http://money.cnn.com/2014/02/11/news...html?hpt=hp_t3
Lawmakers are poised to again suspend the debt ceiling -- at a level that's now about $512 billion higher than it was last fall.
On Tuesday, the Treasury Department reported that the nation's borrowing limit automatically reset to roughly $17.2 trillion, after the last suspension expired on Friday.
Here's why: Suspensions have become lawmakers' favorite way of "raising" the debt ceiling. They let Treasury borrow as needed to pay the bills and avert default. And when the suspension ends, the debt limit resets to the old cap plus whatever Treasury borrowed during the suspension period.
In other words, a suspension doesn't technically raise the debt ceiling, but that's the net effect.
The beauty for Congress is that lawmakers don't have to go on record as voting for a formal increase by a specific dollar amount.
The reset to $17,211,558,177,668.77 marks the fifth effective increase in the debt ceiling since August 1, 2011, when it was $14.3 trillion.
Related: House passes debt ceiling bill
Treasury last week announced that it had begun to use special accounting maneuvers to make sure the country doesn't breach the limit, something it was forced to do because Congress has yet to raise or extend the borrowing limit as needed.
But House Republicans on Tuesday said they would drop their demands for concessions tied to a debt limit extension. So House Speaker John Boehner brought a "clean" debt ceiling bill to the floor for a vote, and it passed Tuesday evening with just 28 Republicans backing the measure.
It is now set to move to the Senate, where it is expected to pass as well. But if there are any delays there, chances are lawmakers won't take up the bill until the week of February 24, after they return from their President's Day recess.
Treasury Secretary Jack Lew has warned that he doesn't think the extraordinary measures at his disposal will last longer than February 27.
Budget experts say the debt ceiling is a flawed concept since the decision to raise it is almost always divorced from the decision to pass spending and tax policies that obligate Treasury to borrow more in the future.
I remember when I was young in the 90's, everyone said that 12 Trillion would be the break point. I guess as long as our economy grows, then we can sustain this (CBO report: future-2%).
I'm curious from ST'ers who think this isn't bad, or unsustainable: What is the number? What is too much?
the priority now and has been for 5 years is to stimuluate the economy with MORE GOVT SPENDING to create jobs.
the deficit is largely due to REPUG WARS and REPUG tax cuts and REPUG AUSTERITY in the Banksters Great Depression.
As long as the debt is in US dollars and in US terms, I don't think it's necessarily "bad". What's "too much" depends largely on the demand for such debt instruments.
Now if we argue this from a moral standpoint, that might yield a different conclusion though (ie: positing this is a giant ponzi scheme, etc).
That is a ridiculous statement. The government debt is clearly tied to the fact that it spends way too much money.
the deficit is largely due to REPUG WARS and REPUG tax cuts and REPUG AUSTERITY in the Banksters Great Depression.
now that the 1% and corps are filthy rich, they want to screw everybody else with austerity.
St Ronnie doubled the debt, dubya tripled it, Obama has reduced it as far as he could.
Last edited by boutons_deux; 02-12-2014 at 05:13 PM.
I think it's time to start printing Krugman's trillion dollar coins.
Or, start preparing for a non-existent alien invasion. Krugman is never short on good ideas.
Agreed that as long as it is in US dollars we are a lot better off, but it still makes me nervous because we may not always be as dominant as we are right now, and if/when that day comes (surely it is a matter of when and not if), the country may no longer be able to withstand the economic warfare to which we could be subjected.
The absolute dollar amount of debt is of less concern to me than the amount of debt as a percentage of the GNP. That latter number has been coming down as the tax revenues have increased and the productivity has gotten back on track.
Finally, the increase in the debt ceiling shouldn't be considered the problem, imo. To focus on the debt ceiling is to concern yourself with the shape of the new lock on the barn door after all the livestock have left. The debt ceiling only reflects the necessity to pay for DEBTS ALREADY APPROVED BY THE CONGRESS.
The time to make decisions about your credit card debt is before the card is used. Once it is used, you'd damn well better pay the bill or they come and collect your goodies…and you are known to the world as a deadbeat.
Budgets are worth arguing over…debt ceilings are nothing more than accounting contrivances.
you right-wingers, suckered by VRWC propaganda, have been whining about the debt, the (NOT) out-of-control spending, and HYPER-inflation, SS disaster, none of which arrived. Meanwhile,the govt's borrowing costs are at an all time low, a GREAT time to borrow and spend, since the world and the wealthy are all very willing to lend US govt money.
QE1, QE2, QE3, ...., QEn
that's not govt spending, that's the Fed buying toxic MBS, iow paper, not goods, from the financial sector.
Has almost no benefit to the Real Economy of the 99%.
Yeah, that's why I pointed out the on the moral aspect it might be different. You *could* argue this is a giant ponzi scheme since the debt is effectively backed by the "faith and credit" of the US government (you know, euphemism for thin air).
In other words, as long as the US is the sheriff in town, that's a ponzi scheme that's not going to get busted. Morally, it's a ty construct: The sheriff is taking advantage of it's position as sheriff.
That said, even in the event of a power tilt, you still have the benefit that the debt is in your own currency and your rules. There's no bankruptcy, just the threat of inflation due to a potential massive increase in money supply. However, if we reach that point, then it becomes imperative to rein in spending or increase growth.
You're right.
Your 'ponzi scheme' reference has become even more apt since the loss of a gold or silver backing. I mean, let's face it, the entire planet's economic structure is a socially constructed reality. These things have this value because we all agree that they do. If/when that changes, it all goes poof. (ponzi result on a global scale).
Everytime I try to see things from Team Blue's perspective I come upon a boutons post and quickly lose interest
...it's much more complex than the US just being 'the sheriff in town'...and that's not really true with France in Libya and Israel in Syria...this is a global economy with the US dollar the world currency, so almost everybody has some skin in the game and inflation? We should be fearing a period of deflation instead...n other words, as long as the US is the sheriff in town, that's a ponzi scheme that's not going to get busted. Morally, it's a ty construct: The sheriff is taking advantage of it's position as sheriff.
That said, even in the event of a power tilt, you still have the benefit that the debt is in your own currency and your rules. There's no bankruptcy, just the threat of inflation due to a potential massive increase in money supply. However, if we reach that point, then it becomes imperative to rein in spending or increase growth.
Who is, by far, the largest owner of US debt again? That's right...the US government....
Have you met Nbadan?
hyper- inflation
Said RG and Winehole once...and they both continue to be wrong...ha!
I didn't predict any hyper-inflation... I spoke merely in fairly basic economic terms... blew right over your head though.
...basic is right....
apparently not basic enough, seeing we're talking US dollar economics and somebody gets confused enough to bring up "France in Libya and Israel in Syria"...
if you think anything I posted isn't correct, please point out what part isn't right... I'm already on the record that what's "too much debt" is entirely dependent on how much demand there is for US debt instruments.
The point is that it isn't just American hegemony that keeps the capitalist ball rolling worldwide...this is a global hegemony working here...a true global economy and....new world order...
So, nothing wrong? Okay.
Dan, you're missing the entire context of what you're saying. It's easy to throw around "the US dollar is the global currency" lightly without understanding the reason for that was the Bretton Woods system that followed WWII, when the rest of the world was pretty much in shambles. The US took advantage of that and put itself in a cozy situation, being able to, for example, lend money under it's own rules (ie: you can't ask for your money back, you have to spend it). They also ran an negative balance sheet to pump US dollars to all those countries that needed to rebuild thus creating the dependency and strengthening the position of the dollar as a global currency. Once the US moved to a fiat currency (and the system effectively ended), it only allowed it to move even more money around.
Now, I'm fairly pragmatic, and I have no problem with "to the winner go the spoils". But pretending that the US doesn't have it's economic enemies that would like to see such advantages eroded and potentially replaced is extremely naive.
then there's the positive effects of government borrowing at negative interest rates....
http://en.wikipedia.org/wiki/Nationa..._United_StatesSince 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt, meaning the inflation rate is greater than the interest rate paid on the debt.[28] Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular ins utional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk.[29][30] Economists such as Lawrence Summers and bloggers such as Matthew Yglesias have stated that at such low interest rates, government borrowing actually saves taxpayer money and improves creditworthiness.[31][32]
In the late 1940s through the early 1970s, the US and UK both reduced their debt burden by about 30% to 40% of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay so low.[29][33] Between 1946 and 1974, the US debt-to-GDP ratio fell from 121% to 32% even though there were surpluses in only eight of those years which were much smaller than the deficits.[34]
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