industry, major monopolies and privatizers of the public domain, the need for some kind of Congressional oversight is as necessary as was parliamentary power over military spending in times past.

No discussion of this basic principle was voiced in the debt-ceiling debate. Even critics who voted (ostensibly) reluctantly – so as to provide plausible deniability to what no doubt will be their later condemnations of the deal when election time comes around – acted as if they were saving the economy. The reality is that there is now little hope of rebuilding infrastructure as the president promised. Cutbacks in federal revenue sharing will hit cities and states hard, forcing them to sell off yet more land, roads and other assets in the public domain to cover their budget deficit as the U.S. economy sinks further into depression. Congress has just added fiscal deflation to debt deflation, slowing employment even further.

How indeed will they explain all this in the November 2012 elections?
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline tritonman

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Re: To default or not to default?
« Reply #99 on: August 06, 2011, 11:26:40 PM »
I believe that the most will be made of the new downgrade of our credit rating.  This superduperpooper congress will make up all kinds of law that they could not othrewise pass through congress and attach it to the debt [paydown and of course congress will pass this for "our own good"  to save us from further downgrade.  They will of course claim not to have time to read what treasons get heaped upon us in the process. :o

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Autumn Chaos: Five Reasons To Fear Shutdown, Default
« Reply #100 on: August 16, 2013, 03:06:07 AM »
Here we go again!  ::)

http://tpmdc.talkingpointsmemo.com/2013/08/five-obstacles-shutdown-default.php

Autumn Chaos: Five Reasons To Fear Shutdown, Default

Sahil Kapur
Talking Points Memo
August 14, 2013

For all the gridlock in the age of President Obama and divided government, Congress has always, somehow, managed to avert a shutdown of the federal government and a catastrophic default on U.S. debt. And so many expect it to pull it off again when government funding runs out on Sept. 30 and the country’s borrowing authority expires later this fall.

But a confluence of factors makes it a more daunting task this time. Here are five reasons why a government shutdown, default, or both, are very real possibilities.

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

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Looming Government Shutdown: What a Way to Run a Country
« Reply #101 on: September 30, 2013, 05:36:19 PM »
http://www.globalresearch.ca/looming-government-shutdown-what-a-way-to-run-a-country/5352201

Looming Government Shutdown: What a Way to Run a Country

By Stephen Lendman
Global Research
September 30, 2013



Americans get the best democracy money can buy. The best, brightest and most honorable are excluded. Rare exceptions prove the rule.

Washington is dysfunctional, out-of-control, corrupt, lawless and self-serving. Both parties represent two sides of the same coin.

At the same time, each one jousts with the other. They do it for political advantage. Self-interest is the coin of the realm.

Ordinary Americans lose out. No one in Washington represents them. America is a democracy in name only.

Calling it that is a convenient illusion. Numerous examples explain. A looming government shutdown approaches. What a way to run a country. More on what doing it means below.

The last one occurred in late 1995/early 1996. Most people don’t remember. The world didn’t come to an end.

Government shut down after Clinton vetoed a Republican-sponsored spending bill.

Non-essential federal workers were furloughed. They were out from November 14 through November 19 and from December 16 until January 6.

A temporary spending bill resumed normal operations from November 20 through December 15.

Twenty-eight days were adversely affected. Republicans wanted deeper budget cuts than Democrats.

A 2010 Congressional Research Service report explained what happened. Several hundred thousand federal workers were furloughed.

According to the White House Office of Management and Budget, the cost was at least $1.4 billion.

Economically it hardly mattered. Ordinary people felt it most. Payments to veterans were suspended. National parks were closed.

An estimated 200,000 passport applications weren’t processed. Visa application processing was suspended.

Airlines and other tourism related businesses lost millions of dollars. About 20% of Washington area contracts were impacted.

So were health services, environmental cleanup, law enforcement and public safety.

A September 2013 Congressional Research Service (CRS) report is titled “Shutdown of the Federal Government: Causes, Processes and Effects.”

The Antideficiency Act (ADA) dates from 1884. Updating amendments followed. The legislation prohibits Congress from incurring obligations or appropriating funds in excess of amounts available.

Federal agencies must stop operating when budgeted dollars run out. So-called “exempted activities” aren’t affected. They include the military and other sectors affecting national security.

Some consequences of shutting down government remain unclear. According to CRS:

    “Programs that are funded by laws other than annual appropriations acts – for example, some entitlement programs – may, or may not, be affected by a funding gap.”

    “Specific circumstances appear to be significant. For example, although the funds needed to make payments to beneficiaries may be available automatically pursuant to permanent appropriations, the payments may be processed by employees who are paid with funds provided in annual appropriations acts.”

On or around October 17, America reaches its debt limit. If Congress fails to raise it, the Treasury runs out of money. According to CRS:

    “In a debt limit impasse the government no longer has an ability to borrow to finance its obligations.”

“As a result, the federal government would need to rely solely on incoming revenues to” do so.

    “If this occurred during a period when the federal government was running a deficit, the dollar amount of newly incurred federal obligations would exceed the dollar amount of newly incoming revenues.”

    “In such a situation, an agency may continue to obligate funds, because it has budget authority available for obligation, provided that appropriations are in place.”

    “However, the Treasury Department may not be able to liquidate all obligations that result in federal outlays, due to a shortage of cash, which may result in delays in federal payments and disruptions in government operations.”

On September 20, the Washington Post headlined “Wondering about a government shutdown? First thing to know: It all won’t disappear.”

If Capitol Hill and Obama don’t agree by midnight September 30, “much of the federal government is set to run out of money (by mid-October), and large functions of the federal world could shut down Oct. 1.”

WaPo discussed “basics of what a government shutdown might look like.”

(1) Who’s at fault? It depends on your political persuasion.

America’s fiscal year ends on September 30. Under current budget law, Congress must approve 12 appropriations bills.

“It almost never happens” on time. Over the past 17 years, “Congress did not meet its statutory deadline for approving the spending bills.”

Confrontation today is over Obama’s Affordable Care Act (ACA). On Friday, the Republican controlled House approved a stopgap funding bill.

It excludes ACA funding. Democrats control the Senate. They passed legislation including it.

Unless one side blinks, nonessential government operations will cease on midnight Monday night. They’ll remain nonoperative until both parties resolve budget impasse disagreements.

(2) Has Washington prepared to shut down?

    “Yes. The Obama administration told agencies this week to begin planning for a partial shutdown.”

    “A memo issued to agencies said that ‘prudent management requires that agencies be prepared for the possibility of a lapse.’ “

    “Federal managers must review which of their employees would be essential and required to come to work, and which would be non-essential and sent home during a shutdown.”

Hundreds of thousands of federal employees will be furloughed. They’ll remain out until budget impasse squabbles are resolved.

(3) “Does the entire government close?” Exempted activities aren’t affected. Certain agencies will continue operating with unpaid staff.

According to the Office of Management and Budget, they include employees who:

[Continued...]
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0

Offline Geolibertarian

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Re: Looming Government Shutdown: What a Way to Run a Country
« Reply #102 on: October 02, 2013, 09:18:20 AM »
"Abolish all taxation save that upon land values." -- Henry George

"If our nation can issue a dollar bond, it can issue a dollar bill." -- Thomas Edison

http://schalkenbach.org
http://www.monetary.org
http://forum.prisonplanet.com/index.php?topic=203330.0