If anyone believes the political establishment has a solution to the debt problem, please visit one of Virginia’s close-minded “conservative” republican establishment political blog sites, bearingdrift, and see for yourselves.
From an article posted there titled “Virginia Candidates React to Debt Ceiling Issue“:
- That the U.S. has a debt ceiling at all is unusual. Most countries routinely increase debt levels without requiring lawmakers to approve an increase in the overall amount being borrowed.
- Candidates who categorically oppose the increase must provide a plan for how the U.S. should handle a situation where we are unable to borrow further and yet 40% of the budget relies on borrowed dollars. [emphasis added] If we are unable to meet our obligations [IF?], where will we default first and what impact will that have on the economy. Some legislation has been introduced in the House, such as H.R. 1908, which attempts to govern how the Treasury would allocate funds in the event that Congress fails to pass an increase in the debt limit. Likewise, candidates who support increasing the debt limit should give voters real answers as to how their position deviates from business as usual in Washington and what they would do differently to ensure real long-term reductions in the overall federal debt burden.
This is a false choice, and it illustrates the cognitive dissonance that characterizes establishment political groupthink. It is based on the presumption that we will be able to continue to borrow indefinitely, in any amounts we choose, and that the choices of whether to borrow, and how much to borrow, will always be ours to make. This is also a classic example of the wrong kind of American exceptionalism: the belief that we are special, the world loves us, and we can do any damned stupid, irresponsible and unsustainable thing we want ad infinitum.
People describe the fiscal bus as headed towards a cliff. In fact, the front wheels of the bus have already gone over the edge. We have already crossed the event horizon for a monetary catastrophe; there is no going back, turning the steering wheel doesn’t do anything anymore. Neither does hitting the brakes.
QE2 will end as scheduled in June. The markets are already pricing it in. The resultant withdrawal of liquidity (free money) is already having an effect on stocks; the bond market is next. Fed dot gov is overextended and cannot meet its obligations, obligations it handed out like candy to garner support for Leviathan and get people elected. Social Security, Medicare, Medicaid, the never-ending global war on terror, the never-ending and now global war on drugs…exactly the thing libertarians call “the welfare/warfare state,” big government personified, and the antithesis of personal liberty.
A majority of adults now either work for the government or receive some kind of government subsidy. In other words, a majority of adults now need government payments in order to live. How will they vote? How will they react to the ending of transfer payments and the slashing of government payrolls? The only question for the establishment political system is: how do we pander to them one more time and get ourselves elected? The notion of government as the protector of liberty and property rights is nowhere on their agenda.
America has already defaulted twice in the past 100 years. The first time was when comrade Roosevelt confiscated privately held gold and then devalued the dollar by 70%, stealing 70% from savers overnight. The second time was when Nixon closed the gold window in 1971, ending the convertibility of the dollar into gold and stiffing our foreign creditors, paying them back instead in easily-printed paper dollars. It’s going to happen again, and, just as before, savers and foreign holders of U.S. dollar-denominated obligations are going to take the haircut. Fiat currencies always die, and IMO this is what it looks like when one is in its death throes.
Brace for impact.