Tuesday, October 15, 2013

Short Term Memory

Just about a month ago, the genius light-worker Obama said, "Now, this debt ceiling — I just want to remind people in case you haven’t been keeping up – raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy.  ... It’s always a tough vote because the average person thinks raising the debt ceiling must mean that we’re running up our debt ...".  This is the link to the Human Events article which says Obama is lying, which is harsh but accurate, to paraphrase Dan Rather.

The article itself does a better job than I can do of dismantling Obama's arrogant assumption of stupidity on the part of the American people.  But then, more than half of the electorate voted for this twit, so maybe it's not such a bad assumption. 

In any case, I bring this up because people tend to quickly forget ridiculously false and/or dumb statements by leftists when such remarks are ignored by the Media -- the overall intelligence of which it is impossible to underestimate. 

Here's the problem with Obama's statement on a simple, easily communicated level:  if we are not going to borrow more money, why do we need to increase the debt limit?  And, isn't borrowing more money by definition increasing the debt? 

We already know Obama, however good his memory may be, or however clever or intellectual or well-read he may or may not be, has no common sense.  Obama has never held a real job, never solved an actual concrete problem in his entire life.  He has no connection with the real world.  All he knows is politics.  Clinton, as in Bill, is a despicable, disgusting, perverted lump of protoplasm, but, growing up in small-town Arkansas, he has more of a connection to the blood and soil of America than Obama.  (Clinton, as in Hillary, is, essentially, the old, fat, white, masculine version of Obama.) 

The truth is that a default need not occur if the debt limit is not raised.  Remind everyone every time you get the chance that the federal government has revenue coming in every month.  The interest on the debt as well as obligations to Social Security, Medicare, and the military payroll can all be covered by incoming revenue.  Back in July of 2011, the interest payment amounted about $29 billion, or roughly 15 to 20 percent of what the Treasury takes in during any given month. 

It is undoubtedly more now since we increased the ceiling just two years ago and added another trillion or so in that time period, but the ratio should be about the same.  But let's call it 25% of the monthly revenue just to help us think about it.  People who have a house payment, a car payment or two, and a credit card payment can relate to that quite well.  A significant portion of a family's income in that case goes to debt service and nothing else.

Right now the U.S. can still handle the payments.  It's rather dependent, however, on the current Fed policy that buys $85 billion in bonds every month to keep the 10- and 30-year rates low.  If the 10-year were to go to, say, 5%, there would be a lot less revenue left over after the monthly interest was paid. 

Somewhere we have to start thinking about what we are going to give up in terms of federal programs and government services.  Somebody has to get serious and realistic and tell the truth that we cannot continue indefinitely giving away money we do not have. 


  1. If the investment class knows we won't default on our debt because there is plenty to cover it then why all this action on Wall Street as if we are a credit risk? It's like they are believing his lies. Maybe they are trying to trade on the lies in the hopes of finding a greater fool who will buy from them.

    Ugh, It's just too fatiguing to listen to such lying all the time.

  2. Somebody has to get serious and realistic and tell the truth that we cannot continue indefinitely giving away money we do not have.

    We know that's not going t to happen. I've been thinking on this a bit and I'm beginning to see how so pervasively chained we are to government spending. What are you going to cut first? I don't have numbers to back this up but I'll rant anyway. It has been my experience and observation that so many well-paying, professional jobs are either directly dependent upon government or one level removed. If you go to two levels removed I imagine that the percentage of the people dependent upon the government is huge. So, the ripple effect of a cut would be devastating.

    This dependence can't be undone fast enough. Meaning, this will crash

  3. So, the ripple effect of a cut would be devastating.

    That's absolutely true. I'm a level off -- on the revenue side. EDS, Ross Perot made all his money off government contracts. Highway departments, schools and a great deal of health care already, technology companies that cater to the defense industry -- it's would be huge. At a minimum, it would be about 40% of the GDP. It would be a worldwide depression, and it would take the rest of my life to grow out of it.

    I think the ultimate crash will be worse. Denninger will ban anybody who suggests hyperinflation, but I still see that as possible. They are going to keep printing until the Fed collapses. It's hard to say what will happen after that. At this point, I'm resigned to whatever happens. They are never going to do the right thing. An awful lot of voters in this country have an IQ below 100, and they are not all hillbillies.

    As far as the market, it's a cross between manipulation and irrationality. There has been a lot of the Fed's new money go into equities to keep them up. Goldman has the resources to move the market against all reason. Plus you have a lot of people who just aren't thinking.