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Support your local sheriff... and your federal debt ceiling

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July 17, 2011 – Comments (13)

It should go without saying, but if the debt ceiling holds fast and the government stops borrowing money, it will be a good thing for the economy. The resources that would have been appropriated for use in advancing the welfare/warfare state that produces nothing, or bureaucratic desk jobs that produce nothing, or the corporate muckety-mucks that produce nothing the market wants, and instead spend their time and money lobbying Congress, will all be spent trying to satisfy the wants and needs of paying customers instead.

So government will default on its interest payments? Great! More and more resources will stay in the private sector instead of being spent on the very apparatus that undermines productivity, to wit, the government goon squad. 

Social security recipients won't keep receiving their checks in the mail? Not likely. Social security recipients, those people who are complicit in the government's Ponzi scheme and kept voting for it all those years, are the real bondholders of the U.S. government - that is, they are first in line to get paid if the government is bankrupt.

So who really loses if the debt ceiling holds? Lobbyists. Especially the weakest lobbyists. The ones who barely managed to convince Rep. Doofenshmirtz (R-WY) that their clients were essential to his reelection, will see their golden goose cooked. The ones who cost the most money relative to their political clout, including many of the federal employee unions. If they get laid off and have to get jobs in the productive sector, we will see a recovery like you've never seen before. In fact, some of them will get to go back to the unproductive sector, courtesy of the taxes paid by their compatriots. Then we will have balance again, the "third way" that got us here gradually, so that we made it for fifty pretty good years with only intermittent crises.

The overwhelming majority of the country wins if the debt ceiling holds. In fact, even those who "lose" will see very real moral benefit from living in a more honest country. Tell your senator and your congressperson that you don't give a flying fig about promised spending cuts for the future. You want the certain spending cuts from a steadfast, rock-steady debt ceiling.

Also, buy gold and silver, because you need to be prepared when they raise the debt ceiling.

(Disclosure: Iong gold and silver.) 

13 Comments – Post Your Own

#1) On July 18, 2011 at 7:13 AM, jwebbzor (< 20) wrote:

What is called lobbying in the US is called bribery in other countries and is a felony. This is the problem with a pluralist form of democracy... Only the most organized and well-funded special interest groups get power in Washington.

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#2) On July 18, 2011 at 8:36 AM, FleaBagger (29.37) wrote:

I think the problems with this democracy and all democracies are manifold. As a wise man once said, a democracy does nt last much longer than it takes the majority (or the well-lobbied) to discover they can vote themselves favors from the treasury. It's the same in any democracy, just with different constituents.

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#3) On July 18, 2011 at 8:57 AM, Frankydontfailme (27.20) wrote:

But I thought debts were a good thing? They give our nation credit, right? Also, someone with a phd told me that it would be better to abolish the debt ceiling because nothing bad has ever happened to a heavily indebted nation.

Also, may I ask if you have a phd? If you don't you couldn't possibly understand the intricacies of the economy. It's very complicated. All the math used proves that.

...sarc... 

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#4) On July 18, 2011 at 9:50 AM, PeteysTired (< 20) wrote:

a wise man once said, a democracy does nt last much longer than it takes the majority (or the well-lobbied) to discover they can vote themselves favors from the treasury. It's the same in any democracy, just with different constituents.

Do you think this could happen with a gold standard?

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#5) On July 18, 2011 at 10:41 AM, outoffocus (23.59) wrote:

In other news Gold just $1600 an oz....

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#6) On July 18, 2011 at 11:51 AM, Frankydontfailme (27.20) wrote:

If you have a gold standard with fractional reserve banking you don't really have a gold standard.

And of course there could be corruption with a pure gold standard.

Now if you prevented companies and individuals from bribing politicians AND had a gold standard... 

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#7) On July 18, 2011 at 12:35 PM, leohaas (35.73) wrote:

"It should go without saying, but if the debt ceiling holds fast and the government stops borrowing money, it will be a good thing for the economy."

Huh? If the ceiling isn't increased, the economy will collapse. The LEH aftermath will be peanuts compared to it. Please stop urging the total collapse of society as we know it.

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#8) On July 18, 2011 at 12:46 PM, whereaminow (42.76) wrote:

Huh? If the ceiling isn't increased, the economy will collapse. The LEH aftermath will be peanuts compared to it. Please stop urging the total collapse of society as we know it.

Isn't that fear mongering? 

Flea,

I'd like to keep in touch. Email me, please.

David in Qatar

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#9) On July 18, 2011 at 2:22 PM, djemonk (< 20) wrote:

Huh? If the ceiling isn't increased, the economy will collapse. The LEH aftermath will be peanuts compared to it. Please stop urging the total collapse of society as we know it.

It's tough to say what will happen, although I don't expect that we'll see a collapse.  It probably won't even be as bad as the LEH bankruptcy since I don't believe this would threaten to end the global financial system (just throw some more confusion into it), but that's just my guess. 

 

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#10) On July 18, 2011 at 4:15 PM, leohaas (35.73) wrote:

We'll see about the "fear mongering" accusation. I sincerely hope I am wrong about this. First, I trust both parties will come to some compromise close to the deadline. That will be because of the same fear I am allegedly mongering. Second, if they don't, I still hope my fear proves to be misplaced.

Just in case, I am long FAZ with a significant portion of my real life portfolio: putting my money where my mouth is.

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#11) On July 18, 2011 at 8:55 PM, FleaBagger (29.37) wrote:

With Bernanke and Geithner funneling the nation's wealth into the banks, FAZ is a very risky play. That said, they're crap, and they're bound to have some severe corrections now and then if Bernanke isn't super careful.

As for advocating the collapse of society, how do you know it's the end of the world if banks fail? And the Treasuries aren't the first things on the chopping block, regardless of what politicians say. Did you know tax revenue covers UST interest several times over? Entitlement programs will still be okay for a few months, too, though the life will be choked out of them through gradual cuts.

It's not that I like seeing seniors suffer, it's just that this can happen now through a solid debt ceiling, or later through the gradual collapse of the American economy and universal destitution. I prefer the former. (And just think: if the rest of us still have some money when Social Security and Medicare are eliminated, we will be able to set up soup kitchens and charity nursing homes, etc.) "Progressives" (and fake conservatives and politicians with no ideology besides their next reelection) prefer to ignore economic reality and choose the latter by default. Fundamentalist Christians say that if you don't believe in Satan, he's already won. Well if we don't believe the government will destroy the wealth of this country with its spendthrift ways, it's a foregone conclusion. You have to know what's really going on to stop it.

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#12) On July 18, 2011 at 8:57 PM, FleaBagger (29.37) wrote:

To PeteysTired, it can happen in any democracy, regardless of how they obtain their treasury. However the wealth gets into the hands of politicians, they will spend it getting reelected.

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#13) On July 18, 2011 at 8:59 PM, FleaBagger (29.37) wrote:

I hope that didn't make it sound like I think a gold standard is useless, because it is of great benefit. But politicians will gradually find ways around the limitations that were imposed by those now dead (or out of favor with the majority of the electorate, which is the same thing, politically).

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