Blogger was down last night so I couldn't post this, however, here is the latest from Treasury:
And we didn't "run out of money" and the world didn't end.
However, what is important is the political response to this, which will be to bring it back down via spending cuts. That will hurt aggregate demand and the economy.
7 comments:
http://www.treasurydirect.gov/govt/charts/charts_debt.htm
This graph is classifying two different types of debt it seems: Total Outstanding and Debt subject to the limit.
Can anyone provide more detail around this? It seems the former is over the limit but the latter is under.
The securities sold on Tues and Wed that put the gov't over the limit will settle on Monday and that's when you will see it become official.
According to Tsy:
Total Public Debt Subject to Limit is defined as the Total Public Debt Outstanding less the Unamortized Discount on Treasury Bills and Zero-Coupon Treasury Bonds, old debt issued before 1917, and old currency called United States Notes, as well as Debt held by the Federal Financing Bank and Guaranteed Debt.
http://www.treasurydirect.gov/news/pressroom/pressroom_bpd11082004.htm
Help Wanted: Grandchildren needed to pay off debts. Immediate openings.
I was recently surprised to learn that Australia also has a debt ceiling limit.
It is 200 billion in our trillion dollar economy, legislation is about to be introduced to increase it to 250 billion dollars.
Mind you, our private savings clock (debt clock) says its at around 63 billion - so why the move is beyond me.
I just got back from a little league game in West University in Houston Texas. The price per sf here might be the most expensive in Texas, but all the executives from the legal and oil firms here are oblivious to how things really operate at the macroeconomic level. Might as well count them as welfare recipients of massive tax breaks for big oil which runs off in advantage to the attorneys.
I had to square off a typical fat cat in front of several well to do know nothings, and they all thought that tax and spend meant that the government can only function with it's tax receipts and nothing more.
I begged to differ and had to counter with a $100 bet ( I happened to have a c-note in my back pocket ) so I raised it up and held it like a cheap furniture commercial, and challenged him ( as well as the others ) that Ronald Reagan ( somehow ... somehow their deficit terrorist hero ... ) outspent all previous administrations combined, and topped it off with that only Carter and Clinton in the past 50 years made a negative rate on the government spending scale.
This infuriated them all .. imagine these are the fatso's who control the energy firms and the contracts that govern their transactions ... being put on the spot by a relatively kids-glove to the area.
None of them took the bet, and I made my point as best I could.
In case no one knows:
Brief history of the debt ceiling. It was started to make issuing debt easier (let Treasury issue debt instead of Congress having to review and pass every single debt issue) not constrain it (the limit was just a "control" so the Treasury had a check on it, not to prevent the nation from spending.)
http://www.npr.org/blogs/money/2011/05/16/136363196/the-history-of-the-debt-ceiling
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