The Debt Ceiling Deadline Approaches

[r3volution 3.0]

Treasury is currently fiddling with the accounts to keep the debt below the limit. By early October, these "extraordinary measures" should be exhausted. So another debt ceiling fight is coming up soon. A few Freedom Caucus members, along with Rand, are already on record demanding spending cuts, as you might expect. The remainder appear to be drifting toward a "clean" bill: i.e. raising the ceiling without any meaningful reforms. Congress will be back in session in a couple weeks, and the media will soon start winding up the old "Ohmahgah we're gonna default!" propaganda machine, so brace yourself and get your dialing fingers ready to flood those DC switchboards.

[Zippyjuan]

October is still a bit off. Nothing will probably happen until the last minute when Congress will pass a bill raising the debt ceiling. Congress is on vacation until September.

[r3volution 3.0]

October is still a bit off. Nothing will probably happen until the last minute when Congress will pass a bill raising the debt ceiling. Congress is on vacation until September.

Until the 5th, which will give them about a month.

[Madison320]

Treasury is currently fiddling with the accounts to keep the debt below the limit. By early October, these "extraordinary measures" should be exhausted. So another debt ceiling fight is coming up soon. A few Freedom Caucus members, along with Rand, are already on record demanding spending cuts, as you might expect. The remainder appear to be drifting toward a "clean" bill: i.e. raising the ceiling without any meaningful reforms. Congress will be back in session in a couple weeks, and the media will soon start winding up the old "Ohmahgah we're gonna default!" propaganda machine, so brace yourself and get your dialing fingers ready to flood those DC switchboards.

We have to borrow money so we can pay our bills!

As Peter Schiff says, "When you're running a ponzi scheme you're not supposed to tell everyone."

[P3ter_Griffin]

Is Rand's requested reforms just the balanced budget amendment or the balanced budget amendment and a budget that balances within 5 years? It seems like a good occasion to attempt to coalesce support for some specific reforms by asking reps to oppose it without reforms x,y,z.

[Zippyjuan]

Is Rand's requested reforms just the balanced budget amendment or the balanced budget amendment and a budget that balances within 5 years? It seems like a good occasion to attempt to coalesce support for some specific reforms by asking reps to oppose it without reforms x,y,z.

https://www.facebook.com/RandPaul/posts/324885054287210

I will not vote to raise the debt ceiling unless we get a balanced budget amendment to the Constitution because so far I've seen no objective evidence to trust the Obama administration. They set spending limits but always go beyond them. They're not trustworthy with money or very good with it. We shouldn't give them anymore. We should cut spending and make government smaller.

(That was in 2013- but there will never be a Balanced Budget Amendment to the US Constitution).

This week:

I encourage my fellow senators to join me in calling for an end to this counter-productive, devastating status quo.

I urge legislators in the U.S. House to support the House Freedom Caucus’ push to change how government operates, which would allow us to avoid hitting the debt ceiling in the future while still meeting our obligations.

May this be the time we look back on as the moment Republicans kept their commitments to deliver change and be the party of limited government.

Let us take our case for a Balanced Budget Amendment to the American people and finally get it done.

Let us provide stability and better keep the guarantees we’ve already made by reforming our entitlement programs, and let us start on the road to fiscal sanity right away by passing a budget that balances within five years.

And through it all, may we make our voices heard loudly and clearly: “No Debt Ceiling increase without Reforms!”

(not specific on what "reforms" here).

[r3volution 3.0]

Is Rand's requested reforms just the balanced budget amendment or the balanced budget amendment and a budget that balances within 5 years?

The latter

[Chester Copperpot]

all we gotta do is get rid of the federal reserve and then we dont need any balanced budget amendment.

[Swordsmyth]

all we gotta do is get rid of the federal reserve and then we dont need any balanced budget amendment.

Yes we do, we still don't want the government going into debt.

[Zippyjuan]

all we gotta do is get rid of the federal reserve and then we dont need any balanced budget amendment.

Not having a central bank doesn't prevent them from spending more money then they have. As long as the are able to borrow money from someplace.....

[Chester Copperpot]

Not having a central bank doesn't prevent them from spending more money then they have. As long as the are able to borrow money from someplace.....

without a federal reserve interest rates would be 25% right now.. that will stop the spending and encourage savings.

[Madison320]

Yes we do, we still don't want the government going into debt.

The debt ceiling does the same thing as the balanced budget amendment. I think if they passed a balanced budget amendment they would ignore it, just like the debt ceiling.

I think the problem will eventually solve itself when the dollar crashes and rates skyrocket. We'll have a balanced budget because no one will lend us money!

[Swordsmyth]

The debt ceiling does the same thing as the balanced budget amendment. I think if they passed a balanced budget amendment they would ignore it, just like the debt ceiling.

I think the problem will eventually solve itself when the dollar crashes and rates skyrocket. We'll have a balanced budget because no one will lend us money!

We derive benefit from the 2nd amendment even though they don't follow it either, it helps to limit how much they abuse us.

In the end what really matters is who is in office but a balanced budget amendment would still be a good thing.

[Zippyjuan]

without a federal reserve interest rates would be 25% right now.. that will stop the spending and encourage savings.

Why would interest rates be 25%? Interest rates banks charge or pay their depositors depends on the rate of inflation. If the rate of inflation was 20%, that may be the case (interest rates did hit 20% in 1980). Inflation is below 2% today- that does not justify interest rates of 25%.

that will stop the spending and encourage savings

Do we need more savings? Is there a shortage of money for companies to borrow? (banks currently hold about $2 trillion in excess reserves- money they haven't lent out)

What would happen if people stopped spending? How would that impact business? Would they increase borrowing (which would cost them much, much more money) to expand output capacity? If people stopped buying, demand for their goods would plummet and they would be cutting- not expanding- production. They would be laying off workers causing high unemployment (those 20% interest rates in 1980 were quickly followed by 10% unemployment).

[Swordsmyth]

Why would interest rates be 25%? Interest rates banks charge or pay their depositors depends on the rate of inflation. If the rate of inflation was 20%, that may be the case (interest rates did hit 20% in 1980).



Do we need more savings? Is there a shortage of money for companies to borrow? (banks currently hold about $2 trillion in excess reserves- money they haven't lent out)

What would happen if people stopped spending? How would that impact business? Would they increase borrowing (which now costs them much, much more money) to expand output capacity? If people stopped buying, demand for their goods would plummet and they would be cutting- not expanding- production. They would be laying off workers causing high unemployment (those 20% interest rates in 1980 were quickly followed by 10% unemployment).

The new zippy is being possessed by the ghost of John Maynard Keynes.

[nobody's_hero]

The new zippy is being possessed by the ghost of John Maynard Keynes.

Lol. It's almost like he's never listened to a minute of Ron's economic speeches.

[Swordsmyth]

Lol. It's almost like he's never listened to a minute of Ron's economic speeches.

You would think they would require him do study the forum he was assigned to before starting to post there.

[Zippyjuan]

So interest rates should be 25% and if they are, the economy will be amazing. Ok. What is the mechanism for how that works?

(if interest rates are 25%, the rate of inflation would be around 20%).

[Swordsmyth]

So interest rates should be 25% and if they are, the economy will be amazing. Ok. What is the mechanism for how that works?

(if interest rates are 25%, the rate of inflation would be around 20%).

LOL

[devil21]

The new zippy is being possessed by the ghost of John Maynard Keynes.

Zippy just applied Keynesian econ to a specifically non-Keynesian quoted post. New Zippy is either very skilled or floundering with utter bs. I can't decide which yet.

Why would interest rates be 25%? Interest rates banks charge or pay their depositors depends on the rate of inflation. If the rate of inflation was 20%, that may be the case (interest rates did hit 20% in 1980). Inflation is below 2% today- that does not justify interest rates of 25%.

Does not compute. Quoted post was about no central bank targeting rates.

[Zippyjuan]

Zippy just applied Keynesian econ to a specifically non-Keynesian quoted post. New Zippy is either very skilled or floundering with utter bs. I can't decide which yet.



Does not compute. Quoted post was about no central bank targeting rates.

Without a central bank targeting interest rates, interest rates would still be about where they are today. Why? Because the rate of inflation is so low. A lender uses three things to determine what interest rate they are willing to agree to. First is the expected rate of return on their loan. If they are happy with a one percent rate of return, they start with one percent. Then they want a real return- after inflation. So they add in the expected price inflation during the course of the loan. Today, about two percent. Then you add in a risk factor- how likely do you think the borrower is to pay back the loan. Now we are looking in this example at about 3.5%. Mortgages and car loans and business loans are all within ranges expected based on the current rate of inflation.

[TheTexan]

The Debt Ceiling Deadline Approaches

[Swordsmyth]

Without a central bank targeting interest rates, interest rates would still be about where they are today. Why? Because the rate of inflation is so low. A lender uses three things to determine what interest rate they are willing to agree to. First is the expected rate of return on their loan. If they are happy with a one percent rate of return, they start with one percent. Then they want a real return- after inflation. So they add in the expected price inflation during the course of the loan. Today, about two percent. Then you add in a risk factor- how likely do you think the borrower is to pay back the loan. Now we are looking in this example at about 3.5%. Mortgages and car loans and business loans are all within ranges expected based on the current rate of inflation.

LOL

Central banks cause inflation.

[Zippyjuan]

LOL

Central banks cause inflation.

What sort of financial systems have experienced zero price inflation?

[Swordsmyth]

What sort of financial systems have experienced zero price inflation?

Those that don't debase their currency experience DEFLATION (a good thing) from wealth production which almost always outstrips the mining of gold or silver.

[devil21]

Without a central bank targeting interest rates, interest rates would still be about where they are today. Why? Because the rate of inflation is so low.

Doubling down on same illogical argument, I see. Inflation is controlled by the central bank through open market operations, including rate targeting and QE.

A lender uses three things to determine what interest rate they are willing to agree to. First is the expected rate of return on their loan. If they are happy with a one percent rate of return, they start with one percent. Then they want a real return- after inflation. So they add in the expected price inflation during the course of the loan. Today, about two percent. Then you add in a risk factor- how likely do you think the borrower is to pay back the loan. Now we are looking in this example at about 3.5%. Mortgages and car loans and business loans are all within ranges expected based on the current rate of inflation.

I won't postulate what inflation or interest rates (or if there would even be a such thing as usury) could be without a central bank but do you realize how ridiculous your post is?

[Zippyjuan]

Doubling down on same illogical argument, I see. Inflation is controlled by the central bank through open market operations, including rate targeting and QE.



I won't postulate what inflation or interest rates (or if there would even be a such thing as usury) could be without a central bank but do you realize how ridiculous your post is?

I see. You have no idea what they should be yet are certain that they are wrong. They could be too high, they could be too low, they could be just right.

Yes, you did not suggest a rate but Chester Copperpot did and he is who I responded to.

[Swordsmyth]

I see. You have no idea what they should be yet are certain that they are wrong. They could be too high, they could be too low, they could be just right.

Yes, you did not suggest a rate but Chester Copperpot did and he is who I responded to.

When somebody picks the rate instead of letting it happen naturally the odds that they get it right are almost non-existent.

CC made a guess that is probably wrong as well but since he was just guessing and wants the market to decide it doesn't make much difference.

[devil21]

I see. You have no idea what they should be yet are certain that they are wrong. They could be too high, they could be too low, they could be just right.

Yes, you did not suggest a rate but Chester Copperpot did and he is who I responded to.

I'm only certain that your post is illogical, misapplied crap.

[jllundqu]

Who cares? Does ANYONE think that congress will do ANYTHING about the debt EVARRRRR? No. They will increase the debt. THey may bitch and moan about 'fiscal responsibility!' or they may even have a token government shutdown, only to pass a debt increase and keep right on marching over the cliff.

THEY WILL NEVER STOP THE DEBT.