Its time to talk about that elephant in the room. That room being the Secretary of the Treasuries office. It's debt ceiling time, so strap in because the U.S. always pays it debt on time.
The debt ceiling debate has been floating around Washington for several months now. In early October congress passed a temporary resolution to "extend" the debt limit through December. We've reached December and thank heavens Congress manages to get the important things done. Because the they found a way to fast track the issue without bipartisan support.
Biden announced late Friday night that he was signing a bill to fast-track the process of raising the debt ceiling. This would allow for only 51 votes in the senate to pass the bill bypassing the filibuster. The only caveat is that the Democrats will "own" any debt above the current limit. This kind of gives Republicans a pass on supporting additional spending measures since they don't have to own up to any extra debt. That's if anyone honestly thinks that $28 trillion is an acceptable number.
This clock is always running and you better believe that $29 trillion is going to keep going up!
I want to point out how the total revenue collected barely covers the costs on interest that the government has to pay. What happens when the interest amount increases due to adding more debt or when interest rates move "higher" to fight inflation? Zero percent interest rates are one of the few things keeping his house of cards standing.
What we are looking at is one of the biggest Ponzi schemes ever thought of.
How can the U.S. claim they always pay their bills on time when the only way they can pay them is with new debt. This is the equivalent of a person paying off their Visa card with a Mastercard then saying they paid something off. They didn’t pay anything off! All they did was restructure the terms of the debt.
Janet Yellen has been screaming for months about how the U.S. always pays its bills. Everything that she brings up during testimonies says that the only way it is possible for the government to avoid bankruptcy is if we raise the debt ceiling. Her saying that is an admittance of the scheme the government is running.
Paying off debt with more debt isn't paying anything off!
I've mentioned inflation is the most probable way out for them. Devaluing the dollar so the amount paid back can be paid back with more currency units of less value.
Federal Debt to GDP is at 126% down from 145%. Inflation is allowing that number to decrease. We could assume the Fed can keep inflation at an elevated rate for a few years but that isn't quite a positive public policy. The government is truly at odds with the people on this one.
Politicans keep spinning that more spending will cure inflation. It's like saying we're going to poor more gasoline on a fire and that will help put it out. This type of thinking is so nonsensical. I hope people are waking up to it!
All this debt has to get repaid by somebody. At the end of the Ponzi someone is gonna be left holding the bag. Right now those bag holders are working class Americans. Either they suffer the pain of paying it back or it never gets paid back. If it doesn't get paid back they're still holding the bag of higher inflation and a decreasing standard of living.
I should mention that Evergrande, a property developer in China, defaulted on $300 billion of debt this week. Leaving anyone who was holding their bonds or bought property through them to be left with an empty bag. The financial implications are beginning globally and will have impacts domestically.
The pain is only just beginning so start preparing now before it's too late.