In November 2004, lawmakers voted to once again increase the public debt ceiling from $7.39 trillion to $8.18 trillion. December of 2005, as the spending cap neared the limit, Treasury Secretary John Snow told Congress that the government may reach its statutory borrowing limit by mid-February and asked to raise the debt ceiling “as soon as possible.” Since then, Congress has been relatively idle on the issue.
On January 24th, the U.S. government went into technical default according to the government’s own debt watch website.
Economist Dr. Chris Martenson is sounding the klaxons and wondering why it hasn’t hit the financial press yet, saying “But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious $70-$80b in Treasury paper will hit the market.” He suggests emergency congressional action may be needed to avoid a full-fledged default.
An earlier Bloomberg article states that covering the borrowing limit “would force the Treasury to use unusual measures such as shuffling money among government pension funds to finance operations.” Which is exactly what happened in February 2003 when the nation came close to default but borrowed against the $48 billion in the government pension fund. A passage from an old CNN article puts things in serious context:
Congress would be very unlikely to allow government finances to reach a point where there would be the possibility of an actual default on any part of the national debt, given the effect that would have on the government’s credit rating and future interest levels it would have to pay on its substantial debt.
Between now and whenever Congress finally notices that the government is in technical default, if the funds from shuffling money out of other investments run dry, it’s very likely the U.S. will move from technical default to active default.
However, raising the spending limit doesn’t adress the root of the problem, which is that Republicans are just as big of spenders as Democrats, even worse. In contrast, Libertarians have long proposed a constitutional amendment to stop government deficit spending and require balanced budgets.
Point #2 has already happened as of TODAY, we’ll see if the SHTF on Monday when people go back to work and the stock market opens.
http://hammeroftruth.com/2006/01/29...
Fed Debt Limit Breach: U.S. in Technical Default
In November 2004, lawmakers voted to once again increase the public debt ceiling from $7.39 trillion to $8.18 trillion. December of 2005, as the spending cap neared the limit, Treasury Secretary John Snow told Congress that the government may reach its statutory borrowing limit by mid-February and asked to raise the debt ceiling “as soon as possible.” Since then, Congress has been relatively idle on the issue.
On January 24th, the U.S. government went into technical default according to the government’s own debt watch website.
Economist Dr. Chris Martenson is sounding the klaxons and wondering why it hasn’t hit the financial press yet, saying “But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 with next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious $70-$80b in Treasury paper will hit the market.” He suggests emergency congressional action may be needed to avoid a full-fledged default.
An earlier Bloomberg article states that covering the borrowing limit “would force the Treasury to use unusual measures such as shuffling money among government pension funds to finance operations.” Which is exactly what happened in February 2003 when the nation came close to default but borrowed against the $48 billion in the government pension fund. A passage from an old CNN article puts things in serious context:
Congress would be very unlikely to allow government finances to reach a point where there would be the possibility of an actual default on any part of the national debt, given the effect that would have on the government’s credit rating and future interest levels it would have to pay on its substantial debt.
Between now and whenever Congress finally notices that the government is in technical default, if the funds from shuffling money out of other investments run dry, it’s very likely the U.S. will move from technical default to active default.
However, raising the spending limit doesn’t adress the root of the problem, which is that Republicans are just as big of spenders as Democrats, even worse. In contrast, Libertarians have long proposed a constitutional amendment to stop government deficit spending and require balanced budgets.