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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.

  • http://www.youtube.com/user/zedgehero Zedge Hero

    Another great article, my show this week talks about the debt ceiling, QE2 ending and what it means and the Greek Protests. Happy 4th everyone, we could use a little Thomas Jefferson now.

    http://www.youtube.com/user/zedgehero

  • Hognutz

    The sooner we crash the better. Putting it off will make it much worse. It is simple mathematics.

    Look, I am sure no one wants what is coming, it will literally be hell on earth. But there is no other way out of it……..

    • Capitalist Eric

      Sadly, you’re exactly correct.

      It’s quite simple: the government takes in ~$2T a year. Both current and future (off-book) debts total a Net Present Value (i.e., in *todays* dollars) $200T. So, just to pay off what we have, we’d have to quit government spending, maintain current tax revenues… and hope to Hell that our interest rates don’t go up (which they will).

      What do you call it, when you’ve got 100 years of debt at your current wages/salary? It’s called “BANKRUPT.” We’re done. Stick a fork in, ’cause it’s finished.


      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.

      If my debts worked out to 100 years of my salary, I’d drop the house-keys in an envelope, and send them off to the bank. I’d go to a bankruptcy lawyer, and tell them “I’m through.”

      I would NOT let my kids starve, so that the banksters could get their pound of flesh. The interest was charged as a risk-premium. In this case, they’d lose the bet.

      It’s irresponsible NOT to default- as quickly as possible.

      The longer we wait before we must succumb to financial reality, the more painful it’ll be… better to take my medicine NOW, then when I’m at deaths’ door.

    • Hayseed54

      Totally my friend. Let it crash, and let it burn. Putting it off ends up costing far more in the end. Just like the bailout of Wall Street. What did they accomplish? Nothing. Other than enriching the already too rich. If the government closes down, so much the better. That circus needs to be closed down, until further notice.

  • Hognutz

    BTW, “End the Fed!”

  • Save the Republic

    I don’t know for sure how we can get out of this. In a way, I’m hoping for some more QE, and that when the Fed does this, that other countries refuse to accept our money anymore. My expectation from this is that there would be demand for products that other countries would no longer be willing to sell us, and that jobs to produce these products would have to be created in America. If other countries don’t accept our paper money, and we need something like oil, then we would need jobs to mine or produce the things they would be willing to accept to pay for the oil. Or we would be forced to use our own energy sources, thereby creating jobs.

  • Steve

    The problem with raising the debt limit is that those running the show WANT to collapse the system and will borrow and spend more and more in order to accomplish the goal. The final collapse will be much worse the more they borrow and spend. If these were reasonable people who had our best interests in mind, I would agree with you. But it has to stop at some point. Pain now isn’t any better than worse pain later.

    • Michael

      Steve:

      We can do the same thing without destroying out credit rating.

      If the Republicans refuse to pass anything but a balanced budget in 2012 we can maintain our credit rating and yet still address the debt at the same time.

      Michael

  • Hognutz

    The main reason I say “Now” is because of my children. I can still take care of them. In a few years I will be too old and they will be nothing more than debt slaves.

  • mondobeyondo

    “Things fall apart, the center cannot hold – mere anarchy is loosed upon the world”… – William Butler Yeats

  • Teresa

    “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.”

    Our creditors will take what we give them and like it!

    Seriously, you are acting like a crybaby when confronting the truth. The truth is, without hyperinflation there is no paying back 14T, let alone 100T. Kicking the can down the road just allows the looters to make off with more loot, the people to be squeezed into serfdom that much more, and makes the resulting crash that much more horrific.

    When someone is so terminally in debt that they can’t pay their bills, the choice is bankruptcy. Face it, live it, learn it. It’s time to cut the crap, face the consequences like adults, and fix the problem of too much spending.

    There is just no alternative to debt slavery. Any bankruptcy lawyer will tell you the same. Declare now while there’s still a bit in the kitty, and people won’t die from hunger.

  • HerrLT

    I’ve discussed with my wife the very real possibility of needing to leave the country. We were saving to purchase a home here in America but have since decided that we will purchase our first home in South America and are researching now. Worst case it’ll be a vacation home and retirement location. Best case it’ll provide a solid bugout location in a country that is on the upswing economically.

    God help this country and everyone on here. Thank you for the regular articles Michael and to those who do their part in waking others up to the awful reality we face in the near future.

  • doctorjay317

    This assessment is spot on. The US economy is like a skier going downhill, but still thinks it’s fun. The catch is the skier will be falling off a 90 degree cliff pretty soon.

    The two skis are like the Democrats and the Republicans who are basically wasting time and expediting the demise of the once great country. There will be no return once the cliff is in site.

    The US can save the too-big-to-fail financial cheats. The scary thing is even God cannot save the too-too-too-BIG-to fail-USA.

    The American administration still has this “invincible mentality” because they have been up there for so long “apparently” controlling the universe.

    The sad thing is they cannot even control what’s happening right under their noses. Until you admit that something is very wrong, no one will bother fixing it.

    When the US goes down, they will really be “involuntarily” controlling the universe because we will all go down with them. I am sounding worse than the author, but sadly, all this is true. A matter of when, not if.

  • T Bonham

    The notion that if I had a family member or friend that was drowning in debt I would encourage them to continue maxing out their lines of credit to maintain a mortgage car payment, etc is ridiculous and not even a correct analogy.

    First, they should sell off some assets, then if that doesn’t work file bankrupcy. But for the country or anyone to say, we have to continue to print, print and print currency to pay the debt does not help either. Its like telling a crack whore to smoke more crack to get off of crack. We either bite the bullet now and deal with things getting really bad, or we do it later. At some point the crack whore is going to crash.

    Listen, there are not enough decent constituionalist in Washington to accomplish what needs to be done, even if there was a soultion to the massive amount of debt. We have two paths to take, and neither are good. Default or Devalue. Default means we aren’t paying the loans taken out by the Federal Reserve which means no one will loan use any more money (and why should they when the Treasury has the Constituional right to coin and print) or Devalue by continuing to print and the only way someone will loan use money will be at significantly higher interest rates but of course a loaf of bread may cost you a days wages but but at least we are paying the credit card company right?

    And since when does this dangerous man, President Obama, care about violating the constitution? Maybe he wants an insurrection so he can use the 14th to get his way?

    When the day comes, GIVE NO QUARTER TO THE ENEMIES OF THE CONSTITUTION OR THE REPUBLIC!

  • A.S.

    SOLUTION–****** THE FED ASAP!

    IF Obama wants a second term, he should ****************** is the plague. Bernanke and his cronies should be imprisoned for life. Throw away the key. The Fed must go!

    Kennedy tried it and look what happened.

    • mondobeyondo

      And therein lies the rub.
      Anyone who tries to stand up against the Fed and its policies – or the elite in general – usually meets with an unhappy end.

  • T Bonham

    The problem with this statement you made

    “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.”

    Is that $14.7 trillion in debt under any economic condition can be sustained or paid off. There is no solution, there is no economic fortitude to change the tax code, monetary system back to a constitutionally sound money system. 10 times worse today, 100 times worse tomorrow….I’ll take the 10 times worse today. You think economic collapse is bad, hyperinflation with economic and societal collapse is where continuing this policy will led.

    Face it, do not buy into the “official stts” we are well beyond the debt to GDP ratio of Greece. The only thing keeping this ship from capsizing is the fact that most people are in denial. The only way Washington will stop spending is to no longer have a check book. The people will have to force them to make deep cuts, spend no more than your tax receipts bring in the previous year.

    Same thing with your fictional family or friend if you only make $20k a year you can’t spend more than $20k. If you owe more you spend less, its not hard, there is just no will power to suffer the pain.

    America is delusional if we think this can continue.

    • Michael

      T Bonham:

      The same thing could be accomplished by having the Republicans refuse to pass anything but a balanced budget for 2012.

      We would maintain our credit rating by not defaulting and we would get the budget balanced.

      Thoughts?

      Michael

  • Tommy

    I sense an unwillingness to take on the debt between the lines of this article. An “I know we need to do something, but I don”t want to suffer.” attitude. Look, the party is over, the easy fiat money is drying up, the hangover is here. And, yes, it’s time to look at the Ugly Betty we just woke up in bed with, and deal with her as well.

    • Michael

      Tommy:

      I have been calling for a balanced federal budget since I was knee high to a grasshopper.

      But again, I would make the following three points….

      #1) Defaulting will actually make our budget problems far, far worse because interest rates would soar out of control.

      #2) The suffering that is coming to this country is so horrific that I would not wish it on anyone.

      #3) The current debt-based system that the Federal Reserve is at the heart of needs to be totally replaced by a new non-debt based system. That will be much easier to do in a financial environment that is not in chaos.

      Michael

      • Capitalist Eric

        A “balanced federal budget” won’t change anything. So sorry, but it’s decades too late for that to do any good, NOW.

        To your points:

        #1) Defaulting will actually make our budget problems far, far worse because interest rates would soar out of control.

        Nothing- and I do mean NOTHING- will stop that from happening. I appreciate your sentiments- that there may be some escape- but they are *wishful thinking* only. The high interest rates are gonna’ hit, whether we default or hyperinflate. That IS the reality.

        #2) The suffering that is coming to this country is so horrific that I would not wish it on anyone.

        Agreed. Those that will suffer the most, are those who most trust the government; unemployed, welfare and social-security recipients. Those that survive only by the largesse of the Federal Government will suffer the very worst. The next worst situation will be the government hangers-on, who depend on their “cut” of money they’ve taken from us, at the point of a gun, before giving it to those who depend on it for their very survival.

        #3) The current debt-based system that the Federal Reserve is at the heart of needs to be totally replaced by a new non-debt based system. That will be much easier to do in a financial environment that is not in chaos.

        That would be a gold or silver-based economy. Because central banks LOVE fiat money (due to the power it gives them), they will fight to their last dying breath, the idea of ever going to a currency based on gold or silver.

        You must understand: the central banks are parasites, and the debt is the venom they have left behind, in the host body… the venom is now killing the host through sheer accumulation… And only when the host dies, will the parasite die.

        It’s really as simple as that.

      • ralbol

        michael

        “if only the republicans…”–nice dream, but get real; it’s not a matter of dems vs reps. they both are in the pocket of the fed/TBTF banks and their acolytes

        cui bono? look at the interest of the private and unconstitutional cabal of fed/TBTF banks: it is not america and it is not americans, it is their very own bottomline

        so wake up: how can a ponzi system based on debt (not assets) ever be balanced?

        the sooner we get rid of it, by repeal or crash, the better–the consequences in future would inevitably just be much, much worse

  • wobbly-1

    While I too agree that to purposefully crash the economy is not the answer (and not being able to borrow would do just that), we have to do something. No one in our government is willing to face the truth that we are out of dollars. Printing more is like continuing to write checks because you have checks in your checkbook. It is a fantasy that one day becomes one’s undoing.

    Unfortunately no wants to take that step, so we continue to “kick the can down the road” for future leaders to deal with….the problem is the can can go no further down the road. We have to act now.

    Why not be “the greatest generation” that truly solves the debt problem by making the decisions that have to be made to fix this?

    • Michael

      I totally agree that we have to fix it.

      But destroying our credit rating is not going to help.

      Michael

  • Rowell

    This article is probably the most important and most inciteful piece you’ve done all year. I agree completely that raising the debt limit is a necesary evil, and it’s just putting off the inevitable. But, the extra time granted through raising the limit gives us extra time to ease into the coming storm, rather than jumping in half-prepared. I just wish more people understood this fact, rather than cheering for a default.

    Thanks for writing this.

  • bobbobbobbob

    remember the debt is in us currency not gold or euros. increase taxes on the super rich and make medicare more cost effective. please google “Tax credit for exporting us jobs” and ” walmart peasant insurance” to see what the super rich think about u

    • Cat

      Increase the taxes on the super rich you say. I have news for you, that won’t do it. Everyone is going to have to pitch in to get us out of this. Have you ever made payroll before. Most people don’t pay any taxes. Sure they pay about half of their social security and medicare, but pretty much either no, or very very little in federal income tax. If you don’t believe me, ask any CPA you know. I noticed it in my payroll and asked several CPA’s about it and they all agree. In fact many people get more back at the end of the year than they put in. I agree that the tax on the super rich might need to be increased, but you can tax their income at 100% and it won’t solve this problem. I think we need to get rid of all tax deductions and unfunded tax refunds for both individuals and corporations. Then go to a simple tax structure that anyone can can understand and be able to file their income tax on a one page sheet of paper. It doesn’t necessarily have to be a flat tax. The upper incomes can have higher tax rates as they currently do, but everyone in this country who earns income must pay something. Maybe then, people will pay some attention to how the government spends our money. Ultimately the real cause of our problem is the same one that is plaguing all those European countries, like Greece & Ireland, there are too many people collecting money and to few paying in.

      • Gary2

        wrong-the rich have never had it so good and paid so little in taxes. Tax them hard.

  • http://www.zenithminds.com Anthony Allen

    I agree, a debt crisis would make life in America very difficult. It would also make life around the world very difficult. But here is where I disagree with your POV. This system will NEVER fold into a new system unless a gun is pointed at the head of our system and the trigger is pulled. Greed will never allow a new system to be established unless there is no option. This is why I want the system to crash. Yes we will have a rough few years. But guess what, people are having rough years now. Get the pain over with NOW, end the FED, and get this country out of the hands of the few and back to the many.
    Rome is burning

    • http://www.povertylinejournal.blogspot.com/ the optimist

      I have to agree with this. It’s really a done deal and no one in the White House/congress/senate is ever going to do anything REAL to prevent it. This crash is coming. I’m starting to let go of worrying, and get ready. Very few of the people I know have any interest in this, amazingly enough.

      And yes, I’d tell my friends to BAIL on that debt and start over.

  • GJO

    Gonzalo Lira explains our debt situation rather well in this article.

    http://gonzalolira.blogspot.com/2011/06/dream-little-dream-how-long-would-it.html#more

  • McKinley Morganfield

    Go to http://www.treasurydirect.gov/NP/BPDLogin?application=np and you will see the real numbers.

    The $9.78 trillion “debt held by the public” is what is covered by the 14th. The intra-governmental debt refers to what is currently owed to the Social Security (mis) Trust Fund, federal pension programs, Medicare, etc. The humongous unfunded liabilities you list are future intra-governmental debt. Again, these are not debts that fall under the “shall not be questioned” category. The federal government will eventually default on the intra-governmental debt. That is guaranteed to happen.

    “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?”

    I would tell them to file for bankruptcy, move to the cheapest apartment they could find, eat rice & beans everyday, never again use a credit card, buy a bicycle, work 2 jobs, and try to rebuild their lives.

    “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.”

    The place to start is to not raise the debt ceiling. Raising the debt ceiling allows DC to kick the can down the road a few yards and make it even more difficult to begin ‘transition’ or, most likely, make the economic crash all the more painful and prolonged. The cure to our national debt disease is not to be found in doing today and for endless tomorrows what we’ve been doing in the yesterdays of the past 30+ years.

    As I stated yesterday in response to your Shell Game article, there is no looming default crisis. Don’t take your eye off the ball.

  • Reality Seeker

    At some point in time the entire system is going to collapse; therefore, why not let it collapse now? Does anybody really think that prolonging the agony and death of this dying system provides any real long-term benefits? The only benefits that there are to prolonging the death of this system is the extra time it affords some individuals, who are a part of the ignorant masses, to better educate and prepare themselves. That is the primary justification of consenting to more muddling down the road to serfdom, right?

    At some point in time the infrastructure of a high-tec, super police-state will be totally erected. Then, the proverbial Death Star will be complete; And, just think, the ignorant masses are funding their very own undoing by allowing the system to continue as it is. Yes, that’s right, currently, we are funding the construction of our own high-tec, Prison Planet/ Death Star. Is there ever going to be a better time to face a collapse and the aftermath than right now? Perhaps, but then again, perhaps not. That’s the fundamental problem we all face: If not now, then when?

  • ELLETA

    I have been reviewing the ‘Fair Tax’ research. What do you think of it?

    • Michael

      Ideally I think that we could set up a system without any income tax whatsoever, but I am open to all suggestions that would change the current system.

      Michael

  • http://theeconomiccollapse jackieR

    We already know that our gov want business as usual because they only know how to spend and not how to live within ones means. They will cut gov spending and then raise more taxes on the middle class then it is back to spending. They will pacify us in the short term then back to kick the can. We have been on this path forever. To expect changes is only a dream.

  • Gary2

    The following are why the right and conservative republicans will be CRUSHED in 2012. They are disgusting and immoral.

    Corporate jets depreciating over seven years, rather than five? ********, what monsters have we become? It’s all right to nix new school lunch standards because feeding kids healthier food would cost more. It’s all right to break labor agreements. Heaven knows it’s all right to cut food stamp assistance or unemployment insurance, or tell seniors that Medicare is going away and good luck finding private insurance, pals.

    The scum repubes go to the mat for private jet owners. They sicken me.

    The governor said his last offer would have raised income taxes only on those earning more than $1 million a year—an estimated 7,700 Minnesotans, or 0.3 percent of all taxpayers, according to the Revenue Department.

    Republicans rejected the proposal, Dayton said, because they “prefer to protect the richest handful of Minnesotans at the expense of everyone else.

    http://www.dailykos.com/story/2011/07/01/990439/-Minnesota-government-shuts-down?via=blog_1

    Again before anyone says it both parties suck, however, the dems are a lot better than the repubes. The above are but two of many many examples of the repubes going to the mat for the rich but screwing the middle/lower/poor folks. These are not my opinions they are a fact.

    • DownWithLibs

      MOVE TO CUBAAAAAAAAAAAAA

    • El Pollo de Oro

      Gary2 in Wisconsin: Anyone who wants to abolish food stamps, social security, unemployment insurance or Medicare will get a very rude awakening when they find out what the alternative is. The alternative will be the imposition of DPDDTT: the dreaded Desperate People Doing Desperate Things Tax and all the brutal activities that go with it (carjacking, violent home invasions, kidnapping in broad daylight). People who think the IRS is bad should spend a few years in Nicaragua, the Philippines, Papua New Guinea or El Salvador and watch the DPDDTT collectors in action; they play hardball, especially when they’re feeling really cranky because they’ve missed a few meals. DPDDTT collectors in Third World countries pull themselves up by the bootstraps alright—and they usually do it by booting their victims in the face in order to speed up the collection process. DPDDTT is no fun.

  • Gary2

    U.S. corporatio­ns are sitting on $2 trillion in profits in the U.S. and $1.7 trillion offshore.

    The GOP has assured us, promised us, pledged to us, that corporatio­ns take money from tax savings, subsidies, and tax loopholes and turns them into jobs, expanded inventory, growing infrastructure, and Read More… research/d­evelopment­.

    They have been telling us that for 12 years. Could they be lying?????­?

    The GOP lying I’m shocked please tell me it isn’t true…

  • Rhinehart Fox

    I reread yesterday’s column before responding to this one as I believe that the theme of both is one and the same. Here is a response to many of yesterday’s respondents. What we want, frankly, does not matter. Politicians (who generally work to the next election cycle) and businessmen (who work to the next fiscal year) will not fix this problem.

    For all us peons, I see the kick of the can as buying time for our personal preparation for the inevitalbe. As is stated in so many other places, have cash on hand, store food and water, have a means to defend yourself and convert traditional investments into tangibles (Beans, bullets & bandaids first, then silver & gold). Reduce personal debt. This is where you are either part of the problem or solution.

    I am now months away from retiring my mortgage. No credit card debt. Whittling a zero interest car loan. Therein is freedom. “Owe no man.”

    And Gary2, please do us all a favor and run the numbers so that you see that confiscation and redistribution of wealth would only kick this can down the road for a very short time and would actually hasten the crash. You are the most envious, bitter person on this blog site. It’s truly pitiful.

    • McKinley Morganfield

      Great post Rhinehart! I am debt free. I own my property free and clear. I have food, water, arms, silver, and I stand prepared to help my less prepared neighbors.

      “And Gary2, please do us all a favor and run the numbers so that you see that confiscation and redistribution of wealth would only kick this can down the road for a very short time and would actually hasten the crash. You are the most envious, bitter person on this blog site. It’s truly pitiful.”

      He’s stuck in a utopian dream world where all is rainbows & free rides on unicorns if only the evil republicans/rich were dead. He has no interest in “running the numbers” because he is either incapable of doing so or he can not face reality. He, and many millions of others, will wait forever for Obama to pay his rent, put gas in his tank, and buy his groceries. What he fails to realize is he is merely cannon fodder for the socialists who will eventually toss him into the compost pile.

  • CincyChris

    This is the first time I totally disagree with the blog. WE DO NOT OWE THESE DEBTS. They are fraudulent!
    Paying these debts would be like paying for a home that you will never step foot in. Paying banksters for nothing is like paying to be raped.

    To me, America has two options:
    1) Find these debts to be unjust, and wipe them from the ledger.
    2) Default

    Instead of taking the advice of this blog post, I’ll take the advice of some of the earlier articles: PREPARE for the worst.

  • David

    Have you announced that you are running for president? I would vote for you over anyone put up by either party at this point!

  • orsobubu

    Almost all of you stick with the concept of “making, after the crash, this country great again for our children and grandchildren” based on “a new tax system that works in the 21st century”.

    I fear you americans don’t understand that the no-more-working-system is the capitalistic economy based on money, exploitation, market, wage workers and private property of the means of production.

    The alternative (this time or after next bigger crisis) is between war or revolution. Personally, I prefer the second: a new horizon for mankind, a new production system based on internationalism, abolition of capitals, money, competition and markets. It is called Marx’ scientific communism, and it is totally different from old Soviet Union (and current USA) state capitalism.

    In communism, capitals are no more needed to achieve big, long term project for mankind, like transfer of electricity production by sun microwaves from low orbit down to Earth, or Sahara desert farming, because all it’s needed is a scientific international organization of associated workers using large scale robotized machines (a system simply impossible in capitalism, because too much robots bring to surplus value accumulation collapse and overproduction crisis, like today).

    But I fear you americans do prefer machine guns instead of robots, both in overseas battle fields or inside your little barbed-wire-protected prepped country-side house.

    • McKinley Morganfield

      Wow! You must live in North Korea.

  • mark

    I have said this before and will do so again. A plan that might work and will be very painful.We need to balance the budget. We then need to cut back 500 billion more to use as a yearly payment over 30 years to pay off the 15 trillion debt. we do not borrow any more money and Ben should not create more out of thin air. We tell the bond holders that they will be paid off the oldest bonds first and so on. We pay a fixed rate of one percent. We will get riots as services are cut and current depression will be worse. I do think that this would be better that the collaspe that will come if we continue down our currant path. There are steps that we can do to help ourselves as a country such as drilling for our own oil and mining our own rare earth minerals and removing many regulations that stop us from competing in the global economy. We will have to step in to help out our neighbors when the borrowed cash flow to them stops.

  • Just me

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

    Certianly he would, then he can blame Congress whe we go under…

    “””””””””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.””””””

    sadly the truth is, we have to face the music sooner than later, why keep kicking the can down the rd, lets get the inevitable over with

    • Michael

      When people are starving in the streets you may wish that “the inevitable” had not come so quickly

      Michael

      • Just me

        At least now there may be a chance to take care of some, if we wait a few more yrs, it won’t just some starving, it’ll be all

        • Michael

          The Republicans can stop deficit spending by simply refusing to ever authorize another federal budget that is not balanced.

          The credit of the United States does not have to be trashed to accomplish what you are seeking.

          Michael

          • Just me

            Come on , people in the rest of the world are just as smart as we are, they know that we a have debt that can never be paid until there are some major changes which will not happen with the people that we have in government now. We would need to change 95% of the whole Senate and Congress and president to get any changes. No one there now has the guts to make any changes as it may affect their future in office.

      • josh

        Micheal usually i agree with what you say but come back to reality! go back to talking about preparing not about wishful thinking. you’re going to confuse the new comers ;-) we are past the peak of any solution that will be beneficial to the avg person. balanced budget… doesn’t matter. 15 trillion would take more time to repay than anyone on this blog will be on earth. the strong will survive the weak will not, evolution.

    • Ming

      Pulling the plug on the country is NOT a solution.

  • James

    Unfortunatly you are absolutly correct. The central banks have us right where they want us.
    Unless we go back to the original system of tarrifs to fund government and get back to a manufacturing base economy we are totally screwed. The global corps and cartels are the problem and until that realization is embraced by the population there is no sulution.Regards,james

    • Ben Dover

      The half that is riding in the cart do not want to hear about tax cuts.

      It must be great to file a tax return when the only reason you file is because you get free money.

  • http://infowars.com Capt. Woodrow F. Call

    King Soetoro, They twist the Constution any way they want. when that does’nt work excutive order time. Go back to sleep America it’s all OK King Berry will lead you to the promised land.

  • Uncurable wound

    Michael,love your site.Im not on the page with your last two articles.Sounds to me like you want to kick the can down the road again.To who?More corrupt politicians?They havent done very well so far.Michael you are great,but the BUCK has to stop here.You have earned my respect and I dont disagree with you lightly,but I feel you are wrong here.
    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?

    That is exactly what I have been telling people.I know people that never refied,put 15% down and they were close to 95,000 underwater.The banks would do nothing-SHOCK!!!They stopped making payments 1 1/2 years ago.They saved their money and just bought a little hobby farm in northern Minn for cash…
    Responsibilty is great,but what if your the only one doing it?
    TARP-toxic asset relief-FOR WHO???
    I mean if you dont cheat but your wife does you end up in the same place.
    The banks are CHEATING,and posting record profits.
    Millions of people have lost their homes,and not one banker has gone to jail,let alone trial.
    I have faith in America,but not the system it has become.
    I feel that if our forefathers had taken this same approach,we would not exist.
    We wouldnt be 112 trillion dollars in debt if this system was working.
    We fear our government Michael,How much more time do you think we have?

    We did the right thing in Minnesota-SHUT IT DOWN,and watch the cockoaches scramble.

    Im an AMERICAN,if Im playing poker with someone and I catch them cheating,I dont say deal another hand.
    I either get up and walk away or I stomp in their heads…
    Again Michael,thankyou for your work,and this site.We as Americans,should disagree,and find common ground-but we shouldnt SELL out.
    Micah 1:9 Micah2:1-3
    Brother,God bless you and your family

    • Michael

      I know a lot of people disagree with me on this point.

      That is okay.

      It is good to debate and I know a lot of people have strong feelings about this.

      I think that most of us agree that the current system is doomed to failure.

      My point is that it would be best to have an orderly transition from this system to a non-debt based financial system.

      A lot of conservatives want to “be tough” and refuse to raise the debt ceiling right here.

      The problem is this….

      Right now the federal government is spending 3.6 trillion a year.

      The federal government is taking in 2.2 trillion a year.

      If we blow out our credit rating, we could potentially be paying a trillion dollars or more just on interest on the national debt very quickly.

      So does anyone have any suggestions for how we are going to operate the entire U.S. government on just 1.2 trillion dollars a year?

      Meanwhile, we will have crashed the economy while having no plan for something better.

      Michael

      • Uncurable wound

        Michael,with respect,this flys in the face of so many of your articles.We dont have another year of govt spending to spare.We are buying our own debt.What happens when we default next year with a couple more trillion to pay interest on.
        You and I both are telling people to prepare.
        How many more people will have lost their homes
        jobs,savings-making it that much harder to prepare in a year,or two?
        Last year was the summer of recovery,LMAO! We cant do a couple more years of this.Look at your own charts.Unemployment levels above 10% everywhere.This will be WORSE in a year.I mean its summer and we are still losing 400,000 jobs a week.
        Michael,I have young kids to…no one WANTS this pain.But its time…the buck stops here.

        As americans its time we ante up,no more pushing it off…time to take the pain,for our country,and our Children.
        Michael I hope you and the family have a great Fourth,Good debating with you sir.

        Our debt is much bigger to those who died to give us our FREEDOM!

        Happy fourth everyone…

      • McKinley Morganfield

        Michael,

        You are obviously sincere, informed, and intelligent; but in this context you are wrong IMO. We have to take the hit. It will be painful and perhaps very ugly, but that is what must happen. Raising the debt ceiling will only dig the hole deeper. Sooner or latter we must stop digging the hole. The sooner the better because the climb upward will be a strenuous undertaking and the fewer inches the depth of the hole the better.

  • Hans

    Constitution worshipers may now feel so stupid that their venerated document will allow Barry & Associates to raise the debt ceiling while circumventing Congress action on this matter.

  • Steve

    Spend, spend, spend! Rather than tackle the problem of the national debt, it seems that both sides would rather argue over semantics. And I find very ironic that the democrats would use the Constitution as the basis for their position.
    Regardless of whether or not the debt ceiling is constitutional, our debtors will eventually demand that we pay up, and in the mean time, increase the interest rates on our loans, and, at the same time, decrease our credit rating.
    We are in the economic death spiral, and will likely not escape its grasp.

  • Daniel Simon

    This is not an attack on the author.. who obviously really cares about his fellow mankind and the horrific pain that is coming for many, many people.

    Having said that, some of the points made in this article really don’t make any sense.

    Suppose the United States totally and completely defaulted on it’s entire debt….and “ruined it’s credit rating” so that no one would loan it any more “money” or that money would only be loaned at extreme interest. That would simply mean that the government would have to IMMEDIATELY start to live within it’s means and have a balanced budget.

    I am not suggesting by the way, that this would be anything less than extremely painful for many people but so is personal bankruptcy and not being able to live off of debt in the way you have gotten used to.

    Borrowing costs would not go up because there would be no borrowing. Re-financing the existing debt would not go up because the existing debt would be repudiated.

    The author writes; “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.”

    But if we totally and completely DEFAULT AND REPUDIATE on the national debt…it will essentially cease to exist and we will not have a debt ceiling to raise! Our “ruined credit rating” wouldn’t matter at all EXCEPT to keep us from going back into debt.

    To use the analogy of the friends who are over their head…it is time for them to consider letting the house go, and anything else they cannot afford to pay for with their current income, and live a lower and more austere lifestyle on a “cash” basis.

    What sense does it make for them to borrow even more….to stave off reality?

    It would be horrific…but we would hit bottom hard and fast, and then REAL recovery would begin from there.

    • Ben Dover

      We all know that raising the debt limit will only allow the gubmint to keep spending as they do now. Raising the debt limit has ALWAYS had the effect of INCREASING spending.

      Sucks, but we might as well take it in the shorts now. Trying to put it off will only result in the use of broken glass as lubricant.

  • dw

    Wait a second.

    In the same article, you say the system cannot be saved -and- that we need to perpetuate the system for some amount of time.

    Your words:

    “If we continue on the path that we are on, a horrific collapse is inevitable.”

    Then you say it is necessary to continue on the path we are on?

    I vote for collapsing it now. I’ll struggle through the collapse, so that my kids won’t have to in the future.

    • McKinley Morganfield

      “I vote for collapsing it now. I’ll struggle through the collapse, so that my kids won’t have to in the future.”

      Its not just your kids, its your grandchildren and great grandchildren yet to be conceived. That is what is at stake!

  • http://electronicbook-readers.com/ Heilager

    What a depressing article to wake up on.

    You paint a truly dark picture and one that I have a few comments on.

    First: “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?”

    This is exactly what I suggested to many readers on a site I used to write on regularly back in 2008. For the first six months every comment told me I was crazy, and then the tune started to change. People started leaving comments saying “I’ve done this and it helped me more than you could ever imagine.” …etc

    You cannot really compare a government defaulting to the defaulting of a single consumer. Our government has obligations to the people of this nation that they either uphold or we have the right to pitch them out on their collective arses.

    The elderly who worked and paid in on social secuity, medicare, these people have to be paid back or the government who is supposed to do it will have to go. Same goes for the social safety net that provides assistance to those in need. Either help these people or the government that does not has to go. No questions asked, these are services that the American people have DEMANDED. It was never a request.

    There are things the American government could default on such as the debt held by foreign bond holders such as China. Its not like China could effectively come and collect if we did default. (I’d like to see them try)

    But for a government to default on its promises to its own people is to risk its entire reason for being allowed to exist. We as a people exchange certain key freedoms to the State in order to get several assurances that the State will act in our best interest. This has not been happening and if the State wishes to remain the State then it needs to start.

    A progressive tax would go a long way toward resolving this problem. Fact is people only need so much money to have an awesome life. They may want more money, but they have no real need of more money past a few millions of dollars. Anything else is simply greed if that money is not being used to build or grow something.

    Capital gains should be increased to their original 35% to slow down the heating of the economy that has been so common in the pre-bust times of every recent bubble-bust we have had, most recently the real estate market.

    Real scientific methods of determining corporate value needs to replace the voodoo science the market uses to determine stock price. Stocks, bonds, and commodities should swing in price on what happens, not what someone fears will happen six weeks or six months from now. No one begrudges industry trying to assess immediate commodity prices in which are essential to the continued operation of their industry, but do fund managers really need to be flash trading in oil and gold when they don’t use either? No they don’t.

    I could go on for hours here about the nonsense I see in our economy but the bottom line is that either these yahoos we elected in 2010 toe the line and raise the debt ceiling, or the people of this nation will take that right away from them and do what is necessary to ensure our survival. No one on this side of the government would lift a finger to help those in government charged with treason against the USA for failing to lift the debt ceiling.

    • Ben Dover

      I think the average SS recipient takes out everything they paid in in less than five years. Look at life expectancy when SS was created and what it is now. In relation to life expectancy in the early-to mid 20th century, we are retiring at quite young age.

    • mondobeyondo

      China’s made a considerable investment in our financial future by buying all those Treasuries and dollars. Beijing is not very pleased about our falling dollar, nor our increasing debt. In fact – they are already looking at other options…

      If the U.S. defaults, or devalues its currency to Weimar-style toilet paper, the Chinese will not be happy campers. Those dollars the Chinese hold would be worth little to nothing. They will then take what we DO have which is of value, to compensate. Just like the IMF and Greece. “Hey, we have a big canyon in Arizona to sell you! Beautiful views! Only 1 trillion yen!”

      • mondobeyondo

        1 trillion YUAN (renembi..?!) Sorry, my monetary conversion skills are a bit off. We’ll give the Chinese government our Grand Canyon for 850 billion Euros if he prefers… *sigh*

      • Ben Dover

        If we keep our wits about us as we default, they won’t be ABLE to take anything from us.

  • Perry K

    Great blog today. I couldn’t find a single thing to disagree with. Amazing! Perhaps the debt ceiling is unconstitutional. I hope it is. Prior and current congresses and presidents have already authorized spending well in excess of revenues. And then they have to come back again and authorize borrowing the money to make up the difference?

    My only disappointment is with the Obama administration taking a Bush-era action like this. I thought we didn’t elect the other guy because we didn’t want what was perceived by some to be Bush’s third term. IMHO we got it anyway.

  • Daniel Simon

    I forgot to address the 14th Amendment part of the post above. Again this is not attack on the author.

    1. There is a whole lot of evidence that the 14th Amendment was not lawfully ratified. (Google it if you are curious)

    2. Assuming it was ratified and is “legal” the Constitution could be amended to repeal the 14th.

    3 The Amendment reads; “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.” So even if we don’t “question” the “validity” of the debt….that doesn’t mean we can’t refuse to pay it. Plenty of valid debts are not getting paid at the moment. People stiff creditors every day.

    For what it is worth, the first amendment preserves the right of any person to “question the validity of the debt” or anything else for that matter. There is, and can be no law making it a crime for an INDIVIDUAL to do so.

  • Ben Dover

    We all know obummer will ignore the US Constitution at every opportunity. He is in no way a friend of the USA and thinks he can do whatever he wants.

    The Kool-Aid drinkers think this is great while he is doing things they agree with. When his thugs come for them, their attitude will change slightly.

    • Ming

      More TeaBagger rhetoric.

  • Joshua

    Hi Michael, The way your article reads makes it sound like you don’t have
    any ideas to solve the problem. The truth is that we can start paying the principle down if we wanted to. The problem is that no one is willing tomtake the political heat for saying no. Secondly if we default its the federal reserve that takes the biggest bath. Which honestly sounds good to me, perhaps that’s bad but they are a business and choose the risk of investing in government bonds.

    • Michael

      Joshua:

      There is no solution under the current system. We desperately need to go to a financial system that is not based on debt.

      In addition, if we default and our interest payments go to a trillion dollars or more per year then we will never even have a prayer of ever balancing the budget.

      Michael

    • Ben Dover

      I say don’t worry about the principal. You only have to worry about your credit rating if you want to be in debt.

  • William

    Monetary reform NOW! That’s the solution
    http://www.themoneymasters.com/monetary-reform-act/

    It´s very simple: banks won’t be able to lend money they don’t have.

  • Daniel Simon

    Heilager,

    You say ” You cannot really compare a government defaulting to the defaulting of a single consumer. Our government has obligations to the people of this nation that they either uphold or we have the right to pitch them out on their collective arses.”

    It is important for everyone to stop sugar-coating the fact that the only way the government can fulfill it’s “obligations to the people” is to point a gun (figuratively) to the heads of those of the people not currently net collectors of government “benefits”.

    We have to get away from the idea that there is some kind of free federal money out there.

    Sure the old people worked and paid into various programs over the years…but we all pretty much know now that the money was not saved and invested and the only way the current recipients can get “theirs” is if current and future payees are forced to cough it up. This is the much vaunted “compact between the generations”.

    What exactly does the younger generations get from this? What true moral claim do current recipients have upon my daughter (17) and my son (15)…a lifetime indenture?!!!

    It is time for some extremely hard, sad, bitter, but rational choices. It is time for strict means testing of Social Security, painful cuts in public sector pensions and a position that only those who are extremely physically or mentally handicapped to the point of near helplessness receive a handout.

    Google “Adult Baby” to see an example of a current story about two healthy adults living off of SSI.

    As a society all we OWE the elderly, the truly disabled and helpless is enough to keep body and soul together.

  • mondobeyondo

    The best thing any of us can do at this point, would be to get out of all debt as soon as possible. All credit card debt. All student loan debt. All household and mortgage debt.

    Unfortunately, the bankers play a very good game of chess, and they’ve already thought a few moves ahead of us. They realized that it’s very hard to get out of debt when you’re unemployed. How do you pay your debts with no money? Sure, you can earn money at Wal-Mart. Just enough to keep from starving, and you still have those debts…

    What a wicked trap the big banks and Wall Street have set. When times were good, we racked up the credit card debt. We believed housing prices would always soar, so we took out home equity loans to finance extravagant cars, vacations, etc.

    Then Wall Street pulled the rug from under us in 2008 (more like blackmail, actually. “Pass this banking reform poop we sent you, or the economy will crash and there will be another depression tomorrow.” Well, Congress passed it, despite the protests, phone calls and letter writing campaigns to members of Congress. The people knew better. But we know who Congress really represents, and it’s not We The People.

    The debt ceiling will be raised, and the can will be kicked down the road again. But each time, the can gets a bit heavier. It’s now become a brick. Ow, my foot hurts!

  • Justin

    I agree that not raising the “debt ceiling” would be catastrophic. However, nothing stops our politicians from spending and spending, raising our debt ceiling would be rewarding bad behavior. I have seen the third world, no one doesnt want a collapse more than I do. I dont think people understand the amount of terror we would be in store for if our system collapsed. You believe the financial system in this country will fail, you have said it numerous times. We keep buying time and buying time. No one in Washington has the guts to make the proper cut to get us back on track. The question really isnt if we raise the debt ceiling. The question is whether or not we allow our most precious possessions, our children, inherit this problem and live in utter hell while we just kick the can down the road and try to hang on as best we can so we dont have to. I dont hope for a collapse. I hope that I have to deal with hell so my children dont have to. I think that is why people say “let it fall.” Is it really unresponsible to want to get a collapse over with so we can be the ones to deal with it. Like you say, its going to happen. Why not just let us deal with it instead of our future?

    • Ben Dover

      Time is the most expensive commodity on Earth.

  • SMASH THE CONTROL MACHINE

    what would JOHN THE BAPTIST SAY?The ax is already at the root of the trees, and every tree that does not produce good fruit will be cut down and thrown into the fire.”

  • TK

    Allowing the US to default is unthinkable at this point. The damage it would cause would be irreversible. There is still hope, but only if we can maintain our credit.

    Yes, it sounds like kicking the can down the road, but look at the alternative.

    #1) Do yall really want to see the elderly who have little in savings ruined?
    #2) Do yall really want thousands of small business’s to go out of business?
    #3) Do yall really want to see huge amounts of rioting, stealing, and even murder in America?

    What is being asked for by defaulting on our debt is the ruin of millions of Americans. Millions of Americans who did not want our government to rack up so much debt. Millions of Americans who are innocent and just trying to get by.

    Wake up to the realities of defaulting on our debt, it ain’t pretty.

    • Ben Dover

      #1,#2,and #3 will happen either way. It will suck hard for all of us, but face it, many nations have survived and prospered without debt.

      I doubt if anyone here WANTS to go through hell on Earth.

  • John Bonnema

    I have read every response and no one mentioned stopping these deadly godforsaken wars of aggression and hegemony, which are costing how much?

    Got Peace?

    • Ben Dover

      Maybe not today, but I have said pretty much the same thing. We will leave these countries the same way the USSR left countries… barely able to afford to repatriate our soldiers and unable to bring home the equipment.

      On the up side, we will leave these countries for good.

  • mark

    Michael, If we balance the budget and not borrow more and we pay the bonds over a thirty year time frame like a mortgage. We should be able to say the terms. What choice would the bond holders have? It is this way and we will pay them back what we borrowed. I know it is not what they want but it is better than nothing.

    • Michael

      The vast majority of U.S. government debt is financed over the short-term. We constantly have to roll over that debt to avoid defaulting. If we cannot continue to roll over that debt at super low interest rates we are done.

      Michael

      • Bob

        Michael, you are right on the mark !

        For 15 years the Treasury & the federal reserve have avoided the long end of the yeild curve.
        The maturity ladder was cut off at the bottom. To compound this a majority of primary dealers are now foreign banks with no loyalty to America.

        This will not end well.

    • WhoDatMan

      There is no need to default. Money can be moved around to make the necessary debt payments. That means that some spending will not happen because the money went to service the debt.

      One thing we can be sure of: the boy President will do his best to eff it up.

      • daddyro

        show some respect

  • DownWithLibs

    I love how the left couldn’t care less about the Constitution unless they can wield it against us like a sword.

  • PaulF

    Michael, there is absolutely no way we will get a balanced budget in 12. NONE. ZERO. You must know this.

    The Repubs can’t even do it themselves because they won’t touch THEIR Sacred Cows (The International Democracy-Exporting War Machine.) You know it cannot be done without massive cuts to both entitlements and the military.

    But if they did, it would not matter, as it would be vetoed, and not veto-proof.

    • Michael

      Paul:

      Yes, I know that we will never see one again.

      However, I believe that one is possible under the current system. It would just be a horrible, horrible blow to the economy. It would mean living way below our means and that would really hurt.

      Michael

  • PaulF

    “It is called Marx’ scientific communism…”

    LOL!!!!!

  • http://www.riseupforamerica.com Carl

    Starve the beast and bring it on. Maybe then all of you fence turles will get right with God, pick up your pitchforks and torches and show these beasts your true righteous indignation. Look for it, it’s coming soon to a neighborhood near you.

  • http://theeconomiccollapseblog.com/archives/will-barack-obama-use-the-14th-amendment-as-a-way-to-get-around-the-debt-ceiling Bruce

    What do we accomplish by raising the debt ceiling? More spending by both Dems & GOP. I think we should default on our debt and start the NWO amero currency. It does no good to place blame on GOP as it has been both GOP and Dems who are giving away our money to the wall street and foreign aid. We need to get the US working at home by restoring all manufacturing jobs and deport all illegal immigrants. We make prisons seem like F**k*** country clubs, we should eliminate all rights period of any inmate and everyone that is serving 25 to life should be made to go overseas and fight our wars. Years ago this country was very profitable and had no taxes. Too stressed to continue – need more kool aid

  • http://TheEconomicCollapse Dave

    Michael:
    I would be neat to theorize what a president could do to turn things around, if he or she believed that this nation must go through some horrendous restructuring and was not afraid to do what needed to be done and was not afraid to have 95% of Americans against him or her.

  • Miser

    Doesn’t the consitution also say that only gold and silver can be legal tender?

    • Ben Dover

      Timmaaa! thinks that part is outdated and meaningless.

  • Phantom

    Very IMPORTANT!!! Here are some of your tools for fighting for FREEDOM…It starts from within…the mind!

    famguardian.org/Subjects/Freedom/Freedom.htm

    sedm.org

    usavsus.info

    loveforlife.com.au/node/895

    worldfreemansociety.org/Welcome+Page

    freemanontheland.com

    worldfreemansociety.org/tiki-index.php?page=Front+Page

    barefootsworld.net/index.html

    buildfreedom.com/

    3wisemenessentials.com/commerceteachers.html

    freedom-school.com

    makethestand.com

    1215.org

    We each play a part in this world called life!

  • Italics Mine

    ah HAAA! So the Constitution isn’t entirely ignored after all.

  • Scott

    The problem I have with your idea of a slow transition to a new sytem is in order for that to happen the following things would have to happen first:

    1) 220 Congressmen woould have to be willing to convert to a new system

    2) 60 Senators would have to be willing to convert to a new system

    3) The President would have to be willing to onvert to a new system

    We had a historic change of seats in last year’s election. Assuming maybe %10 of the ones who were there before (I just don’t think it is any higher then this)combined with the freshmen reps elected last year doesn’t even equate to half of what is needed.

    Our polititians, both GOP and Dems, are in the same business, the getting re-elected business. The system has allowed them to be re-elected about 95% of the time each and every year, year after year. They like this system and will never give it up. The only ways is if we could replace enough of them at once to reach the previously stated totals.

    Is there any other way to acctually slowly transfer to a new system?

    Prepare for the worst, Pray for the best.

  • Gary2

    Tax ************* and spread the wealth. Capital gains=income and needs to be taxed accordingly. Hedge funds only pay 15% FTS we need to tax the F out of them. I want to see wall street taxed to hell and the rich taxed extremely hard. Then I will believe in shared sacrifice. Until the top is TAXED HARD there is no shared sacrifice.

    • Kent

      Gary2
      You could tax everyone at 100% and it still wouldn’t be enough to offset the amount of debt we have. When you are talking about the amount of debt it comes to almost $50,000 for every American that pretty much means we spent too much money.

    • kyle

      F that. im not trying to turn the united states into a socialism run country. and look at the facts kent. the rich already pay 95% of the counties taxes. i think you kent, should pick up the slack a little bit and stop living off of other peoples pay checks.

    • kyle

      i meant to send that to gary

  • Mookie

    Look at it this way guys.

    If they raise the debt ceiling you may have a few more years to prepare or get the hell out of Dodge.

    If they don’t… well then… coming soon to a neighborhood near you… LA Riots the Sequel.

    There isn’t going to be a balanced budget in either case. This ends only one way. You want it now, or you want more prep time?

  • Davey Jones

    I support raising the debt ceiling as it would give me and my family more time to get off the grid and prepare for near total or total disruption in the monetary/financial/distribution systems that we are trying hard to separate ourselves from.

    More time to secure the valuable commodities and tangible goods we have acquired. More time to adjust to a very different lifestyle that does not include modern conveniences ie: city water, washer and dryer, conventional oven, modern refrigeration, or electrical or gas heating for our dwellings. The clearing of land and tilling of soil for garden space and the collection of heirloom seeds from each harvest. Stacks of cloth, denim, polyester, needle and thread. Outdoor lavatories, the list is long, but many of the difficult steps have been accomplished.

    So in earnest I agree with Micheal, let’s not initiate an immediate meltdown now, but utilize the ‘kick the can down the road’ model that we are well versed in from the people responsible for not only the political malfeasance but especially the financial larceny we have been victimized by.

  • Jael Robinson

    So if you know the car is gonna hit the tree and bloody the occupants, let it happen to the kids someday, huh.

    • mondobeyondo

      No, it’s not the kids and grandkids’ fault.
      But.. ya know what? Life isn’t fair. Our generation made the bed our kids and grandkids and great-grandkids will sleep in. Too bad, so sad. And that’s the best we have to offer our progeny?!?

      What are we going to tell them – that you should have been born in 1982? They won’t buy that. More likely, they will come after us with swords in hand, ready to avenge what we have done to them. Yes, I’m scared for the future. Our offspring will not like the present generation.
      God help our country.

  • Fascist Flotilla

    Now that its expedient, govt quotes the Constitution? By the same criminals that have jettisoned the document years ago…

    When WE THE PEOPLE quote the constitution we’re put on the terrorist threat list under the Patriot Act.

    This entire obscene imbroglio is outrageous on so many levels. But WE THE PEOPLE refuse to do the necessary work to reclaim our govt so we will soon live as slaves.

  • Alfredo

    The 14th Amendment is clear that the government cannot forfeit the debt authorize by congress, but raising the debt ceiling is actually accepting new debt, and only congress can authorize new debt.

  • RevBryan

    The 14th Amendment and a loose construction view of the Constitution: great for big government and big corporations but spells big trouble for John Q. Public.

  • http://survivalrealestate.com T.J. Jackson

    If you say that collapse is inevitable and that delaying it will only make it worse, would it not be better that we took our medicine now rather than later? I know that economic collapse will lead to some form of civil war and social cataclysm but I am ready for such events and would rather face them now than later when I might not be in such good shape.

  • j r

    Since when do the Feds give a crap about the Constitution?

  • http://survivalistboards.com Sierra Dave

    Anyone have a good link that shows what our short term debt is? Might give a clue as to when TSHTF. I read somewhere that supposedly we had $5 Trillion coming due this year.

    IMHO, I think we have too many people at the trough and not enough people willing to sacrifice.

  • Sigmund Derman

    The plain meaning of the 14th Amendment indicates that the debt ceiling is unconstitutional. If there is no agreement, I would urge President Obama to ignore the ceiling and give a speech similar to the one below:
    http://www.theatlantic.com/politics/archive/2011/04/the-speech-obama-could-give-the-constitution-forbids-default/237977/

    The debt problems are not so hard to solve. Clinton did a good job and we actually had surpluses. But we really do not need a surplus. In fact, some level of debt may be better for continued growth. Also, despite what the pie-in-the-sky Laffler curve theoreticians might say, decades of experience have shown that just as taxes can be too high, taxes can also be too low. Clinton had them about right. Bush lowered too much, especially in the face of a war economy. A combination of moderate benefit cuts and moderate tax increases should bring things into a proper balance. The problem is that the Republicans are hoping to engender an economic disaster in order to enhance their chances of getting the White House in 2012. I expect (and hope) that this will backfire.

  • Bruce C.

    Why do you equate not raising the debt ceiling with default? Default on what exactly? Interest and principle on Treasuries? SS and Medicare/Medicaid? Federal pensions and salaries? I think only a refusal to pay out on Treasuries would greatly affect our credit rating. The rest is an internal affair.

    And why would even an individual care about higher interest rates and fees if they default on credit cards or whatever? If it’s stragtegic then that would be ignored as well. If by necessity then such fees, etc. would be equally unpayable.

    The debt ceiling will be raised so that the decline will be more orderly and pushed as far into the future as possible.

  • freedom69

    Please look at the wording of the amendment. “includes” as a legal term basically means the same as “is strictly limited to”. Or think about it logically…why put in the includes clause at all if the scope of the amendment is everything?

  • t i p nell

    gd site. “m fund co also says total u +
    S) debts $75t , profs $200t. two hundred
    tril=T.” gov’s of West borrow to pay int
    cant pay prin.”

  • Nick

    That clause in the Constitution has to do with the Civil War.

    It’s one of the Reconstruction Amendments intended to restore the Union and heal the country.

    That Amendment has nothing to do with our situation today. Our situation today wasn’t at all caused by any of the factors that lead to the Fourteenth Amendment.

    This is the old living document versus strict constructionist debate.

    People who see the Constitution as a “living document” do so in order to bend the Constitution to fit their philosophy. They have no desire to understand the Constitution as was intended and adjust their philosophy to fit it. They think they know better. They do not.

    If you look at the context of the Fourteenth Amendment, it has nothing to do with our situation today.

  • SMASH THE CONTROL MACHINE

    Rev 6:6-“And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.”
    When a laborer went into the field to labor, during the time of Jesus’ walk on the earth, the standard wage for a day’s labor was a penny a day. Of course this is not a “penny” of our day, but a coin of that day. The value of it must be measured it what it represented – Payment for a day’s labor. The rich ate wheat bread. The poor ate barley bread. A “measure” was approximately what a man with large hands could hold in his two hands cupped together. A measure would make a small loaf of bread.
    This verse obviously represents sky-high inflation, but see that it shows a measurement of wheat for which one is to be charged!!
    Look up, look up- our redemption draweth nigh!

  • UCLA

    As my professor said, our economy is NOT going to collapse any time soon and even if it does our government will just print enough money for us all to keep going. No big deal. As I understand it, we might even be able to pay off our credit card bills faster because we will just get paid more to do the same job. What is the big deal anyways? Regardless of what happens, I will keep my cell and my netflix and close my door to the world. Wake me when it’s over plz.

  • Abia The Cat

    All this ongoing talk for the past four years of a financial collapse around the world has me getting back in shape and learning survival skills (mainly plants as food and medicines and simple trapping techniques because I am already a bowhunter, gun hunter, fisherwoman).

    Hope the collapse can be held off for at least six months as I build my endurance and muscle strength. What jobs there will be available will go to those who are the least health risk no matter the age.

    I’ve noticed I have pretty good instincts as I get older and my instincts are telling me to prepare for the absolute worse with double-digit unemployment over 20% with clean water and food shortages.

    One of my main prayers to God is for Him to prepare me now for what’s coming so it won’t take me by surprise and overwhelm me. Being drawn to get back in shape (aerobic and body building), learn food preservation like salting, smoking, and canning, and learning primitive survival skills seems to be what I’m drawn to these past few years. Also learning minor medical skills like sewing up minor cuts and gashes.

    • Abia The Cat

      Oops… CORRECTION
      with double-digit unemployment over 20% *and* with clean water and food shortages.

  • Concerned

    I wouldn’t be one to tell my bankrupt neighbor to go ahead and default, but my law firm sues people every day who do default. At the end of the day they’re either judgment proof in which case the creditor eats it, or they’ve got something to attach and liquidate. See any difference between that and what’s happening in Greece right now? Currently the biggest yard sale in the world. I have a sneaking suspicion the Chinese won’t be so keen on eating the loss as a major creditor, and making war to no good end (though it might have some valuable social side effects for them) is unlikely. On the other hand, we do have some rather tasty resources that aren’t part of the continental US that -might- be considered adequate for debt liquidation.

  • 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

High Blood Pressure?
The End Of America?
FINCA BAYANO
Survive After Collapse

Silver.com

Camping Survival
GunMagWarehouse.com
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