National debt limit gonna get a bump soon

[jim4silver]

You all know they are going to raise it again. Of course it will be PM negative although it should be just the opposite. I am still waiting for any pundit to explain how this debt will be paid someday- it won't!!

I find it amusing they always say something like here: "increasing the debt limit does not authorize new spending commitments," but rather "simply allows the government to pay for expenditures Congress has already approved." They say this every time. So somehow miraculously they find a way to keep approving new expenditures once the limit gets raised. Then in six months they come back with the same line. Total BS.

Even more sad 99% of the population has no clue nor do they even care.

Just my opinion.

Lew to Congress: US hits debt limit on March 16, needs to be raised ASAP


Jim

 

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[skarmajunga]

This country needs an enema

 

[bradley1719]

The problem is that there are too many binary thinkers in this world. People believe that if we can't pay off ALL of the debt then we had might as well give up and default. This is of course asinine.

We do not NEED to pay off the debt. We only NEED to quit increasing it. The US could hold $18 Trillion in debt for the next 100 years and it wouldn't kill us. People don't seem to understand this. 100 years from now that $18T would be worth about $560 Billion in today's dollars. In other words, we'd be the most fiscally fit country in the world. And yet, we would still always have debt.

What we NEED to do is stop INCREASING the debt. We need to start running a surplus that will at the very least pay for our current interest payments on the $18T we already owe. And if we can pay off even a fraction of the debt each year beyond our interest payments then that will help tremendously. However, it is not a requirement. Simply keeping the debt at $18T forever would be good enough. Eventually inflation would pay it off for us. We don't need to pay it off... we just need to outlast it.

My math may not be right because I'm pulling these numbers from various places on the Internet, but in 2014 the US interest payments on the debt were supposedly about $146B. Our receipts were around $3T. So our interest payments were around 5% of our receipts. So we simply need to run about a $200B surplus each year and our debt problems would eventually go away. We'd meet our interest payments AND be paying down the debt slightly every year. $200B is only about 7% of our current receipts. So it is certainly possible given enough time. Again, my math may be way off. But the point is that we don't even have to pay down the debt. We just need to be able to always run a surplus that makes the current interest payments so that the debt doesn't keep going up. Given the current political climate, I'm not going to hold my breath. But it IS possible despite what those politicians and pundits want you to believe.

The next time some politician tells you that we should just default on our loans because we can never pay them off, take note that you have just witnessed a binary thinker. And that binary thinker is potentially making decisions on your behalf....

 

[jim4silver]

The problem is that there are too many binary thinkers in this world. People believe that if we can't pay off ALL of the debt then we had might as well give up and default. This is of course asinine.

We do not NEED to pay off the debt. We only NEED to quit increasing it. The US could hold $18 Trillion in debt for the next 100 years and it wouldn't kill us. People don't seem to understand this. 100 years from now that $18T would be worth about $560 Billion in today's dollars. In other words, we'd be the most fiscally fit country in the world. And yet, we would still always have debt.

What we NEED to do is stop INCREASING the debt. We need to start running a surplus that will at the very least pay for our current interest payments on the $18T we already owe. And if we can pay off even a fraction of the debt each year beyond our interest payments then that will help tremendously. However, it is not a requirement. Simply keeping the debt at $18T forever would be good enough. Eventually inflation would pay it off for us. We don't need to pay it off... we just need to outlast it.

My math may not be right because I'm pulling these numbers from various places on the Internet, but in 2014 the US interest payments on the debt were supposedly about $146B. Our receipts were around $3T. So our interest payments were around 5% of our receipts. So we simply need to run about a $200B surplus each year and our debt problems would eventually go away. We'd meet our interest payments AND be paying down the debt slightly every year. $200B is only about 7% of our current receipts. So it is certainly possible given enough time. Again, my math may be way off. But the point is that we don't even have to pay down the debt. We just need to be able to always run a surplus that makes the current interest payments so that the debt doesn't keep going up. Given the current political climate, I'm not going to hold my breath. But it IS possible despite what those politicians and pundits want you to believe.

The next time some politician tells you that we should just default on our loans because we can never pay them off, take note that you have just witnessed a binary thinker. And that binary thinker is potentially making decisions on your behalf....

I agree with you, unfortunately I don't see them keeping the debt level stable anytime soon. With all the gov expenditures like medicare, medicaid, soc sec, food stamps, etc, etc, plus other things like foreign wars, etc, the US will keep needing more $$$. It has been reported in the past couple of quarters that the US has taken in record tax revenues, yet we still run deficits. I don't see anything on the horizon that will make that change but I hope I am wrong. No part of the US population will want to give up any gov money they get now so politicians who run on "austerity" platforms will not be elected, and those who promise more stuff will (even if it means taking on more debt to pay for it). So I don't see the trend changing anytime soon.

I am sure as a country we can keep clicking along for a while and just keep raising the debt. As long as the dollar is king we should be OK. Paying it back is not possible so I guess we can hope at some point to simply stop raising it. I am more worried about future generations than my own per se.

One thing to remember is that the US debt is not what you would call "fixed rate", so if interest rates go up over time so will the interest due on the national debt, so taxpayers will be paying more just to pay the vig (interest) and not even dent principal (whatever level that might be).

Just my opinion.



Jim

 

[bradley1719]

I agree with you, unfortunately I don't see them keeping the debt level stable anytime soon. With all the gov expenditures like medicare, medicaid, soc sec, food stamps, etc, etc, plus other things like foreign wars, etc, the US will keep needing more $$$. It has been reported in the past couple of quarters that the US has taken in record tax revenues, yet we still run deficits. I don't see anything on the horizon that will make that change but I hope I am wrong. No part of the US population will want to give up any gov money they get now so politicians who run on "austerity" platforms will not be elected, and those who promise more stuff will (even if it means taking on more debt to pay for it). So I don't see the trend changing anytime soon.

I am sure as a country we can keep clicking along for a while and just keep raising the debt. As long as the dollar is king we should be OK. Paying it back is not possible so I guess we can hope at some point to simply stop raising it. I am more worried about future generations than my own per se.

One thing to remember is that the US debt is not what you would call "fixed rate", so if interest rates go up over time so will the interest due on the national debt, so taxpayers will be paying more just to pay the vig (interest) and not even dent principal (whatever level that might be).

Just my opinion.



Jim

I agree with your opinion.

 

[jim4silver]

US debt at same level for 90 days? Why even have a debt limit? Nothing to see here folks. Ha Ha

90 Days: Treasury Says Debt Has Been Frozen at $18,112,975,000,000 | CNS News

Jim

 

[bradley1719]

US debt at same level for 90 days? Why even have a debt limit? Nothing to see here folks. Ha Ha

90 Days: Treasury Says Debt Has Been Frozen at $18,112,975,000,000 | CNS News

Jim

I thought we already covered this? Perhaps I have deja vu or have been discussing this somewhere else.

My take on this is simple: it is standard accounting. If you are the accountant for a business and they tell you that you simply can't take on any more debt, then you pretty much HAVE to perform whatever steps are necessary to make sure you don't take on any more debt. And that means your debt will be stuck at a relatively fixed number until you figure out how to fix the problem.

And for the federal government that is up against the debt ceiling, by LAW they can't go above it. So it makes sense that they would be required to stay below it using whatever means possible. And if the debt isn't going down, then the debt would stay at the exact same value for a very long period of time (at least until you have run out of ways to make up the difference).

It is not possible to keep doing this forever. Eventually, they will run out of accounting tricks and be forced to either raise the debt ceiling or default. When it gets to that point they'll raise it again. But until then they will defer payments, cut unnecessary government defense programs, and other such standard accounting tricks so that they don't violate the law. And this means the debt will stay at what seems to be a relatively fixed number for a little while longer. All the while, behind the scenes they have put spending on life support and are robbing Peter to pay Paul.

My brother works for the air force as a civilian research scientist. We were just discussing the other day how their budget has been cut severely from what was agreed upon at the beginning of the year. Programs and upgrades that had already been in the works have been cut. And more and more cuts come each month. This all makes sense given that from an accounting perspective we just aren't legally allowed to take on more debt without raising the ceiling again. But at some point, there just won't be anything left to cut and they will have no choice.

The debt has stayed the same because they can't legally let it go up any more.

 

[jim4silver]

I thought we already covered this? Perhaps I have deja vu or have been discussing this somewhere else.

My take on this is simple: it is standard accounting. If you are the accountant for a business and they tell you that you simply can't take on any more debt, then you pretty much HAVE to perform whatever steps are necessary to make sure you don't take on any more debt. And that means your debt will be stuck at a relatively fixed number until you figure out how to fix the problem.

And for the federal government that is up against the debt ceiling, by LAW they can't go above it. So it makes sense that they would be required to stay below it using whatever means possible. And if the debt isn't going down, then the debt would stay at the exact same value for a very long period of time (at least until you have run out of ways to make up the difference).

It is not possible to keep doing this forever. Eventually, they will run out of accounting tricks and be forced to either raise the debt ceiling or default. When it gets to that point they'll raise it again. But until then they will defer payments, cut unnecessary government defense programs, and other such standard accounting tricks so that they don't violate the law. And this means the debt will stay at what seems to be a relatively fixed number for a little while longer. All the while, behind the scenes they have put spending on life support and are robbing Peter to pay Paul.

My brother works for the air force as a civilian research scientist. We were just discussing the other day how their budget has been cut severely from what was agreed upon at the beginning of the year. Programs and upgrades that had already been in the works have been cut. And more and more cuts come each month. This all makes sense given that from an accounting perspective we just aren't legally allowed to take on more debt without raising the ceiling again. But at some point, there just won't be anything left to cut and they will have no choice.

The debt has stayed the same because they can't legally let it go up any more.

I agree with your analysis, but my slant on this is that the debt limit is supposed to limit spending. If they are robbing Peter to pay Paul they are still spending money not authorized. They will then tell Congress "we need the money to pay for these things ALREADY agreed to, bought, etc". Then Congress gives in and raises the limit, and in a year or so we are back in the same situation as the debt keeps growing.

So what I am saying is a debt limit is worthless to stop the spending. They will spend anyway, rob Peter to pay Paul for a bit, then get more authorization. That is why I say do away with the debt limit and just let them spend all they want. They are going to do it anyway. There may be a few Mickey Mouse reductions here and there but in reality they are spending like drunken sailors as the old saying goes. And BOTH parties are involved in doing this, it is NOT just the current administration.

Look at this chart. Where does it say we are headed?

? Public debt of the U.S. 1990-2015 | Statistic



Just my opinion.

Jim

 

[bradley1719]

I agree with your analysis, but my slant on this is that the debt limit is supposed to limit spending. If they are robbing Peter to pay Paul they are still spending money not authorized. They will then tell Congress "we need the money to pay for these things ALREADY agreed to, bought, etc". Then Congress gives in and raises the limit, and in a year or so we are back in the same situation as the debt keeps growing.

So what I am saying is a debt limit is worthless to stop the spending. They will spend anyway, rob Peter to pay Paul for a bit, then get more authorization. That is why I say do away with the debt limit and just let them spend all they want. They are going to do it anyway. There may be a few Mickey Mouse reductions here and there but in reality they are spending like drunken sailors as the old saying goes. And BOTH parties are involved in doing this, it is NOT just the current administration.

Look at this chart. Where does it say we are headed?

? Public debt of the U.S. 1990-2015 | Statistic



Just my opinion.

Jim

I agree with most of what you said. I would just add that it is not black and white. When they do the budget each year we know that there is some padding built in. If there weren't, there would be no way to pull the accounting tricks that they are pulling.

My brother is a good example. His group is budgeted a flat amount based on last year's budget and how much they came in under budget last year. If they don't spend the money each year then they get less the next year. So they don't account for each and every expense at the beginning of the budgetary process. They kind of make it up as they go along based on how much they were allotted and where they need to end up. This is why his group has been losing funds in order for the treasury to be able to pull these types of tricks. They are cutting the budget in the middle of the year and anything that has not already been spent has been put on the chopping block.

This is no different than what happens in business. You guess at the budget at the beginning of the year and then tweak it as you go along and hope to come in under budget. If we didn't have an actual limit then I would be worried that they would over spend even worse than they are now. There is just no way for them to think about every single expense that might come up so the process will still include a lot of guessing. The amount of extra padding they add is what can make or break the process.


But maybe not. I really don't know what would happen if we had no debt limit. Perhaps we'd be even better off.

 

[redbeardrelics]

I thought we already covered this? Perhaps I have deja vu or have been discussing this somewhere else.

My take on this is simple: it is standard accounting. If you are the accountant for a business and they tell you that you simply can't take on any more debt, then you pretty much HAVE to perform whatever steps are necessary to make sure you don't take on any more debt. And that means your debt will be stuck at a relatively fixed number until you figure out how to fix the problem.

And for the federal government that is up against the debt ceiling, by LAW they can't go above it. So it makes sense that they would be required to stay below it using whatever means possible. And if the debt isn't going down, then the debt would stay at the exact same value for a very long period of time (at least until you have run out of ways to make up the difference).

It is not possible to keep doing this forever. Eventually, they will run out of accounting tricks and be forced to either raise the debt ceiling or default. When it gets to that point they'll raise it again. But until then they will defer payments, cut unnecessary government defense programs, and other such standard accounting tricks so that they don't violate the law. And this means the debt will stay at what seems to be a relatively fixed number for a little while longer. All the while, behind the scenes they have put spending on life support and are robbing Peter to pay Paul.

My brother works for the air force as a civilian research scientist. We were just discussing the other day how their budget has been cut severely from what was agreed upon at the beginning of the year. Programs and upgrades that had already been in the works have been cut. And more and more cuts come each month. This all makes sense given that from an accounting perspective we just aren't legally allowed to take on more debt without raising the ceiling again. But at some point, there just won't be anything left to cut and they will have no choice.

The debt has stayed the same because they can't legally let it go up any more.

I believe your analysis is correct for how private/for profit business accounting and management works when it runs up against a debt/spending limit, (ie. cut spending wherever possible to stay at or under the limit). Unfortunately though, we are talking about the massive nanny state welfare industrial complex here. limiting spending when up against a debt limit is counter productive to their goals and ideology, therefore it is much more likely that the spending and debt has risen far greater than the debt limit. They simply keep reporting the same debt day after day, disregarding the debt limit laws, and leaving those of us concerned about such alarming situations, with no recourse to counter or audit their debt level claims. JMO (PS. military spending is being cut any way it can without raising red flags, so those monies can be redistributed to where they can be used to buy more votes)

 

[jim4silver]

No more debt ceiling. The article says the debt level immediately jumped to near $18.5 T. I would have thought it would have been higher since it hasn't moved in several months. I bet we hit $20 T before the Nov. 2016 elections.

Debt ceiling lifted, and the same day, debt jumps $339B | Washington Examiner

Jim

 

[patiodadio]

What happens if we default ?

 

[jim4silver]

What happens if we default ?

I don't think they will do that. They don't have to since they keep raising the limit. I think the game can keep going, even at $100T. The problem will be if people/institutions ever lose faith in the dollar (maybe because the debt is so high and/or other reasons). Or if the interest rates were ever to get to normal levels again, they would have a hard time paying just the interest payments I would imagine.

We will never have a balanced budget again though no matter who is president. So the debt will keep growing. We have been having record tax receipts but still have to keep adding debt.

Just my opinion.

Jim

 

[billjustbill]

I don't think they will do that. They don't have to since they keep raising the limit. I think the game can keep going, even at $100T. The problem will be if people/institutions ever lose faith in the dollar (maybe because the debt is so high and/or other reasons). Or if the interest rates were ever to get to normal levels again, they would have a hard time paying just the interest payments I would imagine.

We will never have a balanced budget again though no matter who is president. So the debt will keep growing. We have been having record tax receipts but still have to keep adding debt.

Just my opinion.

Jim

Jim, take a look at this interview. With other countries beginning to use other currency than the dollar, and day after Comex's last ounce of gold delivered to a country in the East, December may be the beginning of the speedup of the crash. If not, right before the next election. Still comes down to gold and silver being used in a "mix" of deflation and inflation.



Bill

 

[jim4silver]

Now that they've suspended any debt limit, let's see how fast it grows.

National debt spikes $578 billion in three weeks | Washington Examiner


Jim

 

[Gold Maven]

What happens if we default ?

I remember last time this happened, Hillary and a gaggle of other professional BS slingers, got something passed that our lenders insisted on, that uses our Country's land as collateral. If I understand it right, we could eventually be flying a different flag.

 

[jim4silver]

Just read the national debt now has passed $19 Trillion. Amazing to think that the national debt has almost DOUBLED since the current administration took office. In less than 8 years we amassed as much gov debt as we did from roughly 1789 to 2008. That's an accomplishment they can be proud of! I'm going to opine the level will be $20 Trillion before the next prez takes office.

Can the rating agencies ever call our debt "junk" like in junk bonds? If so, I wonder when that will happen?


Jim