US Debt Ceiling solution

Tap into the pension funds:

Cost of insuring against US dollar default (CDS - 1 year) rockets to 0.5%

Central banks still stocking up on gold:

Gold price still creeping up :slightly_smiling_face:

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The debt ceiling is defined as a debt limit.

The debt limit was hit on the 19th. This is debt we have. Cutting the debt ceiling/limit means not paying or financing some of the debt. That is called a default.

If another debt ceiling is proposed and it is not high enough there will have to be a debt ceilings proposed in quick succession.

BTW this does not make gold more valuable at all.

This makes the dollar worthless. Our savings or investments will be down the tubes.

No one in the US buys in gold. No one will switch gold for point of sale. When you want to sell your gold it wont matter how much of any currency USD or whatever you get. All of it will be worthless.

Your golden dreams wont pan out in this scenario. You may not realize this but when you buy gold it is because you want more dollars.

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That’s not true. There is no debt limit.

The debt ceiling is how much the US Congress can legally borrow in order to pay for spending authorized by the US Congress. The US Congress can and has authorized more spending than it can borrow to pay for.

For example, Congress authorized the US Border Patrol to spend $17 billion, that includes salaries, equipment, building leases, etc. If the debt ceiling is reached, then the US can’t pay those expenses, but the payment for those expenses is still owed.

In other words, the debt is still there, but it just can’t be paid for. There are many mental midgets in Congress who don’t understand this.

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It is absolutely true. Simply google that one.

Spend less?

The Captain

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Entirely new concepts would have to be adopted. Such as Congress learning to consider its spending appetite before committing to spend. Even some of the younger people have difficulties grasping the complexities.

Don’t you believe in miracles?

The Captain
does not either :slight_smile:

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The largest parts of our budget are, by far, defense, social security and medicare. Where do you propose we cut? Because those are the only places where it makes sense to cut, because cutting anywhere else is just noise.

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The solution to the debt ceiling is to get rid of it.

A debt ceiling is like arguing about whether to pay for the credit card bill after you already agreed that you were going to buy a new sofa.

The way to fix the debt is to first decide not to spend it; instead of not to pay it.

Besides, the debt ceiling was created by Congress about 100 years ago (Second Liberty Bond Act). It is a statutory requirement that could simply be undone by Congress (and the POTUS).

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Just a random thought here…how about cutting the tax cuts to the “JCs” that caused the deficits, to no effect other than enriching the “JCs”?

Steve

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For the second time recently I heard that the ‘entitlements’ are the bulk of the budget and that there is no way of reducing them. With the work force shrinking and inflation growing it will only get worse. The problem is rooted in the past when proper cost accounting was missing. Lots of pension funds have the same problem, they expected higher yields from their investment than they have been getting.

Where do you propose we cut?

I don’t need to propose, it’s written in stone! The only way to cover the budget is through debt, printing fiat money, which will necessarily result in inflation which the recipients of the entitlements will bear. They will protest and the government will cave accelerating the arrival of Doom’s Day. Venezuela? (a rhetorical question)

The one unlikely alternative is for the economy to boom but for that to happen you need to reduce taxes which is the reason for this alternative to be unlikely.

“Spend less?” was a rhetorical question.

  1. a question asked in order to create a dramatic effect or to make a point rather than to get an answer.

“the presentation was characterized by impossibly long sentences and a succession of rhetorical questions”

The Dictionary

Simpson-Bowles was the last serious attempt to deal with the national debt in a fiscally responsible manner. That was 11 years ago and it was scuttled for political reasons that continue to prevail and cannoli be discussed here.

I’m not entirely sure that has been shown to work. Reducing taxes has certainly made it easier to companies to do stock buy backs however, and raise executive compensation. Remember, wages and R&D and capital expenditures are NOT taxed. A company can already reduce their tax burden by spending more on capital expenditures, or on R&D, or on raising wages.

Agreed that the social security pension fund has been under-funded for a long time now. Ditto for many pensions. Long term investing is hard, especially when the actuarials are ignored for so long.

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Thanks for the clarification.

With all of us Boomers retiring, it makes sense to sell us U.S. bonds. Just saying.

At any rate, what the Social Security budget cutters would do is just transfer disability expenses to the states, which would not help the economy in any way that I can see. It makes more sense to adjust the maximum income dinged for social security than to cut the income of people who are drawing Social Security.

So these 23% sales tax people (with no income tax) think they have a solution, but that would be a devastating blow to people with low incomes, and the really rich people would just buy stuff overseas or find some other way to dodge the tax.

Growing the economy is definitely the way to go. Over the next five years there will be a lot of onshoring, because of the international situation and disrupted supply chains, as well as a lot of moving industry from China to Mexico (where labor is cheaper and more reliable). However, it won’t do any good to grow the economy if business doesn’t pay its taxes, so they need to take a good look at the tax codes.

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Eliminate ALL tax cuts to alleged JCs (i.e. all of them). Require JCs to PROVE they “created ADDITIONAL, GOOD-PAYING JOBS WITH BENEFITS in the US”. No additional jobs, nothing for the FAKE “JCs”. Payments to JCs will drop like a rock.

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Or make sure everyone pays the taxes they owe.

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I’d much prefer discussing cannolis instead of how we’re going to get out of this mess.

'38Packard
→ Mike’s the ABSOLUTE BEST cannolis this side of the Atlantic

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Now you made me hungry.

I am very grapefruit for autocorrect. It makes my posts more interesting.

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