The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

The Prepper's Blueprint

Don't Buy Survival Food Until You Read This - If you stockpile the wrong foods, you could be setting your family up to starve. It sounds harsh, but the truth is too many people with good intentions are making critical mistakes with their food stockpiles. Watch this video now >>
The End of Obama? Approaching Obama scandal could change the White House Administration and our country overnight... Click Here
Gold Buying Guide: Golden Eagle Coins

Archives

The Mystery Of The Shemitah

Will Barack Obama Use The 14th Amendment As A Way To Get Around The Debt Ceiling?

As the deadline to raise the debt ceiling draws closer, many are now wondering if Barack Obama will try to go around Congress if a deal is not reached by August 2nd.  In particular, a number of voices (including U.S. Treasury Secretary Timothy Geithner) are now touting the 14th Amendment as a way to get around the debt ceiling.  There are others that believe that Barack Obama should invoke "national security" in order to avoid a default.  If the Republicans and the Democrats do not reach a deal by the end of July, things are going to get really, really interesting and there is no telling what Barack Obama may do.

Section 4 of the 14th Amendment to the U.S. Constitution says the following....

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

At a breakfast hosted by Politico last month, U.S. Treasury Secretary Timothy Geithner actually pulled out a copy of the Constitution and read this clause out loud.

Geithner (and others) are now attempting to argue that the debt ceiling is actually unconstitutional.  They believe that the phrase "shall not be questioned" means that if the U.S. government refuses to make debt payments it would be directly violating the U.S. Constitution.

So what does Barack Obama think of this legal theory?

Reporters have been trying to ask him this question, but right now Obama is not answering.

Certainly Obama would very much prefer to have the Republicans and the Democrats reach a deal far before the debt ceiling deadline arrives.

So what will Obama do if a deal is not reached?

Nobody seems to know.

But this clause of the 14th Amendment brings up some deeper issues as well.

Does this clause make it unconstitutional for all future generations to renounce the national debt?

Does this clause make it illegal for all U.S. citizens to even question the validity of the U.S. national debt?

Most Americans would like to think that when it comes to constitutional questions there should always be some clear answers.  But the truth is that for many constitutional questions there are a lot of gray areas.

When there is something in the U.S. Constitution that we do not like, that does not mean that we get to ignore it.  We have way too many politicians doing that already.

Personally, I would like to see this phrase in the 14th Amendment changed.  I think that this phrase is way too vague and could potentially open up a whole can of worms.

But of much more immediate concern is raising the debt ceiling.

Yesterday, I talked about how horrible our national debt is and I also talked about how dangerous refusing to raise the debt ceiling would be.

A large number of Americans that are deeply concerned about the national debt are also completely opposed to raising the debt ceiling.

But if we default right now, it is going to make our national debt problem much, much worse.

Think of it this way - if you had friends that were drowning in debt, would you tell them to immediately start defaulting on their mortgage, their car loans and their credit cards?

Of course not.

The penalties, fees and interest rate hikes would kill them.

Well, it is the same thing with the federal government.  Right now we have a great credit rating and we are able to borrow money at extremely low interest rates.

If that suddenly changed, interest rates on our debt would go up dramatically.  Just look at Greece.  Greece is paying somewhere around 28 percent interest on 2 year bonds.  If that happened to us, it would be a complete and total nightmare.

Even if we adopted a "balanced budget" next fiscal year, we would still need to roll over gigantic amounts of debt.

If interest rates on U.S. government debt started skyrocketing, interest payments on the U.S. national debt would very quickly start eating up the majority of our tax dollars.  We would soon have very, very little money to spend on anything else.

Wrecking our credit rating just to make a point about fiscal responsibility is not going to solve anything.

What point would there be to wrecking our financial system when neither political party has a viable plan for something better?

A lot of people (including some readers of this column) are actually rooting for a financial crash so they can watch the world go down in flames.

Yes, an economic collapse is coming, but that doesn't mean that we should wish for it and try to get it to happen faster.

Look, you are probably going to die someday.  That doesn't mean that you should go out and run your car into the nearest tree.

If we blow out our national credit rating right now, it is going to make it 10 times worse to try to get a handle on our national debt.

Plus, if the world financial system was to crash, it would create a massive amount of economic pain for hundreds of millions of people.

Most Americans cannot even conceive of what the consequences of a complete and total financial collapse would be.  It is not something that we should be wishing for.  Life as we know it would change dramatically.

Once our economic system crashes, it is not going to be able to be put back together again so easily.  Most Americans have no idea how bad things could get.

Yes, we must do something about the national debt.  We must stop spending ourselves into oblivion.  We must dismantle the current debt-based financial system that we are operating under and we must transition to something new.

But to purposely default by refusing to raise the debt limit would bring a whole lot of future financial pain into the present and would make it almost impossible to transition to a new financial system in an orderly fashion.

The sad thing is that a whole lot of people out there actually believe that the current system can be fixed.  Many Republicans believe that if we can just cut spending enough we will be okay.  Many Democrats believe that if we can just raise taxes on the wealthy enough we will be okay.

But the truth is that the current system cannot be fixed.  It is designed to be a perpetual government debt machine from which there is no escape.  We have reached a terminal phase of the debt spiral and we get closer to a collapse every single day.

According to John Williams of Shadow Government Statistics, if the U.S. government used GAAP accounting principles the "real" U.S. government budget deficit each year would be somewhere in the neighborhood of 5 trillion dollars.  Williams believes that the U.S. government is essentially bankrupt and that our current system is not anywhere close to sustainable....

Generally, you'll find that the accounting for unfunded liabilities for Social Security, Medicare and other programs on a net-present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That's 15 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year, which is neither sustainable nor containable. If the U.S. was a corporation on a parallel basis, it would be headed into bankruptcy rather quickly.

Sadly, Williams is right.  We are drowning in debt.  Something has got to be done.

But refusing to raise the debt limit is not going to help.  If we allow our credit rating to be destroyed we could quickly find ourselves paying a trillion dollars or more just in interest on the national debt every single year.

If we want to handle the national debt monster, we need to do it the right way.  One thing that we need to do is to admit how bad the situation really is.

The truth is that we are in a lot more than $14.3 trillion in debt.

For example, according to The Financial Armageddon blog, the combined total for all "U.S. government bailouts" and "U.S. government guarantees" related to the financial crisis comes to a grand total of over 20 trillion dollars.

Also, the "unfunded liabilities" of the U.S. government are estimated to be somewhere between $60 trillion and $100 trillion.

If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

There are no easy solutions to our problems.  If we refuse to raise the debt ceiling our interest costs on the national debt may end up doubling or even tripling in short order.  That is not going to help us get our fiscal house in order.

Right now the state of the economy is so fragile that one really bad "shock" could cause it to totally fall apart.  The U.S. economy is like a patient that is barely hanging on in the operating room.  If we don't show patience and discipline we could end up with a total disaster.

Look, you will probably not find many writers on the entire Internet that harp on the horror of the U.S. national debt more than I do.  It is a crisis that is so nightmarish that it is hard to even put into words.

But refusing to raise the debt ceiling is not going to solve anything.  In fact, it would only accelerate our demise.

Our economic system is in bad enough shape already.  Let's not do any unnecessary damage to it.

According to a new poll conducted by CBS News and The New York Times, 39 percent of all Americans believe that the U.S. economy is now in a "permanent decline".

Sadly, that is the truth.  We are in a permanent decline.  Just "tweaking" a few things is not going to work.  Doing what the Democrats are telling us to do is not going to work.  Doing what the Republicans are telling us to do is not going to work.

Our financial system is fundamentally flawed from the Federal Reserve on down.  If we continue on the path that we are on, a horrific collapse is inevitable.

We need truly dramatic changes if our way of life is going to survive.

Unfortunately, most Democrats and most Republicans believe that they can fix the current system somehow.

It is not going to work.

Be Sociable, Share!
  • Pat Strandberg

    I think that the GOP is just crazy enough not to vote for the debt ceiling. The debt ceiling is only a vote for money ALREADY spent. The vote does not mean we spend more, just that we can continue borrowing. Why would anyone in their right mind consider defaulting on loans when we need to borrow the money right back???

    If we had enough REVENUE to pay our bills, we wouldn’t have to borrow. The Bush tax cuts, two wars, wall street greed, corporate greed and the fact that more people are getting older, retiring and needing Soc Sec & Medicare put us into this mess. We can dig out of it but that means RAISING taxes. Go back to the Clinton era taxes. If that doesn’t work, go back to Regan era taxes and if that doesn’t do it go be to Eisenhower taxes. We didn’t have any problems paying our bills then.

    What do we have a government for it not to take care of the citizens? Cutting social programs without looking at the long term consequences is just reckless. I am one of the folks who will not get real Medicare even though I have paid in all my life. A voucher so I can argue with the insurance company is NOT even close to Medicare. Everyone knows what it is like to argue with an insurance company – you lose.

    Basically, it comes down to the haves and the have nots. The GOP will force this country into third world status with their “no taxes” strategy and the rest of us will be worker bees with few rights and no ability to change things. Just look at the rest of the world for examples of how other governments treat their people. In third world countries RICH people run the show & the rest suffer for it. America is the land of the free & we need to be free from the tryanny of the very few RICH folks in this nation and their cronies, the GOP. There are 350 million regular folks up against approximately 1000 rich folks (Congress, Supreme Court, 400 richest families) that control our country.

    We need to do what is right for the MAJORITY not the rich minority. Unfortunately, everyone is going to have to participate in one way or another. Some will have to pay their fair share and others will lose some benefits. I don’t believe this is an unsolvable situation but it is going to be very painfull and take years to complete.

    Pat in Las Vegas

  • the Beast

    Mike, I don’t get you. You said that this system is flawed and made people’s lives terrible, and yet you propose to perpetuate the system.
    You also said that this system is not sustainable, but you are opposing its destruction and recommend to postpone its demise.
    I tell you this, a bad deed is made by choice but its effect came by fate. You may choose to use drug or not to use drug, but if you choose to use it then the destruction of your nerve system (to a certain extent)is inevitable.
    Any attempt to prolong this system only make more lives in misery (but those 1% that own 90% of our wealth will remain happy).
    Have you got struck by Helsinki Syndrome Mike?

  • findthetruth

    “authorized by law” is the question. For instance, we have paid for and owe for MANY wars, that have not been authorized by law.
    That is why congress will and should be held absolutely accountable for their not making the executive branch accountable.

  • deMontjoie

    Good grief! I realize that ~52% of the electorate are profoundly cognitively-impaired, but I am surprised at how many of the folks on this website share that trait. I had always thought that this site self-selected for logical and economic intelligence.

    Michael is quite right, assuming that anyone believes that our system-of-government can 1) publicly recognize the problem, 2) develop a solution, and 3) remain in office long-enough to implement the solution. Of these three, 1 appears extremely unlikely, 2 has many options, and 3 is completely and utterly impossible.

    Our original republican form of gov’t was brilliantly constructed to prevent this failure-mode, which is common to democracies. Although this worked for a while, it was perverted by greedy/selfish politicians/electorate (they are the same thing). As a result, we are doomed.

    Trolls (or morons) like UCLA, Bruce, and (especially) Sigmund just don’t seem to get it.

    If we could take our short-term debt (think credit cards) and transition it to longer-term instruments (think 30-year home-equity loan) AND stop spending more than we take-in (get rid of cable TV, forget high-speed internet, sell all but a single car, get a second job, move from our nice house into a crappy apartment or single-wide trailer, etc.) so that we could pay-off the 30-year paper, then maybe we could pull outta this death-spiral. But what are the odds of that happening?

    Abia, Concerned, and DaveyJ have the right ideas. Recognize that our “Leaders” are gonna kick the can down the road, but do NOTHING to prevent the inevitable crash — except for making-sure that they are insulated as much as possible while making certain that the inevitable crash (when it happens) is even worse.
    We need to do the same — prepare for the worst in the remaining months/years before the crash.

    Invest in precious metals — gold, silver, brass, and lead.

  • what?

    sounds like you are saying better to postpone the punishment than take it in the chin.

    When the punishment grows exponentially it is better to take it now. It is only going to hurt more later.

  • mondobeyondo

    According to official government logic – I should be able to pay off the balance to my Visa credit card, by charging more purchases to it. (i.e. spend your way out of debt).

    Didn’t work for me, and it won’t work for the U.S. government, either.

  • Bob Marshall

    The list someone mentioned. Well, since my files have been erased twice in a month i could be on that list. If i am it makes me feel proud because they know i don’t buy the corporate controlled news media lies coming from Washington. Credit card debts was a good example of debt problems and why they occurs. In either case, you can’t spend your way out of debt.

  • Have2MakeHope

    We need to end this craziness now! not wait! Capitalism is wasteful, corrupt and unfair, the longer it goes on the less resources we have to transition to a sustainable resource based economy!
    We are living on a system designed for infinate growth, which is totally unsustainable! the only reason why people don’t want to give up on capitalism is they think that a RBE is just a form of communism but that is a misconception. We can all be free, happy and have a democratic society in a RBE but the problem is there is no money, ownership and only one class of people where all are equal! Many people think they deserve better for whatever reason and though there is alot less luxuries we have to decide if we want to spend all our resources now and have nothing left to transition to a sustainable economy. We can whipe out poverty, greed and corruption with this system but we have to give up our materialistic ideaologies! We need to decide who we are, Are we human beings are just animals looking to have our pleasure here and now till it’s gone and then fight over the scraps? The choice is ours, will we choose
    selfish materialism for fewer and fewer of us or sustainability for all man kind?

  • arekaine

    I just woke up in Feb ’11. Society is more stratified than the previous depression. Fight that now -get to know your neighbors.
    Write your reps in DC, even POTUS-make every effort to be heard.
    At the same time prepare for the worst.
    Bring it down sooner than later. The pain will be worse the longer we live the lie. Life, liberty, and pursuit of happines-one without the other two will not work.

    Will work for food…Do you have a skill that will be needed on that level?
    Bless u all…. plan for reconstruction prepare for revolution.

  • J

    THIS WAS BY DESIGN. PLEASE PREPARE IF YOU HAVE NOT ALREADY. FOOD, WATER, PERSONEL PROTECTION.

  • Zonie

    “…authorized by law”

    That is the key phrase.

    If the debt is ILLEGAL….you bet your ass we can question it.

    IE: The interest owed to THE FED.

  • http://microsoft mary heavner

    i believe the president should use the 14th amendent

  • http://www.speakmanshowerheads.org/tag/bathing-source/ Speakman

    With the constant trend in rising costs and the financial meltdown, persons are needs to pay more attention to their finances and spending. Everywhere around us, we observe this trend from the changing world.

Emergency Essentials/BePrepared
Agora Financial
Thrive Life
FEMA Hates This

Austin Coins
Family Survival Plan - Check This Out!
High Blood Pressure?
The End Of America?
MHAdNew_125x125 copy(1)
FINCA BAYANO
Survive After Collapse
cheaper to burn dollars than paper

Silver.com

Camping Survival
Facebook Twitter More...