The “debt ceiling” has replaced the “fiscal cliff” as the new crisis of the month. The gargantuan debt of the U.S. which – as of this writing – stands at an astounding $16,450,981,484,618 is now slightly above our current national debt ceiling of $16.394 trillion and growing. Let’s take a closer look at what the debt ceiling is and why it is important. Words: 1020
So writes Jerry Robinson (www.FTMdaily.com) in edited excerpts from his original article* entitled Our Desperate Bankrupt Nation.
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Robinson goes on to say in further edited excerpts:
So… about that “debt ceiling”
Shortly after the Federal Reserve Act was signed in 1913, the Congress took an unusual step by allowing the Treasury to independently choose when to issue bonds to the public. (From the founding of the nation until World War I, every single bond issuance by the Treasury was subject to its own Congressional vote.) These sweeping fiscal changes, which came as a result of the Second Liberty Bond Act of 1917, imposed a Congressionally-mandated borrowing cap upon the Treasury Department. The Treasury could now make the decision to issue bonds without gaining Congressional approval.
This newfound freedom to create debt came with strings attached: a Congressionally-mandated limit to the amount of debt that the Treasury could create, otherwise known as a “debt ceiling.” When the Treasury hits this debt ceiling, it is then required to come groveling back to the Congress for approval to issue more debt.
Since its inception, Congress has consistently voted to raise this debt ceiling. And with each passing decade, the amount of debt owed by the Federal government has increased exponentially.
- In December 1919, the debt ceiling imposed upon the Treasury Department by the Congress was $43 billion…
- In August 1954, it had jumped to $281 billion…
- In March 1976, the debt ceiling had more than doubled to $627 billion…
- By June 2002, it had risen to a staggering $6.4 trillion…
- And today, in 2013, it stands at a whopping $16.394 trillion.
The debate that is breaking out today regarding the debt ceiling is cleverly disguised as one over “fiscal responsibility.” One political party is demonized while the other is idolized. This is completely laughable for at least two reasons:
- neither of these two spendthrift political parties can claim the high ground in a debate over “fiscal responsibility” with a straight face and
- both parties have used the debt ceiling as a weapon against each other for years. When Republicans run Washington, Democrats don’t want to raise the debt ceiling and now that Democrats are running Washington, the Republicans are attempting to block an increase in the debt ceiling. The absurdity of the debate is mind-numbing.
While the hand-wringing and political theatrics will be impressive to those who still believe the corporate-controlled media’s narratives, the outcome is completely predictable: The debt ceiling will be increased. After all, can our nation improve its immediate financial situation by defaulting on its debt?
For example, imagine that for the last several years you have been on a spending binge. Your spending sprees have maxed out virtually all of your credit cards and the things you have bought on credit no longer seem like a good idea. One day, you have an epiphany that it is time to improve your financial situation so, when your credit card bill comes in the mail, you simply toss it in the garbage. After all, why keep paying for those worthless items you bought last year? You need to start saving money!
Does anyone with a drip of logic believe that this is the best way to begin improving your financial picture? If you spent money with your credit card, it is in your best interest to pay the bill when it comes due. If you want to change your financial future, you can cut the credit card in half and stop using it or you can limit your use of the credit card, etc., but to just toss the credit card bill in the trash when it comes will not improve your financial situation. If anything, it will make matters worse.
Debating the debt ceiling is rooted in a false argument. It is like trying to cut down a tree by striking at its branches. If Washington wants to solve its debt problem, it should cut spending, not toss its debt bills in the trash and hope the problem goes away! The power given to those in Washington has apparently become so intoxicating that it is now impairing their sanity.
The Fed Wants the Debt Ceiling Scrapped!
Earlier this month, Federal Reserve Chairman Ben Bernanke entered the fray by calling for the debt ceiling to be scrapped. According to Mr. Bernanke, limiting the Treasury from unlimited borrowing from the Federal Reserve is an antiquated fiscal statute with “no practical value.” Spoken like a true central banker…
Imagine if all financial institutions and credit card companies followed Bernanke’s advice and eliminated credit limits on all of its borrowers. What if all American households decided that limiting the amount of debt they took on was irrelevant?
Mr. Bernanke, and those global financial institutions with ownership stakes in the Federal Reserve, has an incentive for America to continue its spending binge. After all, the Federal Reserve gets paid back with interest on all of the loaned dollars that it prints ‘out of thin air’ for the Federal government so, of course, the Fed wants the U.S. government borrowing to be uncapped!
You may ask, isn’t the Federal Reserve concerned that America may not be able to pay it back? After all, banks only make money if their loans are paid back with interest. Ah, dear reader, the Federal Reserve is yet again one step ahead of the common man.
Central banks are clever wealth creation tools used by the mega-wealthy to bleed dry a nation’s treasury. Over the centuries, central banks have correctly understood the importance of ensuring the taxing power of its national subjects. After all, the Federal government’s taxing power over all income generated within its borders (and even abroad) practically guarantees their ability to extract fresh capital from its citizenry. This taxing power helps central bankers sleep easy at night….
My forecast: America’s debt ceiling will be increased despite political hand-wringing after the corporate-controlled media milks it for ratings and ad revenue.
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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