Raise the debt ceiling? What debt ceiling?
“Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.” - U.S. Treasury Secretary Tim Geithner
Pay no attention to that man behind the curtain, dear hearts.
It's ludicrous to speak in terms of not raising taxes. It's a myth, a fairy tale, a hustle, a game.
Americans pay a huge debt tax, as high or higher as any other socialist economy anywhere in the world. The difference between the American system and any other is simple enough.
In this nation, the true beneficiaries of the socialist system are also the private owners of all the assets.
Since the cascading crash of 1929, the owners of those assets have realized capital gains of hundreds upon hundreds of percentage points – on paper. Now, this power structure is desperate to retain their wealth.
Who benefits?
Half the United States' gross domestic product is spent on taxes and that more insidious form of taxation – debt service.
As the world's largest debtor, the nation owes almost $56 trillion – about 400% of the GDP.
The debt service on this massive amount - which includes federal, state, local, municipal, corporate, private mortgages, and student loans – all of it backed by the “full faith and credit” of the United States government - is $3.6 trillion each year.
It's about the same amount of money as the federal government's entire yearly budget.
How is it paid? Quite simply, the board of Governors of the Federal Reserve buys 70% of all the debt issued by the U.S. Treasury. The private banking system will stop buying those bonds later this month.
When they do, the price of Treasury bonds will fall. Such a bargain.
Interest rates will rise. Who will benefit?
Foreign nations who trade with U.S. consumers accept American dollars, and in the past they bought U.S. Treasury bonds.
In the past, they didn't have much choice. As former U.S. Treasury Secretary John Connally said, “It's our dollar, but it's their problem.”
That's no longer true.
Now, America's trading partners buy and stockpile U.S. commodities such as coal, oil, natural gas, copper, and steel. Prices for these commodities have soared higher and higher as the August deadline approaches for Congress to either refinance U.S. debt by raising the government's debt ceiling, or vote nay and refuse to do so.
“Pay no attention to that man behind the curtain.” - The Wizard of Oz.
This is what happened the last time someone tried to make an end run around the system:
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