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Yellen's warning about the debt ceiling.

OK, so Janet Yellen warns that if the congress doesn't increase the debt ceiling by June, the US could default on it's $31 trillion national debt. The warning was dutifully reported on by the media in appropriately solemn tones. Janet descends like a goddess from on high and declares this epiphany.

Is anyone curious about the timing of this warning? Wy weren't we talking about this debt limit when Biden and his congress crammed through the $1.7 trillion spending debacle just one month prior in the lame duck democratic congress?

Is it best if we just default in 2023 and get it over with? Maybe it would be doing our children and grandchildren a huge favor! Or should we just wait until our debt is, say, $60 trillion?

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whowasthatmaskedman · 70-79, M

You clearly have no idea of the consequences to the US in world economics if the US defaults. Overnight, nothing will happen. and everyone will say. "Look , the sky didnt fall". Then a month or so later, American $ wont be acceptable payment for Saudi oil, Chinese imports of anything and companies like Sony will ship critical areas off shore to avoid paying tax in the US, so they can do their accounting in yen.. America will have to buy foreign currency on the market to pay its bills. (like every other country does right now in $US) and the value of the $US will plummet. So its not a good thing...😷

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SomeMichGuy · M

@whowasthatmaskedman You are welcome to buy Chinese as often as you can.

whowasthatmaskedman · 70-79, M

@SomeMichGuy Well I bought Japanese, since we dont make our own.. But I cant guarantee where the brakes and suspension started life.😷

SomeMichGuy · M

@whowasthatmaskedman Oh, of course!

MasterLee · 56-60, M

Yellen is a failure

akindheart · 61-69, F

Good Point. She has issued this warning in order to get herself off the hook. The Dems are leading us straight into a recession or worse, Depression. Maybe we can take the MIchelle Obama walking park or the Nancy Pelosi federal building out of the picture

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irishmolly72 · 56-60, F

@whowasthatmaskedman Europe has been lucky with a mild winter so far.

irishmolly72 · 56-60, F

@whowasthatmaskedman Welcome to the world of fiat! (Not the car :) ) What's a trillion here ot there between friends?

whowasthatmaskedman · 70-79, M

@irishmolly72 I agree. Fiat currency is fine.. Until one side of the transcation gets the idea that either maybe they arent ever going to see any real value, or they can do a better deal elsewhere and stop taking it.. I suspect in this case a little from column A and a lot from Column B...😷

HoraceGreenley · 56-60, M

Good ole Janet, stating the incredibly obvious with an air of discovery

BizSuitStacy · M

@HoraceGreenley She can join Joe Buck and Troy Aikman in the broadcast booth.

irishmolly72 · 56-60, F

The idea of keynesianism was to run big deficits in times of recession and then run surpluses in the good times. This way the business cycle would be moderated and we could avoid the angst of recessions as well as excessive exuberance of boom times.

Why do we now run giant deficits even in the good times? Does it even matter? Republicans do it through tax cuts while Democrats do it through massive spending. Was Dick Cheney right? Deficits don't matter? Maybe we should not even have a debt ceiling? Just let the debt rip forever.

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SomeMichGuy · M

@irishmolly72

Not worth a response.

Then you failed at *that*, as well...

irishmolly72 · 56-60, F

@SomeMichGuy Kevin Hassett has an interesting idea. McCarthy should offer Democrats a deal: $3 in spending cuts for every $1 added to the debt ceiling.Can we agree?

SomeMichGuy · M

@irishmolly72 LMAO

There isn't a 1:1 ratio of dollars of debt to spending and part of why we need the IRS agents IS to go after people who not only are tax cheats on the annual bill, but tax cheats DURING the year (like a user here who filed an incorrect W-4 so he can keep more money, but doesn't pay estimated tax to keep up, so he is violating the IRC/reg's in at least 3 places...

DallasCowboysFan · 61-69, M

The Republicans introduced a bill to increase the ceiling by $1 but only if $3 is reduced from spending. But it won't get passed because it did not originate from the Dems..

On another note, China stopped buying US debt a year or so ago.
Partly because they don't like the increasing deficit and partly as a shield from sanctions if (when) they attack Taiwan and their assets are frozen.

Crazywaterspring · 61-69, M

@DallasCowboysFan The Chinese see the sanctions slapped on Russia. They're making plans for a forced unification of China.

Khenpal1 · M

@whowasthatmaskedman internal debt of real-estate in China is huge . They hide 9.2 trillion debt in 2022 alone and it is not stopping there. The difference is trust , debt in US is transparent , in China not. US can print money as long as there is demand for dollars.

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whowasthatmaskedman · 70-79, M

@irishmolly72 Thats almost correct.. First because America is an established base. Second because its a currency so many currencies are already invested in and thirdly because as you say, so many other countries are in a worse position.. And fourth, because there is a market to sell those $US to trade with a third party nation.. But all that reputation is what is currently sliding off the plate..😷

samueltyler2 · 80-89, M

@whowasthatmaskedman the global "standard" shifted from gold to the dollar decades ago.

a too sudden cut in current inflation with low unemployment, could lead to inflation with high unemployment, the worse case scenario.

One suggestion, to cut expenses, always involves Medicare and social security, both paid for by the workers. Rumor has it, that one "solution" is to raise the minimum age for retirement with social security to 70. That puts the burden on the younger to workers.

whowasthatmaskedman · 70-79, M

@samueltyler2 Addressing the first part. After the Gold standard was abandoned, there came the "petrodollar". A deal with the $US and ther OPEC countries to link the $ to oil. That was good for the Saudis and great for America, to gave a real commodity to prop the $ against. No need to explain if you take one side of a prop away, the other falls over.. And the Saudis are looking at doing that with China, because the Chinese are a more solid trade partner. So remove the oil and the $US falls over..
As to the second part...I really cant think of another developed nation where the tax system is so totally FUBAR as America. The idea of the rich paying so little might have meant something in the days of opening up the West, when gold was the standard and investment was needed everywhere, to the extent that foreign labor like the Chines was shipped in all through the West.. Now the rich invest in share buy backs because there is no new growth in the nation. (Apple, Nike and Tesla all employ Chinese labor in China) And what the rich do spend either drives up real estate prices, or imports foreign luxury items. Meanwhile, subsidies keep inefficient businesses in operation. It is absolute insanity..😷

Crazywaterspring · 61-69, M

Conservatives are always squawking about the national debt. How about NOT cutting taxes for the rich and very successful corporations? Are all these wars really necessary for national defense?

irishmolly72 · 56-60, F

@Crazywaterspring Good points. A pox on all their houses!

Budwick · 70-79, M

Our debt is not recoverable.
It's been years and years irresponsible policies.
The interest grows so quickly, there isn't a prayer of ever paying this down.

irishmolly72 · 56-60, F

@Budwick If we keep interest rates low, we get inflation. If interest rates get high the cost of debt repayment swamps other budget items. Welcome to 2023!

akindheart · 61-69, F

so what is the answer? Raise the ceiling again. sooner or later, the ceiling will collapse

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samueltyler2 · 80-89, M

@akindheart i do not have a party. I vote for those most competent, regardless of who their supporters are.

whowasthatmaskedman · 70-79, M

@akindheart Sadly we agree, with the rider that this statement has been broadly true since Reagan. Its not just a matter of politics and government expenditure (although they play their part.). Its that the whole nation has gradually shipped what made America great overseas in exchange for cheap labor. Even American cars cant be built without Chinese parts any more. And Some Wall Street bright spark decided "money" was a commodiy to be made and sold, instead of a medium to exchange value. Taking the value out of money was never going to end well.. 😷

akindheart · 61-69, F

@whowasthatmaskedman thanks for educating me. i admit i don't know what you guys know but i do know what is right and wrong and i know something is seriously wrong in our country. (keep tutoriing me)

redredred · M

Default is not an option. If default occurred the US could never sell a bond (the mechanism for borrowing) again without paying an interest rate in the 20%-39% range, basically junk bonds.

If that happened home mortgage rates would soar to near loan shark levels of 50%.

The only reasonable way out is to limit government spending to tax revenue levels, basically spend no more than we take in. We need to stop selling bonds to foreign governments and pay existing bonds off over time.

The sleazy way to do it is to stop selling bonds and drive up inflation to the point where $30.6 trillion is chump change.

anythingoes477 · M

You seem to have MAGA amnesia.................of that $31 trillion...............the traitor racked up $17 billion in 4 just 4 years and there was no Ukraine. And that isn't the bad news...........that $17 trillion was what was added to our deficit courtesy of his tax scam break for the 1% in his FOUR YEARS.

The tax scam is still in effect because the Republicans have enough votes in Congress to block repealing that stupidity..................so part of "Biden's $31 trillion"........is more burden added on to the deficit in the last 3 years too from trumps tax scam.

Budwick · 70-79, M

@anythingoes477 Hey, there's enough blame to go around.
Dems and Republicans are to blame - and with OUR money - so we are hopelessly in debt.
Individuals have bankruptcy to make a fresh start. USA does not have that luxury.

SW-User

They only want it raised because they want to spend more.

SomeMichGuy · M

@SW-User The debt ceiling us for servicing spending obligations ALREADY approved.

irishmolly72 · 56-60, F

@SomeMichGuy There's nothing keeping us from cutting much of the spending. How about the Dept of Education for starters? It's an abject failure by virtually any measure!

SomeMichGuy · M

@irishmolly72 Don't worry, the damage done by Devos is being reversed.

But if you understand how education currently works in this country, you'd direct your anger at states and esp. the local school boards.

wildbill83 · 41-45, M

if only ordinary people could handle finances like the government does...

when you're broke, just call the credit card company at the end of every month and tell them to keep increasing your credit limit...🤔

BizSuitStacy · M

Congress loves kicking the can down the road.

irishmolly72 · 56-60, F

@BizSuitStacy But isn't it just as much the executive branch's fault?

BizSuitStacy · M

@irishmolly72 Congress owns the budget. Prez approves. Accountability is shared.

irishmolly72 · 56-60, F

@BizSuitStacy Agreed! Good thing Pelosi's gone as Speaker. :)

Khenpal1 · M

Its not going to happen due to possible collapsing of Chinese banks

whowasthatmaskedman · 70-79, M

@Khenpal1 Please show your working on this one......😷

samueltyler2 · 80-89, M

You don't realize that the $1.7 trillion you would is the gross, not net, and the debt lol not is not affected by that at all. The debt limit is debt paid able for the finds already spent as the result of votes by both Republicans and Democrats in many past congresses,band that an alleged 25% of that was added in the years 2016-2020.

MasterLee · 56-60, M

@samueltyler2 yellen is horrible

samueltyler2 · 80-89, M

@MasterLee mybe so, that has nothing to do with the facts!

StrictSouthernHOH · 46-50, M

I don't think a default is imminent or likely in the forseeable future. Debt service is expensive, but as long as it is done without a huge spike in inflation, a default will be avoded.