Questions On the Debt Ceiling

The media and the nation is being directed to think about the debt ceiling in many ways that are probably not accurate at all. I believe the wrong questions are being asked and the answers that are being given are not being questioned as they ought to be. Our non-representing representatives keep telling us that if we don’t raise the debt ceiling that we’re going to default on our loans and lose our good credit rating as well as possibly dooming the dollar to lose its place as the world’s standard for currency. No one is asking how these two things are related?

Let’s put this in real world terms we all understand and see if the same applies. Having been in the position once I understand it in a very personal way.  Consider a person who either has no job or has a job that is inadequate to pay for his spending habits, but who has a good line of credit. This person determines that the only way to continue with his current spending habits that he’s used to is to borrow money on a credit card. He does not change his location of work or the amount of income he has but keeps hoping that things will turn around for him. He’s always had a good job and lived within his means until his job situation changed. Now he feels it is either to live on the streets or to borrow the money on his good credit. He opts for the second solution as the idea of the discomfort or embarrassment of living on the streets and eating at soup kitchens is more than he can bear. So the borrowing begins. At first it isn’t bad and he realizes he should be able to pay it back within a few short months if he can just get a better job or a raise or any job at all. As the months go on he becomes progressively further behind in his bills and his debt begins to mount. He now makes the leap that he’s going to have to get a large enough bank transfer from the credit company so he can not only live off the money he borrows but use some of it to make one of his payments. This of course means the next month he needs to borrow that same amount again for living expenses and yet a little more to be able to pay the credit card payment which has also gone up from the last month’s spending. After a while have the money he borrows is just to make the payment and the rest is to live off of. Soon the payment is much larger than this monthly bills and he can see no end in sight. Now he’s up to almost 30,000 in debt which is as much as he makes in an entire year and he’s still not able to pay anything to the debt and he’s reached his limit. The man does not have the will to stop borrowing so instead he calls the credit card company and asks for an increase to his credit limit. The credit card company grants this and so the borrowing continues. Eventually he realizes there is no way he’s going to be able to keep up with the mounting debt or even the payment due each month even if he were to find the best job he could qualify for. At some point either the credit card company is going to stop lending him money or he will have to declare bankruptcy which will also ruin his credit.

It is clear that either the man will have to learn to live within his means and stop getting all the things he’s been used as well as a get a better job or at least cut back in his spending such that his paycheck covers his spending and a little bit more. If he does this he may have some hope of paying off his creditors and still maintaining his good name. If he had done this sooner it certainly would have made things much easier, but it is still possible to deal with the situation if the man becomes prudent and careful in his excess spending. He must deny himself every luxury and live as a miser.  So the reality is that whether we raise the debt ceiling or not the same fate awaits us the only question is how bad it will get before it all caves in. In my opinion the sooner the better so it won’t be as bad for us or all the nations affected by our out of control spending.

Another question not asked is how would raising the debt ceiling help us pay our bills with something other than more borrowed money and how would borrowing more money in anyway help us get out of debt? This is such a no brainer question that it’s clear they would have no answer to it and they certainly don’t want to put our non-representing representatives in some difficult position so they don’t ask this one either.

The reality is there are only 2 ways out of normal debt and for the government there is a third way but it doesn’t work any better than counterfeiting.

• We can either earn more money. This is what the government calls raising taxes. After all they don’t actually earn or produce anything.

• We can cut spending. This of course implies those horrible words no one wants to utter, self control, self restraint, and responsibility

• We can print more money and this is no different than counterfeiting. It makes the money in existence worthless and implies that we don’t care about our money at all. It means whatever we give you today will be worthless tomorrow. It is for this reason that I say the third method is not one that is acceptable if we want to have any hope of actually turning things around.

It seems reasonable to assume then that the only two viable solutions are the first two.

Yet what are we seeing from our non-representing representatives? We see that they are not willing to cut any real spending or show any real self control. We hear our president recommending only that we spend more  to somehow buy our way out of debt and to tax the rich more. He doesn’t seem to understand that if he taxed every citizen everything they made it would still not be enough to pay off the debt. This is yet another thing now one is willing to address when the tax and spenders go at it.