The U.S. debt ceiling : a call to some understanding

Hi there fellow ATSers,

If this is the wrong forum moderators do not hesitate to move where it should belong.



During these recent days of what's going in the U.S. on the side of economics events right now. The debt ceiling approaching, republicans and democrats unable on a consensus, divergence of opinion, etc.


I have a link which currently calculates the debt of the country. Right now it is at 14,29... trillion dollars. So with that being said, my question is what is the real debt ceiling in term of U.S. dollars? I heard it was 14,3 trillion, 14,294 trillion and so on just to name a few.


Second, considering (and this is pure speculation for my personal knowledge) the political parties do not come to an agreement on this what would happen to the country? A recession, a depression, far worse or far better?


The last but not least question, on a global plane, world widely talking, what would be the consequences of the U.S. to default on its' debt.


Those are my three questions and I will be pleased to receive some of your insight on it because the more we learn, the less we know.




Sincerly yours,



Thruthseek3r

reply to post by thruthseek3r


I dont know how many economist are on ats but I'd like to see some of these questions answered so.. S&f for you

Originally posted by thruthseek3r
Hi there fellow ATSers,

If this is the wrong forum moderators do not hesitate to move where it should belong.



During these recent days of what's going in the U.S. on the side of economics events right now. The debt ceiling approaching, republicans and democrats unable on a consensus, divergence of opinion, etc.


I have a link which currently calculates the debt of the country. Right now it is at 14,29... trillion dollars. So with that being said, my question is what is the real debt ceiling in term of U.S. dollars? I heard it was 14,3 trillion, 14,294 trillion and so on just to name a few.

Not to sure what you mean there ? Is your question , just how high can the dept ceiling go while the USD holds it value ? If so , it all depends on a lot of factors , one of which is the US paying it's debt .


Second, considering (and this is pure speculation for my personal knowledge) the political parties do not come to an agreement on this what would happen to the country? A recession, a depression, far worse or far better?

If the US fails to service it's debt any country or US citizen holding US debt would feel the pinch . Treasury bonds would crash and markets would also go down . It would also prove difficult for the US to borrow money i.e where would they get the money to run a deficit ? What all would be cut in order to meet target spending goals ? What laws or acts would need be past regulating the US government on what they could spend and where they could spend , all by the willing lender ?


The last but not least question, on a global plane, world widely talking, what would be the consequences of the U.S. to default on its' debt.

War , financial meltdown and rioting in US cities .

IMHO

Also keep in mind , this is all assuming that the US doesn't meet it's debt payment obligations nor has any hope of doing so .

If the " debt " ceiling is reached or an agreement is reached in a few short days of it's reneging on it's payments then little is likely but the markets will be effected either way .

One could also see the UN come to some agreement on a new currency for world traded items , once again assuming the US doesn't meet it's payments .

reply to post by Max_TO


There are no fiscally responsible people left in DC. Well, there are, but they have been made irrelevent. Pushed to the curb and I fear it may be to late to elect them.

Star for you my friend.

This debt ceiling is as they say. "Kicking the can, down the road."

reply to post by mb2591


Thanks to you for this comment

Be well and I hope you'll receive the answers you seek,


Thruthseek3r

reply to post by Max_TO


That's great to hear some answers. I hope this is not going to happen but on another side the U.S. cannot keep on always going down and down with a debt that rise much higher than their sky building, if you understand what I mean. The solution is possible but complex at the same time.


Thruthseek3r

reply to post by TDawgRex


Yea, I fear there would be many hands pointing everywhere but very few rising their IF the # hits the fan.


Thruthseek3r

reply to post by thruthseek3r


I have a bad feeling that only a SHTF moment may fix this. Wipe the slate clean and start anew.

If we default, only bad things will happen. It'll open the flood gates and everyone will default.

14 trillion is just what the debt of Treasury Bills (Bonds) that are in circulation are.

The true debt of the United States is somewhere around 52 trillion when you factor in Social Security, Governmental Pensions, and other commitments that we have.

The debt ceiling WILL be raised each and every time we reach it, no matter what kind of diversion the political parties play. It has to be raised or the house of cards fall immediately.

The house of cards IS going to fall this is just the way our Federal Reserve System is constructed.

You cannot just keep creating dollars out of thin air forever. Nor can you loan yourself money. Which is exactly what we are doing.
What does this really mean.

When, not if, we default on the debt and the dollar crashes, we will enter into Hyperinflation. Which is wheelbarrow loads of cash to buy a loaf of bread. If you could even get someone to accept it. This is the problem with Fiat currencies, i.e. currencies not back by a commodity, because after all it is just printed paper and nothing more. Our monetary system is FAITH in action. We accept a piece of printed paper as it actually has value, the only value it has is our collective faith that we will be able to exchange this same piece of paper to another for something of real value, like food. But what happens when the next guy says No, I want something of real value and all you have are these “magic papers”
We already are seeing the inflation rate starting to rise. Some of our citizens are starting to say No, I need more paper today than I did yesterday, so Food packages are getting smaller and costing more this is an example everyone one of us experiences daily.

This is not the biggest problem however. The biggest problem is that the World economic life is tied to the dollar. The dollar is the de-facto world currency. So when the dollar goes so does the World economy.

At first there will still be a supply of necessities, but most people will not be able to purchase them. Let say a loaf of bread was $25 dollars, how many loaves could you buy? As the collapse drags on the supply will dwindle, because manufactures would not be able to afford to purchase the raw materials, Job losses next, so now you don’t even have that $800 bucks a week to fall back on. Can you see the recipe for social upheaval.
Inflation then Job Losses, then Hyperinflation then more Job losses, then Hunger, then Starvation, Homelessness, then
Social Chaos, then Societal Breakdown.

What do you do ?

Stockpile food today while you still can. Your 401K is already worthless, cash it in and buy Water, Food, Shelter.

A Storm IS coming.
youtu.be...

reply to post by brokedown


Not much more I could add over there. You enlightened me and a lot with these words. Everything out there is clear and I understand 100% your point. Thank you for your knowledge.


Thruthseek3r

What would happen?
I think about this a lot. Too much really. I ought to have better things to do with my time since nobody with the power to do anything is asking my opinion....but you asked, so here's what I have come up with.
As above poster stated: the official line is that the sky would fall. That it would be the straw that breaks the camel's back.
It is definitive that our currency would plummet. That is not only official line, I can't really see a good way around it.

Then, it is possible that we would all go crazy and wars and what not. Real doomsday stuff.
But, if you believe in the Bilderberg reports: that is exactly wha they want us to think, right? I mean, am I going to lose billions? No. Are you? If you are you shoudl definately have better things to do on a Friday night than hang out on ATS (no offense ATS). So bankers (and not your friendly neighborhood kind), the international elite. THEY would lose real money. But what if none of us cared?
What if people here, in Greece, in Spain, In Portugal, Ireland, and Italy: what if we just didn't care?
What if we got up and went to the store and yes, all of our imported stuff would be more expensive.
We would HAVE to tap our own oil supplies because our devalued currency wouldn't be able to afford the price of oil. And they would have to take oil out of U.S. dollars for world wide trade. Immediately. But other than that, why do we really need anything from the rest of the world?
Not want. But need?
So we would have to make stuff ourselves. Well that should do wonders for unemployment!
It would be a decision. It would be a clear statement to the rest of the world that we are done with them for now.
No globalization, world market, spreading democracy, free trade, NAFTA, etc.
Just be done with it.
We have fertile land and strong backs. We take the punch we have coming to us and go back to living like our grandparents and great grandparents did.
We are a bit of an entitled bunch by now so that would be uncomfortable, but if we were prepared we could do it.
We would end up freer in the end too I think. Because we wouldn't be all wrapped up in all these multicultural international and oh so entangling alliances and corporations.
The people would have their country back.
An honest day's pay for an honest days work.
I think that is the outcome Ron Paul pictured when he said that we shoudl default (though he also said we wouldn't).
But, that is best case scenario. We rise up and become a generation that would make the "Greatest Generation" proud. We live the way they raised us to.

But, and it's a big but, what if the official line is true? What if we couldn't handle it? Would China attack? Would the Corporations accept the medicine we handed them? Can corporations wage war?

These are crazy times. And it turns out, the reason I think about your question so much is because I don't know the answer. To not pay is so far outside of our paradigm that we have trouble actually picturing it. And they tell us it would be bad. And I don't know if I feel like believing them.

It's going to be an interesting summer.

reply to post by thruthseek3r

my question is what is the real debt ceiling in term of U.S. dollars? I heard it was 14,3 trillion, 14,294 trillion and so on just to name a few.

This is one part of the problem, with the complexity and scams going on it is very hard for anyone to know what the exact situation is. A lack of public accountability and transparency on the public books is a problem.

Second, considering (and this is pure speculation for my personal knowledge) the political parties do not come to an agreement on this what would happen to the country? A recession, a depression, far worse or far better?

Fear of fallout will force them to come to an agreement. They are just playing there dumb political games trying to get as much ground as they can before the last minute.

The last but not least question, on a global plane, world widely talking, what would be the consequences of the U.S. to default on its' debt.

Depends on which debts it defaults on. If it defaults to the international community like China, Japan and the others the US will become more isolated internationally. Any further international loans will come at higher interest rates to accommodate the added risk and austerity measures will be raised. This means selling of public assets and raising the financial pressure on the population.

If the US defaults to the Federal Reserve, wall street will be hit hard with a lot of investors and speculators taking the hit as the bond market collapses. I do see it in the best interest of the nation to get rid of the Fed as the structure of this private corporation is one big scam that has helped create the current problems. A lot of media says the sky will fall and for a lot of these rich fat cats it will. The rest of the population can get through this without falling back into the stone age as you have the resources and capability. It is the organisation that will be the problem as it will take a fair amount of responsibility.

Even if the US hit the debt ceiling the US would NOT default. The US would have to pay it's creditors first, then the money left over is what the government has to spend. Government doesn't want to be starved of money. However all of us DO want to starve the government of money. They've wasted tons money on (insert whatever ticks you off here), and they don't feel any responsibility for it.

Government spent too much money and got used to it, and expect you and I to keep paying up.

Problem with debt is once it gets above a certain percentage of GDP, it can't be paid off. The debt limit is supposed to be a limit to prevent debt from getting out of control. A limit is useless if you can move it because it annoys you.

An analysis on US debt can be found here: www.cbo.gov...

reply to post by Dbriefed


A nation’s debit can in no way anything be compared to a personal financial situation.

No, the United States does not pay it creditors first. What the United States does first is “Print” the money it uses to pay it creditors. The United States just creates the money used to pays it bills out of thin air.

This is the way it works:

the United States creates a Treasury Bond, which is just a promissory note. The Treasury sells this promissory note to the Federal Reserve, the Federal Reserve prints the value of the promissory note a gives this cash back to the Treasury, money created out of thin air.

In past years the Treasury would sell these Bonds to whoever wanted to purchase them, and they still will, however the list of potential buyers is down to just one, the Federal Reserve.

So, in reality, the United States is loaning themselves money. Yes, you guess it, that doesn’t work, it is a ponsey scheme, and yes if we did this it would be illegal.