Government reaches debt limit

Treasury Government Tim Geithner

The Treasury Department scrambled Monday to move money around as the US government hits its debt limit, preventing Uncle Sam from borrowing any more money to stay afloat while Congress remains in deadlock over a budget cuts and an extension of the limit.

 

Treasury Secretary Tim Geithner suspending payment to the Civil Service Retirement and Disability Fund, giving the government some spending relief until early August.

Geithner has warned Congress for month that the day would come when the government’s ability to borrow would end and was ready when the time came Monday but if the deadlock continues the government’s shaky rating in the financial markets could fall even further.

The move is primarily a gimmick. Eventually, the Treasury will have to catch up with the payments and that could cause more problems down the line but the move does give the government some breathing room while the naysayers in Congress continue to posture and pontificate.

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5 Responses to "Government reaches debt limit"

  1. Jim0001  May 17, 2011 at 10:25 am

    $14,300,000,000,000

    We’re broke!!!!!

  2. bogofree  May 17, 2011 at 3:21 pm

    Congressional woman’s caucus solves debt problem.

  3. Carl Nemo  May 17, 2011 at 6:49 pm

    I’m thinking folks would enjoy an article that puts a single “trillion” into perspective much less 14.3 of the same. It’s truly an astronomical number.

    http://articles.cnn.com/2009-02-04/living/trillion.dollars_1_trillion-john-allen-paulos-stimulus?_s=PM:LIVING

    There’s no way it can ever be repaid and default is imminent in some way shape or form on long term debts, not necessarily short term treasuries though. The only thing we have control over is future spending; ie., to live within our budget and to implement a debt reduction program as Canada has done. If we have 400 billion per annum to pay interest then we best come up with a way to apply 200 billion to principal annually via cutbacks across the board. We could whack off one trillion every five years or so, but it would still take a third of a century to approach being flat on our debts because more of the interest would be going to payoff reduced principal. This would be no different than applying extra to principal each month on a home loan, thus accelerating the payoff.

    *****

    “If you owe the bank $1,000, you have a problem. If you owe the bank $100 million, the bank has a problem.” …John Maynard Keynes

    *****

    The Keynes quote fairly sums up the “mega-banker’s” dilemma particularly when it comes to sovereign debt.

    Carl Nemo **==

  4. Lillibet  May 18, 2011 at 12:27 am

    There is a solution to this. It is in the Constitution. The US could, today, stop borrowing any money at all. Congress just issues the money, and bypasses the Federal Reserve completely. No need to borrow a dime.

    Ever.

    It is so amazingly simple. John Kennedy did it. We could do it again.

    The Constitutional power to issue money has never been amended away from the Congress. All they need to do is to revive the Constitutional process of issuing money.

  5. Senegoid  May 18, 2011 at 6:58 am

    This essay is an interesting read, although a little bit long:

    “You can’t outrun the bear but you can outrun your neighbor.”

    http://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html

    “Ultimately, every penny of every debt must be paid — if not by the borrower, then by the lender.”

    “Sheesh! Where to begin? It’s difficult to give up a belief system that took root 30 years ago, but I find your arguments irresistible. I took notes as I read the essay, thinking to rebut you point-by-point; instead, halfway through it I found myself overwhelmed by the clarity of your thoughts. The real power of this essay is that each step of the hyperinflationary endgame you foresee is entirely consistent with human nature, particularly where self-interest and self-preservation are fated to play out.” – Rick Ackerman (previously a deflationist)

    It’s worth a read,

    Cheers S.

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