Monday, June 4, 2018
It was instituted by Law in 1917. In the 20th century, our Government's Debt Ceiling was raised 90 times. From 2001 through 2016, it has been raised 14 times; and it was supposed to be raised again last Fall. Through some sort of machinations, Congress conjured up "emergency spending funds" and postponed the problem until mid-March of this year.
March 2018 has come and gone, so what happened? Congress SUSPENDED the Debt Ceiling until March 2019. In other words, there is no Debt Ceiling presently. It was suspended once during Obama's Administration as well. Considering the history of it, arguably there never has been a Debt Ceiling. The whole thing appears to be Orwellian Doublethink and Doublespeak.
The Nixon Shock---
Why is any of this important? Why should we care at all? It started with the "Nixon Shock" in 1971. That's when the Executive Branch issued a "temporary suspension" of the convertibility of the U.S. Dollar into gold. We went completely off the "Gold Standard". Essentially, our Gov't defaulted on its Debt. Shortly thereafter, the Dollar lost 25% of its value. Our long, "temporary" excursion into fiat currency began. Instead of being backed by gold, our "money" became backed by "the full faith and credit of the United States". That means virtually nothing at all if our Gov't borrows, and borrows, and borrows into oblivion... and the rest of the world knows that.
The Largest Debtor Nation---
This great Land has gone from being a creditor nation to being the world's largest debtor nation. To whom is the "money" owed? Primarily, it's owed to foreign Central Banks, other Mega Banks (including domestic ones), and other Mega Corporations. The kicker is this: that Debt is now mathematically impossible to repay in full. So why do those outfits keep loaning us funds? For the same reason a Bank doesn't want you to ever repay the full amount on your credit card: the perpetual interest payments; they will never end. And from where does the Gov't get the funds to make those multi-billion dollar interest payments to Banks & Corporations...from personal income taxes, of course.
In the spirit of Orwellian Doublespeak, the Fed Reserve calls borrowing the "selling of Debt, or Bonds". When other entities cut back on "buying Debt" (loaning us funds), the Fed Reserve (which is made up of privately owned banks) "buys" U.S. Bonds. That essentially means a supposed part of our Gov't loans funds to our Gov't. All this borrowing serves to devalue the fiat Dollar.
The Bottom Line---
Why should we care? If for no other reason, because we are saddling our children and grandchildren not only with a continually devalued Dollar, but also with a Debt that will have interest payments in perpetuity. Then there's the extremely high probability that our economy will collapse because of the Financial shocks brought on by the Fed's insane amount of borrowing.
When it comes to borrowing, the Trump Administration is following right in the footsteps of the Administrations of Obama, Dubya Bush, and others: increasing the National Debt by multiple times. And why all this borrowing? For the most part, it's to maintain U.S. Hegemony throughout the world. And why is that? Because the availability of several key natural resources is peaking or shrinking, and without control of those resources, the USA cannot dominate the world and further enrich itself. Naturally, the Establishment denies any such thing...hardly a big surprise. The Plutocrats claim the whole shebang is to protect the world, spread democracy, and preserve freedom. Right. Edward Bernays would be proud of such claims.
Price Inflation is not the result of the cost of production going up; rather, it's the result of the value of the Dollar going down. When the value of the dollar decreases, it takes more dollars to buy the same amount of goods or services as before the decrease.
Not only my opinion. Be Well